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FCC Chairman William E. Kennard
Association of Local Telecommunications Services (ALTS) Convention
Nashville, TN
May 3, 1999

(As Prepared for Delivery)

"A Competitive Call to Arms"

Thank you, John, for that generous introduction.

John is part of a leadership team that you all should be proud of. John, Cronan, and the rest of the staff -- plus Royce and the board of directors -- are some of the most effective advocates that I have seen. The fact that I see them so much should tell you something about how good they are at giving you a voice in Washington.

Now, they have given me the chance to talk back directly to you. And I thank them for this opportunity.

I feel very honored today to appear here with Don Cruickshank. When the history of this period in telecommunications policy is written, Don will be remembered as a pioneer -- one of the first to recognize that telephony is not a natural monopoly and that consumers deserve to have choice in telephone service.

And finally, I want to recognize one of the great citizens of Nashville. Someone to whom we are all indebted, but who gets far too little recognition at events like this. His name is Joel Owsley Cheek. He is the man who invented Maxwell House coffee.

Were it not for him, these morning convention speeches would not be possible.

Nashville is also the final resting place of one of Tennessee's three presidents, James Polk. Now, Polk may not be the most famous president, but he did make America what it is today literally. During his presidency, Polk annexed Texas, California, Washington, and Oregon.

Even at the beginning part of this century a few decades after they were annexed, those states were still the frontier. Brave men and women looking for a better life would load up their belongings and head west to places like Oregon, California, and Texas.

These people didn't have much just a strong back and a stronger will. These were the people of Ivanhoe, Oklahoma. Ivanhoe was a town it had one street: Main Street. It had a general store and a barber shop. In the surrounding fields, people eked out a living, mostly working the land.

Then, in 1917, the world changed in Ivanhoe, Oklahoma. The town leaders read that the railroad was due to come to their part of the world. The biggest and most important network in the country was going to reach out to their part of the West. The economic possibilities seemed endless with quick transportation would come jobs, new businesses, new ideas, and more people.

Except there was one problem. When they studied the plans, the town fathers saw that the railroad was coming no question about that but six miles away -- in Texas.

Knowing what being bypassed by the railroad would devastate their town, its leaders made a decision. They decided to move. The entire town. Buildings and all. Now, Ivanhoe, Oklahoma rests six miles to the north and is known as Follett, Texas.

Thankfully, towns don't have to move to access the networks that you are building to remake our future. The Internet, unlike the railroad, can come into every office, every home in America, even in our briefcases and pockets.

We have the capability to bring broadband technologies to all Americans wherever they live and wherever they may go.

With cable, copper, wireless, and satellite, we can build on-ramps to the Information Superhighway for anyone anywhere. No town, no community has to be condemned to becoming a ghost town in the New Economy.

Part of the reason for this flexibility is technological bits of data are a lot easier to maneuver than iron and steel.

But it is also because Congress made the right policy decisions when it came to deciding what kind of telecommunications system we wanted to establish for the 21 st century.

When drafting the Telecommunications Act of 1996, Congress wisely reached back to a value as old as America itself: choice. The idea is that competition would drive deployment of the networks of the future. And that once given an array of options, individuals can best decide what is best for them.

To reach this goal, Congress gave the FCC the tools to break open monopoly markets to establish the ground-rules for robust competition.

Indeed, the Telecom Act of 1996 is a framework that recognizes that the transition to competition is needed, and it does not happen overnight. It requires hard work.

Congress said that we can transform monopoly markets by the force of law. That Americans will have competition only if we write the rules and regulations to pry open those markets and keep them open to competition.

And its hard work. You know how hard it is to bring competition to a monopoly market. Because you are out there working at it every single day.

In many ways, it is much more difficult than the structural solution that the courts ordered with the divestiture of AT&T. Because the 1996 Act demands that the incumbent provider make its facilities available to the very competitors who are vying for the competitors own customers.

The incentives are not lined up just right. But the good news is that it's working. The Act is working and your industry proves that it is working.

And while we have a lot of work ahead of us, we are seeing the fruits of our efforts so far. Investment in telecommunications infrastructure is up, job growth is up, and choice is becoming a reality in the local phone market and in broadband access.

But it's not enough if, in a city like Nashville, only large businesses have choice in local phone service. If that's all we get out of the Telecom Act, then we will have failed the American public.

Because the goal is to bring all Americans the benefits of a competitive marketplace, we must redouble our efforts to bring choice to residential subscribers - - choice in local phone service and choice in broadband access.

Consumer demand should be the driving force. And indeed, the huge demand for data is creating lots of new opportunities for all of the players. Companies are racing to provide broadband connections.

And that's a good thing. Its good for competition and its good for our economy.

Cable companies are investing billions to upgrade the coaxial pipe for broadband. Wireless companies are deploying new broadband wireless networks. Phone companies are conditioning those old copper wires for high-speed, DSL connections.

This is great for consumers.

All of these networks are interdependent because they all require interconnectivity to grow and prosper.

The law creates a framework to allow networks to connect seamlessly for the benefit of consumers. Consumers are discovering that this framework does give them choices they have never had before. And thank goodness we now know that the United States Supreme Court believes in this framework too.

We would not have scored this victory if not for the help of people like you. I want to thank the terrific team at ALTS for consistently supporting our efforts in the courts.

But the time for litigation is past. It's time for consumers, not lawyers, to shape the outcome in this marketplace. It's time to bring the effort out of the courtroom and into the marketplace. It's time to end the legal uncertainties. It's time to move on.

Now that the courts have upheld most aspects of the FCC's implementation of the Act, we must ensure that the Supreme Court's recent decision produces momentum to the market-opening mandates of the Act. Not more delay. Not more confusion.

We have worked hard at the FCC to implement the 1996 Act. But so have you. You have been out there on the front lines, doing the hard work of bringing new choices to consumers.

And we have learned much from your experiences. You told us about the challenges you face in collocating at the central offices, and we responded.

In March of this year, we strengthened our collocation rules to make sure that incumbents can't throw up unnecessary roadblocks to keep you out of those central offices.

No more requiring you to build a cage that is priced like a Rolls Royce when a Chevy will do just fine.

No more turning you away because they say there is no space when you know the space it there. Now you can see for yourself.

No more turning you away for lack of space when you know that hundreds of square feet are being taken up by obsolete, unused equipment.

No more saying that you don't meet some stringent safety requirement that the incumbent itself doesn't even meet.

The American public will not get the benefit of competition if you can't get into the central office.

Well, our actions in March opened the door for more competition in data services. We opened the door for more robust local phone competition as well.

Here's something else that we did.

We established rules on spectrum compatibility. When two loops placed close to each other are both carrying high-speed data, they can cause interference to one another. This is a serious issue.

But we didn't want the potential for problems alone to slow the pace of competition and deployment. So we said that if the loop technology to be used has worked before, than it's OK with us. And if not, then the incumbent will have to convince our colleagues at the state commissions that interference concerns should delay competition.

We took these actions because you educated us about what is happening out there on the front lines of competition. And I want to thank you for that.

On the same day that we adopted our new collocation rules, we started a proceeding on line sharing issues. Line-sharing has great potential to open up the marketplace to even more broadband competitors. That's why we're giving it a very close look.

I am proud of the work that the FCC has done to implement the 1996 Act, but this is just a start.

Our work is not done. As Winston Churchill said at the beginning of World War II, this "is not the end. It is not even the beginning of the end, but it is perhaps the end of the beginning."

We still must address the question left in the wake of the Supreme Court's decision: which network elements of the incumbent's local phone system must be made available to competitors.

This is a vitally important question for all of us and not all of the answers are clear to me yet. But let me say one thing about this at the outset. If we are to give true meaning to the pro-competitive thrust of the 1996 Act, one thing is clear: the local loop must be made available. It must be at the very top of the list of network elements.

Because that copper wire that goes from the central office to your home or business is not just the last mile. It's the most important mile. It's the route into the marketplace for competitors. And it's got to be first item on the list of unbundled network elements.

I believe that it key to making the Telecom Act work.

Availability of loops is the heart and soul of the Telecom Act.

The Act has unleashed a flood of entrepreneurial activity. And the people in this room are testimony to that.

It has also unleashed a frenzy of consolidation. My wife thinks that the telecommunications business has co-opted the press because its all she sees on the business pages these days. Everything and everybody seems to be in play. Even the FCC. Some people want to merge it out of business too.

I want to say a word about consolidation. We are seeing some great benefits from consolidation in many sectors of the telecommunications marketplace -- consolidation that is bringing convergence to consumers.

But let me be clear convergence does not have to mean consolidation. I want to see more competition in the market for broadband services, not less. That's one reason why it's vital that the FCC uses its statutory authority to consider the public interest impact of proposed mergers.

We need to make sure that any merger serves the public interest. And a big part of that interest is making sure that competition in telecommunications from local phone service to broadband is not stifled.

Someone asked me the other day whether I am frustrated when people say that the Telecom Act isn't working. And my answer is yes and no. Yes, it's frustrating, especially when you consider how much progress we have made in three years, and compare that to where long distance competition stood just three years after divestiture. By that measurement, we're in pretty good shape.

On the other hand, impatience can be a virtue. When people say the Telecom Act is a failure, it renews my resolve, and I hope it renews your resolve as well.

Because there are some who say it's already time to revisit the Act, and with everyone bringing their own wish list to the table, who knows how that would turn out.

If you want to avoid that outcome, you have to keep pushing competition, in rural areas as well as urban, to residential consumers as well as businesses. You need to get the message out there that competition is growing and it's working. But you do that not just by saying it's so, but by making it so.

And I know I don't have to remind you that some of your allies in the fight to open the local networks are now pursuing a strategy of by-passing the incumbents loops and developing their own networks to reach the local customer. Now by itself, that could be a very positive development for competition and consumers. But when these by-pass networks are up and running, some of your allies may no longer be there to fight your fight.

So I say to you, this is no time to rest. You and you alone have to tell the American people that competition works. You have to articulate a compelling vision of how you will serve residential customers.

Because, as I said before, if the residential consumers do not have choice in local phone service, people will say that the Act has failed. And that is unlikely to lead to anything positive for competition.

My assumption, of course, is that you're truly interested in serving the average residential consumer. And I hope you are, because one way or another the residential consumer's demands have to be met.

I believe that an open, competitive marketplace will benefit our country with better service and benefit all Americans with lower prices. This is a goal that I work towards every single day.

And I know that ALTS will be there with me fighting this fight. Getting involved in the process. Staking out your positions. And showing the entire industry and the entire country that competition works.

You must make your voices heard. Get out there and tell the world that this Act is working. Get out there and tell the world that you support an FCC that is willing to stand strong and keep this Act working.

Thank you.