September 22, 1994
Thank you, White, for that very kind introduction. Thanks, too, for the invitation to address this distinguished group. I have been an active FCBA member for many years, and have great regard for the fine work of this organization.
I particularly have been impressed by the dedication and zeal of the FCBA Foundation, an organization that demonstrates strong community spirit and leadership in public service. The Foundation's endeavors -- not only in supporting local charities, but also in encouraging FCBA members to give of their most precious commodity, their time -- reflect the Bar at its best.
Normally, I would have taken this opportunity to encourage each of you to become involved in the noble work of the Foundation, but my ethics guardians tell me that I may not do so . . . so I won't.
I am glad to see so many friendly faces. I know many of you from FCBA events over the past dozen years, just as I know many others from my years as a lender to various sectors of the communications industry.
Based on the constant flow of people through my office, I find it hard to believe that I haven't already met all of you. Still, I realize that some of you may be attending this lunch in the hope of learning my regulatory philosophy or the way I approach issues. I plan to shed some light in those areas, but first I'd like to dispel some misimpressions.
I am anxious to correct the misbegotten notion that I am Chairman Hundt's philosophical twin, and that as a fellow Clinton appointee I can be counted upon to unhesitatingly and obediently do whatever the Chairman asks.
I have been outraged by this typecasting, and I have awaited this opportunity to set the record straight. But -- I asked Reed's permission to deny this, and he said I couldn't.
So then I thought I might address the assertion that I tend to be too serious. I don't take this characterization personally, but I do find it puzzling. Remember, I'm not just an attorney, but also a banker and, now, a government employee.
If you were asked to name three groups of professionals most noted for their effervescence and wit, surely "lawyers, bankers, and bureaucrats" would be on the tip of your tongue.
That's why I decided to seek the help of a humor expert. I went to Dan Brenner of the National Cable Television Association and tried to hire him to write some jokes for me. He offered to do so on a going forward basis, but he asked for 25 cents a joke. Reed told me not to pay more than a nickel, so Dan and I never came to terms.
It turns out I should have snapped up the opportunity before it was too late. Dan saw how things went at the PCS and IVDS auctions and now plans to sell his material to the highest bidder. He hasn't decided yet whether, as a female and a small business-oriented Commissioner, I qualify for a 25 percent discount.
Meanwhile, one of the telephone companies stopped by to discuss video dialtone cost allocation. I asked the representative to quote me a price on jokes, and she said her company was going to write them anyway, so the cost could be placed in the telephone ratebase, and I would only need to pay the incremental cost of the paper on which the jokes were printed, or 2 cents apiece.
I thought this was a great deal until I met a broadcaster who offered me a "social compact." He said, if I wouldn't try to tell any jokes, he would promise not to laugh. And it would be for free as long as I didn't auction off his spectrum.
So, since I'm not going to tell any jokes, not even about the Portals, I'll move on. I would like now to outline the philosophy and values that underlie my approach to the issues pending before the Commission.
As I see it, our job at the Commission is to manage a transition of epic proportions.
This year, as we celebrate the 60th Anniversary of the Communications Act, the Commission faces challenges of unprecedented complexity and importance. New technologies and services are being introduced at a record pace. Each day brings news of business alliances that not long ago would have been unimaginable. Competition is being introduced, or planned, for markets which have long had monopoly characteristics.
In the midst of such tumultuous circumstances, it is a formidable task to devise, much less to administer, a coherent, principled public policy. But this is a responsibility the Commission cannot shirk.
The communications industry -- or more precisely, industries -- now represent a substantial and still-growing segment of the American economy. The international competitiveness of our businesses, faced with intensifying global competition, increasingly depends on communications and information tools. Jobs, exports, and quality of life are all affected by communications services and products -- and therefore by the manner in which the Commission discharges its regulatory responsibilities.
The people in this room have known for years what the rest of America is now learning: that the changes underway are revolutionary.
You understand the consequences of Moore's Law, predicting the doubling of the power of computer chips every 18 months. You know (some of you in mind-numbing detail) about the vastly accelerating transmission speeds of common carrier facilities, the introduction of digital compression in now-analog cable systems, and a host of other developments. You realize that wireless modems will increasingly be installed into computers, computer interfaces installed into TV monitors, and telephones and cables connected to both.
More important, you understand the significance of these developments, how they affect commerce, investment, and business planning, to say nothing of the effect of these changes on our families, our homes, and our leisure time.
You also appreciate, as few others can, how the changes now underway involve interdependencies that previously were unthinkable. Today, developments in any one market may create opportunities, challenges, or dangers for related markets. For example, the inexorable changes in the telephone and cable businesses will allow both industries simultaneously to play the role of incumbent and insurgent.
How should the Commission manage this period of upheaval? What are our responsibilities? What are the guiding principles?
The starting point necessarily is the rule of law -- the Constitution of the United States and the Communications Act of 1934, as amended on many occasions over the past 60 years, plus other related statutes and judicial decisions interpreting these foundation documents.
But the Commission is still left with considerable latitude. Our lodestar is to promote "the public interest, convenience, and necessity." But that is not the end of the inquiry. We need to refine our analysis within the context of this expansive and supple standard.
There is no single, ideological, one-size-fits-all answer. Our job is to balance multiple factors, giving appropriate weight to each.
Ten years ago, the Commission had one overarching principle: deregulation. Today, if there were a single theme, it would be competition.
Competition is not an end in itself but a means to promote benefits to consumers. Economics, and more importantly experience, teaches us that robust competition expands consumer choices, lowers prices, improves quality of services, and fosters innovation. Competition also spurs investment, creates economic opportunities as well as risks, and promotes efficiency.
Our upcoming decisions on video dialtone and cable upgrades will test our ability successfully to introduce more competition in the video marketplace. The recent launch of Direct Broadcast Satellite service and the Commission's actions to streamline wireless cable licensing should accelerate competition. Our video competition report to Congress, adopted earlier this week, is a baseline to measure that progress.
As competitors to cable television increase market share, rate regulation imposed under the Cable Act of 1992 will -- as Congress directed -- be eliminated. More importantly, as competition develops, new business opportunities will emerge and new consumer benefits will be realized.
Competition is a worthy objective, but a single-minded focus on competition is far too narrow an approach to our public interest responsibilities. Market dynamics are a vital consideration, but even perfect competition does not fulfill every legitimate public interest objective.
Competition alone cannot ensure "economic opportunity for a wide variety of applicants" in the PCS and IVDS auctions or a diversity of voices in broadcast media. Competition doesn't necessarily guarantee that PBXs and wireless phones will transmit location information necessary for Enhanced 911 services to save lives. Competition alone doesn't induce foreign nations to open their markets to U.S. products and services. And competition doesn't necessarily ensure socially responsible behavior, as is dramatized in Robert Redford's new movie, Quiz Show.
Principles and goals other than competition have to be part of the equation. What are these considerations, and how can they help us meet our responsibilities to Congress and the American people?
Universal service is one of our primary responsibilities. This consideration is front and center in Section 1 of the Communications Act. There are economic and social reasons why access to cutting-edge communications and information services should be widespread, so that no one is left behind as we are swept forward into the Information Age.
Yet there are countervailing considerations, even for this worthy goal. There is tension between the objective of universal service and the need to wring out subsidies that distort investment and skew competition.
There are also resource limitations. Can anyone really argue that it is the proper role of government to supply a broadband pipe, a personal computer, 60 channels of cable programming, and five hours a month of on-line database services for each family in America?
How do we reconcile our aspirations and our resource constraints? We need to find ways to start addressing the issue, even though the ultimate solution is not immediately apparent. Schools and libraries clearly can play a pivotal role in making vital services broadly available. What other mechanisms can best promote universal service goals, consistent with sound economics, applicable law, and considerations of equity?
This issue, like many others, is one that in my judgment would benefit from legislative guidance. My personal view is that the best way to celebrate the 60th anniversary of the Communications Act is with a Rose Garden signing ceremony to implement comprehensive communications reform legislation.
A common core of precepts and provisions won strong and bipartisan support both in the House of Representatives and in the Senate Commerce Committee. It is distressing to think that time may be running out on legislation that passed the House with scarcely a dissenting vote and cleared the Senate committee by a vote of 18-2. For now, I remain an incurable optimist. If legislation does not pass, however, we will of course continue to operate under the present statute, whatever its limitations.
Meanwhile, other goals and principles must also be woven into the policy fabric.
Efficiency. We want to promote the efficient use of spectrum. We also want to become more efficient, as an agency, in our provision of services to the public.
Expeditious action is also a worthy goal. Eliminating backlogs in application processing. Devising mechanisms to issue licenses promptly. Streamlining routine processing of paperwork. From my prior life, I know how important to business plans timely government action can be.
There are other considerations that enter into the policymaking process. There isn't time to try to enumerate all of them this afternoon. I do want to quickly highlight just a few.
Sensitivity to the needs of small business. For example, should we apply all of the same regulations to a cable company that serves two thousand customers as to one serving two million? Should large and small broadcast markets be regulated identically?
Safeguards. Some "rules of the road" are appropriate even in a competitive environment. But which rules? Equal access? Unbundling? Privacy protections?
Streamlining. Maintaining outdated and unnecessary requirements can burden businesses and ultimately harm consumers.
Certainty. I try to be sensitive to business realities, particularly long-term planning and financing needs. I also recognize that our government agencies must adapt rules and policies in light of changed circumstances and evolving experience, especially in new areas such as auctions. This can be a difficult balance to strike.
Foresight. We have no crystal balls, but we must gather whatever information we can and use predictive analyses to illuminate the path before us. An awareness of the potential for unanticipated consequences should be ever-present in our deliberations.
We also need to consider our individual and collective responsibilities as members of a single national community. Might the issues of children's television or TV violence, for example, more successfully be addressed in the context of joint, cooperative, voluntary efforts by all interested parties? Would it not be worthwhile to see what broadcasters, program creators and producers, advertisers, educators, and parents can agree upon, independent of any government regulation?
Fortunately, as we wrestle with the complex issues confronting us, we have an outstanding bar to assist us.
I appreciate the valuable role FCBA members play, through your advocacy on behalf of your clients, in helping the Commission to formulate communications policy. To a significant extent, you frame the issues for us. You supply much of the information upon which we rely. You help draw the connections between your clients' private objectives and the public interest objectives that must be our touchstone.
I welcome your assistance. The challenges are formidable, but the opportunities for both private and public benefits are limitless.