Remarks of
FCC Commissioner Susan Ness
before the
NARUC Committee on Communications

San Francisco, California

July 25, 1995

Hand in Hand

Thank you for the kind introduction and warm welcome.

This is my first real chance to participate in a NARUC activity. I am glad to be here. In the short time I have been here, I have learned a lot from you.

In fact, over the 14 months that I've been at the FCC, I have benefited repeatedly from the wise and beyond-the-Beltway counsel you have offered. I truly appreciate the way in which you have extended your hand of friendship to me.

I am pleased to be here with my colleagues from Washington, Larry Irving and Andy Barrett.

Larry brings extraordinary experience, enthusiasm, and energy to his role as chief telecom policymaker for the Administration. He packs more information into a minute of conversation than anyone I know.

In addition to its other valuable activities, NTIA provides a helping hand to the FCC and your State commissions through its timely research on a variety of topics. The information presented this morning on telephone subscribership is an excellent example.

Let me also say a few words about my dear friend, Andy Barrett. You know him well. I'm sure you enjoy working with him as much as I do.

Andy has focused for many years on the issues we are discussing today. He has a unique understanding of both the federal and State perspectives. I am deeply grateful for his guidance, insights, and friendship and look forward to serving with him as FCC representative on the Joint Board.

My visit this week is all too short, but it's important to me. I came here to get to know you personally, to hear what's going on in your States, and to lay the groundwork for future cooperative efforts.

In that vein, I thought I'd caption these remarks "Hand in Hand."

I don't intend to speak for long today. Frankly, I'm more inclined to listen than to talk. There is certainly much for us to discuss.

It is an extraordinary time. Congress is poised to enact comprehensive telecommunications legislation, tailored to a fundamentally different industry as we enter the 21st century. It is an exciting moment, full of opportunity for our elected officials to chart a new course.

It is also an anxious moment. I'm well aware that many of you are concerned about the extent of the preemption in the pending bills. Though this matter is in congressional hands, I certainly understand your resolve to retain your grasp of the tools to safeguard your constituents.

The message I most want to convey today, and to back up through future actions, is my personal commitment to promote federal-State partnership. Together with my fellow FCC Commissioners and staff, I want to build mutual consultation and cooperation wherever possible.

The FCC's audience is national, and your focus is State by State, but the core of our responsibilities is the same. We're all here to serve the same public.

The FCC has the Communications Act of 1934, and you have a variety of diverse State statutes, but we're pursuing the same goals:

This is our common agenda. This is our shared responsibility. And, frankly, we will collectively share in the credit, or the blame, for the results of our handiwork.

Now, like most relationships, the one between federal and State regulators hasn't been, over the years, shall we say, perfect. I'm aware that, in past decades, relations between the FCC and State Commissions were marked too often by conflict and too seldom by an accentuation of our common goals.

In an environment in which an integrated network is used for both interstate and intrastate communications, some jurisdictional conflicts are inevitable. Yet we ought to be able to look beyond these conflicts and keep our eyes on the larger vision we share. Of late, I think we are doing just that.

Now, before I joined the Commission I was a banker. But my original professional training was as a lawyer. I've never forgotten the importance of building and supporting the case.

So, let me introduce some evidence. Let me cite a handful of specific examples of the kind of cooperation that I'm talking about.

A couple of months ago, we reconsidered a previous decision regarding Caller ID -- a decision to which many of you had objected. The reconsideration order we adopted in May of this year can be summarized in two words: we listened.

In our earlier decision, we had established an interstate per-call blocking scheme and preempted intrastate per-line blocking. The original decision was based on a belief that there was a significant national interest in the availability of a wide array of services based on ubiquitous deployment of Caller ID technology. There still is.

But, upon review of the comments filed by State representatives and others, we determined that the broad preemptive effect of our earlier order was unnecessary. We were persuaded that federal objectives for interstate services could be achieved without so completely displacing State authority over intrastate services. In this case, our willingness to look beyond hand-me-down precedent resulted in a sensible, balanced approach.

There has been a similar shift on numbering issues. Cellular and wireless companies complained about Ameritech's plan for implementing a new area code. In addressing that complaint, we established certain important federal policies -- for example, dislocations resulting from area code changes must be technology neutral (evenhanded, if you will). But we also withdrew a previous assertion of "plenary" federal jurisdiction over all numbering issues. It was not realistic, we concluded, simply to tell the States "hands off" with regard to all numbering issues.

Again, we achieved a pragmatic accommodation of State and federal interests.

There needs to be room to consider local circumstances. Conditions in Boise are not the same as those in Brooklyn, or Bethesda for that matter. Also, there can be great value in individual States experimenting with different approaches to problems. There's a strong national interest in promoting number portability. But the nation as a whole can benefit when New York and Illinois and Washington State are free at the outset to explore new ways of addressing this complicated issue.

Video dialtone is yet another example of comity. Last fall, we changed the previous determination that VDT is exclusively an interstate service. We acknowledged that intrastate jurisdiction applies when the customer-programmer, the carrier, and the end-user are all in the same State.

We also expressly preserved for the States the right to determine which of the intrastate network upgrade costs should be included in local telephone rates. You thus retain the ability to protect intrastate ratepayers, as well you should.

One more area of fruitful federal-state cooperation involves joint audits.

In the area of affiliate transactions, the results of a joint audit by Wisconsin, Ohio, and FCC staff were released -- at last -- in June. Five State Commissions and the FCC are now working together on an audit of GTE's accounting records. And we have set our sights (and our green eyeshades) on other areas in which joint audits may be appropriate.

I like this approach because I think it is efficient. It avoids duplication of effort. It's important to look at the federal and State ledgers at the same time to get a complete picture of what is going on.

Comparing notes between federal and State jurisdictions can help prevent our being "whipsawed." Carriers may find it convenient to tell you one thing and us another (they do this all the time with us and Wall Street). Regular communications between us can discourage that behavior.

I believe these examples -- Caller ID, numbering issues, VDT, and joint audits -- demonstrate a new willingness to avoid needless conflict between federal and State regulators. National policy goals are often better pursued through cooperation at the State and federal levels than by preemption.

Our resolve will be put to the test as we confront new challenges in the vital areas of universal service and local competition. These are our most important policy priorities, hands down.

Universal service is a long-standing national goal. It's founded in Section 1 of the Communications Act of 1934.

A 94 percent subscribership rate is no small achievement. But it's also true that literally millions of Americans remain unserved. And, as Larry Irving has noted, the picture is much bleaker when the data are sliced to highlight geographic, racial, and economic disparities.

Let me put this in very personal terms. Earlier this year, I visited an inner-city elementary school with Speaker of the House Newt Gingrich and FCC Chairman Reed Hundt. Each teacher in the school has been provided with a mobile telephone -- under a program of the CTIA Foundation. A 5th-grade teacher told me how she uses the mobile phone to engage parents regarding classroom performance.

When a student who has not had much success gets an answer right -- or makes a special effort -- right then and there she calls the parent to praise the child. It has a remarkable effect on performance. But this breakthrough can only occur if both the teacher and the parent have a phone close at hand.

The FCC has taken two important steps regarding universal service in the past month. One is the telephone subscribership rulemaking, where the information and insights Larry presented will be translated into action. We're especially interested in identifying what programs individual States have found to be effective, and why. The other is the Notice of Proposed Rulemaking on the Universal Service Fund and DEM Weighting.

Does the USF Notice look familiar? Of course. There was frequent consultation with the Joint Board staff as the Notice was drafted. The Common Carrier Bureau tells me that State contributions were invaluable in shaping the document. Your ideas are reflected.

We did the drafting this way, with you, because it made no sense to start coordination only after the Notice was adopted, and the proceeding was formally referred (or should I say "handed off"?) to the Joint Board. We're in this together, and we're doing our best to work with you on that basis.

Universal service questions are complex and pressing. For example,

Our USF Notice does not represent a comprehensive review of all universal service issues, but it is ambitious nonetheless. I am especially encouraged that we are now questioning a system that rewards the expenditure of each additional dollar. And I am intrigued by the third option set forth in the Notice, the block grant-like approach, under which States could determine how universal service funds are distributed within their borders.

Congress may guide us in these areas. Or, it may not. In any event, pending enactment of legislation, we will aggressively seek -- in consultation with you -- other ways to advance universal service.

Competition will promote universal service through the availability of lower cost providers and the deployment of new technologies. It will bring increased innovation and better service. But it will also make certain subsidy mechanisms -- explicit and implicit -- more difficult to sustain.

I believe the communications marketplace will be transformed by the competition that is coming. In so stating, let me emphasize that I do not engage in wishful thinking when assessing the extent to which local competition already exists. There is a long way to go.

Our goal should be real competition. As Vice President Gore has stated, it is not enough to have merely the assertion of competition, the illusion of competition, the distant prospect of competition.

Different markets will draw different kinds of competitive entry, and at different points in time, but we have reason to be optimistic. Competition to local telephone monopolies is coming from cable, from competitive access providers, and from Personal Communications Services. I also see Local Multipoint Distribution Service playing a role.

I am confident that local competition will bring far more benefits than detriments, but there will be dislocations. Managing the complex transition will require careful guidance and oversight by State and federal regulators, working hand in hand. Our collective efforts must be cooperative and complimentary, not contentious and conflicting.

On an individual level, each of us must do his or her best to accelerate the onset of competition that is both robust and fair.

Much of the FCC's involvement in federal-State relations is handled by our dedicated and able staff: Kathy Wallman, Kathie Levitz, Ken Moran, Deborah DuPont, and others. But, like Andy Barrett, I too intend to be personally involved -- hands on, if you like.

Drop by my office when you're in Washington. Pick up the phone. Send me a note -- E- mail or handwritten.

We need to do more than stay in touch. We need an active, open, and continuing dialogue. It's essential that the left hand know what the right hand is doing.

Now, in that spirit, I'd be happy to take your comments or questions.