Remarks of Commissioner Susan Ness On the Occasion of National Consumers Week Indian Treaty Room, Old Executive Office Building Washington, D.C. October 21, 1996 Competition and New Technologies: A Winning Formula for Consumers I am delighted to be here today to describe how our independent agency is serving consumers. We are forging ahead to promote competition in all communications industries. This competition is generating a dazzling array of innovative new products and services with better quality and at lower prices. Competition and new technologies represent a winning formula for consumers. Some might call this the "on-ramp" of the bridge to the 21st Century. The Telecommunications Act of 1996, A New Era This year began a new era in communications. After two decades of battle, Congress passed landmark legislation -- the Telecommunications Act of 1996. On February 8th, President Clinton signed this most sweeping revision of the communications laws in over 60 years. It is now up to the Commission to implement the new law. At the heart of the legislation is a pro-competitive, deregulatory national policy framework. Competition is the vehicle that will deliver the greatest benefits to the consumer in the form of more choices, lower prices, and better service. And as competition takes hold, regulation can be streamlined or eliminated. Local Telephone Competition The single greatest impact of the Act will be to transform the market for local telephone service. Where monopoly has long reigned, competition will now be king. The magnitude of this change is breathtaking. For decades, residential consumers and businesses alike have had no choice of local telephone carrier. Nearly $100 billion per year in revenues has been awarded largely on the basis of exclusive franchises. The future will be much different. Congress has chosen a path of competition. It has ordered that barriers to entry be struck down. And it has established a framework to enable new entrants to rapidly enter the local market -- using the services and facilities of the monopoly telephone company even as they compete against that company. So cable, wireless, long distance, and electric companies will all have the opportunity to vie for the consumer's affection -- and pocketbook. Just as Congress intended, the FCC adopted rules which set forth a strong national policy of competition. And these rules rely heavily on the states to shoulder many tasks of implementation. Congress wanted the FCC to ensure that competition occurs in all 50 states, but without harming pro-competitive steps already taken in some states. Our primary goal has been to promote efficient entry and fair competition. Wall Street investment analysts have reacted favorably to our ruling -- which translates into capital available to both the incumbents and the insurgents to build their networks. Unfortunately, our drive to deliver on this great promise has hit a major roadblock. The 8th Circuit has issued a stay suspending key rules. That has introduced uncertainty for the investment community and would-be providers of telephone service. The likely result is a delay in local competition. It's vitally important -- for the industry, for the states, and for the public -- that the judicial stay be dissolved as soon as possible so that competition can proceed. The FCC remains committed to securing for consumers the many benefits that were foreseen under the new Telecom Act. Universal Service Congress also recognized that competition alone may not bridge the gap for all consumers in all circumstances. The new law directs us to promote affordable telephone service for all Americans. In most cases, competition is the best route to that end. But the law recognizes that special measures are needed to protect low income consumers and those living in rural, insular, and high-cost areas. Formulating new universal service rules is an enormous challenge. Under the old monopoly system, high prices for some services helped keep residential rates low. Estimates of this support range from $4 billion to as high as $20 billion. That worked when there was only one provider. But such a system of support cannot continue in a competitive market. That's why our new universal service rules must be carefully crafted. The new law not only reaffirms our nation's commitment to rural and low-income consumers, but also boldly extends the notion of universal service to reach our children. A provision authored by Senators Snowe and Rockefeller directs the FCC to make sure that elementary and secondary classrooms -- as well as libraries -- have access to Information Age services at affordable rates. This is precisely the kind of idea that prepares us for the transition to the 21st century. I have seen students energized by access to a new world of information. I have felt the excitement as enthusiastic volunteers pulled wires to connect classrooms on NetDay. NetDay is terrific but, frankly, it is not enough. Many schools don't have the same community resources. Yet it's essential to our nation's future that the opportunity to learn and to grow not be dependent on the wealth of a community. Classrooms should be connected in Anacostia, as well as Alexandria and Aspen. The Administration has shown continued leadership in this area by proposing a universal service plan for schools and libraries that includes a no-cost "E-rate" for a basic package of transmission service, Internet access, and internal connection. I favor a strong national plan to ensure access to telecommunications and information services. It is essential that we reduce, not expand, the gap between "information haves" and "information have-nots." That's why I support aggressive discounts that will enable poorer schools and those in rural areas to obtain the services they need. Learning occurs in the classroom. I share President Clinton's hope for a "day when computers are as much a part of the classroom as blackboards and we put the future at the fingertips of every American child." A federal-state joint board, of which I am a member, will meet very soon to recommend a new universal service system. I hope we'll find a majority willing to recognize the importance of providing our children with the tools they need to prepare them for life in the 21st century. Children's Educational Television Speaking of children, the FCC and the Administration achieved a great success this past summer when rules were finally adopted to give full force and effect to the Children's Television Act of 1990. At last, we now have clarified the responsibility of every television broadcaster to air three hours per week, or equivalent, of educational and informational programming. I'm not talking about programming that has education as an incidental objective, but programming for which education is a "significant purpose." Previously, the FCC had rules that were so weak that some broadcasters were claiming they met their obligation to children by airing shows like the Flintstones and America's Funniest Home Videos. Now, we not only have a clear expectation of three hours per week, or equivalent, but also have empowered communities to make broadcasters more responsive. Beginning in January, broadcasters must identify in advance of airing which programs they claim are educational. That information will be published in program listings. Concerned citizens can speak up if they believe that these shows do not meet the needs of children. I also encourage you to enlist newspapers to highlight such family-friendly fare, and to support advertisers who support educational programming on commercial television. We are already seeing encouraging evidence of progress. Talented actors, writers, directors, and others are responding to the new market demand. Broadcasters are competing for the best educational shows. The prospects for much improved educational programming -- which enlightens as it entertains, educates as it enraptures -- have never been better. The President, the First Lady, and the Vice President have been instrumental in achieving the adoption of children's television rules that work for children, for parents, and for broadcasters. We can best honor their efforts by working together, and with our local broadcasters, to ensure that these rules are implemented successfully. New Wireless Services I also want to mention other ways in which we have benefitted consumers by fostering competition through the use of radio spectrum. We are increasingly using auctions to allocate spectrum for new services. We're pleased that this approach has raised over $22 billion for the U.S. taxpayer, but that's not the main goal. The real benefit is that we are accelerating the availability of spectrum for new wireless services. Personal Communication Services, or PCS, is the most notable example. PCS phones will be available throughout the country over the next 12 months. This new digital technology enables providers to offer features such as caller ID, paging, and voice messaging -- all in a smaller handset. And we've seen cellular prices fall rapidly in response to the growing competition. What else is on the horizon? We're just now seeing the first handsets for the new family radio service -- the 21st century version of the walkie talkie that enables you to stay in touch with your children while in a park or in a shopping mall. And we're working on the unlicensed use of new frequencies to create wireless local area networks for schools. Our new Local Multipoint Distribution Service will create new competition for cable and phone companies. Digital Television will transform the home viewing experience. And CD quality radio will be delivered via satellite to your home or car. The 21st century is almost here. Consumer Mission As I noted, competition introduces greater choice, lower prices, and more innovative services. But a downside of competition is consumer confusion, telemarketing during dinner, and complaints about unfair practices. Each year, the FCC resolves tens of thousands of consumer complaints. In the last few years, we have stepped up enforcement actions against companies that take advantage of consumers. We have revamped our Consumer Protection Branch that handles consumers' telephone complaints. When I leave you this morning I will return to the Commission where Leslie Byrne, Special Assistant to the President and Director of the U.S. Office of Consumer Affairs, will join us in officially opening the FCC's first toll-free Call Center. This Call Center, now online in 26 states, furthers our mission to provide information and help consumers make informed choices. The Call Center number is 1-888-CALL FCC. Increased competition will lead to decreased regulation of communications companies. But the FCC will remain vigilant to address unfair competition and consumer abuses. Conclusion I hope that competition in communications leads to real choices for American consumers. The choice of the future should be which telephone company to call -- not whether telephone service is affordable; which websites to visit -- not whether to connect each classroom; and which video programming service is best -- not whether to have a monopoly provider. It is clear: competition and new technologies will steer the way into the 21st century. Thank you.