Text | Word97

Remarks of
FCC Commissioner Susan Ness
Before the
1999 Women's Leadership Forum
Washington, D.C.

June 22, 1999

Thank you very much, Kathy. It is a pleasure to be here. I am delighted to see so many of today's -- and tomorrow's -- leaders assembled in one room. Congratulations to Kathy, CJ, and the Forum Steering Committee for arranging this event and showing that inspiring video of quotes.

Seeing all of you brings to mind how I came to be a part of the communications industry.

I began at WRSU in New Brunswick, NJ in college radio. From there, recognizing that I wasn't destined to be the next Diane Rehm or Nina Totenberg, I went to law school.

I remember interviewing for jobs on the other coast in my third year. I went to one law firm. The interview went really well. The firm was prestigious, and my skills and their needs seemed to match perfectly.

Then, the interviewing partner looked at me and said, "I'd love to hire you, but I'm not sure that my partners are ready for a woman to join the firm. You see, we always eat lunch at the same club, and they don't allow women in. I'm sorry, but I don't think my partners would want to change where they eat lunch."

Well, I don't know what happened to that firm. But I can tell you this: they were clearly out to lunch.

I am sure that we can spend the rest of the day sharing stories like this. And the fact that we can tell these tales and laugh about them, illustrates that we have, in fact, made significant progress over the past 25 years.

And yet, we have not achieved as much progress as one might guess. Think of who runs the largest telephone companies, the largest long distance companies, the largest cable companies, the largest wireless companies, and the largest broadcast groups. Any women CEO’s come to mind? I doubt it.

This is a theme I’ll return to later in my remarks.

Technology and competition are driving extraordinary changes in our industry at a breathtaking pace. These changes provide an unparalleled opportunity for women to break into top jobs in businesses that did not exist 30 years ago.

Each of you in this room has gotten where you are through ability and hard work. Each of you has proven that women can and will succeed in the communications field.

It isn’t enough in the digital revolution just to have a Molly Pitcher here or there. Rather, there is every reason to expect that women will be on the frontlines, building the businesses, setting the policy, and making a difference in our country and the world.

Think about how this technology is changing your own lives and the lives of almost every American. Now, families all across this nation have a choice of a vast array of high-tech communications services, services that now cost less.

Taking a call while driving to work or at a soccer game is now the norm for more than 70 million Americans who last year had a mobile phone, and made calls on a service that cost 40 percent less than it did three years ago.

Calling friends and family across this nation has gotten cheaper and cheaper as the choice of providers has expanded.

Sending an instant message to an aunt in Manila or a colleague in Milan is routine for the 30 million households now on-line.

And as more and more Americans go on-line, so has American commerce. Five years ago, few people had even heard of the World Wide Web. By 1998, 26% of retailers had a web-site, and it is estimated that they did over $10 billion in sales – heading for $100 billion within three to four years.

It is no surprise, then, that data traffic has now surpassed voice traffic on phone lines and may soon represent over 90 percent of all communications.

The telecom industry is changing, changing fast, and changing for the better. Today, I want to talk briefly about six major industry trends and the implications for women pursuing their destiny.



From a policymaker's point of view, our number one goal is to promote competition.

Competition is the foundation of our economy. It's the driver of investment and innovation. Consider those markets that are competitive, like the market for long distance services, information services, computers and other customer-premises equipment, and -- increasingly -- wireless services.

These are the markets where we see the most innovation, the greatest increase in consumer choice, and the greatest reductions in prices.

But competition doesn't come easy. In some sectors there are monopolies to undo, and displacing a monopoly isn't something that happens overnight. But it's something the FCC and the state public utility commissions have been working hard to achieve. The capital markets have responded, showering new entrants with tens of billions of dollars of capital to build new facilities.

Despite the disappointing failure of the local Bell companies to go head to head with their sisters in adjacent territories, we are now much closer than ever before to making competition in local phone service a reality. Meanwhile, direct broadcast satellites have challenged the cable monopoly by signing up 10 million customers over the past few years.

And wired and wireless alternatives for both telephony and video services are now being rolled out. As we work to dismantle barriers to entry, technology works to circumvent them.

New kinds of satellites, new kinds of antennas, and the increasingly ubiquitous Internet protocol mean that an alphabet soup of new services – MMDS and LMDS, and LEO’s -- and fixed wireless services may all help to undermine traditional monopolies.

I am a pragmatist. A laboratory breakthrough is not the same as a marketplace reality. And a business plan is not the same as real cash flow.

But I am also an optimist. I continue to believe that we are on the right track, and that, with the right policy direction and enforcement, Congress's vision of a largely competitive marketplace will -- over time -- be realized.



As this tide of competition rolls in, the shoreline of regulation undoubtedly will recede.

Much of the regulation previously administered by the FCC will become unnecessary as markets become more competitive.

To be sure, government plays an important role in bringing about the transition from monopoly to competition. But once competition arrives, government needs to step back and let the market work its magic.

The best solution to a market problem is a market solution, and that is what we should search for. And Congress empowered the FCC to conduct this search. In the Telecom Act, Congress gave the FCC an extraordinary new power: power to forbear from regulating. We can eliminate not only our own rules but even statutory provisions enacted by Congress.

There are limits on this power, of course. We can only forbear if we conclude that Marketforces will ensure just and reasonable prices and practices, that consumers will be protected, and that the public interest will be served.

To its credit, the agency has shown itself willing to use the forbearance power when circumstances warrant. Generally, we do so when the development of competition has justified an easing of regulation.

But we also have the latitude to forbear when we believe doing so will itself accelerate the development of competition.

Of course, there is a role for the FCC in a de-regulated world. Rules of fair competition will have to be enforced. So will consumer protection.

Also, the FCC will continue to serve as "spectrum traffic cop." And universal service will need our attention.

Yet it is clear that we must prepare now to build a New FCC – one that is committed to the same goals, but which looks and operates differently from the way it does today.



In the new century, the FCC will take on a changed role because the industries that we oversee will likely have been transformed.

Think about your own businesses. How many of you who began working for phone companies ever thought that you would worry about transmitting video? How many of you in the cable business ever thought that you would now provide phone service?

And how many of you in computer companies ever thought that you would have to worry so much about the cable and phone platforms?

Digitization is changing everything. Microprocessors are continually growing cheaper and more powerful. New and old services are using the Internet protocol.

Multiple services can now share the same digital bitstream, whether that bitstream is coming to us over a Digital Subscriber Line, a cable modem, a digital broadcast, a wireless local loop, or a satellite.

We are fast approaching a future characterized by convergence and increased bandwidth. The long-awaited "Information Superhighway" is at last being built.

Of course, it's not the case today that five separate information superhighways are running to every home. Most of us don't even have one, much less two. But the trends are very favorable on both the supply and the demand side.

This presents public policy challenges. Despite a comprehensive and forward-looking rewrite in 1996, the Communications Act still contemplates different regulatory schemes for different market segments. We have Title II for telecommunications, Title III for broadcasting and other radio services, and Title VI for cable.

As technologies, service offerings, and consumer demand converge in various ways, it may be more difficult -- and less logical -- to impose very distinct regulatory classifications and rules on each industry sector.

So, which of these services will help to fund universal service? Which of these services should be subject to equal access and unbundling requirements?

How does one harmonize the differing regimes when cable is regulated primarily at the local level, local telephony is overseen primarily by the states, and broadcasting, spectrum use, and satellite operation are handled by federal authorities?

Local, state, and federal officials will need to work together to create new solutions to these challenges. And it may turn out that some of the solutions can only come from Congress.

Meanwhile, however, I hope you will look on convergence not just as a challenge, but as an opportunity as well. The Internet enables entrepreneurs to spring into being with little capital. What’s needed is a great concept for how to weave the Internet into our daily lives. So convergence can create a platform for female-owned companies to emerge.



The flip side of convergence, and all the entrepreneurial activity it has stimulated, is consolidation. The past several years have brought us a number of mega-mergers, with more to come.

Proponents justify consolidations on a variety of grounds. They may be based on a perceived strategic value of certain assets, as with AT&T's acquisition of Teleport. They may reflect a perception of the efficiencies associated with larger scale, as with Worldcom's acquisition of MCI.

They may be driven by economies of scope, and the hope for synergies across business lines, as with Disney's acquisition of ABC, and they may embody hopes to exploit convergence, as with AT&T's acquisition of TCI.

As a general matter, these mergers are beneficial and receive prompt approval from both the FCC and the antitrust authorities.

But some mergers may diminish the prospects for competition or frustrate the statutory goals of the Telecom Act. These are not the kind of mergers I want to approve.

Some of the mergers we review have both negative and positive consequences. These are the hard ones. The Bell-Atlantic-NYNEX merger is a case in point.

There, we lost the potential competition each company could have brought to the other’s market -- a decided negative from a public policy standpoint. This merger was approved only because we felt the public interest balance was tipped by the parties’ concrete market-opening commitments.

We believed that these promises would help consumers throughout the merged companies’ region, thereby advancing the goals of the Communications Act.

In the coming months, careful scrutiny of mergers will continue to be important. But I want to emphasize, even though we must be thorough, we must also act expeditiously. Businesses need certainty. Investors shouldn't wait interminably for regulatory decisions -- on mergers or otherwise.

How does consolidation affect women? It poses another negative -- the elimination of senior jobs -- jobs that might have been open to women on the rise.



What is extraordinary about the communications revolution is that none of the developments I have mentioned is occurring in the United States alone. The same changes in technology, business strategy, consumer demand, and public policy are also apparent throughout the world.

Today, more than ever, ideas, products, and capital travel at lightning speeds.

Today, more than ever, the world's economies are interdependent. Not surprisingly, U.S. communications and information companies are increasingly active in overseas markets, and foreign companies are increasing active in the U.S. market.

There has been a remarkable change in other governments' views of telecommunications. State-owned telephone companies are being privatized. New independent regulatory agencies, often modeled after the FCC, are being established.

And a large number of countries have committed, under the World Trade Organization, to concrete market-opening measures.

It seems that the goals of competition, deregulation, and universal service are increasingly part of a shared vision for communications. I urge each of you to pay attention to developments in international communications, and to exploit these opportunities.

Universal Service

Finally, as we look outward to the promise of the worldwide market, we must also look inward to our national community. For in this era of change we also must continue to honor our responsibilities to promote universal service.

The opportunities of the New Economy should be made available to all Americans.

That means addressing the distinct needs of low-income consumers, consumers in rural areas, students, library patrons, and rural health care patients, as well as people with disabilities.

The challenge is how do we make sure that the services that will be basic to our lives in the next century reach all Americans?

The implicit subsidies that worked so well in a monopoly environment won't serve as well in a competitive environment. You can't assume that the underpricing of service to low-income or rural subscribers will continue to be funded by overpriced business lines, vertical features like Caller ID, or intrastate toll. After all, the new entrants will target those high-margin services first, and drive out the subsidies.

Thus, the high-cost support system must be revamped. We need to preserve affordable service while making subsidies explicit and competitively neutral and economically efficient.

This is one of the toughest challenges that we face at the FCC. But we are making steady progress, and we will see it through.

Meanwhile, we are also taking proactive steps to bring the skills and tools needed to compete in the Information Age to our nation's children.

Thanks to Senators Snowe, Rockefeller, and Kerrey, as well as the inspired leadership of President Clinton and Vice President Gore, we now have the e-rate program that provides discounted communications services to elementary and secondary schools and public libraries throughout the nation.

Over 80,000 schools and libraries -- and more than 38 million kids -- have already been helped by the e-rate program. This year’s funding will help 40 million more. The benefits go disproportionately to rural schools and to schools serving low income households.

Some people want to try to make the e-rate a political football. They say that we can't afford to connect our nation's classrooms and libraries to the Internet. I say to them, remember what Derek Bok, the former president of Harvard, once wrote: "If you think education is expensive, try ignorance."

For if we keep our children ignorant of the technologies shaping our world, we'll all have to pay -- with unqualified workers, limited economic growth, and unrealized opportunities.



And as we create these opportunities for our children, we must realize that the digital divide is not just a kids issue. It's also about who is participating in these high-growth industries; and who is not.

This was a concern before the dawn of the digital age. The very first time that I set foot in the FCC was 15 years ago as a panelist at a conference organized by Commissioner Mimi Dawson on the challenges that women media entrepreneurs faced when trying to acquire capital for their ventures.

Fifteen years later, much has changed. As we discussed, this industry is churning with opportunities created by competition, globalization and new technologies. And yes, most luncheon clubs now admit women.

Markets have been opened and industry boundaries are converging. New industries, like wireless, have exploded, and whole new industries like the Internet have been created. The opportunities are immense.

Yet one thing hasn't changed.

To this day, I go to industry conferences, and see very few women in the highest echelons of the telecommunications and media businesses.

I just got back from one trade association meeting, and the program book said it all. Page after page of general session panelists – not one woman. Not one minority.

The same thing occurred at an earlier industry convention -- the superpanels featured all men.

Not one woman heads the largest telephone, long-distance, wireless, cable or broadcast companies: The Executive Committees of most of the major trade associations are devoid of women. When Wireless Week recently ran a profile on the 25 most influential women in the industry, the same issue profiled the 50 Newsmakers of 1999. Of the 50 "newsmakers," not one was a woman.

This is the challenge for all of us in this room. As policymakers, businesswomen, and engineers, we must work to open up our industries to women and to all those that have been shut out for too long.

We must make sure that the immense opportunities of the Information Age -- in old media and new media alike -- are open not just to our sons, but to our daughters.

As you all move up the career ladder and pioneer this industry -- remember.

Remember that as women leaders -- as American leaders -- your job is to fill a seat at the table with the values that you cherish.

Give voice to what you know and what is in your heart, and you will benefit your companies, your industry, and our entire country.

Thank you.