Thank you so much for that kind introduction. It’s wonderful to be back in Puerto Rico, where I was born and raised, to talk with you about the communications revolution taking place here in the Caribbean and across the globe. It’s no secret that the Information Age is changing the way we conduct business, the way we learn, and the way we communicate. And increasingly, policymakers and members of industry are finding that leaders in the Caribbean are taking the right steps to unleash this potential. The promise, of course, is a series of communications networks that empower individuals, connect communities, and strengthen economies. We are in a truly remarkable time.
As a Puerto Rican, I’m also very pleased to be here this month, our nation’s National Hispanic Heritage Month. Each year, this celebration gives us an opportunity to reflect on our history – and on our future. To honor the contributions of Hispanic Americans, President Clinton recently issued a proclamation, which reads in part:
The Hispanic American community is a collage of distinct groups, including people with roots in Central and South America, Mexico, the Caribbean, and Spain. Hispanics have been an important part of the history and heritage of the Americas since the earliest days of European colonization, and today Hispanic Americans are the youngest and fastest-growing minority community in our Nation. Devoted to family, faith, country, and hard work, they bring unique perspectives and experiences to our national community and character.
President Clinton went on to say that “with our cultural and linguistic ties to our trading partners throughout the Western Hemisphere, Hispanic Americans are crucial to maintaining our Nation’s competitiveness and prosperity in the global economy of the 21st Century.” And so, I stand here among friends in Puerto Rico and say that the communications marketplace offers a wonderful opportunity to contribute to the growth of our people, our nation, our region and the global community.
I’d like to begin today by taking a quick look at the communications medium that is transforming all our lives, the Internet:
Yet we all know too well that access to the Internet is highly uneven. In the United States, households with incomes of $75,000 and higher are more than twenty times more likely to have access to the Internet than those at the lowest income levels. White Americans are more likely to have access to the Internet at home than African Americans or Hispanics have from any location. And Americans living in rural areas are lagging behind in Internet access, let alone high-speed Internet connections. Overall, about 33 percent of American homes have Internet access. This compares with 15% of Puerto Rican homes with Internet access, as identified by a study by Research & Research.
But before we can tackle the Digital Divide, we must first confront the issue of basic telephone penetration – the rate at which households subscribe to telephone service. As the globe becomes increasingly connected, some parts of the world are being left behind. Indeed, there are still parts of the world where teledensity remains at 1-2 percent of the population, where for most people access to a telephone is a walk of several days.
In the Caribbean region, statistics are rather hard to come by but the data that are available are rather startling: in 1999, telephone density was at 19 lines per 100 people in Jamaica, 9 lines per 100 people in the Dominican Republic, and just 0.8 lines per 100 people in Haiti. That compares to 66 lines per 100 people in the U.S. overall and 33 lines per 100 people in Puerto Rico. As policymakers, as industry professionals, and as citizens, we need to find ways to do better – here in Puerto Rico, in the Caribbean, and across the globe.
Fortunately, technological and marketplace developments in the Caribbean – in many cases spurred by regulatory decisions – are causing a stir. For years the province of state-owned monopoly providers, the Caribbean telecom market is awakening to investment and competition. The result is increased telecom build-out and more widespread access to basic telephone service and the Internet.
On many of the islands, wireless technology is the driving force behind telecom growth. While wireline penetration remains limited, wireless deployment is allowing consumers to leapfrog into the next generation of technology. Many consumers are happily substituting the reality of mobile service for the faint hope of a wireline connection.
Puerto Rico offers a great example. The island currently enjoys a vibrant wireless marketplace with 5 mobile operators and a sixth scheduled to begin service in the next few months. Subscriber growth has been nothing short of phenomenal. Today there are well over 800,000 wireless customers in Puerto Rico – more than 20 percent of the island’s population. From 1998-1999, the number of wireless subscribers grew 58 percent. That compares to a 32 percent wireless growth rate for the United States as a whole. If the current growth rate continues, Puerto Rican wireless users may soon surpass wireline penetration, which hovers around 35 percent. And competition is bringing innovative offerings. Clearcomm, for example, provides all incoming calls for free.
In the Dominican Republic, with its burgeoning telecom market, the number of wireless subscribers increased 70 percent from 1998 to 1999. New technology, moreover, helps to bridge the Digital Divide. Star Media and Codetel have established the Dominican Republic’s first personalized mobile Internet portal that delivers local news and short messages directly to consumers’ mobile phones.
Together with technology developments, liberalization of telecom markets is advancing rapidly in the English-speaking Caribbean. Indeed, the leaders of many Caribbean states have recently taken courageous market-opening steps. As you know, Cable & Wireless is the entrenched wireline provider in the English-speaking Caribbean countries. C&W is the beneficiary of long term licenses granted by these island nations which generally included very favorable terms, including long-term monopolies. But these governments have, to their immense credit, subsequently recognized the importance of competitive communications markets to healthy economies and vibrant communities.
On February 16, 2000, Jamaica’s Parliament passed legislation codifying the government’s deal with Cable & Wireless to end the latter’s telephone monopoly. In doing so, the government has embarked on a 3-year transition plan to full competition. Jamaica recently auctioned two new wireless licenses and the providers expect to begin offering service early next year.
In addition, members of the Organization of Eastern Caribbean States have established a regional regulatory authority, the Eastern Caribbean Telecommunications Authority. Its first task is to oversee the uniform revision of new telecommunications laws, which will eventually be proposed to each of the individual parliaments.
Other nations are also in discussions to end C&W’s long-established monopoly in the Caribbean.
I congratulate these nations for taking affirmative steps to ensure that their people will benefit from a competitive telecom marketplace.
Liberalization, however, is still at an early stage and a key challenge for all governments is the development of a strong regulatory framework to guide the transition to a fully competitive market. In each nation, policymakers face similar challenges. These challenges are tough, I can assure you. But there are a few stalwart principles to bear in mind, to keep the transition on course. And in the end, all of us – regulators, service providers and manufacturers alike, know that these are challenges we must face if we are to embrace the communications revolution. The Information Age promises great benefit for our citizens and our economies, so long as we seize the opportunity.
These principles were first outlined by Vice President Al Gore back in 1994 when he addressed the first International Telecommunication Union Development Conference in Buenos Aires. There he called upon all nations to join in the creation of a Global Information Infrastructure (GII). This network of networks, he asserted, would allow all of us “to transmit messages and images with the speed of light from the largest city to the smallest village.” The Vice President understood that we were in the midst of a revolution – a revolution that would enable us to transcend old barriers of distance and time, and connect the people, cultures and ideas of all our communities. And he predicted that this information infrastructure would be the key to the future growth of our national and international economies. How right he was.
Vice President Gore set out the following building blocks for a successful transition: (1) a privatized and liberalized telecommunications sector; (2) open telecommunications networks; (3) a strong, independent regulatory authority; and (4) government policies to promote universal access. This framework is taking hold right here in the Caribbean and across the globe, and the FCC stands ready to assist those nations prepared to commit to these principles.
During the past year, my colleague FCC Chairman Bill Kennard has championed a Development Initiative aimed at partnering with telecom policymakers in the developing world. The FCC has entered into work programs with several countries that have embraced competition as a method of expanding access to telecommunications. Jamaica is one example. FCC staff have worked with their Jamaican counterparts to provide spectrum management and numbering assistance. In partnership with USAID, the FCC has also assisted the OECS members in the development of the regional regulator.
As policymakers, we confront hard issues. Of course, the United States is but one model – we don’t purport to have all the answers. But we have seen dramatic increases in consumer benefits with the advent of competition – demand and usage are up, rates are down, and economic growth and job expansion continue unabated.
Despite the United States’ own progress towards injecting competition at home and abroad, we still have work to be done right here at home. Here in Puerto Rico, PRTC is still the overwhelmingly dominant provider. Competitive entry thus far is lagging behind the mainland, and consumers are not yet reaping the full promise of the Telecommunications Act of 1996. While a few resellers are making some headway in the business market, facilities-based competition is still in its infancy. Recently, however, GTE, which controls PRTC, was absorbed into Verizon, the combined Bell Atlantic/GTE provider. PRTC now has access to the resources of one of the largest wireline carriers in the United States and the first RBOC to show that its local market was sufficiently competitive to enter long distance market. I am looking forward to seeing the benefits of Verizon’s management here in Puerto Rico the next time I visit the island.
I am pleased, however, that over the last three years schools and libraries in Puerto Rico have benefited from over $120 million in discounts on telecommunications services, Internet access, and internal connections under the “E-rate” program created by the 1996 Act. This program provides primary and secondary schools and libraries with discounts ranging from 20-90 percent off commercially available rates. Last year, Puerto Rico received the 4th highest per student funding at an average of $93 per student. I am proud that the E-rate program will be funded at its cap of $2.25 billion this year.
I came to Washington in 1997 to serve as an FCC Commissioner guided by a single principle: creating incentives and adopting policies to ensure that all Americans benefit from the communications revolution. In truth, our role is much broader. Together with our neighbors here in the Caribbean and across the globe, we have a wonderful opportunity to enhance our societies and our economies. The reforms and innovations taking place here in the Caribbean are going a long way to reaching these goals.