[ Text Version | WordPerfect Version ]

Introductory Remarks of
Commissioner Gloria Tristani
at the Cellular Telecommunications Industry Association Conference
Panel on "Public Policy Affecting Your Bottom Line"
February 9, 1999

Consumers, Competition, and the Veil of Ignorance

Thank you, Brian. I'm delighted to be here.

There's been a lot of discussion lately about competition and deregulation. In these discussions, one becomes the chicken, the other the egg, and we go around and around debating which comes first.

Seriously, I've enjoyed our discussions about the evolution of competition, particularly the connection between competitive markets and consumer welfare.

I do believe that competition generally does keep prices at levels consumers are willing to pay. It generally does foster innovation in new products. It generally does promote growth in new markets.

Chairman Kennard, this morning, referred to the wireless industry as the poster child for telecommunications competition. He's right.

This industry has taken off like a rocket. In one decade, subscribership has grown from little over a million to 66 million. And the growth in competition has been even more startling: in 1994, consumers, if they were lucky, had a cellular duopoly for choice. Today, most Americans have at least 5 -- and some as many as 6 -- providers to choose from. And the benefits for consumers?

The premise for this panel discussion is that the FCC has fostered a competitive wireless marketplace.

That's right. The advent of auctions -- in contrast to lotteries or comparative hearings -- has benefitted service providers and consumers alike, by quickly injecting multiple new entrants into the marketplace.

So now we have the full flower of competition in many, though not all, markets. And that gets us back to "competition, public policy, and your bottom line." Some have suggested that now is the time to "let competition, not the FCC, regulate the wireless market."

If I could, I'd like to take a step back and look at the full regulatory landscape. From this perspective, I see three aspects of public policy: policies that address the foundation for competition, policies that address industry's relationship with its consumers and its competitors, and policies that address the public interest.

First, I ask myself about the foundation for competition. By this, I mean nothing more than performance of our licensing function. Have we rationed or limited the ability to compete, or created an open playing field?

Second, I ask myself about the relationship between business and consumers, and the relationship among competitors. Do we control what products are offered, what rates are charged? Do we favor some competitors, some technologies, over others? Or, do we simply get out of the way?

Luckily, wireless didn't have to wait for the pro-competitive, deregulatory policies of the 1996 Act. Instead, in 1993, Congress granted the Commission forbearance authority over CMRS. The result was that the FCC eliminated all tariffing and market entry and exit requirements. So today, free market auctions, not regulators, determine who obtains access to commercial spectrum. Licensees, not regulators, formulate business and marketing plans. And carriers, not regulators, set prices that they may change at will. Let us not underestimate the tremendous value these policies have had for competition and the American consumer.

Of course, radio spectrum is a valuable public resource. No less than the air we breathe, or the water we drink. And that brings me to the third area of policy -- the public interest.

Certainly, we all benefit from goods produced by industries that use our waterways -- for shipping, for irrigation, for fishing. As individual economic actors, those industries would have an interest in maximizing their use of this public resource. As a society, however, we have a larger common interest in seeing that resource used in the public interest -- seeing that it is protected, for example, from pollution or over-harvesting.

With spectrum, too, important obligations are part and parcel of a licensee's exclusive access and use. Of course, spectrum needs not be protected as we do our water and air. Spectrum is inexhaustible -- any use today, will not preclude any use tomorrow.

But it is a limited resource. And so I think it incumbent upon us to ensure that it is used in the public interest. Indeed, this is the heart of the Communications Act. For there may be social goods -- things that our society as a whole deems valuable or just -- that singular pursuit of economic gain will not provide. These are the social policies that Congress -- our elected representatives -- have spoken to.

One way of thinking about this last area of regulation is by donning John Rawls' "veil of ignorance." Rawls posited that principles of social justice would best be chosen through such a veil, where no one knew his or her place in society -- class position or social status, intelligence or gender, natural assets or abilities. So, while I believe competition serves us well with lower prices, innovation, and expansion into new markets, that is not the end of the story.

The Communications Act directs that we ensure that communications services be available to all people of the United States. And that it be used for the purpose of protecting life and property. So I would ask, consistent with that statutory obligation, where might the market fail to provide the goods that we all, as citizens, would want our society to provide?

Think of yourself. As a rural American. As someone who is deaf or hard of hearing. As a person with a speech or mobility disability.

Would you want a society that valued emergency call completion and location identification; a society where cellular systems could utilize the strengths of both networks to eliminate dead zones? Remember: 100,000 emergency calls are made from cellular phones every day.

Would you want a society that used its technological prowess to ensure that a TTY user can use her digital phone to reach emergency services?

Would you want a society where manufacturers and service providers make their products and services accessible to people with disabilities, where doing so is readily achievable? Remember: one-fifth of our population has some level of disability. Eleven million people have difficulty hearing normal conversation. Ten million have difficulty seeing words and letters.

These are the areas where it is our statutory obligation to pause and ask, "will the market insure these needs are met?" Or is minimal regulation necessary?

I hope industry chooses not to limit itself by looking at these obligations as simply "government mandates." Some manufacturers have already shown their competitive and innovative stripes by finding commercial applications of widespead appeal. Wildfire's voice command dialing provides access to people with mobility disabilities, but it simplifies dialing for all of us. Vibrating pagers assist not only people who are deaf, but also anyone in a meeting, or at a concert. And service providers have locked on to the messaging applications of emergency location technology, such as traffic alerts, directions, and roadside assistance.

By now, you are aware of our decision yesterday to forbear from local number portability for wireless carriers until 2002. LNP is a case in point. When we imposed LNP, we did so in large part because we, and much of the industry, believed that it would facilitate competition between wireless carriers, as well as between wireless and wireline. In the Forbearance Order, we looked at the status of competition today, and the costs imposed on carriers during this critical buildout phase, and determined forbearance was warranted in this competitive analysis.

But within LNP, there is also a story of the public good. This country faces a numbering crisis -- a perfect example of individual self-interest eclipsing a common good. Carriers obtain large blocks of numbers, without demonstration of need, and often with low utilization of existing numbers. But, carriers would agree that they have a common interest in ensuring that fair rules of utilization promote conservation of this limited resource. Because LNP is a predicate to number pooling, we noted in the order that LNP could possibly be required earlier than 2002, to permit wireless carriers to participate in pooling solutions.

Let's resist the temptation of reducing our public policy dialogue to the mere issue of whether we ought to "regulate markets." Such a reduction is simplistic and wrong. I certainly have no interest in managing the competitive markets of wireless. But the Commission will always have its critical obligation to ensure that spectrum is used for the benefit of all.

In closing, I'd like to welcome Tom Sugrue. I was about to say, "our new Wireless Bureau Chief," though with only 3 weeks on the job, he has slipped in like a veteran, and established his credentials as a strong leader and doer. I know you'll all enjoy having this opportunity to get to know him better.

Again, thank you for having me here today.