**Remarks by**

# William E. Kennard, Chairman

**Federal Communications Commission**

**At the**

**National Association of Telecommunications Officers and Advisors**

**19^th^ Annual Conference**

# Atlanta, GA

**September 17, 1999**

##  "CONSUMER CHOICE THROUGH COMPETITION"

Thank you very much, Darryl, for that kind introduction. And
congratulations on your imminent ascension to the presidency of NATOA.

Although I am not a member of NATOA, I am very proud to see my hometown
of the District of Columbia represented well here by NATOA's new
president.

And to my friend, Jane Lawton, congratulations on your terrific
leadership at NATOA this year. Jane has done an exceptional job
representing your interests in Washington and especially at the FCC.
Jane, you should be very proud of the work that you have done for this
organization.

And congratulations to NATOA on the appointment of Libby Beaty to be
your new Executive Director. Libby is one of the most talented people
that I have ever had on my team at the FCC. She is a dynamo. She will do
a wonderful job at NATOA and I am delighted for Libby and for NATOA.

PREDICTIONS

It is a great honor and privilege for me to be here today as part of
NATOA's 19^th^ Annual Telecommunications Conference.

We gather at a time of incredible change and excitement in
telecommunications. Jane asked me to make some predictions about the
future of telecommunications in our country. The one thing that I have
learned about predicting the future of telecommunications is that most
predictions in this area are wrong.

In 1946, the head of 20^th^ Century Fox predicted that people would get
bored with watching television after six months.

In 1977, the president of Digital Equipment Corporation predicted that
no one would ever want to have a computer in their home.

It has been reported that even Bill Gates said in the early 1980s that
no one would ever need more than 64 kilobits of bandwidth.

So I am not going to make any predictions today, other than to say that
I predict that people will continue to dramatically underestimate the
power of telecommunications in our lives.

And, those of us who labor in government will find it increasingly
challenging to do our jobs in this ever more rapidly changing
telecommunications arena.

The world has never seen anything like the Internet. It is the fastest
growing communications technology the world has ever known. It is
changing every aspect of our lives. It is a fundamental paradigm shift
in the way that we live.

As you know, the Internet touches all three tiers of regulation of
telecommunication: federal, state and local.

We are assigned various tasks in our roles as local, state and federal
representatives. But any jurisdictional boundaries are somewhat
artificial, because in a very real sense, we are dealing with national,
indeed international, networks. And this is becoming more and more the
case with the phenomenon of convergence.

We operate in a world in which bits know no jurisdictional boundaries,
nor should they. Indeed, when I use a cable modem to send an e-mail
across the country, or even across the street, it may move through many
different jurisdictions.

That means that more than ever before, we have to work together to
coordinate our activities. To promote the growth of networks that are
international in scope, we have to work together to promote growth and
competition for the benefit of consumers.

And as you know, sometimes there are tensions in these
inter-governmental relationships. We have tension sometimes with our
colleagues in the states and sometimes with our colleagues in the
cities. And what I have found in my tenure at the FCC is that what works
best is when we put aside, for the moment, our jurisdictional
differences and focus on what is best for consumers. I learned that when
we worked with state public utility commissioners to implement the 1996
Telecommunications Act. We found ourselves fighting jurisdictional
battles \-- all the way to the U.S. Supreme Court . At the end of the
day, we found that what we all wanted for consumers was exactly the same
thing. For the most part, we agreed on the fundamental objective. The
fight was about the means of getting there.

Many of you remember that when I first became chairman of the FCC the
wireless industry came to the FCC and to me and said, "Mr. Chairman if
you want to have a ubiquitous national wireless system in this country,
you have to preempt the local municipalities. We can not get our
cellular and PCS towers built because the local zoning authorities are
getting in our way." They filed petitions at the FCC and they said,
"Just preempt the local governments and we will have a national wireless
system."

I thought about this and I said that is not the right approach. We are
going to work with our colleagues at the local level. And we worked very
hard with the local state government advisory committee under the
leadership of Ken Fellman and Jane Lawton. We came up with a dispute
resolution process because we decided that we can serve these twin goals
of having a national wireless system and also respecting the authority
of local regulators. And it has worked. We have a national wireless
system in our country and I am proud of that. And I am especially proud
of the work of the local state government advisory committee in helping
me resolve these issues in a cooperative way.

BROADBAND

The most important issue on our agenda today is broadband. This debate
that we are having in our country about broadband \-- that we must have
about broadband \-- is an important debate. Broadband is going to change
America in wonderful ways that no one in this room can predict,
certainly not myself.

The most important thing we should recognize is that as public servants,
those of us at whatever level---state, federal, or local--- want the
same thing for all American consumers.

That has become very, very clear to me when I have talked to my
colleagues at the local level around the country about the current
issues surrounding broadband deployment.

It was clear to me when I talked to Supervisor Leslie Katz in San
Francisco, and David Olson in Portland and Commissioner Dennis Moss in
Dade County, Florida, as well as Ken Fellman and Jane Lawton.

We all want to foster a regulatory environment that will maximize
consumer welfare. It will be the best thing for all of our consumers.

Fundamentally, we want four things for consumers in the broadband world.
We want fast deployment. We want ubiquitous deployment. We want
competitive deployment. And we want open deployment.

Here is what I mean.

**Fast Deployment**. Our challenge today is to make broadband happen and
make it happen fast. We want to bring high speed Internet access to
every home in America. The demand is there. Americans want it. If we can
get it there, it will open up a whole new horizon for electronic
commerce in this country.

The networks we have in this country already are the envy of the rest of
the world. It is abundantly clear to me when I meet with my counterparts
around the world in the European Union and in the Far East. They are
very envious of the network that we have managed to build in this
country. They are envious of the Internet because we in this country
invented the Internet. Our companies drive the hardware and the software
that are building the Internet around the world. There is no question
about that. And the next phase of the Internet is broadband. We have to
make sure that we, as a nation, retain our competitive lead in the
broadband world. And so we have to create the conditions for fast
deployment.

**Ubiquitous Deployment**. And second, we want ubiquitous deployment. We
have to make sure that all Americans have access to broadband in our
country. As some of you may know, I have devoted my chairmanship of the
FCC to the principle that all Americans must have access to
telecommunications services. I decided when I got this job that I wanted
to do it somewhat differently from my predecessors. And so we have
reached out to constituencies that never had a voice before at the FCC.
We have reached out to the education community and we fought hard for
the E-rate to bring telecommunications access to every classroom and
every library in America.

We also fought hard along with the disability community to make sure
that Americans with disabilities have access to telecommunication
technology so that they can participate in this wonderful new digital
economy. In July of this year we wrote new rules that are the most
significant initiative for Americans with disabilities since the
Americans with Disabilities Act was enacted in 1990. We literally wrote
the rules that created the first curb cuts on the information highway.
We are also involved in some historic initiatives for rural Americans
and for Americans on Indian reservations. And all of us in public
service share this commitment to make sure that all Americans have
access to state-of-the-art telecommunications services.

We cannot afford to live in a world where broadband becomes another
chasm of the digital divide, that separates those who have access to
technology from those who do not.

**Competitive Deployment.** And third, we want competitive deployment.
The best way that we are going to bring all Americans broadband quickly
is to create competitive conditions for high-speed networks to be built
out. I think the debate we are having today about broadband is one of
the most exciting debates I have seen in communications policy in the
last 20 years. The debates surrounding the 1996 Act were mainly about
competition in the narrowband world for voice telephony. And while we
were having this debate at the FCC and in the Congress in the years
leading up to the passage of the Act in 1996, everyone was debating
voice competition. It was yet another chapter in the holy Jihad war
between the long distance companies and the local companies that raged
in the halls of Congress. And at that time the Internet was just
beginning to burst onto the scene. And once it did, the Internet changed
the whole dynamic. Because now the debate is all about the next
generation of the Internet. And that is broadband.

And it is a great debate because we are seeing the competitive
conditions develop for a truly competitive broadband environment. The
most exciting thing that is happening is this competition emerging
between the telephone companies rolling out their broadband product,
DSL, and the cable companies simultaneously rolling out their broadband
product, the cable modem.

And it is just beginning. At the beginning of 1998 there were 50,000
cable modems in service in America. At the end of 1998 there were
500,000 -- a ten-fold increase. At the middle of this year, there were a
million. By the end of this year there are predictions that there will
be a million and half to two million cable modems in service.

And on the telephone side, on the DSL side, we are seeing some real
interesting growth in DSL service. The telephone companies are starting
to deploy it much more aggressively. Between the end of March and the
end of June of this year the number of DSL lines doubled to nearly
200,000 and it is expected to double again by the end of the year. And
this pickup in growth is a function of one thing: competition. The
regional Bell companies know that for the first time in the history of
this country they are facing a serious, facilities-based competitor in
their backyard: the residential marketplace. And that is the cable
television industry. And it is the prospect of that competition that is
going to really jumpstart broadband deployment in this country.

But we should not stop there.

Two pipes are not enough. We want to see multiple broadband pipes. I am
convinced that we will have a wireless broadband pipe. The wireless
companies are starting to show up at the broadband party. They now need
the spectrum that will allow them to do high speed Internet access over
a wireless platform.

And the broadcast industry, which recently received from Congress 6 MHz
of spectrum for digital television, can also use it to deploy broadband
to create yet another terrestrial wireless broadband platform.

And the satellite industry, as many of you know, is starting to roll out
broadband offerings as well.

It is exciting for the industry; it is exciting for consumers.

The challenge for us is to make sure we are creating a regulatory
environment that is technology neutral so we get as many players on the
field as possible. And then things get very interesting and very good
for consumers.

Just this week, the FCC addressed the very complex FCC rules to bring
competition to the incumbent telephone monopolies, to encourage new
competitors in that marketplace. We issued a decision that was the
result of a remand from the United States Supreme Court. Basically, we
told the Bell Companies, "We want you to get into broadband. We want you
to deploy and compete." We told them that we are not going to require
them to unbundle their equipment for rolling out broadband -- the DSLAM,
the packet-switched network \-- because I envision a broadband oasis,
where anybody who wants to compete in this broadband marketplace and
make the investment to deploy should be able to do so in an unregulated
environment or a significantly deregulated environment. Because that is
the fastest way we are going to get broadband out to the American
public.

**Open Deployment**. And finally, the fourth value that we all embrace
is openness. Everybody wants this to be an open platform. The wonderful
thing about the Internet is that it is a wonderfully open environment
and that has fueled its growth and characterized its success.

And I think we can all agree on these principles that spell out what we
want for the broadband world. What some of us disagree on is how to get
there. So, our debates on this access question are really debates about
means and not ends. I think we should all recognize that we share these
values. We should recognize that right up front.

RESISTING REGULATION

What I would like to do is take the opportunity here today to talk to
you a little bit about why I believe the best way to achieve these
values is to resist the urge to regulate right now. One reason is
because of my vision that we will have multiple broadband pipes --
cable, DSL, broadband wireless, satellite, terrestrial broadcast. That
is why I think the debate that we are having today about unbundling and
access to this cable pipe is fundamentally different from the debates
that we had about the telephone industry, when everybody knew that we
only had one wire for the foreseeable future..

We have in the broadband world the conditions developing for choice and
once you recognize that, and you recognize how quickly this world
changes and how quickly networks get deployed today, you realize that
this access issue is a transitional issue. It is a transitional debate
that we are having.

And second, and very importantly, we should resist the urge to regulate
because I think that it is likely that the market will sort this out.
You need regulation when market-based incentives are not aligned with
the needs of consumers. That is really why we have our jobs. But I
believe that there are market incentives that will drive openness in the
broadband world. One is the prospect of alternative pipes that I have
talked about. The second is the culture of the Internet that has grown
up in this country. Consumers love the openness of the network. Those
early adopters who are going to migrate from the narrowband world to the
broadband world grew up in a culture of openness on the Internet. They
are going to insist that they have that same culture of openness in the
broadband world.

And broadband providers will have to learn to accommodate it and deliver
it. Otherwise they are not going to be competitive in a broadband world,
particularly one where there are multiple broadband pipes.

Now, third, we must also recognize that regulation has costs. We all
know that. And I come to this debate as a battle-scarred veteran of the
telephone wars. I have been in those battles. I helped write the
regulations implementing the 1996 Telcom Act. I was general counsel when
that process was on-going. I defended those rules all the way up to the
United States Supreme Court. I am still defending them. I believe in
them. But I also know that it is more than a notion to say that you are
going to write regulations to open the cable pipe. It is easy to say
that government should write a regulation, to say that as a broad
statement of principle that a cable operator shall not discriminate
against unaffiliated Internet service providers on the cable platform.
It is quite another thing to write that rule, to make it real and then
to enforce it. You have to define what discrimination means. You have to
define the terms and conditions of access. You have issues of pricing
that inevitably get drawn into these issues of nondiscrimination. You
have to coalesce around a pricing model that makes sense so that you can
ensure nondiscrimination. And then once you write all these rules, you
have to have a means to enforce them in a meaningful way. I have been
there. I have been there on the telephone side and it is more than a
notion. So, if we have the hope of facilitating a market-based solution
here, we should do it, because the alternative is to go to the telephone
world, a world that we are trying to deregulate and just pick up this
whole morass of regulation and dump it wholesale on the cable pipe. That
is not good for America.

I have talked to many, many people about this issue, on all sides. No
one has offered a practical solution to me that avoids drawing us into
this quicksand of regulation and embroiling what is a very nascent
marketplace in a situation that I do not think we will be able to work
our way out of anytime soon. So, when I look at the cost of regulation
versus the benefits, when I look at the prospect that we can have a
robust, competitive broadband marketplace, I conclude that we have to
resist the urge to regulate and let it play out for just a while longer.

But that does not mean that we are putting our head in the sand and
ignoring what is going on. If there are competitive problems, we will
step in. If consumers are being denied access to products and services
that they want, we can address that as an enforcement matter. What I am
hearing on this issue is a lot of rhetoric that the sky is falling but
when I look out in the marketplace and see only a million cable modem
subscribers and about 200,000 DSL subscribers, my first reaction is to
allow this marketplace to play out for a while before we step in and
start regulating.

At the FCC we are continuing to monitor closely what is happening in
this marketplace. We will continue to do that. We will continue to work
with you. We will continue to learn from each other in this debate. I am
convinced that we can create the conditions for an open, robust and
competitive broadband marketplace that will serve consumers. And I am
also convinced that, if we follow this course, this country will have a
broadband marketplace that is better than anything the world has ever
seen.

Thank you all very much.