Principal FCC Achievements

During Chairman Kennard's Tenure

1997-2001

January 12, 2001

**"I have devoted my Chairmanship to meeting the twin challenges of the
Digital Age. The first challenge is to fight for a competitive
marketplace in which monopoly is ended, innovation and entrepreneurship
are cherished and consumers have competitive choice. The second
challenge is to make sure that the benefits of the Digital Age reach all
Americans \-- from the business districts to the barrios; from those
with every advantage to those with disabilities; from the young to the
old; from suburban enclaves to the rural heartland."**

**FCC Chairman William E. Kennard**

**[Promoting Competition]{.underline}**

1.  **[Moving the Market from Monopoly to Competition]{.underline}**
    Chairman Kennard has fought consistently and forcefully to promote
    competition in all sectors of the communications marketplace. During
    his tenure, the Commission won a key U.S. Supreme Court case
    upholding the FCC's authority to open local telephone markets to
    competition. Chairman Kennard resisted efforts by the Bell Companies
    to enter the long distance marketplace before making their networks
    accessible to competitors, as required by the Telecommunications Act
    of 1996. Ultimately, the FCC granted long distance authority to
    Verizon in the state of New York and SBC in the state of Texas, only
    after ensuring that those markets were open to competition. The
    Commission successfully defended the legal basis for these
    breakthroughs in numerous federal court cases. As a percentage of
    local service revenues, revenues earned by carriers (CLECs) that are
    in competition with the monopoly incumbents grew 152% from 1997
    through 1999. The number of competitive carrier lines grew 53% in
    the first six months of 2000.

2\. **[Merger Review]{.underline}** During Chairman Kennard's tenure,
the Commission has dealt with

> an unprecedented wave of consolidation. Chairman Kennard defended the
> Commission's authority to conduct comprehensive merger reviews to
> protect the public interest and advance consumer welfare. Thus, in
> approving some mergers (SBC\\Ameritech, Verizon\\GTE, AT&T\\MediaOne),
> the Commission imposed unprecedented market-opening conditions to
> advance the pro-competitive goals of the 1996 Act.

3\. **[Rate Reductions]{.underline}** Chairman Kennard has strongly
advocated policies to reduce

telephone rates. During his tenure, the Commission reduced access
charges payable

by long distance carriers by \$3.2 billion, resulting in overall access
charge reductions

> of approximately \$6.4 billion since enactment of the 1996 Act. The
> Commission also created a \$650 million universal support mechanism to
> ensure that telephone service in rural America remains affordable. By
> stimulating competition, the Commission has continued to reduce
> domestic long distance rates (dropped 63% since 1984), wireless rates
> (dropped 52% between 1993 and 1999), and international rates (dropped
> 81% since 1980, including 31% from 1996 to 1999).

4.  **[International Advocacy]{.underline}** Chairman Kennard has
    aggressively promoted the benefits of competition and deregulation
    worldwide. He insisted that the FCC forcefully advocate competition
    in all international forums. He also pioneered an innovative
    Development Initiative to assist countries in the developing world
    to establish strong independent regulatory agencies. Through this
    initiative, Chairman Kennard signed partnership agreements on behalf
    of the FCC with ten countries on four continents to share US
    regulatory experience with developing nations, and to help guide
    them toward independent regulation of competitive markets and full
    participation in the Global Information Infrastructure.

# **Broadband (High-Speed) Connections to the Internet** 

1.  **[Broadband Deployment]{.underline}** Chairman Kennard has been
    called "The Broadband Chairman" for creating a regulatory
    environment to spur broadband deployment. He successfully concluded
    a number of proceedings to create incentives for broadband
    deployment. He often speaks about the need to create a "regulatory
    oasis" for any company seeking to deploy broadband to the American
    public. Toward this end, the Commission has not imposed "open
    access" obligations on cable television companies willing to invest
    in broadband, and it has resisted calls to impose onerous unbundling
    obligations on much of the equipment deployed by the Bell Companies
    to deploy high-speed DSL. As a result, competition is emerging
    between the cable and telephone industries in the deployment of
    cable modem and DSL technology. At the same time, the Commission
    created opportunities for data CLECs to compete by mandating line
    sharing, colocation, local loop unbundling and other pro-competitive
    measures. In a recent report to Congress, the Commission documented
    the steady growth in high-speed links to the Internet. In the first
    six months of 2000, the number of high-speed lines increased 57%.
    That includes an increase in DSL lines of 157%, and a 59% increase
    in high-speed cable service. High-speed service providers were
    reported in all fifty states, the District of Columbia and Puerto
    Rico, and in about 70% of the nation's zip codes.

####### Spectrum Auctions Chairman Kennard consistently fought to protect the integrity of

####### the Commission's auction process. During his tenure, the FCC reclaimed valuable spectrum from winning bidders that had gone bankrupt, and reauctioned the spectrum for the benefit of American consumers and taxpayers. Bids in the currently on-going auction of spectrum for personal communications services (C Block PCS) have topped \$14.7 billion. Sixty-eight percent of Americans have a choice of five or more mobile telephone carriers, and the number of mobile telephone subscribers has jumped 547% since 1993, to about 36% (97 million) of the nation's population.

2.  **[Spectrum Management]{.underline}** Building on the success of the
    FCC's spectrum auctions, Chairman Kennard has sought to import more
    market-based techniques to the FCC's management of the spectrum. He
    believes that this is essential to avert a "spectrum drought" that
    could constrain wireless Internet access. He spearheaded a novel
    initiative to create a "secondary market" in spectrum, to allow
    entrepreneurs to deploy spectrum more quickly and fluidly in the
    marketplace. The Commission also adopted, for the first time, a
    comprehensive spectrum management policy and laid the foundation for
    use of advanced technologies, such as ultra-wideband radio, software
    defined radios and guard-band managers. These achievements promote
    efficient spectrum use and will facilitate the wireless Internet.

4\. **[Digital TV]{.underline}** In implementing the guidelines called
for by Congress, Chairman Kennard resisted calls for the FCC to
micromanage the transition to DTV. At the same time, he has made sure
that the Commission takes the essential steps necessary to begin the
transition to digital television by establishing compatibility standards
and by encouraging the initial roll out of digital television to the
current coverage of 64% of the American public.

# **Access for All**

1.  **[E-Rate]{.underline}** Chairman Kennard has made bridging the
    digital divide a top FCC priority.

> During his tenure, the FCC successfully implemented the E-Rate, a
> program to bring technology to the nation's schools and libraries. The
> E-Rate program has helped to bring the Internet to 95% of elementary
> and secondary schools, to over a million classrooms, and to over
> 58,000 libraries. Chairman Kennard oversaw \$6 billion in E-Rate
> investments, the nation's largest program to bring technology to
> education.

2.  **[Access for Americans with Disabilities]{.underline}** Chairman
    Kennard fulfilled his commitment that people with disabilities would
    be assured access in the Digital Age. In a series of groundbreaking
    policies, the FCC mandated that all telecommunications products and
    services be accessible to people with disabilities. The Commission
    adopted new rules to make television more accessible, through video
    description for the blind and closed captioning for the deaf, and it
    dramatically improved the telecommunications relay services.
    Chairman Kennard also created a Disabilities Rights Office to
    institutionalize the FCC's commitment to people with disabilities.

3.  **[Low Power FM Radio]{.underline}** Chairman Kennard believes that
    the airwaves belong to the public and should be used to build
    stronger communities. During his tenure, the FCC created a new
    low-power radio service designed to allow schools, churches, and
    other community-based nonprofit groups to use the airwaves to speak
    to their communities. Although the service was scaled back by
    Congress at the urging of incumbent broadcasters, the FCC will still
    issue hundreds of new licenses for the service.

4.  **[Tribal Lands Initiatives]{.underline}** Native Americans are most
    at risk of being left on the wrong side of the digital divide.
    While, on average, 96% of Americans have access to basic telephone
    service, less than 50% of Native Americans living on tribal lands
    have a telephone. Chairman Kennard championed the cause of bringing
    telephone service to Indian Country. The Commission adopted policies
    that will extended telephone service to over a million low-income
    Native Americans on tribal lands, in part by taking steps to augment
    the existing FCC Link-up and Lifeline programs. The Commission also
    created new incentives for wireless and wireline companies to serve
    tribal lands. Chairman Kennard led an aggressive outreach program to
    tribal leaders and the FCC became one of two independent agencies to
    formally recognize tribal sovereignty.

5.  **[Expanding Opportunities]{.underline}** Chairman Kennard has
    worked tirelessly to create opportunities for employment and
    ownership in communications for minorities, women and small business
    entrepreneurs. During his tenure, the Commission significantly
    revised its equal opportunity rules for broadcasters and cable
    operators. When broadcast station mergers were proposed, the FCC
    encouraged new owners to spin-off stations to minority owners. As a
    result, 43 new minority-owned stations were established in the last
    four years. The Commission documented the bias of the advertising
    industry's undervaluing the purchasing power of minority consumers,
    and adopted principles to correct urban and Spanish-language
    advertising limitations. It also produced five groundbreaking
    market-entry-barrier studies on the participation of minorities,
    women, and small businesses in the broadcasting and wireless
    telecommunications industries. The Chairman also encouraged the
    broadcast industry to shatter the glass ceiling over ownership and
    management opportunities for women and minorities. Taking the
    challenge, broadcasters created the Quetzal/Chase Communications
    Partners, LP fund, to help women and minorities acquire media
    properties by providing them with access to capital. Initially
    funded with \$175 million, the fund made investments totaling \$42.5
    million in its first quarter of operation.

######### **Creating A Model Agency for the Digital Age**

1.  **[Strategic Plan]{.underline}** Chairman Kennard developed a
    five-year strategic plan to transform the FCC into a more effective
    organization, one that focuses on consumer protection and
    enforcement of rules and away from traditional industry-specific
    "command and control" regulation more appropriate to the monopoly
    era.

2\. **[Enforcement and Consumer Bureaus]{.underline}** The Commission
launched two new bureaus

that consolidated and focused Commission efforts in the critical areas
of enforcement

and consumer information.

3\. **[Electronic Filing]{.underline}** The Commission converted much of
required filing and licensing to electronic formats for the convenience
of service providers and consumers.

4\. **[Move to the Portals]{.underline}** Over a period of six months,
during 1998-1999, the Commission successfully completed the massive
undertaking of moving nearly 2000 employees, their files and their
equipment to the Commission's new headquarters at the Portals. The move
has helped move the Commission toward a state-of-the-art agency for the
new millennium.

+-----------------+-----------------+-----------------+-----------------+
| Objective       | 1992            | 1997            | 2000            |
+-----------------+-----------------+-----------------+-----------------+
| K-12 Classrooms | \~0             | 27%             | 63% (1999)      |
| on the Net      |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Households with | N.A.            | 18.6%           | 56%             |
| Internet Access |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Households with | 93.8 %          | 93.8%           | 94.4%           |
| Phone Service   |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Wireless Subs   | 11.0 million    | 55.3 million    | 97.0 million    |
+-----------------+-----------------+-----------------+-----------------+
| Avg. Mobile     | \$0.53/minute   | \$0.43/minute   | \$0.24/minute   |
| Telephone Price |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| Avg LD          | \$0.15/minute   | \$0.11/minute   | \$0.11/minute   |
| Interstate Rate |                 |                 | (1999 -- Not    |
|                 |                 |                 | including \$2.1 |
|                 |                 |                 | billion per     |
|                 |                 |                 | min. reduction  |
|                 |                 |                 | in access 7/00  |
|                 |                 |                 | or the effect   |
|                 |                 |                 | of Bell LD      |
|                 |                 |                 | entry)          |
+-----------------+-----------------+-----------------+-----------------+
| Avg             | \$1.04/minute   | \$0.71/minute   | \$0.56/minute   |
| International   |                 |                 | (1999)          |
| LD Rate         |                 |                 |                 |
+-----------------+-----------------+-----------------+-----------------+
| CLEC market     | N.A.            | N.A.            | 6.7% (lines)    |
| share           |                 |                 |                 |
|                 | 0.3% (1993)     | 2.3%            | 5.8% (1999      |
|                 |                 |                 | revenues)       |
+-----------------+-----------------+-----------------+-----------------+
| Broadband subs  | N.A             | N.A             | 4.3 million     |
+-----------------+-----------------+-----------------+-----------------+
| Telephone Jobs  | 887.2 million   | 993.0 million   | 1,017.0 million |
+-----------------+-----------------+-----------------+-----------------+

Sources: Falling Through the Net: Toward Digital Inclusion, A Report on
Americans' Access to Technology Tools, NTIA, DOC, October 2000: Survey
on Internet Access in US Public Schools, National Center for Education
Statistics, DOE, Fall 1999: Trends in Telephone Service, IAD, CCB, FCC,
December 2000: CTIA Semi-Annual Wireless Survey, June 2000: "Internet
Access Tops 56 Percent in US According to Nielsen/NetRatings, Dec. 18,
2000: Thomas J. Sugrue, Opening Remarks, Presentation on the Adoption of
the Fifth Annual Report on State of Wireless Industry Competition,
August 3, 2000
\<[http://www.fcc.gov/wtb/statements/Sugrue_slides3.ppt]{.underline}\>