"The Africa Development Initiative: One Year and Counting"

Remarks of William E. Kennard

Chairman, Federal Communications Commission

At the

AFCOM 2000 Conference

Fair Lakes, Virginia

August 1, 2000

(As prepared for release)

# **Introduction**

Thank you, Professor Akwule, for that very kind introduction.

Honorable Ministers, Distinguished Guests, Ladies and Gentlemen:

It is a great pleasure to be here again at AFCOM. I am particularly
delighted to see so many familiar faces again, not the least my good
friend, Ray Akwule.

As many of you know, it was one year ago - - in the keynote address of
this very conference - - that I announced the creation of the Chairman's
Development Initiative. Conversations I had with Ray shortly after I
became Chairman really helped to shape that Initiative. Since then, he
has kept us motivated and focused on working for all of Africa.

I appreciate all your support and help, Ray, and I look forward to
working with you on your newest project, the "Center for Media Research
and Telecommunications," at George Mason University.

Hamadoun Toure is also here today. Hamadoun has brought new energy and
initiative to the ITU Development Bureau, and I applaud him for that. We
in the U.S. are grateful for his efforts.

I have also had the great pleasure of meeting with Ivy Matsepe-Casaburri
on several occasions now. I share her desire to see Africa leap-frog
into the next generation technologically, and to see South Africa's
residents reap the benefits of the Information Age in health, education,
and economic rewards.

#### 

##### Visiting Africa

As Chairman of the Federal Communications Commission, I go many places
and I see many things. I see all the latest gadgets. I see cities
teeming with fiber optic lines, and I meet the twenty- and
thirty-something billionaires who have made their fortunes in
cyberspace.

But none of these compare with what I saw in Africa. Visiting Africa
since I last saw you was possibly the greatest highlight of my
chairmanship.

What an extraordinary continent. Extraordinary in your natural resources
and in your natural beauty, but most of all, extraordinary in your
people.

Everywhere I went I saw hope and eagerness written on the faces of your
people, from your boardrooms to your market squares.

I saw an Africa that is hungry for progress, an Africa that is restless
and ambitious.

I predict that this hunger for progress will ensure that the next
hundred years will be Africa's century.

Our job now is to lay the foundation. We are the foot-soldiers of this
future, and I am proud to serve alongside of you.

#### The Challenge

Africa needs infrastructure. It needs the telecommunications highways,
the wireless towers, and the fiber optic footpaths that link its
villages to its universities, its manufacturers to the world's markets.

But this infrastructure will not be built by government. It will be
built by the private sector. And the only way to attract private
investment is to have fair and independent regulatory bodies that
support competitive markets, and that give investors the confidence and
predictability they need to make their investments.

This was the conclusion of the world's communications leaders in 1994,
at the ITU Development Conference in Buenos Aires. That conference laid
out the principles for how each country can become part of a Global
Information Infrastructure, or "GII," a worldwide network of
networks - - and how each country can participate in the new information
economy.

The key organizing principle of the GII is competition -- multiple,
privately-owned networks that give consumers choice. To promote
competition, there must be independent regulatory agencies with the
power to break up monopolies, and the discipline to deregulate as
competition takes hold. These are the very principles embodied in the
Telecommunications Act of 1996.

Two weeks ago the European Commission (EC) issued a bold package of
proposed legislation and directives aimed at bringing the Internet
revolution to Europe. It is no coincidence that the EC\'s initiative is
a close cousin to the 1996 Act. Those principles are becoming universal
as countries rush to embrace competition as the organizing principle of
the telecom sector.

The principles of the GII apply to Africa too. If we are ever going to
have a truly global information infrastructure, there must be an African
information infrastructure. If there is to be a GII, there must be an
AII. Anything less is unacceptable.

**The Development Initiative: Design and Implementation**

It has become cliché at these conferences to expound on the virtue of
the GII. Yet, as the saying goes, when it's all said and done, too much
has been said and too little has been done.

That's why, during my tenure as FCC Chairman, we have taken action.

We created the Development Initiative, a commitment to work with
developing nations seeking to sustain their place in the Global
Information Society through implementing the goals of the WTO Basic
Telecom Services Agreement: promoting competition, liberalizing markets,
and adopting open, pro-competitive, and transparent regulatory policies.

This last year we entered agreements with South Africa, Uganda and Ghana
to share ideas on open markets, competition, spectrum management and
licensing. These two-way partnerships allow us to demonstrate the
critical links between privatization and investment, and competition and
universal service. We consult with our partners on a regular basis to
ensure steady progress toward their goals.

In Southern Africa last summer I met with 12 nations from the Southern
African Development Community (SADC) in Botswana. I also met with the
counselors and regulators of South Africa Telecommunications Regulatory
Authority (SATRA) in South Africa. I signed a Work Plan with SATRA, and
had the pleasure of conducting an FCC regulatory workshop with SATRA. I
now look forward to working with ICASA, the successor organization to
SATRA.

We invited representatives from the regulatory authorities of South
Africa, Uganda, and Ghana to visit the FCC last spring, and together we
were able to fashion a set of regulators' tools tailored to each
particular nation.

We chose these countries in part because of their ability to be regional
leaders, to serve as catalysts for the advancement of regulatory reform
in their regions. In addition, we looked at the potential already
present in their existing regulatory environment, their level of need,
their commitment to change, and their interest in working with us.
Although there were clearly many other qualified candidates, we believe
that these three nations are an excellent start.

Out of the focused attention on these three countries, we have been able
to develop several resources that can benefit countries in all regions
\-- those participating in the initiative and beyond.

First, we designed a system of courses that highlights the practical
aspects of modern regulation. The courses contain eight modules, ranging
from an overview and universal service, to regulatory institutions,
competition, interconnection, spectrum management, mass media, and the
Internet.

Second, as you may recall, at AFCOM '99 I announced the availability of
the FCC's *Connecting the Globe: A Regulator's Guide to Building a
Global Information Community*. This is a how-to handbook on
telecommunications regulation that may be able to be applied to local
country conditions. We have copies in English in print and on our web
site, and French and Spanish versions are coming soon.

In February of this year, we published a second book -- *Connecting the
Globe: The Africa Initiative*, which focuses on Africa. It describes the
FCC's successes in its development efforts in Africa, and contains
copies of the Work Plans signed with Ghana, Uganda, and South Africa. It
also is available on our web.

We had the generous help of many parties in creating these courses and
handbooks, and in making them available. Lane Smith and Ed Malloy at
USAID were instrumental in the handbook translations. And Hamadoun Toure
of ITU and the Telecommunication Industry Association's Matthew
Flanagan, Eric Nelson and Christine Keck made it possible for several
policy makers from the developing world to travel to the States and
participate in the first FCC-designed course on telecommunications
policy and regulation.

I am very pleased to announce today that we are exploring how we might
work with Cisco Systems to make this FCC course available in an
interactive on-line format, so that regulators from around the world
will be able to use it.

**The Ends: Uplifting People**

Our next challenge is to build on the success of these first few country
agreements.

There are many encouraging reports of how this nascent AII is already
transforming African life.

Africa has become one of the fastest growing markets for cellular
phones. Almost 20 new mobile networks were deployed between 1997 and
1998 alone. In Uganda and Ghana that year, mobile cellular teledensity
increased 80% and 300% respectively!

Since 1997, 1.6 million new phone lines have been laid down in South
Africa, one million of them in poor areas. 86,000 public telephones,
including the first telephones to 2000 villages, have also been
installed.

Uganda's government sold 51% of UTL to a German-Swiss-South African
consortium for \$33.5 million.

Botswana and Zimbabwe both agreed to new, lower accounting settlement
rates to the benefit of consumers there and around the world.

And today, village computer centers in East Africa help farmers check
the going prices for their produce in the city, and thus avoid arbitrary
markups by middlemen.

Today, rural artists and craftsmen in remote villages can reach a global
market for their handmade products, thanks to non-profit Internet sites
such as Buy-Afrika.com

The Africa Virtual University, a satellite-supplied distance learning
project whose headquarters was inaugurated in Nairobi last week, has
already allowed over 12,000 students to take engineering and science
courses, and over 2500 professionals to attend seminars on management
and e-commerce.

I was very pleased to see President Clinton's \"Global Call to Action\"
at the recent G-8 Summit, which addressed the growing international
"digital divide" among nations. The President recognized the FCC\'s
\"Development Initiative\" in the G-8 document, \"A List of Public and
Private Sector Alternatives to Bring the Digital Opportunity to
Developing Countries."

Japan, in fact, launched the summit by introducing a proposal that would
spend \$15 billion and train a force of 10,000 technicians over the next
five years to help wire developing countries.

I have great hopes that Japan's generous offer will encourage other
world powers to donate considerable funds to the project of telecom
development in the near future.

**The Means: Robust Competition**

In the final analysis, however, the future of Africa is in the hands of
the leaders and regulators of Africa - - in your hands. You in this room
are the key to a vigorous and competitive telecommunications market in
Africa. You create and set the conditions for growth.

I am convinced that the only way to make the African Information
Infrastructure real is through vigorous competition.

You must have the legal tools - - and importantly, the political
will - - to break up monopolies, foster competition and engender a
robust competitive marketplace.

In Morocco, the King put his support behind a set of fair and open
competitive rules. As a result, in February Morocco received one billion
dollars for the second mobile license in that country.

Here in the U.S., we have been through 30 years of breaking up
monopolies and deregulating markets. The result is that since 1984 long
distance rates have dropped 56%, to as low as five-cents-a-minute.
Telephone penetration is 94% and equipment such as computers and modems
and answering machines is practically jumping off the shelves and into
consumers' shopping baskets. Seventy-five percent of Americans have a
choice of five or more wireless mobile carries and 50% of users access
the Internet other than through the incumbent local telephone company.

**Universal Service**

Skeptics will argue that market-driven competition and universal access
are mutually exclusive. They say that mandated connections undermine the
requirement of making a profit, and pit shareholders against the general
citizenry.

They are wrong. First, competition spurs universal service by forcing
providers to extend their networks in search of new customers. Second,
for those areas that would not otherwise be served if left only to
market forces, universal subsidies can be provided by requiring that
each private carrier contribute a proportionate amount to a pool that
supports access for all, so that the competitive playing field stays
level.

Other skeptics argue that utility monopolies are natural and unavoidable
because of the huge capital investment required and the physical
limitations of rights-of-way.

But technology has now evolved to a point that competitors can plug into
a monopoly network without disturbing the service quality of the
monopoly. That's called unbundling. What's more, we can require the
monopolist to allow the competitor's connecting equipment to be placed
near the monopolist's equipment. That's called co-location.

Unbundling and co-location, together with network interconnection, are
three of the great marvels of modern regulatory reform. They spell the
end of natural monopolies, and the replacement by new competitive entry
\-- a great boon to consumers everywhere.

#### 

##### Vigilance is Eternal

So the simple answer is competition, but, as is often the case, simple
does not mean easy.

Here in the United States, we must continue to work hard to pry open
historic monopoly markets and keep them open through government
intervention. Each day at the FCC, I work hard to foster competition in
the local loop and to ensure that our poor and rural areas are all
included in the Information Age.

I sometimes envy Africa's remarkable opportunity to bypass the difficult
intermediate steps we have been through, and to move directly to
advanced technologies. Indeed, some of the world's most sophisticated
national networks are in Botswana and Rwanda, where 100% of their main
lines are digital, compared to just 50% in the U.S.

**What Must Be Done**

So you have the unique opportunity to leap-frog ahead in regulatory
reform - - to take the world's best practices and put them to work for
your people.

In technology, that may mean jumping over the problems of the copper
wire to take advantage of wireless and satellite. In market structures,
that may mean designing a fully competitive market from the ground up.

Your governments should break down the old Berlin Walls of trade
barriers and tariffs, and open up to the world wide web of
communications equipment, software, and e-commerce.

Your public policy should stimulate teleports and investment pools, and
encourage blanket licensing, mutual recognition agreements and
type-approvals.

And like the African Virtual University, I hope you will watch for
voluntary opportunities to link universities, schools, libraries, and
job markets...public institutions that can nurture the aspirations of
all people.

There is the relatively easy step of establishing a regional database of
who regulates which service, and what the minimum requirements are.
These databases will serve as gateways for foreign investment, and
encourage harmonization and best-practices among nations.

And I hope you will consider flat-rate pricing for Internet access. That
is one reason Internet penetration is exploding in the U.S.

**Private Sector Challenge**

But the G-8 Summit issued a challenge not only to governments, but also
to the private sector.

Today, I want to challenge American companies to invest in Africa's
communication infrastructure.

French companies are doing it. The Germans are doing it. The Malaysians
are doing it.

And more American companies [should]{.underline} be doing it.

An investment in Africa is a good return on both capital and people, so
this is a chance to do well and do good at the same time. SBC's
investment in South Africa is a prime example of this.

#### Closing

I am convinced that Africa will have a telecommunications infrastructure
that rivals any on the planet. You will have high teledensity rates. You
will have high Internet penetration - it's just a matter of time.

And it will come a lot faster if we work together and commit to the hard
things. And I believe that, when that happens, people will look back and
they'll say "Well, what was the turning point? What made this happen?"

And, unquestionably, people are going to look at this period in history
and realize that at the dawning of this new century, there was a change.
Governments in Africa and around the world made a commitment to do
things differently in telecommunications, break open old monopolies,
embrace competition, and back the small, up-start entrepreneurial
companies that are going to make a difference.

And, when we look back on that period in history, I will remember all
the friends I made in this room and know that we were the pioneers who
made this happen, and that will be a wonderful legacy for us all.

Thank you very much.

\-- FCC \--