# Remarks

Of

Michael K. Powell

Commissioner

#### Federal Communications Commission

## Before

# 

# North Dakota Telecommunications Technology Symposium

Fargo, North Dakota

# May 5, 1999

Good afternoon, ladies and gentlemen. It is my pleasure to be here with
you in Fargo to participate in this important telecommunications
technology symposium. At the outset, I would like to commend Senator
Byron Dorgan, someone with whom I have had the opportunity of working on
important telecommunications issues, for hosting this conference, as
well as North Dakota State University and the University of North
Dakota.

It is rejuvenating to get out of Washington, D.C., and to be here in the
Red River Valley area. I believe that the future of telecommunications
in the relatively near term will have its most important and meaningful
impact on rural and insular areas, like Fargo, that previously may have
fallen victim to geographical, social, and cultural isolationism. The
future may not be too far away, as I reflect on the fact that we are 240
days away from the January 1, 2000. Let me say a few introductory
remarks about that before I present my views on the future of
telecommunications.

The 20^th^ century will certainly be remembered as a period of recorded
history that was nearly unrivaled and was as *Time* magazine pronounced,
at once, \"inspiring, at times horrifying, always fascinating.\" As we
approach the conclusion of the Millennium, we find ourselves standing at
the leading edge of a new, wondrous and transforming economic moment
(the so-called Digital Information Age), equal in its importance to that
of the agricultural and industrial revolutions. It is the third economic
revolution. Or, in the words of Alvin Toffler, the \"Third Wave,\" that
holds the promise of a \"super symbolic economy where knowledge will
equal assets.\" This economic revolution, as those that preceded it, is
being fueled by dramatic advances in technology.

I. THE FACTORS CONTRIBUTING TO THE REVOLUTION

The current communications revolution is born of explosive changes in
technology. The primary defining attributes include: (1) microprocessor
power; (2) digitalization; (3) Internet protocols; and (4) bandwidth.
And I will say briefly something about each.

[Microprocessor Power (Speed & Memory)]{.underline}

The first defining attribute is microprocessor power. I imagine that
most of you know of George Moore\'s Law. That is, the intense pace of
the growth in microprocessor power is represented by Moore\'s Law, which
holds that the speed of the microprocessor doubles every 18 months.
Consider, for example, that microprocessors have only been around for 25
years and yet their performance has multiplied by at least a factor of
10,000. The most state-of-the-art microprocessors can literally process
a billion instructions each second. (The first microprocessor, by
comparison, could process approximately 400 instructions or calculations
per second). Also consider that the typical American household now has
more computer processing power than the entire Massachusetts Institute
of Technology (one of the U.S. educational institutions that pioneered
computer and information sciences) did 20 years ago.

Theoretically, the expansion in microprocessor power could continue
infinitum. What does this bode for the future? Well, I was recently
struck by very thought-provoking essay authored by Michael Malone for
Forbes magazine. Mr. Malone wrote:

\"It is a curious fact that every animal---from the torpid giant
tortoise to the frantic housefly---is given as its birthright about 1
billion heartbeats. . . .It is as if every species would have his same
threescore and ten, the same span of experiences, no matter how quickly
or slowly it was forced to live them. But in the digital, solid-state
world that is the new metronome of life, it is a different story. The
modern integrated circuit chip will soon be able to perform
approximately 1 billion operations per second. One gigahertz. A billion
electronic heartbeats: the equivalent of a lifetime in a single second.
And, of course, at the end of those billion beats, there won\'t be a
tiny electronic death but another billion-beat second, and another. And
since silicon is incredibly stable and invulnerable to almost
everything. . . there will be a billion more of these digital lifetimes
for each chip---more than all the generations of life on earth---before
it goes dark. Producing whole cosmologies of change that are beyond
human comprehension.\"

As a consequence**,** ever-smaller embedded microprocessors will burrow
themselves into our daily lives. These machines and systems (no longer
clumsy and intrusive like personal computers) will be invisible to the
human eye, and will be tremendously autonomous and intelligent. However,
they will also be ever-present and, more importantly, *eternal* (by our
standards of life).

##  This should take your breath away! 

[Digitalization---The March Of The Zeros And Ones]{.underline}

The second attribute of the communications revolution is digitalization,
or what I refer to as the \"march of zeros and ones.\" Who would have
imagined a few short years ago that the whole of human communication and
the entirety of our senses could be reduced to two simple digits, zero
and one? In essence, digital has become the Virtual Planet\'s common
language. Simple binary code married with microprocessor power and
intelligence allow nearly anything to be shared with anyone, at any
time, unencumbered by distance, human languages, and perhaps even
political or socio-economic barriers.

Digital also brings \"sameness\" to communications. With digital
technology, arrange the zeros and ones in a long string and you can
transmit a telephone call. Arranged in another string of zeros and ones,
you have a video picture. In another, you have data or some combination
of all and more. As a consequence, telecommunications industries that
have long been defined by their use of particular underlying
technologies are finding their services, their markets and their
customers converged. No longer is twisted-copper wire the hallmark of a
phone company. No longer is coaxial cable the exclusive domain of those
who bring us CNN and ESPN. And no longer are the airwaves the exclusive
stuff of broadcasters. Each of these industries is finding that they
have new competitive vulnerabilities as well as new opportunities. So
are their customers.

[IP and the Rise of the New Network Paradigm]{.underline}

To my mind, the third primary defining attribute is development of the
Internet Protocol (\"IP\") and the introduction of the new network
paradigm. I would submit, with the exception of the creation of the
original public switched telephone network, we have not seen such an
amazing technological break-through in telecommunications. IP and the
Internet generally are radically altering the legal and regulatory
landscape. Indeed, as Mitchell Waldrop described it, the Internet is at
\"the edge of chaos---where the components of a system never quite lock
into place, and yet never quite dissolve into turbulence, either.\" This
is a long way from the sophisticated tin cans and string we are
accustomed to regulating.

From my perspective, IP and the Internet are also de-constructing
competitive concepts. Innovation is no longer captured in the computers
and switches of a few institutions, but instead, will rest in the hands
and imaginations of millions who can easily stroll across all
boundaries---physical, social, political and organization. Thus, the
users rule!

The pressing of intelligence to the periphery of networks and to users
turns existing networks on their heads and poses a real threat to
incumbents. George Gilder aptly described this phenomenon in discussing
what he called the new \"microcosm\":

> \"The law of the microcosm is a centrifuge, inexorably pushing
> intelligence to the edges of the network. Telecom equipment suppliers
> can no more trap it in the central switch than IBM could monopolize it
> in mainframes.\"
>
> [Bandwidth: The New Driver]{.underline}

And finally, the fourth attribute: bandwidth. Interestingly, Gordon
Moore in *Time* magazine wrote that \"Bill Gates rules today because
early he acted on the assumption that computing power (speed and memory)
would become nearly free, allowing him to write more and more lines of
complex code to make use of the bounty. The law that will power the next
few decades is that bandwidth will become nearly free.\"

Coupled with microprocessor power, digitalization, and the Internet
Protocol, high-speed, high-capacity bandwidth will unleash the powers of
users, and thus innovation will explode at blistering rates.

II\. IT WILL CHANGE EVERYTHING

# 

#  What is the significance of my foregoing remarks? Well, with the explosion of telecommunications and information technologies, today it is possible to surmount the limitations of geographical, social and cultural isolationism. We are literally able to shrink our world, and expand our reach beyond our current place and station in life. For example, it is no more difficult now to communicate or interact with a friend or colleague on the other side of the world than it would with your neighbor across the street. With the Internet on the World Wide Web, you and I are able to access resources and services from every corner of the world. Ranchers and farmers, for their part, use cellular phones, GPS, and on-line services to monitor commodities. There is something for everyone!

# 

#  And no sector need be left out. No region need be left out. Technology has opened, and will continue to open, various enterprises and activities---communications, data and information services, education, entertainment, software, electronics, and financial services, just to name a few---to new interaction, consumption, trade, and investment. Let me briefly say a word or two about the enterprises that are being discussed at today\'s symposium.

# 

#  [Electronic Commerce]{.underline}

Electronic commerce is perhaps the most visible (and seemingly
lucrative) manifestation of the current deployment of telecommunications
and information technologies. In fact, worldwide e-commerce revenue has
pierced the \$20 billion mark, representing a 154% jump over the past
calendar year. Major market studies forecast that in the first decade of
the new Millennium the electronic sales of goods and services will
charge past the \$100 billion mark in the United States alone. The
\"Industry Standard,\" a trade periodical on the Internet economy,
recently reported that e-commerce revenues could soar as high as \$1
trillion by 2005.

Experts estimate e-commerce to invade all forms of traditional,
\"brick-and-mortar\" enterprises and to take their market share. For
example, by 2010 it is forecasted that e-commerce will account for:

-   10-15% of all retail shopping

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-   20% of all airline ticket sales

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-   20% of all financial services

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-   5-10% of all automotive sales

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-   20% of all gift sales

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-   10% of all grocery sales

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-   20% of all on-line banking and financial services

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-   20% of all bills will be paid over the Internet

### Distance Learning and Education

Telecommunications and information services also make it possible for
residents of North Dakota and elsewhere who are interested in
educational fulfillment and professional advancement to take advantage
of resources offered by the higher education institutions in the State
and throughout the world.

For some students, this may happen at special learning centers, that are
essentially high-tech conferencing facilities with audio/video/data
capability, where students can see and speak with instructors who may be
several hundred miles away. In other situations, armed with a computer,
a modem, and the Internet, participants may be able to access the
delivery of distance learning curriculum.

The full panoply of high-speed, broadband, real-time, and interactive
capabilities make the idea of State, regional, national, or global
\"universities\" a reality, wherein the importance of the proximate
location of students and instructors is rendered almost meaningless.
That should revolutionize the education.

### Telemedicine and Health Care

Health care providers can surely benefit from this electronics
revolution. In the United States, per capita spending on health care far
surpasses expenditures made in any other industrialized nation, yet 50
million Americans do without medical coverage. From office efficiency to
consumer education, the new electronic world can potentially reform
health care service.

In the more practical form of \"telemedicine,\" health care providers
can harness the benefits of technology to offer better, more
sophisticated, and timely care to all patients. The various multimedia
applications and functionality that I have previously conveyed make it
possible for patient records, x-rays and all related data and video
information to be accessed and analyzed without geographic limitations.

Various medical groups are experimenting with the Internet systems to
instantly confirm a patient\'s insurance, make referrals, and make
claims, all at one web site. Others are constructing high-tech
examination rooms featuring computer terminals and diagnostic systems
linked to centralized electronic databases. Technology may also make it
possible for remote medicine and surgery.

And more and more consumers are using the Internet to find health and
medical information. For example, a December 1998 report by Cyber
Dialogue reveals that more than 22 million Americans are doing just
that! By accessing OnHealth, Mayo Health Oasis and other sites, millions
of surfers are researching content databases on diseases, diet, and
pharmaceuticals.

III\. MOST CERTAINLY IT WILL CHANGE COMMUNICATIONS REGULATION

You may be asking yourself \"How do governments cope with revolution?\"
To be blunt, not particularly well glancing back at history. They tend
to stick with their old tried and true methods and modify only
incrementally. In a billion-beat a second world, they do so futilely.
Let me take a moment to reveal the issues.

##### Technological and Regulatory Convergence

Communications historically has been regulated (or not regulated)
according to the method of transmission: telephone companies are
regulated under Title II of the Act, radio companies are generally
regulated under Title III, cable companies are regulated under Title VI,
and so on. Such regulatory balkanization was

sustainable in the era before digitalization, when services offered via
one method of transmission could not, as a general matter, be offered
via a second method of transmission in a manner that would lead
customers to view the two services as substitutes for each other.
Policymakers, however, are fast approaching moments of truth in which we
will have to decide whether services similar to those traditionally
offered over one medium should be regulated in the same manner as new
services offered over another medium---or whether new services should be
regulated at all.

[Innovation]{.underline}

I am convinced that innovation is a greater driver of this economy than
any other factor, including prices and choices. It will produce those
things if there are policies tuned to provide incentives for innovation
without skewing the creative dynamic.

[Timeliness]{.underline}

There must be a greater sensitivity to the timely demands of
billion-beats a second world, where business opportunities are rich, but
fleeting. Licenses and regulatory approvals that take months and years
are anathema to the silicon world in which technological lifetimes pass
in that amount of time. There must also be a corresponding sensitivity
to capital markets.

### Faith In The Competitive Market

The current communications revolution demands that we keep our crystal
balls in the closet and allow the market dynamic to efficiently guide us
to changes that our citizens value. History is filled with examples of
failed predictions about technological innovation and progress. In fact,
I always keep handy a list of failed predictions because there is no
shortage of them. Here are a few of my favorites:

-   \"*There is no reason for any individual to have a computer in their
    home.\"* Ken Olson, president Digital Equipment Corp. (1977)

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-   \"*I think there is a world market for about five computers*.\" Tom
    Watson, IBM (1943).

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-   \"*There is not the slightest indication that \[nuclear\] energy
    will ever be obtainable. It would mean that the atom would have to
    be shattered at will.*\" Einstein (1932).

Well, as the economist Fredrick Hayek wrote, maybe *\"It is high time we
take our ignorance more seriously.\"*

IV\. CONCLUSION: \"GET OUT OF THE BOX\"

Technology is evolving at a blinding rate and appears hell-bent to
change every facet of our lives. It undoubtedly will, and the potential
for that is exciting. And if you think Moore\'s Law is fast, just think
about the fact that fiber-optics are doubling every 12 months, wireless
every 9, and the Internet every 4.

There are tremendous opportunities for the residents of North Dakota,
Virginia, my home state, and other locales. Virtually every sector of
the industry can benefit. And important enterprises, like education and
health care, can surely harness these potentialities.

But there are very formidable challenges as well. [First]{.underline},
the broadband, advanced networks are not now fully deployed in rural and
insular areas. In that regard, commentators often refer to the William
Gibson\'s quotation that \"The future is already here. It\'s just
unevenly distributed.\" I will note, though, from what I have witnessed
in my travels throughout the United States that there are energetic and
enthusiastic public and private entities that are working to
constructing these systems.

[Second]{.underline}, as we all know, there is cultural shift that must
take place in the hearts and minds of users of advanced technology. Not
all doctors, educators, farmers, students, or businessmen are inclined
to readily or immediately embrace the computer, the Internet and other
implements of the electronic age. The same may be said of traditional,
\"brick-and-mortar\" enterprises. As a consequence, we collectively need
to be forward-thinking about the benefits of the technology, not just
resign ourselves to the fact that the \"tech-heads\" will lead the way
and usher in all the advantages of the Digital Age.

So in close, I am tired of hearing about thinking out of the box. Let\'s
GET OUT OF THE BOX!

Thank you.