### Remarks by

## Chairman William E. Kennard

Federal Communications Commission

Before the

Competitive Carrier Summit 2000

## Conference on Current U.S. Telecom Policy 

January 19, 2000

Washington, D.C.

(As Prepared for Delivery)

"THE FCC'S NEW ENFORCEMENT ETHIC"

Thank you, Russ, for that kind introduction.

I have known and admired Russ for about 20 years now. He has
distinguished himself at every level of government: local, state and
federal, from city councils and the Supreme Court, at the FCC and in
private practice. He is a friend and a great ally to have in a tough
fight. I feel very fortunate to be able to work with him.

And thank you to Lucent Technologies, Comptel, and the summit\'s other
sponsors for inviting me here.

I\'m delighted to be with you this morning.

Four years ago, some of us were at the Library of Congress for the
signing of the Telecommunications Act.

I remember that day well.

Scores of lawmakers, federal officials, and industry leaders hailed the
passage of the Act as a new beginning\--a great blueprint for the bright
future for telecommunications. We predicted that this law would fling
open the doors to competition and give birth to a wonderful new era for
consumers.

It's been four years of hard work, but the promises of that day are
being realized.

The FCC has spent much of the past four years writing the rules to
implement the Act, defending them in the courts, and working to make
local competition a reality.

And our work is paying off.

In almost every sector, new industries have sprouted, and competition is
driving down rates, spurring innovations, bringing consumers more
choices, better services. If anyone tells you that this Act is not
working, I hope you will set them straight.

Long-distance phone rates are at all-time lows. Rates for wireless have
dropped forty percent over the last three years. The FCC is pumping more
spectrum into the marketplace for wireless services. And we just
approved our first application by a Bell Company to enter the long
distance business. In New York and many other states competition is
taking hold.

But I only need look around this room to know the Act is working.

I see many successful entrepreneurs who responded to the competitive
call to arms that Congress issued four years ago. I see the risk-takers.
People willing to be those first pioneers willing to fight to bring
competition to historic monopoly markets. Willing to innovate and infuse
previously closed markets with new entrepreneurial drive and energy.

Thanks to you, consumers are enjoying the benefits that competition
brings: lower rates, more choices, new services.

And as you worked to gain a foothold in these markets, you told us about
the challenges that you have faced. Every one of you has stories to
tell. Stories about how you have fought to bring competition to
telecommunications. Many of you told us your stories. And in telling us
your stories, you told us what we needed to do to create an environment
for competition.

I am grateful to you for the stories that you have told us. And I am
proud to say that the FCC under my chairmanship has listened to your
stories. I\'m proud to say that we heard your stories.

Because from those stories, we wrote the rules that made it possible for
competition to take root \-- from collocation, to unbundled network
elements, to line sharing \-- these are the rules that have helped open
the doors for the CLECs to blaze a trail toward a more competitive
marketplace for consumers.

We should all be proud of that. Because working together, we have helped
to bring about a transformation of the telecommunications marketplace.
We have a long way to go, but the pathway is clear. And the Act is
working.

Now it\'s true we\'ve hit some bumps in the road. We\'ve faced
time-consuming litigation that slowed our progress. But the way is
becoming increasingly clear. Competition is here to stay.

We have fought hard to get to this point. We have made important gains.
And we can\'t let anyone turn back the clock. I know you won\'t let that
happen, and I won\'t let it happen. I am not going to allow anyone to
transport us back to the old days of monopoly markets. No one wants to
go back.

So I am looking ahead. As more competition develops, I envision a
network of networks freely interconnecting to bring a wide range of
services to the American public: wireline and wireless. I envision
robust, lasting competition in each of the three components of the
network of networks: the content, the conduit, and the intelligence.

Content is the cable, video and other programming that comes over the
network. The conduits are the pipes \-- the wires, cables, and
spectrum - that carry content to the consumer; and the intelligence is
the machines and software that process content for the consumer - the
computers, browsers, set top boxes, and operating systems.

Right now the seeds are being planted to grow this network of networks,
so that one day firms will interconnect freely to bring a range of
services to consumers.

But we still have work to do. We face an exciting new challenge: Our
challenge is to promote competition in every portion of the network. To
protect competition in places where it exists and promote in places
where it is lagging.

How do we do this?

First you need to continue to do the hard work of prying open these
markets.

And we \-- private industry and policymakers \-- must preserve the gains
we\'ve fought so hard for. We must make sure that everybody lives up to
the rules of the road.

I\'m talking here about enforcement.

The FCC has done a lot in the past two years to step up enforcement.
We\'ve revamped and improved our formal complaint rules, increased our
reliance on informal techniques to settle disputes, and created what I
call the Rocket Docket to deal with formal complaints.

But we need to do a lot more. And we\'re doing it.

For the first time in FCC history, I\'ve created an Enforcement Bureau
to make sure we preserve and promote the competitive gains that we\'ve
made.

I\'m not talking about creating another box on an organizational chart.
I\'m talking about creating a whole new enforcement ethic, about
changing the way the FCC does business. I\'m talking about changing the
culture of enforcement at the FCC.

No longer does industry see us as an agency that simply writes rules. No
longer do they see just a rulemaking body that occasionally does
enforcement work. Enforcement is now central to our mission \-- to
virtually everything we do.

And I\'ve put in charge of the new Enforcement Bureau someone who knows
more about communications law than anyone I know: David Solomon.

I know David from my days as FCC General Counsel. David served as my
deputy. He has spent a dozen years at the FCC. And I guarantee you he\'s
seen it all: he knows every trick in the book \-- the games people play,
the enforcement end-arounds, fake-outs, tactics of delay and dispute \--
you name it, he knows it.

David will cut through the tactics of delay and diversion and make sure
the FCC does the right thing. He is a no-nonsense kind of guy.

David knows what I want to happen in the enforcement area. And I told
him I would give him the resources he needed to get the job done. I told
him to go out and find the very best staff he could find.

We knew that we would need a mix of Commission veterans and new blood.
So we recruited people from outside the agency and we handpicked a
topflight team of FCC veterans.

Brad Berry is David\'s Deputy \-- a seasoned litigator, he was a partner
at a major law firm and spent time at the Department of Justice. And
David brought in Richard Welch, a veteran legal hand with years of
experience at the FCC and in the Common Carrier Bureau. And Jane Mago,
another Commission veteran. Both Jane and Richard worked with me in the
General Counsel\'s office. They are among the most well-respected
lawyers in the agency.

Once we put our team together, we designed a blueprint for a new
enforcement ethic at the FCC.

I said I want an enforcement culture that is guided by three simple
principles: enforcement must be firm, fast, and flexible.

We must be firm in the face of violations, fast in resolving disputes,
and flexible in its approach to problem solving.

Firm

When I say firm, I mean that when companies commit a violation of the
statute or our rules, there will be serious enforcement consequences.
We\'ll listen to all sides in any dispute, but when we find violations,
we\'ll be taking tough enforcement action.

Companies should know that we\'re not going to sit on our hands while
firms violate our rules.

And I\'m glad companies seem to be waking up to this fact. Let me tell
you what\'s happened in recent weeks. Several firms have approached the
new Bureau. They have come forward to voluntarily disclose serious rule
violations. They did this because they knew the Bureau would find out
about the violations and that the consequences would be more severe.
Clearly, the enforcement message is getting through.

Let me tell you what else we\'re doing.

Our field offices will be involved in enforcement. The FCC has 25 field
offices around the country. They are conducting on-site investigations,
helping us enforce competition at the local level. We have people in
Washington looking into possible violations. And we have a team whose
sole responsibility is to make sure SBC complies with the order
approving its merger with Ameritech.

Let me say a word about that merger.

A few months ago, some of you came to my office and said you were
pleased with the terms of the SBC order. But some of you told me you
were worried that SBC had proffered the conditions only because it
thought the FCC wouldn\'t enforce them. Now, I believe that SBC offered
those conditions in good faith. I also believe that if, for any reason,
those conditions are not satisfied, we will be there to enforce them.

But of course our focus extends well beyond SBC.

Recently, the FCC created a \"backsliding\" team, to make sure that a
BOC doesn\'t violate the terms of an order granting long distance
approval. Brad Berry is leading that team. He\'s working closely with
the New York Public Service Commission and the Common Carrier Bureau to
make sure Bell Atlantic lives up to its obligations in New York.

Fast

Second, enforcement must be fast.

We must decide cases quickly, decisively and clearly. We will manage the
case docket aggressively. And we\'re going to work with you to solve
disputes as rapidly as possible.

In these markets, where changes happen at lightening speeds, we can\'t
allow important decisions to languish on a docket somewhere. We can\'t
issue long and confusing decisions that raise more questions than they
answer. In the world where you compete everyday, justice delayed is
justice denied.

I\'ve heard from many of you on this point. One thing I always hear is
that you want us to be faster. You want speedy solutions to your
problems \-- and that\'s what we\'re going to give you. You need swift,
clear answers to pending disputes \-- fast and clear answers that will
benefit all sides (even the sides that lose) and let everyone know what
their obligations are in real time.

So we\'re not going to sit on cases. We\'re going to resolve them
swiftly.

In the last two years, the Common Carrier Bureau has done yeoman\'s work
to reduce the backlog of cases. The Enforcement Bureau is now building
on CCB\'s successes, making speed one of the new watchwords at the
agency.

Last week, a satellite carrier missed a deadline for public interest
programming. Within days, the Bureau had launched an investigation.

A few weeks ago, a staff attorney brought an order to David Solomon\'s
office so Solomon could review and sign it.

I don\'t know how many of you are lawyers, but I can tell you from my
experience in private practice that associates often kill themselves
trying to draft documents on deadline. Then they sit around and wait for
the partner to review and edit it.

Well, sometimes that same thing happens at the FCC.

But in this instance, the FCC lawyer got on the elevator, returned to
his office, and received a phone call telling him that David had
reviewed and signed the order and that it was ready for public release.

That, my friends, is fast.

Last month, the Bureau was reviewing a longstanding case involving an
interconnection dispute.

The case raised some complex legal issues.

The staff decided that to issue a written decision it would need more
information from the parties. We called them in to see if a settlement
was possible.

Within an hour, they had a negotiated agreement in hand. Within a week,
the case was over. Both parties walked away satisfied, and the FCC had
moved on to other issues.

We\'ve made a lot of progress in this area, but getting faster is a big
task \-- one we can\'t tackle alone.

You have helped us in the past and we need you to continue to do so.

Here\'s how:

If you have a problem, contact us. And please do so before filing a
formal complaint.

Recently, a CLEC contacted us. The CLEC said it was having problems
interconnecting with an incumbent local exchange carrier. The problem
appeared to be confined to a couple of specific geographic areas. One
person on our staff picked up the phone, called the ILEC, and in a
matter of days the issue was resolved: no muss, no fuss, no need to file
a formal complaint or litigate.

All issues don\'t lend themselves to such quick resolution. But some do.

So help us solve problems faster:

Before contacting us, do your homework.

Carefully document problems over time.

Identify which rule sections and statutory provisions you think are
being violated.

Make sure to check your interconnection agreements to see how they
affect the issue.

And bring us clear, adequate information and documentation to support an
enforcement action.

Let me also encourage potential litigants to take a hard look at
potential cases and bring us cases that really matter. Our resources are
finite, and the industry needs to use discretion in filing complaints if
you want us to be there when it really counts.

Flexible

Now I want to talk about flexible enforcement.

I know you can\'t always file complaints.

If we work together, I\'m convinced we can solve many problems without
having to file formal complaints.

The Enforcement Bureau is moving beyond the formal litigation process
and solving problems with creative, flexible solutions.

When someone contacts us about a problem, the Bureau is going to respond
proactively. It will look into alternatives to formal litigation and
work with firms informally to help settle issues.

A lot of times, informal talks between staff and parties can do wonders,
facilitating a private solution, avoiding the need for investigation and
litigation. And in some cases, the Enforcement Bureau is going to offer
companies initial staff views about a particular problem \-- views that
might help them resolve a dispute quickly.

That will save the parties\' time and money. And it\'s good for
competition and consumers.

After companies do file complaints, the Bureau\'s still going to work on
finding solutions

\-- something all sides can support.

Recently, the Bureau considered a case that involved a set of fairly
easy legal issues. But the staff still had to draft a written opinion,
which can slow down the process. We brought in the parties, suggested
they settle, and they did.

We aren\'t simply taking up cases as they come. We\'re being proactive,
looking for prime candidates for settlement, assessing which ones are
most important, putting them in priority, identifying the frivolous
cases and then dismissing them.

We might ask you for additional information about a case, ask for
further discovery. But whatever we do we won\'t simply sit back and wait
for complaints to arrive at our doorsteps. We\'re out there, looking for
problems, stepping into the markets and asking you to work with us to
solve disputes fast.

Recently we heard about an ILEC planning to incorrectly bill its
customers. We brought in the company in question and basically told them
to cut it out.

They did.

We took an aggressive, proactive approach to problem-solving. Our
approach worked. And it will continue to work.

Conclusion

We\'ve made major strides in recent years and those gains have to be
preserved.

I won\'t allow anyone to roll back these gains, I know you don\'t want
to see them rolled back, and there\'s only one way to preserve them: as
a team.

We must work together to nurture the seeds of competition, sharing
information, keeping open the lines of communication, making sure the
Act continues to work.

If we can get to where we are today, I know we can keep forging ahead.

We will do so by enforcing the laws \-- by being firm, fast, and
flexible.

That\'s my enforcement vision, that\'s where I want us to go, and with
your help I know we will get there soon.

Thank you.