Remarks of William E. Kennard, chairman
             Federal Communications Commission
                           to the
  National Association of Regulatory Utility Commissioners
  
                     San Antonio, Texas
                     November 10, 1999
  
                 (As prepared for delivery)
  
  
  
  "Blazing A Trail: A Vision for the Twenty-First Century"
                              
  I am delighted to join you here in San Antonio.
  
  Yesterday, on the plane ride here, I was thinking that we have a lot of celebrations and anniversaries
  taking place this time of year.  Today we are celebrating over 100 years 111 to be exact of NARUC
  national conventions.  NARUC began in the last century in 1889 and I am honored to give this address
  at NARUC's last convention of this century.  Next February we will mark the fourth anniversary of the
  Telecommunications Act of 1996, and just last week I had the pleasure of celebrating my second-year
  anniversary as Chairman of the FCC.
  
  Lately, I've spent some time thinking about my two years as Chairman, thinking about what makes my job
  so rewarding.  And I thought that what makes it particularly rewarding are all the people I've had the
  pleasure of working with: my wonderful staff, my colleagues on the Commission, and working with you--
  our partners in the states to make sure that the public reaps the benefits of the changes transforming the
  world of telecommunications.  
  
  So let me thank Jim Sullivan, Bob Rowe, Joan Smith, Brad Ramsey, and all of my fine colleagues at
  NARUC.  You have helped make my time at the Commission a special time, and I'm looking forward to
  working with you and strengthening our partnership in the months to come.
  
  And lately I've also thought about the road not taken my own road not taken.  In 1982, I started
  practicing communications law at a Washington DC law firm.  At that time, the practice of
  communications law was not the booming specialty that it is today.  My former law firm had a small
  communications law practice then, but the firm had a huge transportation law practice.  The firm
  represented airlines and trucking companies and railroads and bus companies, mainly before the Interstate
  Commerce Commission.
  
  And I'll never forget the day when one of the senior partners in the firm called me into his office.  He had
  been a former high-ranking official at the ICC, and he had left government and built a large practice
  representing clients before the ICC.  And he told me that I should think about practicing in the
  transportation law area.  That meeting was like my own version of the classic scene in The Graduate,
  when Dustin Hoffman is told that his future lies in one word: Plastics.  Well, for me, in 1982, the word
  was--trucking. 
  
  And I'll never forget that the senior partner told me that I should consider transportation law.  He said
  that transportation technology was unlikely to change dramatically and so the transportation law field
  would be much more stable than the practice of communications law.
  
  It's little wonder that he held this view.  For a long time, of course, the ICC was a large and powerful
  agency blazing new trails in the field of American regulatory policy.  
  
  In the early and middle parts of this century, the ICC had immense regulatory power over rail lines,
  trucks, buses, and just about anything else that moved across state lines.  The Commission busted trusts,
  reviewed merger transactions, issued safety regulations for the railroads and helped desegregate bus and
  train lines; at one point it even handled complaints against moving companies. 
  
  But, as we all know, things changed.  In the second half of the twentieth century, buses and trucks
  replaced railroads as the principal mode of commercial carriers; large portions of the transportation
  economy were deregulated, and market dynamics began to replace the ICC as the principal means of
  protecting consumers.
  
  In 1995 Congress and President Clinton abolished the ICC with a simple stroke of the legislative pen.  
  
  That year, a few days before Christmas, the ICC issued its last order it was a permit for
  Santa Claus to operate "as a common carrier by two-runner sleigh" as long as he "renders
  reasonably continuous and adequate service to the public."  It was a bittersweet end to
  what had been one of the most powerful regulatory agencies in American history. 
  
  It also marked the passing of a large part of our shared regulatory heritage.  NARUC was founded in
  1889, just two years after the ICC, and the FCC and most state commissions are modeled after the ICC. 
  We are all, in a very real sense, offspring of the ICC, and now of course we are orphans.  
  
  We came into being in a different era, an era in which the views of regulation were quite different than
  they are today.  The FCC was founded on the simple notion that each technology was a distinct market
  with a separate regulatory framework.  And our predecessors accepted the prevailing wisdom of the day--
  that the principal mission of regulators was to protect consumers by regulating the retail activities of the
  companies under their jurisdiction.
  
  But now, as we leave the twentieth century, we need a new vision for the future.
  
  The world of telecommunications is changing and changing fast. Technology driven-communications
  services are eroding the traditional regulatory distinctions between different sectors of the communications
  industry.  We are witnessing an inexorable movement from monopoly to competitive markets, from basic
  to advanced services, from analog to digital technologies.
  
  And as these changes transform the telecommunications world, we need to think about our role in the next
  century.  We need to accept the fact that as industry restructures we will have to change.  
  
  And so I've come here today--to this, the last NARUC convention of the century--to say that the time has
  come for us to embrace a new vision.  The time has come for us to respond to the deregulatory demands of
  the next century, to realize that the old regulatory model of the ICC no longer applies to the world today.
  
  We need to find new ways to protect consumers in this new environment.  We need to respond fully and
  quickly to emerging technologies and the other transformations shaping telecommunications.  
  
  The central organizing principle in telecommunications today is change.  The regulatory process is
  incremental; the market process is not.  The regulatory process, by definition and by law, has to be linear
  and methodical, to provide due process.  The market process, by contrast, is chaotic and nonlinear, and
  because of that, very often unpredictable.  
  
  A traditional role for government has been to predict the market and write a rule; and to act as gate-
  keepers to markets, deciding who may enter, and who may not.  But today's markets are moving too fast
  for us to act in that role for very much longer. 
  
  So the question before us today is really quite simple: how do we remain relevant in the
  next century?
  
  Well, one way we remain relevant is by changing both the structure and mission of our agencies.  This
  will not be easy.  One of the most difficult things to do, in fact, is to change the regulatory culture of an
  agency.  It is not easy giving people who have been in their jobs many years people who are accustomed
  to doing things a certain way--a whole new mission.
  
  But that is the first thing we must do.  And we are.
  
  Last August, I submitted to Congress a draft strategic plan for the future, entitled "A New FCC for the 21st
  Century."  The plan recognizes that the FCC must refocus its efforts from managing monopolies to
  addressing issues that will not be solved by the market.  
  
  The plan says that the FCC must become a leaner, faster and flatter agency responsive to the needs of the
  digital age.  It calls on the FCC to redirect its energies towards the twenty-first century to focus on what
  consumers need: promoting competition in all communications markets; managing the electronic
  spectrum; protecting consumers against slamming, cramming and other abuses in a competitive market;
  and making sure all Americans benefit from the communications revolution.
  
  With this plan, the FCC is meeting the challenge of reinventing itself to keep pace with our rapidly
  changing landscape.  It is a plan that says we have to give ourselves a new identity, we have to reinvent
  ourselves.  The plan recognizes that competition is coming to all sectors of the communications industry,
  and that as it does so we must make the transition from industry regulator to market facilitator.
  
  The plan is a blueprint for the regulatory agency of the next century.  And I know that
  pioneering state commissions will also make the transition from industry regulator to
  market facilitator.
  
  But agency restructuring will only be one piece to the new regulatory puzzle.  In the next century, we need
  to understand that there will be only one way to manage the transition from monopoly to competition: that
  way lies through a partnership between the states and the federal government.  
  
  Only by working together can we establish the fundamental tenets of regulatory policy for the next
  century.  Only by forging a partnership can we lay the basis for a successful transition. 
  
  And I'm proud to say that over the past two years, on many issues and in a wide range of
  areas, we have worked together to meet the demands of the new marketplace.  Working
  together, we have recognized that open, unfettered and competitive markets are a
  prerequisite to a healthy telecommunications economy.  
  
  And while we're on the subject of competition, I would like to pause for a minute and
  salute the tremendous achievement of Joel Klein last week.
  
  In today's environment, it's easy to keep your head down and not take risks; in
  Washington today people will give you a thousand reasons not to stand for change.  Well
  Joel took a risk, he stuck to his guns and he ended up winning a historic victory in one
  of the most important antitrust cases of the century.  Consumers will reap the benefits of
  that decision for years to come, and this man is the reason.
  
  The history of these markets teaches us one fundamental truth: there are two ways to
  introduce competition in this marketplace.  Through a structural approach, usually
  involving divestiture, as we saw with the break-up of AT&T; or a regulatory approach,
  which is the underpinning of the Telecommunications Act of 1996.  There are two ways
  and there are no shortcuts. If we as regulators do not do the hard work of prying these
  markets open to competition, then the regulatory solution will fail and I guarantee you that
  Joel Klein or his successors will have to finish the job. 
  
  And I want to applaud the states for being the pioneers in this movement towards
  competition.  
  
  The 1996 Telecommunications Act only codified into national policy what a number of
  state commissions New York, Illinois, Washington, Massachusetts, among others--had
  already adopted for their individual states.  It was the states who first determined that
  local competition could work to the benefit of consumers and they were the first to pry
  open markets and order collocation and the unbundling of networks.  This is important,
  trailblazing work, and I applaud you for it.  And this important work will only be
  completed if we--the state and federal regulators do the hard work of prying these
  markets open to new entry.   
  
  We all recognize that mergers are a tough issue for us.  Together, we have said and we
  need to continue to say--that we will not allow any firm to become so dominant that it kills
  competition and stifles innovation.  But we have also said that not all mergers are bad, that
  some in fact can allow firms to offer new services and enter markets once dominated by
  monopolists.  
  
  And we have forged a real partnership in the merger review process.  I applaud the states
  for taking the time to scrutinize the transactions that come before you, for working so
  closely with the FCC, and for providing a model of a fair and judicious review process. 
  And, thank you for your resolution this week supporting our merger authority.
  
  We need to remember that all mergers are different and that we need to approach them
  one at a time, to make sure we produce the right result.  Some mergers, like SBC-
  Ameritech, take time; others, like US WEST-Qwest, move along more quickly.  I'm
  pleased with the progress being made by US WEST-Qwest.  The companies are working
  to demonstrate that their transaction will not harm the public interest, and it's fair to say
  that their application is on the fast track.
  
  Now so far I've talked about competition.  But I also want talk about the two other
  fundamental roles for our agencies in the twenty-first century: consumer protection and
  universal service.
  
  In the next century, the people who enforce the rules are going to be just as important as
  the people who write them.  And that's why we've created two new Bureaus with an
  important focus on consumers the Enforcement Bureau, which will have a division
  devoted to consumer protection enforcement, and the Consumer Information Bureau,
  which will provide one-stop shopping for consumer inquiries and informal complaints. 
  This reorganization is part of a recognition by the FCC that we must change the way we
  do our jobs as communications markets evolve.
  
  But that's not all we've been doing.  At both the state and the federal levels, we have been
  rolling up our sleeves to help consumers navigate the new telecommunications
  marketplace.  In recent months the FCC has undertaken a number of pro-consumer
  initiatives among them Truth-in-Billing and Truth-in-Advertising in which we have
  said that consumers need protection from unfair marketing and billing practices and clear
  and accurate information about the choices available to them.  
  
  We've also forged an important partnership to address the problem of area code exhaust. 
  The FCC and the state commissions are working together to solve this issue, working
  together on behalf of American consumers.
  
  And as we refocus our energies towards promoting competition and innovation and
  towards consumer protection, we must always remember that competition does not come
  to all people and all parts of America at the same time.  We must remember that
  competition is not the only ingredient to a healthy marketplace.  
  
  Communities without access to advanced technologies will be placed at substantial risk in
  the next century, and we must ensure that all Americans, no matter where they live, reap
  the benefits of the Information Age.  
  
  We are moving full speed ahead to meet this challenge.  Soon, we will be working
  together through the Joint Conference to speed the deployment of advanced
  telecommunications services to all Americans.  The Joint Conference will serve as a
  clearinghouse for information and ideas about broadband.  I'm confident it will speed
  ubiquitous access to every person.  I'm looking forward to serving on it and I applaud
  Bob Rowe and NARUC for spearheading the resolution last July that helped make the
  Joint Conference a reality. 
  
  I'm also pleased to see us joining forces in support of the e-rate.  We fought for full
  funding of the e-rate, and now millions of children across the country are reaping the
  benefits of that program.  Millions of children who otherwise might have been left behind
  now will have access to the high-tech tools of the digital economy. 
  
  And I'm especially pleased to see the FCC and the states working together through the Joint Board on
  other aspects of universal service.  Our new support mechanism for non-rural carriers will keep service
  affordable for Americans in high-cost areas and ensure that in the next century, everyone has access to the
  network.  
  
  And of course, we have more to do.  I applaud the work of the rural task force and look forward to
  working with the Joint Board to focus on universal service issues facing rural carriers.    
  
  You know, two decades ago, around the time the senior partner at my former law firm
  was attending those ICC hearings, critics of the ICC said that the agency had become a
  lumbering, obsolete bureaucracy unable to keep pace with consumer needs of the late
  twentieth century.
  
  They were probably right.  
  
  They said the ICC took 53,000 pages of testimony before it finally decided on the
  appropriate rate for shipping grain.  That it took 11 years to review a single railroad
  merger; and that the ICC had lost its relevance in a new more competitive marketplace.
  
  We can't allow people to say the same thing about us.  
  
  Next year, fifty years, a hundred years from now, we must make sure that people look back on what we
  have done and say that we had the foresight to abandon the regulatory shibboleths of old and meet the
  demands of consumers in the Information Age.  
  
  Our legacy must be that we helped unleash the entrepreneurial energy of the American people; that we
  created an environment in which innovation and convergence could thrive; and that we protected
  consumers from market abuses.  
  
  And they must say that we helped give people access to the digital tools of the Information Age, all
  people, rich and poor, urban and rural, Americans with disabilities, everybody.  
  
  That is my vision.  That is where I want to go.  And I want us to go there together.  
  
  Thank you.