NEWS                                                       March
25, 1996

           Commissioner Ness Predicts Intense Competition and 
                Abundant Consumer Benefits Will Flow from
                Procompetitive, Deregulatory Legislation
                                    
                                    
     FCC Commissioner Susan Ness told wireless industry
representatives today, as a
result of enactment of the Telecommunications Act of 1996, the
markets for local
communications services "will be transformed much more rapidly
than ever before. . . . 
[T]he certainty that came from a very structured regulatory
system is gone."

     In a speech at the annual convention of the Cellular
Telecommunications Industry
Association, Commissioner Ness declared that the availability of
"more and better services to
consumers" is the central goal of the new telecommunications law. 
"Your job and mine is to
make sure that consumers receive the rich array of benefits
Congress intended.  Our task is
to transform the legislative vision into reality," primarily by
promoting increased entry by
wireline and wireless carriers.  

     Commissioner Ness described the new Telecommunications Act
as "the opening tip-
off" for a new era of intense competition.  She cited specific
examples of the FCC's "March
Madness" of effort to implement the new legislation.  "Our
intrepid agency is now working
day and night, seven days a week, to carry out the tasks assigned
by Congress.  There are no
half-time breaks or time-outs to catch our breath."  

     Commissioner Ness claimed that critics of the agency
"focus[] on ancient history.  It's
much more relevant to measure our current performance by our
handling of PCS" than by
the licensing process for cellular service.  She cited the role
of auctions in creating a "'fast
break' opportunity for [PCS] providers to construct and operate
their systems."  She credited
flexible PCS service rules with enabling providers to "chang[e]
your game plan whenever
you want."  

     Commissioner Ness believes that "Wireless services will play
a pivotal role in
enabling consumers to break away from the wireline incumbents
which, until now, were
selected not because they were necessarily the right choice but
because they were the only
choice."  For this reason, "fair interconnection arrangements are
even more crucial -- as you
begin to become the primary local service providers for some
consumers, and volumes of
exchanged traffic increase."
 (over)
                                    
                                   - 2 -

     On the question whether to adopt a separate interconnection
regime for CMRS, or
whether CMRS providers should be subject to the same rules as
competitive wireline
carriers, Commissioner Ness believes "[n]either side has a
'slam-dunk' argument." 
Accordingly, she urged CTIA members "to promote interconnection
arrangements for all
competitive carriers that are as procompetitive as possible."

     She also discussed numbering and universal service issues,
as well as E911, hearing
aid compatibility, and education applications of wireless
activities.

     Contact: James L. Casserly at (202) 418-2100.

                                 - FCC - 

                               Remarks of
                        The Honorable Susan Ness
                    Federal Communications Commission
                               Before the
            Cellular Telecommunications Industry Association
                      Special Commissioner's Forum
                         Wireless '96 Convention
                              Dallas, Texas
                                    
                             March 25, 1996
                                    
                       "The End of the Beginning"
                              (or "Hoopla")

Tom Wheeler suggested that I base my remarks on Winston
Churchill's memorable
declaration after the 1942 battle at El Alamein.  You are surely
familiar with it:  

     "This is not the end. It is not even the beginning of the
end.  But it is,
     perhaps, the end of the beginning."

These phrases certainly describe where we are today in the
development of competition for
local communication services.

In the past, it was assumed the local loop was a natural
monopoly.  Regulation controlled
prices and encouraged investment.  The regulatory bottom line was
certainty for the carrier
and the consumer.  No surprises.

That era has ended.  Local competition is beginning.  And, as it
develops, the role of
government will diminish.

Today, in the wireline arena, the largest cities are experiencing
increasing competition for
transport services and, to a lesser degree, for exchange services
provided to high-volume
end-users.  Residential competition has begun in Rochester, Grand
Rapids, and a handful of
other locations.  

But, the number of small businesses and residential consumers who
have a meaningful choice
in selecting their local wireline service provider is still
modest.  Indeed, fewer than 10,000
homes, nationwide, are using the services of a competitive local
carrier instead of those
provided by an incumbent wireline carrier.  

Contrast this with the literally tens of millions of subscribers
every year who change their
long distance companies.

In the wireless context, cellular service has been successful
beyond all expectations.  Industry
growth rates are exceeded perhaps only by the growth of Internet
connections.  

But for most of the population, there are still only two
underlying carriers in each market.

These markets will be transformed much more rapidly than ever
before.  And the certainty
that came from a very structured regulatory system is gone.
  

Telecommunications Act of 1996

The event that marks the "end of the beginning" is the enactment
of the Telecommunications
Act of 1996.  This historic legislation won overwhelming,
bipartisan support in both Houses
of Congress and was signed into law by the President on February
8.  

It represents the most sweeping change in telecommunications laws
in over 60 years.  
Enactment of the new law, in and of itself, did not "change the
world."  No new
technologies were created by the stroke of the President's pen. 
Market shares on February 9
were presumably about the same as on February 7.  

But this legislation has the potential to usher in a
communications world we scarcely can
imagine today. 
 
The beginning is now over.  Congress has now provided clear
policy guidance.  

Here is how the House and Senate conferees described the new law: 

     . . . a procompetitive and deregulatory national policy
framework designed to
     accelerate rapidly private sector deployment of advanced
telecommunications
     and information technologies and services to all Americans
by opening all
     telecommunications markets to competition. . .

That's a mouthful.  But it's not just a lot of words.  It's a lot
of ideas as well.

Let's parse the language.  At the beginning we have the starting
point, the guiding
philosophy of the legislation:  "A procompetitive and
deregulatory framework."  

And then we have the real objective:  "private sector deployment
of advanced
telecommunications and information technologies and services to
all Americans."  

This is what it's all about -- more and better services to
consumers.

Between the end of the beginning (the new legislative framework)
and the beginning of the
end (providing advanced technologies and services to all
Americans), we have the means to
get to the end:  "by opening all telecommunications markets to
competition."

Your job and mine is to make sure that consumers receive the rich
array of benefits Congress
intended.  Our task is to transform the legislative vision into
reality.  Competition is the key
ingredient.

Success in this endeavor will transform our work and our leisure,
will enhance our education
and our entertainment, and foster both domestic employment and
international
competitiveness.  

For those of you who are keeping track, that's the end of the
beginning of my remarks
today.

                    *    *    *    *    *

Winston Churchill's comment about the end of the beginning
occurred in the most dramatic
and consequential kind of competition:  warfare.  

You and I are dealing with a very different kind of competition: 
the marketplace.

Meanwhile, most Americans are more concerned right now with yet
another kind of
competition:  the NCAA national basketball championships.

This month, homes and bars and dormitories and hotel rooms across
the nation echo with the
televised sounds of pounding feet and squeaking sneakers on
hardwood floors, rippling nets,
and wild applause.  This may be a bit of a stretch, but I think
NCAA basketball and
communications competition have a lot in common.

I assume that's why you subtitled this convention something like
"Get in the Hoop."

For example, we can think of the 1996 Act as the opening tip-off
for the most intense phase
of the competition.  This is the moment we have all been waiting
for.  The players are
ready.  Congress has put the ball into play.  

But the rulebook is not entirely finished.  Congress has resolved
a host of difficult issues, but
it has passed many others to the FCC.  

We have clear guidance to promote competition and a checklist
that tells us the basic
responsibilities of some of the key players.  But Congress has
left it to federal and state
officials both to flesh out many of the rules and then to referee
their implementation.  

Among the open questions:  What are the terms and conditions for
interconnection?  How
will number portability be implemented?  What new burdens -- and
new opportunities -- will
be presented by a restructuring of universal service mechanisms?

And there are obstacles on the court:  Restrictions on antenna
siting.  Fears of the health
effects of radiation.  A few incumbent fixed microwave service
operators who are delaying
the game.

Let me tell you how we at the FCC are working to accelerate the
new era of competition.

FCC In Action

Passage of the Telecommunications Act began the most intense
period of activity our agency
has ever known.  In six short weeks -- it began in February but I
think it's still okay to call
it "March Madness" -- we have identified many issues that require
rulemaking activity.  

We have established a schedule for briefings, drafting of notices
of proposed rulemaking, and
adoption of final orders.  

Our Wireless, Common Carrier, and Cable Bureaus have held public
dialogues open to all
industry and consumer organizations.  Our General Counsel has
moderated an extraordinary
public debate regarding some of the most complex and critical
provisions of the statute.

We have provided unprecedented public access to our internal
planning information.  

Our intrepid agency is now working day and night, seven days a
week, to carry out the tasks
assigned by Congress.  There are no half-time breaks or time-outs
to catch our breath.  

We need to finish our work as fast as possible so that your
industry -- and others -- can get
on with the game.

I'd like now to discuss a few of the specific issues that are in
play. 

Spectrum

First let me turn to spectrum.  Effective spectrum management is
at the center of the FCC's
mission.  It's also the key to your business.

I was immensely pleased by the day-long spectrum management
hearing we held earlier this
month.  I had proposed this en banc hearing because of the need
to review spectrum policies
as a whole, and not just in specific proceedings focused on
discrete slices of spectrum.  

We need to know how best to speed the delivery of valuable new
services to the public.  We
need to know how best to judge when to make additional spectrum
available for such
services -- and when to rely instead on more efficient use of the
spectrum already allocated.

We need to be fair, flexible, and fast.

I learned a lot, and I believe my colleagues did as well.

It was clear that the FCC has already made great strides in its
administration of the
spectrum.  Critics who bemoan the delays in authorization of
cellular service are focusing on
ancient history.  

It's much more relevant to measure our current performance by our
handling of PCS.  Let's
talk about the 1990s, not the practices of ten or twenty years
ago!

Auctions:  Today, we are routinely using the most efficient
spectrum assignment tool yet
devised:  auctions.  Our initial PCS auctions were a triumphant
success.  They placed
licenses in the hands of those who valued them most.  The rapid
issuance of licenses created
a "fast break" opportunity for service providers to construct and
operate their systems.  

Flexibility:  Our PCS service rules have unprecedented
flexibility.  We defined PCS in broad
terms, leaving it to you, your suppliers, and your customers to
decide which services are
most valuable.  Voice communications, business data and faxes,
Internet access, or whatever
-- it's up to you.

And most importantly, you can respond to market forces by
changing your game plan
whenever you want.  You don't have to come to us for permission. 
You have more room to
run.

Fixed Local Loop:  In January, we proposed to authorize you to
provide any fixed wireless
local loop service as well as mobile.  Why should we care whether
the signal from a pole on
the street goes to a mobile phone inside the house or to a
mounted transceiver outside on the
wall? 

The goal, once again, is to increase consumer choice.  Choice
comes from competition.  

Wireless services will play a pivotal role in enabling consumers
to break away from the
wireline incumbents which, until now, were selected not because
they were necessarily the
right choice but because they were the only choice.

Relocation:  Your ability to use PCS spectrum to increase
wireless competition and
consumer choice is, of course, constrained.  You are held back by
the obligation to relocate
incumbent fixed microwave users. 

Most relocation negotiations are apparently proceeding in a
reasonable manner.  But some
incumbents are said to be making extortionate demands out of all
proportion to the true costs
of relocation.  

Our staff has been instructed to review all specific allegations
carefully and expeditiously.  
In April, we plan to address all the microwave relocation issues
in response to these
complaints.

Antenna Siting:  Antenna siting is another major concern.  The
new law takes the FCC out
of the game completely concerning the placement, construction,
and modification of facilities
for personal wireless services.  

Our only involvement is tangential:  State or local government
decisions based on
environmental effects of radiation must comport with our rules. 
We will update those rules
by August 6.

Interconnection

Besides spectrum, I would like to talk about three other critical
issues that will affect your
opportunity to compete effectively against incumbent wireline
companies.  

Looming above all others is the issue of interconnection.

Communications services are based on networking.  Even to provide
mobility services, you
require interconnection with incumbent wireline carriers.  

Fair interconnection arrangements will be even more crucial in
the new era -- as you become
the primary local service providers for some consumers, and as
volumes of exchanged traffic
increase.

A three-cent-per-minute interconnection charge may not hinder you
from marketing a 30-
cent-per-minute mobility service.  But three cents per minute
totally blocks your shot at
offering a $20-dollar-per-month wireless local loop service.

Also, today, you not only pay dearly for the right to terminate
calls on landline networks,
but often receive no corresponding payment for traffic going in
the other direction.  I can
understand why you cried "foul."

For this reason, in December, we sought to establish a new regime
for interconnection
between CMRS providers and wireline carriers.  To speed
implementation of a solution, and
to get competition off and running, we proposed bill-and-keep for
an interim period, pending
more detailed analysis of various alternatives.

That was before the legislation passed.  

The new law establishes a framework for the negotiation and
arbitration of interconnection
arrangements between competitive local carriers and incumbent
wireline carriers.  We now
confront the question of whether to adopt a separate regime for
CMRS, or whether CMRS
providers should follow the same procedures that will apply to
competitive wireline carriers. 

Do differing statutory provisions or practical considerations
require that CMRS
interconnection be treated entirely as a federal matter, while
wireline-to-wireline issues are
resolved under the mixed federal-state regime established by the
statute?  Your industry
argues that it should be treated separately.  

On the other hand, aren't the prospects for fair play enhanced
when competing players are
subject to the same rules?  Regulatory parity.  That's what the
wireline carriers are telling
us.

The lobbying on this issue has been intense (I'd call it a
"full-court press"), even though a
decision is several months away.  I have reached no decision and
will carefully consider the
legal, economic, and policy arguments on all sides before making
up my mind.  

From what I have heard so far, it appears to be a close question. 
Neither side has a "slam-
dunk" argument.

I can give you no assurance that a special -- and more favorable
-- interconnection regime
will apply to CMRS providers alone.  For this reason, it may be
to your benefit to promote
interconnection arrangements for all competitive carriers that
are as procompetitive as
possible.   

Number Portability

The second critical issue is number portability.

Consumers value their telephone numbers.  Competition in the
local loop cannot occur
without the ability of residential and business subscribers to
choose a new supplier -- wireline
or wireless -- while keeping their old number.  

Congress recognized this problem.  It required incumbent local
exchange carriers to devise
means of implementing number portability.

Our rulemaking on this issue was begun before passage of the Act. 
We plan to adopt an
order in May.  

We will be mindful of the progress that has been made in several
of the States.  It is not our
intention to tread on their toes or to prevent them from
completing the work that is already
well underway.  

But it is our responsibility to implement regulations which
ensure that you and other local
loop competitors are not hindered by the lack of number
portability in any of the fifty states.

Universal Service

The third issue is universal service. 

The 1996 Act requires a comprehensive revision of the way in
which universal service is
funded and provided.  Both sides of your balance sheet will be
affected.

On the one hand, you'll be paying to support universal service. 
The bill requires measures
to address special needs of rural, insular, and high-cost areas,
and of low-income consumers. 
It also requires discounts for schools, libraries, and health
care providers.  

All telecommunications carriers will now pay to support these
responsibilities.  That's
consistent with the national policy for promoting fair
competition. (Maybe we can call it a
"level playing court.")  This burden should not fall uniquely or
disproportionately on any one
industry sector.

On the other hand, eligibility to receive universal service
support will be expanded.  Multiple
carriers will be eligible to receive support in non-rural areas
and, at the discretion of the
state commissions, possibly in rural areas as well.  

Wireless carriers will have the same opportunity as wireline
carriers to qualify to receive
universal service support payments.  

Again, this is consistent with a pro-competitive policy
framework.

Schools, libraries, and rural health care providers present
special circumstances.  Under the
new law, these entities are entitled to receive discounted rates
from all carriers, including
wireless carriers, not just the "eligible carriers" selected
under the generic universal service
provisions.  

The services to be provided, the magnitude of the discounts, and
the methods of
reimbursement are all subjects on which we are currently seeking
comment.

I encourage you to participate in this rulemaking. 

Beginning of the End. . .

I have sought to focus these remarks on the FCC issues that I
believe to be of greatest
relevance to you -- the highlights of the action, if you will.  

I want to avoid going into overtime.

Although this is the beginning of the end of my remarks (or
should I say, the Final Four
minutes?), I don't want to close without briefly mentioning three
other topics.

First, E911:  I want to commend CTIA and the public safety
community for seizing the
initiative and negotiating a compromise on E911. You deserve a
lot of credit for promoting
solutions that will enable your customers to receive emergency
assistance where needed.
 
Second, hearing aid compatibility:  I know you are also at work
to solve compatibility
problems between wireless telephones and hearing aids.  This
effort is not as far along, but
again you seem to recognize the need to address genuine needs
before the clamor for
government intervention grows irresistible.

Third, community service:  the best competitors are ones which
also make time for
activities that make communities stronger.  I want to salute the
CTIA Foundation for
Wireless Technologies, especially the ClassLink program.  I
enjoyed the demonstration this
morning.  

I also had the great pleasure of participating in a ClassLink
demonstration with Newt
Gingrich and Reed Hundt last May.  The benefits wireless
technologies can offer to students
and teachers are noteworthy. 
 
Schools are one setting in which the rewards of technology can be
magnified.  I hope you
will continue to make students a priority, even as the battles of
competition intensify.  

Conclusion

At the last, I want to return to the points I made earlier --
about the benefits to consumers of
competition and the enormous difference it will make if we are
successful in bringing about
the competition Congress envisioned.  Success is not
pre-ordained.

But we will have the best chance of success if we approach our
task with the same spirit that
Churchill maintained throughout World War II.  

Just a few days after he uttered the remarks I quoted at the
outset, Churchill sent a telegraph
message to another leader. "There is still a long road to tread,"
he wrote, "but the end is
sure."

That conviction carried him through to the end, and brought him
success.  

I wish the same to you.

And now I hear the final buzzer. . . .