SPEECH BY REED HUNDT
                CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION
                        CENTER FOR NATIONAL POLICY
                        Hyatt Regency Capitol Hill
                            Washington, D.C.
                        (As Prepared for Delivery)
                                May 6, 1996

     Thank you, Mo, for that great introduction.

     It is a great honor to address this celebrated Center.

     Thank you very much for inviting me to speak to you.

     Even if it is only because Don Imus cancelled.

     I want to talk to you today about a progressive policy for one-sixth of our economy
and about five-sixths of our magazine covers:  I refer to the communications, information
and entertainment sector.

      As chairman of the FCC, I suspect that I have the best job in government that you
don't have to be elected to.  As Vice President Gore likes to say, everything that is supposed
to go up is going up.  Revenues, jobs, innovation are up.  We even passed a hugely
important new telecommunications law. 

     When Vice President Gore swore me in to my post two and half years ago I spoke of
what the communications revolution meant to my grandmother.  In the middle of the
depression her husband died and she was left with no way to make ends meet for her and her
nine-year-old son, my father.  She got a new job that was just then created:  switchboard
operator at the Milwaukee newspaper. 

     That new job came courtesy of AT&T's construction of a great national network that
is still the envy of the world.  It permitted her to put my father through school and then on
to college and law school.  He in turn sent me on to college and law school, and gave me a
chance to have dreams that could come true.

     Now as we enter the Information Age, we have the singular opportunity to help make
dreams come true for all Americans.  We can seize this opportunity if we act quickly and
smartly to formulate a progressive agenda that harnessed the tremendous power and potential
of modern telecommunications.

     The two-point agenda for a Progressive Way in communications is to fight for
unleashing competition in the marketplace and to insist on real public benefits from the
communications revolution.

     As to the first point, the communications revolution obliges us to develop smarter,
swifter, more flexible ways of promoting competition.  For example, the spectrum auctions
we have held in the last two years are obviously the best method of distributing licenses. 
Not only have they raised over $20 billion, they've enabled us to speed our licensing
processes, thereby increasing investment and the creation of new jobs.  We have just today
completed the Jackie O of auctions -- we sold a package of mobile phone licenses for more
than $10 billion.  This is the largest auction of anything in history, and it will drive vigorous
competition in mobile telephony.

     The public benefits from communications should focus on children and community. 
We should use modern communications to revolutionize education, to intermediate between
the media and children, to reform our political process.

     The primary obstacle to our two-point plan is the forces who wish us to have no plan. 
For the last year and a half I've been at odds with think tanks and significant leaders of
Congress who wish to eliminate the FCC, and with it, any meaningful national governmental
role in this sector.  Their thesis is that the communications revolution will turn out for the
best if we have no rules and no concern for the impact on people of commercial exploitation
of the new technologies, in short, if we have no government.

     This rejection of governmental purpose rejects the fundamental view of Abraham
Lincoln, not only savior of the union, but also a founder of the Republican party.  Lincoln
said, "The legitimate object of government, is to do for a community of people, whatever
they need to have done, but cannot do, at all or cannot, so well do, for themselves." 

      Even as new communications conglomerates shape our thoughts, decide what we
should know, and define our consumption, all on a global basis, the people must have an
agent of the public interest to represent them.  It is not acceptable that the only collective
community action in an information economy would be the votes of communities of
controlling shareholders in media megafirms.

     It's high time to explain why the challenge to the existence of a national policy for
communications must be repudiated.  It's the right time to set out an agenda for positive
governmental action in the short term and in the long run.

     This agenda does not emanate from the era of anticompetitive, micromanaging,
inefficient regulation of the past.  Nor does it stem from an indiscriminate embrace of the
marketplace as solving all social needs.

     This agenda is not easily pigeonholed as liberal or conservative.
     
     In the late 19th century the transportation revolution changed America as profoundly
as the communications revolution of today.  It created new industries, new concentrations of
wealth and power, new cities and states, new forces for other changes.

     The railroad revolution gave birth to an age of possibilities.  It caused apprehension
that government was too enthralled by the powers of the industrial age.  But it built
confidence that humans could change the world.  This mixture of beliefs led directly to the
progressive movement, which lies behind many of the forms of today's national government.

     The building of the information highway should give us great and renewed confidence
in our powers to identify and solve any challenge to our country.  It should give rise to a
New Progressive Way.

     In my two years at the FCC, I don't pretend that we have yet defined the details of
the new progressive way.

     The good news is that the new Telecommunications Act of 1996 creates the possibility
for pushing a progressive agenda.

     The act rejects the old paradigm of encouraging monopolies or oligopolies as the best
market structures to deliver universal and high quality communications services, such as
telephony or video.  That old paradigm led some to say with justice that the FCC, as the
erstwhile regulator of these monopolies, had come to stand for Firmly Captured by
Corporations.

     Now if the FCC passes rules that open all communications markets to competition,
we will kickstart billions of dollars of new investment, creating more than three million jobs.

     Another part of our competition policy ought to be the expansion of our auction
authority.  Auctions are the best way to jumpstart competition.  They get licenses out fast to
businesses who have the right incentive rapidly to offer new services to the public.

     A progressive policy for communications is based also on a sanguine stipulation to 
Samuel Johnson's famous statement that there are few things a man can do that are more
innocent than making money.

     The best way to maximize that sort of innocence (and the job growth that comes with
it) is to promote with vigor and specific rules competition in all communications markets. 

     Those who wish to eliminate the Federal Communications Commission explain their
conclusion by simply observing, well, we don't have a Federal Computer Commission, do
we?  And that industry is thriving, isn't it?  

     The analogy is wrong.  We don't need a Federal Computer Commission because in
fact the computer industry was never a state-authorized monopoly, because new entry is
common, and because we don't need a national policy of making computers affordable to
everyone in their home by subsidizing their prices.

     But communications markets are intensely concentrated, as a result of five decades of
pro-monopoly laws, and the scale of investment for competition in these markets is in the
hundreds of billions.  It will be years, not months, before real choice among a handful of
sellers is available in all communications markets.  Of course we need a national government
agency to make a long term commitment to the goal of competition. 

     And we do need to guarantee affordable communications in every home and every
classroom if we want to have a functioning society in the information age.

     That won't happen by relying on market forces alone.  For the market to work for the
benefit of all, we have to be able to participate in the communications revolution.  

       In his first inaugural address, Lyndon Johnson said that "[M]any Americans live on
the outskirts of hope.  Our task is to help replace their despair with opportunity." 

     That's what we can do with a proactive, progressive communications policy.  That is
what the pure pursuit of private gain in an ungoverned world cannot do.

     The new law also gives birth to the most important merger ever:  the school bell
merger between technology and education.  Consummating this merger is at the core of a
progressive agenda for an information society.

     The law says that for the first time in our history communications technology should
be in every classroom in the country.  Communications has revolutionized our economy; now
it should be used to change our education system.  Every child in what Nabokov called our
"wise and quiet" country should go to class every day in the 21st century information age
instead of the 19th century world of slate and chalk. 

      This is what President Clinton called for in the 1994 State of the Union.  Now it's
time to do it.

     But not only should we network the classrooms.  It is imperative that networking the
classroom be coupled with teacher training, security in the schools and, of course, the
delivery of computers in the classroom.

     Not all this is within the FCC's reach.  it is expensive, complicated, and it will not
happen in one year.  Rather, meeting this goal requires a multi-year plan -- one that
recognizes that voluntary projects are useful symbols but an army of effort needs to be
mustered and an all-out assault needs to be made on the 19th century schoolhouse.  Federal
and state policies need to be welded to this goal.

     The future of our children and of the country depend on bringing our classrooms into
the 21st century.

     A proactive, progressive communications policy should also address the widespread
popular natural discontent with television.

     We should enjoy and use the power of the medium.  Among many other things, it can
be a public town square that brings us all together to share entertainment, news, sports.   For
example, cable has a new show about a shrink called Dr. Katz.  It's the Simpsons meet Bob
Newhart.  Has anyone seen it? If you have, keep it quiet.  My wife is a psychologist who
practices under her maiden name Dr. Katz.  I've told her the show is specifically broadcast
just to her and me; a perfect example of niche programming combined with cunning lobbying
of the FCC chairman.

     She says I'm delusional.  But I think she only thinks I might be wrong and to a
degree she thinks I might be right.

     A progressive calls that a good start.

     I don't believe TV is a vast wasteland.  I do believe we are largely wasting the vast
land of opportunity to benefit our society that TV gives us.  The Progressive Way is marked
by a commitment to use TV to make a better society.

     Under the new law, for the first time, parents have a tool to put their wishes between
the media's choices and their children.  The V-chip represents a national consensus that TV
can harm children and that technology can be used to screen its harmful effects. 

     This is part of a progressive TV policy. 

     The V-chip is a huge leap toward asserting the public's interest.  But it only gives
parents the power to chose.  They also need something positive to choose.  The power of
television to educate is unbelievable.  A recent study showed that pre-schoolers who watch
educational programming have higher test scores later in life.  Educational TV isn't
HeadStart, but it is available in virtually every home in America for free.

     That is why PBS is so important.  Auction revenues should be used to fund it amply
and forever.

     It is also why the Children's Television Act should be applied by the FCC to
guarantee that parents have something to choose.  

     This is not the case now.  Historically, the FCC has rubberstamped television license
renewals even if a license holder showed only one half-hour of programming that it called
educational per week.  

     Licenses are up again for renewal this summer.  Are we going to enforce the
Children's Television Act this time around?  The President, the Vice President and more
than 100 Congressmen urge the Commission to adopt a simple requirement that broadcasters
air at least three hours of educational programming each week.  As the Vice President asked
at the National Cable convention last Monday, "Three hours a week. . . . isn't too much to
ask, is it?"

     Next year we must grant digital TV licensees so that Washington can have 40 new
digital TV channels, New York 70, Chicago 60 and so forth.

      At the time of this decision we will need to determine if the new licenses carry any
public interest duty and if so, what is it?  Will it be something the American people can
count on?

     It is crucial that Congress require the FCC to attach specific public interest duties to
the new digital TV licenses that we will issue -- whether it intends to give billions of dollars
of digital TV licenses to today's broadcasters or whether it auctions the licenses.

      These conditions should be accompanied by reasonable sanctions, not necessarily
always reaching to nonrenewal of licenses.  As Alexander Hamilton said, "It is essential to
the idea of a law, that it be attended with a sanction."  But the reasonable sanctions that
should run with these conditions need not always reach to nonrenewal of license.  

     The conditions can be whatever Congress wishes.  But with five times as many TV
channels in Washington, D.C., there is no doubt that Digital TV can give easily give us a 24
hours a day quality children's channel free over the air.  

     And surely some digital capacity can be dedicated for free to political candidates to
help loosen the noose of fundraising demands and thus reform political campaigning.

     The FCC has been asked to hold a hearing on the proposal to permit networks to
donate modest amounts of time on today's analog TV for the presidential election this fall. 
The idea is terrific and the leadership of Rupert Murdoch, Walter Cronkite, Paul Taylor and
the Free TV for Straight Talk Coalition in this area is very welcome.

     But this is only a harbinger of what is happily doable with Digital TV's Mississippi-
wide bit stream. 

     Whether the digital TV licenses are auctioned for billions or are given to today's
broadcasters, either way they should have clear, enforceable conditions requiring free time
for political broadcast and plenty of educational TV.  But as of now, no one in Congress has
called for any public interest commitments by digital broadcasters.

     The Roosevelt and Wilson progressives of almost 100 years ago would have died for
a medium that could reform politics and educate children.  It's still to die for; but now we
have it; it is tragic not to use it.

     I am sure that there is somewhere in this country a single parent trying to make ends
meet, trying to fashion a future for her children, out looking for the 21st century equivalent
to that Milwaukee switchboard that was so crucial to the successes of my family.

     That parent would be the direct beneficiary of a progressive competition policy and a
progressive communications policy that gives better TV at home and better education for her
child in class.

      Government should be, as Lincoln reminded us, of the people and by the people and
for the people.  But it might be useful to think simply that Government should be just for one
person:  that single mother.  The progressive agenda for our government is a success if it
helps deliver the American Dream to that single parent, to all parents, to all children as the
glorious communications revolution unfolds.

                                   -FCC-