REMARKS OF REED E. HUNDT
               CHAIRMAN, FEDERAL COMMUNICATIONS COMMISSION
                                    
                               TELECOM 95
                            STRATEGIES SUMMIT
  "INSTITUTIONAL RESPONSIBILITIES:  OUT WITH THE OLD, IN WITH THE NEW"
                                    
                           GENEVA, SWITZERLAND
                             OCTOBER 5, 1995

        It is an honor to speak to you, and an honor to represent my country, at my first
World Telecom Forum.

           They tell me that there are 133,000 people in attendance at this  conference. 
Everybody who is anybody is here. And in addition there are some government
representatives.

           All government policy makers have a chance now to sing sweetly the new
song of competition in one worldwide chorus that will be very pleasing to the ears of
businesses and consumers.

           We should take this chance.  We should get on key and sing in harmony. 
That's what should be happening in the World Trade Organization (WTO) negotiations right
now.
 
           I am being somewhat confrontational here.

           But that's my background.

           Before I became chairman of the FCC in 1993, I was a trial lawyer for 20
years, specializing in communications and antitrust litigation.

           It was this experience, for example, that was behind my accurate prediction
of the verdict in the Simpson trial. The prosecution always had a weak case given the
absence of either an eyewitness or a murder weapon. Relying on a demonstrable racist as a
key witness was the last straw.

           There you have it.
 
           I didn't want to leave you without your daily dose of O.J.
  
           And it is always pleasurable to revert to my previous career--  particularly
because my experience as a trial lawyer has been in most respects of little or no pertinence to
the job of chairman of the FCC.

           On the other hand, I take comfort from the fact that  virtually none of us
involved in the communications revolution can rely on our background to give us guidance.
And those who do have extensive history in communications have the daunting task of
needing to forget most of what they have learned, needing to question most of what they
have tended to believe, needing to absorb information that never seemed relevant before.

           This is why the selection of brilliant businessmen with little or no
communications experience to the top posts at France Telecom and Deutsche Telekom is not
an oddity. It is instead proof of the profound change that is transforming the communications
sector worldwide.

           The change is this: communications markets are definitively not natural 
monopolies.  The delivery of communications services definitively need not be managed by
government in lieu of relying on markets.  Communications products are in fact in almost all
respects not different from any other consumer products.
 
           That means that governments should interfere with communications markets
only in order (1) to break up monopolies or collusive pricing, (2) or to  make sure that
essential communications services are available to all people. This is the same paradigm that
leads to success for governments  and economies when applied to food, clothing, housing,
transportation. It is the right paradigm for communications products.

           If we adopt the paradigm that communications products are just like every
other consumer product then we are, of course, rejecting the approach followed by virtually
every nation since Alexander Graham Bell invented the telephone.      

           Bell himself wouldn't mind at all. His own view was that his telephone was
an instrument for radical change. He never tried to build a monopoly with his phone; that
was the idea of  Theodore Vail and AT&T. 

           My own suggestion is that the nations of the world should declare Bell's
birthday next year, March 3, as a worldwide holiday commemorating the adoption of the
new paradigm for communications policy.
 
           Here are the elements of the new paradigm:

           -- No state-owned telephone companies.  Just as France, Germany or any
other nation wouldn't want to own a grocery store or a consumer electronics company,
there's no longer any reason why any nation should want to own a telephone or cable
company. And a failure to privatize inevitably will delay investment in competitive
infrastructures.

           -- Aggressive programs for breaking up existing monopolies such as by
establishing fair rights of interconnection and unlimited licensing or no licensing at all of new
entrants. If you want to license use of domestic  airwaves by means of auctions, the FCC is 
happy to share our experience.

           -- Creation of communications agencies that are independent of executive or
legislative branches and resemble judicial branches.  These agencies would write the fair
rules of competition, and adjudicate the various disputes of competitors. They might
resemble the FCC, although we ourselves are trying to become more effective, more
lawyerly, more efficient.  If you want to clone the FCC, you're more than welcome.
   
           --And certainly under the new paradigm there would be no rules limiting
foreign ownership.

           No country would bar foreign investment in soap or salsa or software or 
shoes.  Why should services of communication be different?  It should be obvious that
foreign investment in communications properties is a boon to a national economy, not a
threat.

           Incidentally, the initial proof of the benefits of foreign participation in
communications was Alexander Graham Bell himself. When he invented the telephone, he
was a Canadian citizen living in the U.S. 

           Any country that permits Americans to invest in its communications sector is
going to be welcome to invest in our country.  That's what Vice President Gore said in
Brussels in February of this year.  And that's also our negotiating offer in the WTO
negotiations.  And with or without a multilateral agreement, by early next year we will
change our rules or our law so as to permit foreign investment in our communications 
properties from every country that offers Americans an effective  opportunity to compete in
their country.

           -- Last, but not least, every country should be permitted to implement 
efficient, transparent means for delivering communications technology to all of it citizens and
residents. That means some subsidies should be provided for some users.  But these subsidies
should be fairly extracted from all taxpayers or at least all communications consumers.  And
all  communications firms should be permitted to compete for the right to use the subsidies to
deliver services.

           In fact what I have outlined is a crude version of a successful outcome to the
WTO basic services negotiations. Those negotiations should be completed by April.   I 
would personally prefer an early success, such as on March 3, because that is both Bell's
birthday and mine.

           How did you think I was selected for my job?

           A number of positive steps have been taken by companies and countries this
week. The UK's decision to join the US in publishing accounting rates is an admirable and
courageous step forward. And the European offer in the WTO negotiations was at last
received yesterday. We say better late than never.   And in this case, if the delay was
essential to developing the positive features of the offer, it was time well spent.   More time
will be necessary to improve this offer, but this is at last a good start. 

           We particularly appreciate the offer's embrace of the concept of independent
agencies as the rulewriters and adjudicators for the brave new world of competition. I'd like
these independent agencies to teach the FCC how to solve some of the knotty problems of
introducing  competition. But before they can inspire us, they have to be created.

           Similarly the EC offer should inspire Japan and Canada to improve their
offers. Other counties also should participate quickly and effectively in this multilateral
negotiation.

           The world business community is watching the slow pace of our telecoms
negotiations in the WTO with increasing exasperation. And they are anxious about the
upcoming World Radiocommunication Conference  negotiation.   At the WRC,  our
decisions on spectrum allocations can create an environment that will encourage operators
and investors to deploy these services.  Or we can hinder them by failing to obtain a
worldwide commitment to sensible spectrum allocation.  In this regard, I am personally
committed to the U.S. position regarding the spectrum  adjustment for mobile satellite
services at 2GHz.  This is an important  step toward a global information infrastructure.

           The reason the business community has communications policymakers in the
docket, on trial for competence or lack thereof, is that  businesses need  cheap, modern
communications to compete effectively. 

           Competition is the best way to give them the communications services that
are to the information age what oil and railroads were to the industrial age.

           The world's working men and women are also counting on us to deliver an
effective multilateral agreement. There is a great deal of consternation about the jobs that are
lost because of the communications revolution. 

           It is a fact that businesses terminate many middle managers when they rely
instead on computer networks to maintain the flow of information. It  is a fact that
communications firms need fewer employees to install and  maintain fiber instead of copper,
digital instead of analog switches,  wireless instead of wire networks.

           The downsizing caused by the communications revolution is inevitable and
inevitably painful.

           But the communications revolution will lead to huge new job growth. Take as
an example our PCS auctions. We sold  sixty megaherz of  spectrum for $8 billion earlier
this year. We will sell an additional thirty megaherz in December. The competition started
by this auction involved our long distance carriers, local telcos, cable industry,  and others.
It is a  single biggest example of convergence on the face of the globe.

           And that competition is driving more than $50 billion of investment in the
next five to eight years.  The investment will increase the American economy by about one
percent.  That means as many as one million new jobs will be created directly and indirectly
by this new technology.

           American working men and women rely on communications policy more than
they know to give them bright new employment opportunities. The same is  true for working
men and women all over the world.

           And the citizens and residents of each country as well depend on us to give
them choice and innovation and falling  prices for communications  services. I am not
asserting that the consumers of the United States or any country wake up in the morning
demanding a new telephone company.   Indeed, even 10 years after we created seven new
companies called the  Baby Bells,  40% of the consumers in the U.S., according to a recent 
poll, believe that AT&T is still their local telephone company.

           But I am asserting that the communications revolution has the potential to
revolutionize government, politics, health care, and education. And revolutions in these areas
are very much desired by Americans, and perhaps by citizens of all countries.

           Before I was a lawyer I had a respectable job. I was a schoolteacher.

           I taught 5 classes of 35 students each. All 12 year olds. In our school less
than one half would stay in school after their 14th birthday. And less than  one third of those
would get a high school degree. The odds that even one of my students would go to college
were prohibitive.

            In the information economy of America the gap between high income groups
and low income groups has never been higher than it is now. And  that gap correlates exactly
to education. A college graduate -- someone  with 16 years of education -- earns more than
twice as much as someone with 10 years of education.

           I tried to help my students bridge that gap in every way I could. But we had
only 30 books for 175 kids; and our technology was limited to one broken overhead
projector. The personal computer hadn't been invented --  remember Bill Gates was in 8th
grade at the time of this story.  But if it had been, there wouldn't have been any in my
school.


           Finally toward the end of the year I selected three students for special
tutoring on Saturdays. My plan was to have them pass a test that would get them out of their
deadend school and into a special magnet school for talented kids. If they passed that test,
they would have a future.

           We studied every Saturday for several months. Then the day of the test day
arrived.

           Have you ever seen the American movie Stand By Me? Or Stand and
Deliver?  Or Dangerous Minds? These are all part of a genre in which a teacher saves
several kids or, in the case of the beautiful Michelle Pfeiffer, almost an entire class.

           All these movies have the prerequisite for cinema success: a Happy End.

           No movie will ever be made about my students. Not one passed that test. 
 
           So I made a vow that year. Someday I would try to make up for my failure.
Someday I would do something that worked to give educational and  economic opportunity to
some children, in some school.

           The communications revolution has given me the chance to live up to that
promise.

           The communications revolution has given all of us that chance.

           The President of the United States went to California three weeks ago to
announce a plan that will put computers on networks in every classroom of every school in
California within five years. Soon we will be announcing a plan that extends this vision to
every school in the country.

           Networks -- the nervous system of modern communications technology -- 
will transform education hierarchies, inspire great achievements in learning, and bring
parents and teachers into a cyberspace cooperation that will extend the teaching day.
 
           Every country has its own style of teaching. But all rely on chalkboards and
books. And for the information age computer networks are as essential as chalkboard and
books for educating children.

           As each country invents its own and hopefully improved version of the  FCC
I hope you will consider that in our country we need to change the FCC. We need to make
sure that our independent agency supports a  revolution in delivering communications
services to children in  classrooms, to doctors and patients in clinics, to adults in libraries
and job retraining centers. Our chief goal must be to guarantee the  delivery of real services
to people, and to rely on competition to make sure those services are fairly priced. We need
to get out of the business  of auditing the books of monopolists in a vain effort to keep their
prices slightly below a monopoly level. And we need to focus instead on  breaking up the
monopolies and guaranteeing that competitors deliver their marvelous new inventions to the
young as well as the old, the  uneducated as well as the educated, the not rich as well as the
rich.

           This is how I intend to pay the debt I owe to those children in that school
that I failed to help 25 years ago. And this is how all of us can be proud of what we deliver
to today's children.

       - End -