March 29, 2001

Thank you, Mr. Chairman, for holding this FCC oversight hearing. I hope that it will be the first of many productive hearings on the FCC’s activities and accomplishments under its new leadership.

I want to extend a special welcome to my friend, Chairman Powell, and thank him for appearing today. I have every hope and expectation that he will impose a more disciplined approach to managing the Agency’s business. Specifically, one that will require judicious use of the Agency’s delegated authority, fair treatment of all industry players, and, above all, an abiding appreciation that the public interest is paramount.

The public interest standard is, of course, the guiding principle of all the Commission’s activities. It is at the heart of the FCC’s grant of authority, and carries with it broad powers to both regulate and forbear from regulation. The breadth of this power can be used to accomplish many worthy goals. But it can just as easily be abused. My hope is the new Chairman will avoid using this authority as a means to justify any particular agenda, but rather will establish clear standards and objective guidelines that govern the Commission’s use of this broad authority.

In his prepared testimony, the Chairman established a specific four-pronged agenda for the Commission that is right on the money. The FCC clearly needs a new vision that takes into account the rapid technological changes occurring within the industry. Convergence of technologies is more than just a cliche. It is real, it is here, and more than anything else, it is the key to breaking down traditional monopolies. The FCC can try with all its might to regulate its way to a competitive marketplace, but it won’t succeed until all companies have the proper incentives to use these new technologies to compete freely in each others’ markets.

The current regulatory approach is to treat companies based not on the service they provide, but on the technology they use to provide it. This historical approach to regulation causes a fundamental disparity among companies competing to provide the same service. Left unresolved, it will result in less effective competition, less innovation, less investment, and fewer choices for the American public.

The most obvious example of this regulatory disparity exists in the broadband market, but it is a growing problem for other services as well. It makes little sense for broadband services offered by a cable company to be regulated differently than broadband services offered by a telephone company, wireless provider, or any other communications company. The FCC must address this problem across the board, and the sooner the better.

The Chairman should also be commended for his commitment to improving management efficiency at the Agency. While none of these changes will happen overnight, I hope there will be a concerted effort to streamline the Section 271 application process. This area is particularly important in achieving a key Telecom Act objective sometime before the next millennium.

I would note that Bell company entry into long distance was designed to serve two distinct, but equally important goals. One was to encourage more facilities-based long distance competition. The other was to stimulate facilities-based competition in the local market. In my view, these goals are flip-sides of the same coin, and we have seen compelling evidence that they are inextricably linked.

One need only check AT&T’s website to see how Bell company long distance entry has the effect of stimulating local competition. It is more than mere coincidence that the only two places AT&T advertises the offering of local telephone service is in New York and Texas. These happen to be the first two states for which Bell company entry into AT&T’s market was permitted. I would also note that the rates for local service in these two states have dropped significantly.

The FCC process for approving these applications has been exceedingly slow, in part due to an over-reliance on State Commission and Department of Justice recommendations. The statute provides each of these parties with a consultative role, and they are entitled to it. But in many cases the state proceedings have been interminably long, lasting five years or more. It is intolerable that consumers should be held hostage to the slow-roll of the regulatory process, waiting years for the green light from government to get the benefits of greater choices and lower prices.

At the same time, Bell companies must be held accountable for their obligations to comply with the market-opening provisions contained in the Act. The FCC has enforcement tools at its disposal to ensure compliance, and these tools should be used in a fair and consistent manner to make sure anti-competitive conduct is prevented. I am pleased that Chairman Powell has committed to making enforcement of these and other FCC rules a top priority.

I’d like to thank Chairman Powell again for appearing and I look forward to hearing his testimony.