REMARKS BY COMMISSIONER JAMES H. QUELLO BEFORE THE FCBA-NEW YORK JUNE 16, 1994 Before discussing some of the major matters before the Commission, I just wanted you to know that you've given me a pretty daunting speech assignment. Why? because you've asked me to talk about "hot FCC topics" - but you've only given me fifteen minutes to do it in! Nowadays almost EVERY topic before the FCC seems to be a "hot" topic - either because the matters we deal with involve breakthrough new technology, or megaindustries and megabucks, or things and ideas that can profoundly affect our everyday lives - or all three. In fact, the only assignment that would be more difficult than compressing our current plate of hot issues into one fifteen-minute talk would be trying to find "cold" or even "tepid" issues to talk about. From cellular radio to satellite radio, from cable TV to HDTV, and from PCS to HS - Howard Stern - we at the FCC can say that we have truly fulfilled the ancient Chinese wish to "live in interesting times." It was not always so. In fact, I recently had occasion to compare the issues we're grappling with today with those that faced me twenty years ago as a new Commissioner. Back then, a typical Commission meeting might consist of a few tariff decisions, a numbing succession of cable television signal carriage waiver opinions, and a riveting ascertainment case or two. Every once in awhile, just to liven things up, we'd explore the mysteries of how the morning drive team's patter ought to be entered in a station's program logs. I'm exaggerating, of course - but not much. Yet even in those comparatively halcyon days the seeds of change were being sown. Among other things, the "open skies" policy for domestic satellites was taking hold, cable programming was about to graduate from microwave to satellite transmission, new mobile radio services at 900 MHz were making an appearance, and a little upstart named MCI was getting serious about taking on AT&T. Competitive alternatives to virtually every communications service began, quietly and not so quietly, to take their places in our lives. The Congress and the courts complemented - and sometimes prompted - the Commission's regulatory responses to these changes, and within a decade nothing, not the way we made phone calls or watched television or transmitted information, would ever be the same. Compare that June twenty years ago with today. Last week the Commission made its most important decision since the creation of cellular radio in establishing the final rules for PCS. PCS will usher in a whole new age of wireless, portable voice and data communications services and devices, some of which we know, some of which we can envision, and still more, I suspect, that we cannot. This new player in the telecommunications world should shortly grow into a multibillion-dollar industry, creating new jobs and transforming forever our ability to see and understand people, things, and ideas. Two weeks from today the Commission will complement its action in adopting PCS rules by adopting rules that will govern the auction of PCS spectrum. Writing these auction rules poses one of the most difficult problems we have faced in awhile: namely, how to implement the Congressional mandate to assure the participation of minorities, women and small businesses in a manner that will pass Constitutional muster. Although global megagiants like Time Warner and MCI and Motorola are frequent headline-grabbers, the telecommunications industry today is the legacy of gifted individuals who perceived opportunity and had the ability to pursue it. Enabling a new generation of individuals and small businesses to do the same thing guarantees that the public will continue to benefit from the innovation and technological development that these entrepreneurs infuse into the businesses they pursue. Currently we are evaluating ideas and arguments for doing this that run the gamut from bidding credits to set-asides to combinations and permutations of both. It is still too early to predict how this issue will be decided, and I am deliberately being very deliberate about making up my own mind. Simply put, I want to make sure, to the extent we can, that the rules we write achieve their intended result. The Commission will throw away its chance to promote equal opportunity and entrepreneurialism in the provision of wireless services if we write auction rules that would either be effective but unconstitutional, or constitutional but not effective. And if we do that, we will have wasted the resources of those who act in reliance on our decision. That is not an outcome that I intend to risk. As challenging as these PCS auction rules are, they are not the only challenges we now face. Over the course of the last year we have implemented the far-reaching 1992 Cable Act. In so doing, we have helped to bring the prices for monopoly cable services into line with what they would be if cable had multichannel competition. We have also attempted to help bring about that multichannel competition by adopting rules and decisions aimed at assuring that competitors to cable have access to attractive channels of cable programming. And, again at last week's Commission meeting, we took a series of actions designed to expedite the growth of wireless cable systems throughout the U.S. On the cable-telco front, We are in the process of working our way through the complex cost accounting issues presented in the petitions for reconsideration of our video dialtone proceeding, and we hope to have that before us for decision soon. Telcos providing video dialtone cable service will provide consumers with a multiplicity of broadband services and serve as forerunners of the expected integration of video, voice and data by wire. And, as one who has watched the vicissitudes of Direct Broadcast Satellite services over the last decade, I look forward with particular pleasure to the long-awaited launch of DBS service this summer. Does all this mean we've completed our job of implementing the Cable Act? Not by a long shot. Several tasks critical to assuring the continued vitality of the cable industry remain to be done. We must, in my judgment, go further than we have to address the legitimate concerns of small cable systems trying to cope with the intricate new web of federal regulations. And we must also assure that big and small systems alike retain the incentive to add new channels of cable programming to their systems. The touchstone of cable's promise, articulated by the Commission for the past twenty-five years, is cable's potential to present a broad array of specialized programming choices without the use of scarce broadcast spectrum. We would be turning our regulatory backs on two generations of public policy if our new rate regulation rules had the unintended result of restricting the development of new cable services or homogenizing those that already exist. In the weeks and months ahead the Commission will be fine-tuning its rules to assure that in lowering the prices consumers pay for cable we do not inadvertently deprive them of the program choices they might otherwise have had. Which leads me to a topic that is much on my mind and close to my heart: namely, how do we preserve the ability of free, over-the-air television to survive and grow in a multichannel world? This challenge is faced not only by television broadcasters confronted by cable television. It is also going to be faced by radio broadcasters who will be confronted by the coming generation of satellite radio broadcasting. Like cable television networks, which can reach a national audience via satellite, these new radio services will also be capable of offering programming nationally. The public policy issue the Commission must confront is resolving how inherently local, public-service oriented broadcasting can be maintained and strengthened in the face of this multiplicity of nonlocal program services. I do not believe in handicapping new technologies for the sake of preserving existing ones. Even if I did, Commission efforts in the 1960's and 1970's to "integrate" cable television into the system of over-the-air broadcasting demonstrate how impossible it ultimately is to keep technology-driven genies bottled up. Instead, we need to make sure that our regulatory philosophy is adapted to reality and change old rules that harm, rather than help, the public interest. Along these lines I believe we can learn a lesson from the recent and ongoing amalgamation of independent television stations into new network-like groups. In a day and age when most Americans receive television by cable and the average cable system has over fifty channels, the Commission must, in my judgment, reexamine the rules that limit the number of television stations that can be commonly owned nationally or in a given market. We must also be careful to assure that our actions intended to enable broadcasters to provide the new generation of high-definition television service do not unintentionally worsen their current competitive situation. In a similar vein, the proliferation in the number of radio stations, the resulting financial fragility of many of them, and the coming inroads of direct satellite radio broadcasting demand that we take a fresh look at national and local radio ownership limitations. While the unique concerns surrounding small markets and the abilities of new entrants to be able to participate in broadcasting must of course be carefully considered, I have never believed that rationalizing our ownership rules for the greater good of broadcasting as a whole renders this impossible. Chairman Reed Hundt has also expressed a strong interest in these issues. As in the case of PCS, I am grateful for his leadership in this area and I look forward to the opportunity of supporting his initiatives in the near future. This being New York, I suppose no discussion of either broadcasting or hot topics would be complete without at least a mention of Howard Stern. And a mention is about all you're going to get today! Seriously, I have said on several recent occasions that Infinity seems to have taken responsible, and generally fairly effective, steps to assure that Mr. Stern's broadcasts comport with federal laws against broadcasting indecent material. I'm pleased by that, and I'm also pleased that Mr. Stern will apparently soon have a new outlet for his cutting-edge material on the E! network. Reduced to its essentials, the running brouhaha between Mr. Stern and the FCC is no more and no less than Mr. Stern broadcasting what his talents dictate and the FCC in turn doing what the law dictates - and occasionally the twain must meet. So in this spirit I'll say "good luck" to you on cable, Howard - and good luck to E! network! In closing I need to make up for a glaring omission: I have failed to mention the information superhighway even once so far! Well, here it comes, but perhaps not in quite the form you might have expected. From my twenty-year perspective on the FCC I can name for you a number of watchwords by which former Chairmen have sought to define what they hoped to accomplish: deregulation, unregulation, what have you. These past watchwords shared one characteristic: they tended to look inward, that is, to define what the Commission hoped to do for (or to) the industries we regulate. The information superhighway, on the other hand, looks determinedly outward, attempting to describe a template for an entirely new entity that we hope by our actions to help bring about. I am proud to be a part of the Clinton Administration's effort and Chairman Hundt's team. I look forward to the insights the FCBA will continue to provide as we not only make the information superhighway a reality, but also as we strive to make sure that everyone - broadcasters, cable television operators, computer companies, telephone companies, and wireless communications providers - have a place on it. ###