November 16, 1994 FOR IMMEDIATE RELEASE Commissioner Chong Addresses CCPUC November 14, 1994 Washington D.C. FCC Commissioner Rachelle B. Chong addressed the annual meeting of the Conference of California Public Utility Counsel in Monterey, California. Her remarks are titled "The Information Superhighway: Life in the Fast Lane." Remarks of Commissioner Rachelle Chong to the Annual Meeting of the Conference of California Public Utility Counsel Monterey, California November 14, 1994 "The Information Superhighway: Life in the Fast Lane" Introduction It is a tremendous pleasure to be here before the CCPUC playing to a home crowd for a change. Many of you knew me in what I now call -- Washington style -- my "prior life" -- not to be confused with that new TV show, "My So-Called Life." What do I remember most about my prior life? That it was dominated by urgent advice letters and cell siting packets! Not surprisingly, I am having the time of my life as an FCC Commissioner. Don't get me wrong. I really loved my telecom practice here in California, but things are shakin' and bakin', rockin' and rollin' at the FCC and on Capitol Hill on telecom issues. Because so many of you are my friends and colleagues, I thought I would take a few minutes to talk about what it's like to be an FCC Commissioner and what I've been working on. Many of you have asked me what it's like to be a Commish? I've found the hardest thing to get used to are the dignitaries that address me as "Madame Commissioner." Others address letters to the "Honorable" Rachelle Chong. Heck, where I grew up in Stockton, being a "madame" meant something not quite so honorable! Others have asked me what I've been working on. Well, it's been one crash course after another. The thing that has struck me the most about our agenda is the tremendous variety of the issues before the Commission. I believe the root causes of this are the convergence of technologies, and the clear desire of most to sweep away any outdated rules and swiftly introduce competition in most markets. I used to be a regulatory lawyer specializing in the wireless communications area. Now, I feel like I am directing traffic on the multi-laned Information Superhighway. There's broadcasting in the left lane, with all of the very interesting First Amendment issues in the content regulation area. Deciding how to implement the Children's Television Act of 1990 was our focus in an en banc hearing in June. Here, we are balancing First Amendment rights versus the public interest obligation of broadcasters to serve all of its audience, including children. My favorite lobbyists to date have been Elmo from "Sesame Street" and Shari Lewis' Lambchop. If you've never been lobbied by hand puppets, I recommend it. Many broadcast issues are coming up next, including a look at the continuing need for the Prime Time Access Rule and the multiple ownership rules. Next year, we will address the many issues related to the introduction of high definition television. Another lane has been cable. Just last Thursday, the Commission released a long- awaited decision allowing cable operators the ability to increase rates in a limited manner if they add new programming to their regulated tiers of service. We also gave them the flexibility to create new optional packages of new programming that they can offer at market driven rates. In this so-called cable "going forward" proceeding, we were responding to complaints of the cable programmers and the operators that the programming market had effectively been frozen due to inadequate incentives in our prior rules to add new cable channels. Last week, we also released some of the first decisions on over six thousand cable rate complaints we have received to date, ordering consumer refunds in some cases and denying them in others. In the middle lane has been telephone regulation. This summer, the Commission authorized the first ever "video dialtone" system to be built in Dover Township, New Jersey by Bell Atlantic. Video dialtone refers to a new regulatory framework to permit local telephone companies to deliver to consumers video programming on a common carrier, nondiscriminatory basis. Last month, we affirmed and slightly modified our rules for video dialtone. We sought to ensure fair competition among video providers and protect telephone consumers from increases in basic telephone rates as a result of the telephone companies providing video dialtone. I urged us to act quickly in the video dialtone arena in order to increase competition in the video marketplace. This increased competition will foster lower prices, improve service quality, stimulate innovation, increase consumer choice among diverse programming sources, and provide another opportunity for programmers to reach the market. In another lane has been satellites. We are proud that some of the first Direct Broadcast Satellite services are up and operating now. These satellite companies are already providing vigorous competition to cable operators and are being well received by consumers. In the satellite area, we've also been working on Big and Little LEOs. The acronym "LEO" stands for low earth orbit satellite systems. In the fall, we licensed for domestic service the first "Little LEOs." They will provide global high speed data services in the future. Last month, we set forth rules to license the "Big LEOs." They are global satellite telephone systems which will be capable of delivering telephone service to the most remote village in Africa or Siberia. In the far right lane have been wireless communications services. Dominating our wireless agenda has been the licensing of a new industry called Personal Communications Services, or PCS. PCS is expected to provide small, wireless communications devices, like advanced pagers or pocket-sized mobile phones. Pursuant to our new authority from Congress granted last year, the FCC is conducting the very first auctions of the airwaves for the PCS licenses. So far, the Commission has held three very successful auctions for national and regional narrowband PCS licenses and Interactive Video and Data Services. The auctions have all gone very smoothly. We believe that the auctions put licenses in the hands of those who value them most and, as a result, will build the system most quickly and get service to the public. As a sidenote, over a billion dollars has been collected by the FCC in auction proceeds for the U.S. Treasury. The auction for the broadband PCS licenses begins December 5th. Many strategic alliances have been announced in the last weeks, which reveal interesting partnering between many companies from different sectors of the communications business. At congressional direction, we have established special provisions encouraging women and minority owned businesses, as well as small businesses, to bid on the PCS licenses. These provisions are designed to help encourage greater diversity in our licensees. So far, we have been successful in attracting greater diversity in our winning applicants. That's what I've been up to, in a nutshell. Information Superhighway Today, I'm going to talk to you about the National Information Infrastructure, or NII, popularly referred to as the Information Superhighway. I already talked about how the FCC is working actively on proceedings in five lanes of the Information Superhighway. Now, I'd like to take a more cosmic perspective. I'll talk about the importance of viewing the Info Superhighway in context, and why it's such a hot topic. Then I'll share my vision of the NII -- predictions of how this new technology will change people's lives for the better. Finally, I'll describe the concrete things the FCC and others are doing to help bring about these changes. What is the NII? In short, the idea behind the Information Superhighway is that we will create a network made up of local, regional and national information and telecommunication networks. Let me elaborate. When I and others talk about the Info Superhighway, we usually mean more than just an interconnected system of information paths. The Info Superhighway is a shorthand way of talking about what some have termed the concept of connectivity, the collective expectations we have for how technology can bring people from all over closer together. So, the NII concept goes beyond the physical cables and radio waves to embody the ideas and information we all will share on this network. By using the Info Superhighway, we will be able to exchange whatever information we want to send, whether it be an architectural drawing, a sound recording, a video program, or a text document. And we will be able to do it quickly and inexpensively across state borders and, yes, even between continents. It will make no difference whether you want to send the information to your colleague in the office down the hall, to a client in Anchorage, or to your uncle in Paris. Now, some say that all this discussion just generates unfounded expectations. Some people think of the Info Superhighway as "gee-whiz Buck Rogers 21st century" stuff, as gimmicks that won't really change people's everyday lives. I think those folks are wrong. I believe the NII is our future. I recognize, however, that we need to keep these ideas in perspective. There's a lot of work to be done before we will realize the potential of the Info Superhighway. Background People have been thinking about the issue of how information technology can enhance our lives for a long time. In fact, it has taken several generations for the technology and the infrastructure to get to the point where they are today. Admittedly, there are a lot of people who have "technophobia." In short, these technophobes have become overwhelmed by rapid changes in information technology. Why, even in the U.S., there was an independent survey done that found that 74% of people polled have difficulty programming their VCR. Another telephone survey by the Wirthlin Group found that about 16% of 2,000 adults polled admitted that they can't figure out how to stop the darned VCR clock from flashing twelve o'clock, twelve o'clock, twelve o'clock. I digress. The point I am making is that the changes we are experiencing are part of a long process by which new technologies are supplanted by even newer technologies. I am reminded of an early act of an august body, the U.S. Senate, to promote effective communication between American cities. 'Twas a noble goal, certainly, foreshadowing our current telecommunications systems. Now, in 1837, the Senate called for proposals to build a "visual telegraph," a system of tall towers, each within sight of the next. At the top of each tower, signalmen would hold up huge wooden signs to relay a message from one tower to the next, and so on to the final destination. Now picture this if you can, tall towers every mile or so, with some poor guy at the top signalling frantically at the next guy. What if it was foggy?! What if one guy fell off the tower?! Talk about network reliability problems! Thankfully, a few months later, in 1838, Samuel Morse demonstrated the first electric telegraph, ushering in a new era of telecommunications, and rendering the Senate's visionary, but not very practical, proposal obsolete. Technology has come a long way since then, especially in the last three decades. Today, three important developments in telecommunications technologies are driving a revolution in the way we will communicate in the future. A critical development has been the advent of fiber-optic technology. Fiber optics offer major advances in signal capacity and clarity over the traditional copper cable. You've all probably heard it before, but I'm still amazed by the fact that a fiber-optic strand the width of a human hair can carry 65,000 times more information than copper phone wires and can carry it at least 30 times faster. Further, major innovations in semiconductor technology have enabled dramatic advances in digitalization. Advances in computer technology now allow us to take just about any type of information, whether it be voice, text, still picture or video, and easily digitize it -- turn it into ones and zeros -- so that the information can be manipulated, stored and sent through a communication pipeline, with the version received almost indistinguishable from that transmitted. Because all digital information has the same characteristics regardless of form, a variety of communications systems, wired and wireless, can be used to convey any type of message. Further, the common digital nature of these messages means that different systems can be designed to interoperate smoothly. Information can thus easily flow from one pipeline to another, something not currently possible with analog-based networks. For example, a digital message could be sent via a cable TV network, through the telephone network, through a computer network or through a combination of the three. Finally, advances in mobile communications systems promise to connect individuals to the network no matter where they may be. Low-orbit satellite technology and ground- based mobile services such as PCS promise to provide low-cost, wireless telephone and data transmission service to both rural and urban areas throughout the world. These systems will literally link anyone anywhere to the Info Superhighway. Vision of the NII -- Welcome to a Wireless World These three revolutionary technological developments -- fiber optics, digital technology, and advances in mobile communications -- are coming together to bring about what some are calling the "information industry," a mixture of media concerns, telecommunication companies, and computer and equipment manufacturers. This industry will construct and operate the Info Superhighway. It will dramatically change the way we live and work -- the way we interact with each other and with the rest of the world. I'd like to share with you a little about how I envision the Info Superhighway. I see these converging industries producing new devices that combine existing and future technologies. Ours is increasingly a wireless world, although there will certainly still be a role for wired technologies. The wireless revolution can be seen in the phenomenal success of cellular telephones. In 1980, when cellular service was first introduced, AT&T estimated that there would be one million cellular phones in service by the year 2000. Well, it's only 1994, and CTIA industry projections indicate that there are currently over 21 million cellular phones in service. Moreover, companies are poised to invest billions of dollars into PCS, Personal Communications Services. I believe in the predictions that we will soon all carry a pocket-sized personal communicator. And I don't think this is something to fear -- after all, it will be equipped with an off switch for when you don't want to be disturbed. This personal communicator will be far more than a mobile telephone. It will be equipped with voicemail, Email, as well as the ability to send and receive data, such as fast breaking news or sports scores. It will even alert you in the event of a natural disaster or other emergency using our new high tech Emergency Alert System just approved by the Commission last Thursday. I further predict that the Information Superhighway will radically restructure how and where you will work because you will have what one futurist calls a "teleputer," a combination of a television and a networked personal computer. In the living room, this device will deliver entertainment, with interactive capability to deliver movies on demand and play interactive virtual reality games. In the study, it may have sophisticated messaging technology and a CD-ROM collection. The teleputer will provide you with research tools and an interactive encyclopedia with specialized connections to office and school databases and on-line services. Because of your personal communicator and your teleputer, the Info Superhighway will change our work habits, our commute patterns. It opens the way for telecommuting -- defined as the use of networked PCs, fax machines, and other communications technology to link workers in their homes or in special telecommuting centers to their colleagues and clients. Telecommuting will allow us to have more flexible work schedules. And it's good for Mother Earth because it reduces the pollution in our environment caused by automobiles. Finally, telecommuting will allow greater participation in the workplace by those who are constrained by family responsibilities or by disability. Distance Learning I'd also like to talk today about how the Information Superhighway promises dramatic changes in the way we educate our children. I believe that tele-education, or distance learning, is one of the most exciting applications of the NII. I wanted to discuss tele-education in some depth as an example of the power of the new infrastructure. The NII is already providing a powerful tool for improving the quality of education in our country. The new technologies have the potential to restructure the educational process to best challenge our children to learn in this more sophisticated, computer age world. No longer must the teacher be the sole conduit through which all information must flow to the students. Computers or teleputers can share this role with teachers now. Technology frees teachers up to offer students individual instruction. Computers let students learn at their own pace. The experience can be two way and interactive, with information being presented in new, creative ways utilizing video, sound, and interactive exercises. Students aren't limited to reading a dry chapter on whales, but instead can see moving color video images of whales swimming, hear actual whale song, and use an interactive program to electronically "dissect" a whale to study its anatomy. Imagine how these techniques will grab your child's attention and encourage learning. Another advantage is that through the Info Superhighway, students will be able to learn directly from the world's experts. For example, a recent Email project linked children in a Tennessee school to seventy scientists at universities throughout the country. The scientists answered the students' questions about science, giving the students valuable insight into what scientists do and how they solve problems. New information technologies are also allowing learning to occur outside school buildings. Through a satellite TV system, a project called the National Technological University is bringing professors from leading schools of engineering to corporations, small businesses and individuals. This allows professionals to keep abreast of the latest developments in their industry and continually update their skills. Similar techniques can be used to fight adult illiteracy, and to help people obtain high school diplomas. Educators and others seem to be reaching agreement that technology needs to be brought into our schools. The debate now seems to center around how best to bring the NII to schools and, the $64,000 question, who will pay for it. It's no easy question given the sheer cost of linking the schools, the many players and their respective jurisdictions, the required interoperability of such networks, the need to develop the hardware followed by good quality educational software, and the need to train teachers and technicians to use and maintain the equipment. At the Federal level, the FCC has its own tele-education task force that is working with the Department of Education and NTIA on these issues. In connection with bringing the Info Superhighway to this state's schools, the California Public Utilities Commission has launched an investigation into implementation of a grant program to connect the schools of California together. The State of California has a master plan for educational technology that calls for a statewide integrated telecommunications network for education. Private industry has really begun to tackle these issues head on. Pacific Bell has announced its commitment by 1996 to connect every school, library, and community college in its service area with ISDN lines for computer communications and videoconferencing. Other telephone and communication companies are following suit nationwide. In California schools, a public/private partnership has been formed including major California corporations to remedy the crucial shortage of computers in the state's schools. Its leaders have committed to making California the number one state in the nation in terms of the number of pupils per computer. California has the right idea. It is critical that there be a public-private partnership to realize the full potential of tele-education. I believe it is very important for all of us to work together -- this means local, state, and federal government, educational agencies, parent and teachers groups, and private industry. Only through a collaborative effort will such an ambitious goal be met. We have to remember that in the coming Information Age, the workplace will be primarily high-tech. We must prepare our children for the workplace in which they will participate. After all, as markets become global in the future, America's ability to compete in international markets will be determined by the technical competence of our children. We owe it to ourselves and to our children to ensure that they are able to meet the challenges of the next century. Getting There I'd now like to tell you a little about what we in Washington are doing to bring the Information Superhighway about. As a preface, I want to be clear that the U.S. Government does not intend that the NII be a keyword for a new government project to string actual cables or launch satellites, all funded by taxes or some other method. Rather, the government hopes to be a cheerleader and perhaps a referee as we shepherd the process along. The Administration has enunciated five principles which will guide the regulatory aspects of the National Information Infrastructure in the years to come. First, we should encourage private investment. We believe that private enterprise is the best organizational form to foster the kind of innovation and investment necessary to achieve a useful information infrastructure. But privatization is not enough. There must also be competition. That's the second principle. Competition promotes reasonable rates and increases efficiency and innovation. The third principle for the NII, especially important to the FCC, is to put in place flexible regulatory frameworks. These flexible frameworks allow regulators to keep pace with fast-moving technological innovations. The fourth point for building the NII is that we should provide open access network at nondiscriminatory prices for all information providers. Moreover, we should strive for access for all to have some level of basic service. Fifth, and finally, we should rethink issues relating to universal service in this new world of converging technologies. Although the sweeping re-write of the 1934 Communications Act didn't go through this year, Congressional leaders, both current and future, and the Administration indicate that they intend to try again next year and to introduce the bill very early in the session. They state that there is bipartisan support for such a bill. Meanwhile, efforts have moved forward on other fronts. Tax incentives have been passed by Congress to spur private-sector research and development. Grants by the National Technology and Information Agency and the Rural Electrification Administration of the Department of Agriculture have stimulated private investment in businesses which will accelerate the development of communications infrastructure and services. NTIA's grants will help jumpstart the NII. These grants will stimulate private investment for a number of projects designed to improve community access to communication services, including the Internet. There are also projects to provide better connection for educational institutions and to government. For instance in California, one grant will help fund an ambitious project by the San Francisco Public Library. In partnership with PacBell, various city agencies and the local cable channel, the program will link the general public to important city services via a dial- up computer connection and also provide extensive document storage and retrieval capabilities. Another project, called LatinoNet, seeks to empower traditionally disenfranchised populations by linking together non-profit agencies that serve diverse communities throughout the United States. These grants are also bringing tele-education technology to schools in South Central Los Angeles, and providing access to the Internet for disabled persons and language minorities. Another companion development to the NII is the more ambitious Global Information Infrastructure. The GII is the concept of an Information Superhighway on a global level. I wanted to just briefly mention some the international work that has gone on worldwide on this project. In Buenos Aires last March, the World Telecommunications Development Conference adopted the administration's five principles to guide the construction of the GII. Early next year, telecommunications ministers from the G-7 countries will meet to discuss GII issues. Also, members of the Asia Pacific Economic Cooperation (APEC) and of the Organization for Economic Cooperation and Development (OECD) will meet in Vancouver this winter to address global telecommunications issues. All these organizations recognize the vital importance of a solid foundation for a Global Information Infrastructure. Conclusion In closing, I wanted to quote Dr. Elizabeth Blackwell, who in 1849 was one of the first women to become a U.S. physician despite being refused admittance in several medical schools based on her gender. As pioneer in the education of women as physicians, Dr. Blackwell once commented, "It is not easy being a pioneer -- but oh, it is fascinating! I would not trade one moment; even the worst moment, for all the riches in the world." As you can see, we are all pioneers now as we seek the right policies to construct and manage the Information Superhighway of the future. Like Dr. Blackwell, we may not find it easy to be a pioneer, but oh, it will be fascinating. Thank you for your invitation to speak to you today. I would be happy to answer any questions you have with the remaining time left.