The Federal Perspective

NTIA and the Administration

Assistant Secretary Irving stressed the important role that state and local governments play in ensuring that every American has access to basic communications services, and stated that 1994 promises to be the year of universal service. He noted that during his tenure at NTIA the agency has worked with many state and local regulators--for example, through the National Association of Regulatory Utility Commissioners (NARUC) and the National Association of Telecommunications Officers and Advisors (NATOA). Mr. Irving expressed his pleasure that NARUC had recently passed a resolution commending the Administration's NII efforts.

The Assistant Secretary asserted that three of the goals presented in the Administration's Agenda for Action 1 regarding the NII appear to be particularly relevant to the planning conference:

promoting private sector investment through communications reform legislation;
extending the universal service concept to ensure that information resources are available to all at affordable prices; and
promoting technological innovation and new applications through NII grant programs.

Progress has been made in each of these areas.

For example, Mr. Irving emphasized the importance of holding the planning conference "dialogue" before developing a new Administration legislative package. 2 He also indicated that as Chair of the Administration's Information Infrastructure Task Force (IITF), he would consult with those on Capitol Hill and those "outside the Hill" in an attempt to develop the best possible bill for the President's signature. The NTIA official stated unequivocally that the federal government does not want to own, operate, or maintain any portion of the information highway, a role that is the proper province of the private sector.

The Assistant Secretary chairs the IITF working group created to focus on universal service. NTIA's Michele Farquhar had announced earlier in the week at NARUC's convention in New York that NTIA would hold four to six field hearings on universal service. The first would be held in New Mexico on December 16, 1993, jointly sponsored with that state's regulatory commission. 3 Mr. Irving said that the Administration hopes to stimulate demand for the NII through the NTIA matching-grants program. Congress appropriated $26 million for Fiscal Year (FY) 1994 for planning and constructing the telecommunications and information infrastructure. The program is designed to promote the deployment of advanced telecommunications technologies for delivering education, health care, library, and other social services. This is a "bottom-up" approach, so that every project that is funded by NTIA will be proposed at the state or local level, and grants will be made based on merit. The House of Representatives has authorized $100 million for FY 1995 and another $150 million for FY 1996. A special funding priority may be "telecommunications empowerment zones," whereby advanced technologies would be brought into small communities of 5,000 to 10,000 people to provide improved education, health care, and economic conditions. Input from local and state regulators will be "invaluable" to the success of this process.

Mr. Irving also said that the Administration seeks advice on shaping the legal and regulatory framework for the communications infrastructure. Competition is viewed as a "first resort" for helping to drive the deployment of advanced new services for businesses, entertainment, and other high-margin markets, but more is needed to ensure that every American will have access to advanced telecommunications technologies at a reasonable price. Like consumers of cable TV, consumers of telephone services need to be protected until effective competition occurs. A public-private partnership will be essential for making an advanced NII accessible to all citizens.

The FCC

Representing the Federal Communications Commission, Commissioner Andrew Barrett commended the opportunity for dialogue afforded by the planning conference. While endorsing the need for a regulatory model based on private sector initiatives and competition, he noted the importance of federal, state, and local policymakers working together. An interoperable, seamless NII must include both telephone companies and other providers. The FCC will continue to have a role in such areas as universal service funding, network reliability and interconnectivity, competitive safeguards, and consumer protection.

According to Mr. Barrett, three regulatory phases have occurred in telecommunications. The first, the building phase, permitted constructing monopoly telephone networks in return for providing universal service. The second phase stressed the emergence of competition. The third phase focused on enhancing the existing network. All three phases have aimed at universal service, reasonable pricing, and a reliable network. Fundamental changes have taken place, however, causing multiple networks to supplant traditional monopoly service. For example, today there is more than just a public-switched, landline network as cellular providers, cable TV systems, competitive access providers, and interexchange carriers offer alternative services. It is difficult to predict the role of federal regulation, but it will probably include less regulation of profits and costing/pricing. More emphasis will be placed on federal and state regulators providing economic incentives to ensure that all Americans can have an improved quality of life through access to advanced telecommunications technologies.

In response to a question from the audience, Commissioner Barrett explained that he thinks that competition will occur in residential areas, even those in rural locales or the inner cities, particularly if the proper economic incentives exist. Prompted by another question, Assistant Secretary Irving observed that providing broadband to the home is an Administration goal whose implementation will be dictated by competition and the users' needs. The Administration believes that federal, state, and local policymakers should be neutral about the deployment of specific technologies, such as fiber optics, satellites, and wireless systems.

Congress

Representative Jack Fields (R-TX), a cosponsor with Representative Edward Markey (D-MA) of major telecommunications reform legislation, 4 predicted that this "dynamic" sector will experience more technological development during the next seven years than it did during the previous ninety-three years. He believes that telecommunications will replace oil and gas as the future bedrock of the Texas economy, and that pipeline rights-of-way will be an important means to attract telecommunications firms to the state. A burgeoning application of satellite technology is the transmission of educational programming to Africa--"distance learning"--as a means of foreign aid.

According to Rep. Fields, the bill that was subsequently introduced as H.R. 3636 attempted to achieve a consensus among industry participants. The most significant result of the bill, if adopted, would be to provide some degree of certainty about the future, thereby spawning an explosion of investment, modernization, and jobs in the United States. During the question-and-answer period, Rep. Fields stressed the importance of preserving universal service, the urgency of advancing the "policy curve," and the attractiveness of telecommunications as an economic base. Rep. Fields and Commissioner Barrett pointed to the need for selected federal preemption of state jurisdiction, and Assistant Secretary Irving reminded the audience that the President is a former governor who will not ignore the needs of the states. Commissioner Barrett and Rep. Fields acknowledged the importance of the traditional "POTS" (plain old telephone service) definition of universal service and the need to ensure universal access to new technologies to rural and urban areas. All three speakers agreed that a dialogue between the various levels of government must be held regarding these issues.