In the Matter of: FEDERAL COMMUNICATIONS COMMISSION A NEW FCC FOR THE 21ST CENTURY Pages: 1 through 131 Place: Washington, D.C. Date: May 20, 1999 FEDERAL COMMUNICATIONS COMMISSION A NEW FCC FOR THE 21ST CENTURY The Portals 445 12th Street, S.W. Washington, D.C. Thursday, May 20, 1999 The parties met at 2:00 p.m. BEFORE: WILLIAM E. KENNARD Chairman APPEARANCES: Mr. Jonathan Askin Ms. Blackler Ms. Kathryn Brown Mr. Leonard J. Cali Mr. Alan F. Ciamporcero Mr. David L. Donovan Ms. Michele C. Farquhar Mr. Brian F. Fontes Mr. Jerald N. Fritz Mr. Bruce D. Jacobs Mr. Thomas M. Koutsky Ms. Patricia A. Mahoney Mr. Robert M. McDowell Mr. Roy M. Neel Ms. Melissa Newman Mr. Preston Padden Mr. Andrew R. Paul Mr. Michael V. Roberts Mr. Dale "Zeke" Robertson Mr. John N. Rose Mr. Jonathan B. Sallet Mr. Sargeant Mr. Grant E. Seiffert Mr. Alan R. Shark Ms. Lisa Sockett Mr. Thomas J. Tauke Mr. David S. Turetsky Mr. Brent Weingardt Mr. James Winston Mr. David W. Zesiger P R O C E E D I N G S CHAIRMAN KENNARD: Good afternoon, everybody, and thank you for coming. I look around the table. There are a lot of very familiar faces, and that's a good thing because assembled here are the people who appear a lot before the FCC and know all our strengths and weaknesses. And that's a good thing because we are here to do what I believe is one of the most important initiatives that I will preside over while I'm here, and that is designing and implementing a plan to restructure the FCC for the next century. And it's an effort that we are taking very, very seriously at the FCC and are devoting a lot of resources to because the cost of not doing something dramatic here is great, because we do need to remake this agency and reform it and make sure that it is relevant in protecting consumers into the next century. A difficult thing to do, because as you know, this agency is overwhelmed with work right now. We are still involved in a lot of the implementation of the '96 Act. We are dealing with a lot of mergers and transactions that arose out of that act. It's a very, very busy place, so we are challenged today to write the blueprint for how the FCC should look in the next century, and at the same time handle this tremendous work load that you know we have before us. I outlined this process when I testified earlier this year before the House Telecommunications Subcommittee, and I hope some of you have had a chance to look at that plan. But, basically, I outlined a process which we are engaging in today by kicking off the first of these three forums, but also a vision for what the FCC's core functions should be as we move into a more competitive deregulatory era. Now, I outlined what I think are going to be those core functions. And that is universal service, spectrum management, and consumer protection. Getting there, though, means that we've got to succeed in bringing competition to all aspects of the communications marketplace. That, I believe, is what Congress directed us to do in the 1996 Act, and Congress's vision is that we would write the rules to get that process going, implement a policy to promote competition, and then our mission would change dramatically as we move into more competitive markets. And it's my hope that you folks today will tell us what your vision is for the future FCC and how we get there. And I'm going to ask you to do something for me, which I think is really essential if this process is going to be successful. And that is, I hope that you will put aside some of the -- what I'll say the more parochial arguments that you have. That is, we know all the dockets that are before us. We know what's in your pleadings, and we could probably go around this room and pretty much tell for each person what the hot button issues are and what you ant us to do in universal service or access reform or must- carry. We know that. What we'd like you to do and what I urge you to do is to put that aside for the moment and tell us how the FCC could work better, what the FCC should look like in order to work better. And I'm almost going to ask that you be fairly candid in that assessment because there are some things that you might feel constrained to say in this group. But tell us whether you think how the process on the 8th floor could be improved. I certainly have my own frustrations which I can't really share with you, but I hope that you can share your views about that. The circulation process, what works? What doesn't work? Where are the bottlenecks? Where in the agency are we not communicating effectively, and how could we change that? And what we're really looking for is not just a laundry list of issues from each one of you, because that becomes cumbersome and difficult to deal with. But prioritize it for us. Give us your top three or five things that we could do to really remake the agency and make it better, both as a matter of policy and process. And I'm hoping that this process of the forums that we're going to have will kick off a really robust debate in the communications bar and the industry, and people will start to coalesce around some sort of fundamental truths that we all should be pursuing. So, with that, I will turn it over to our Chief of Staff, who will outline for us what we intend to achieve today. Thank you again for being here. MS. BROWN: Thank you. I'm Kathy Brown, Chief of Staff to Chairman Kennard. I also thank all of you for coming today for answering our notice to say, "Please come and help us in this process." And so, thank you really for your time. I realize your time is valuable. Just to sort of outline what we should do, we put forth a couple of questions which we hope could perhaps just structure the discussion. We have about two and a half hours. We don't need to take that long if we can say this all in an hour. That's fine, too. But we wanted to provide an opportunity actually for a conversation. My role, and I will try hard to stay with it here is to be neutral and to listen. So, if you see me wanting to respond, Pepper's job is to hold me back and just allow you really to talk and for us to listen, and try to listen actively to what it is you're saying. We hope for a very -- we want a working meeting, which is why you see flip charts. We'd like to actually take your comments, let you see what people are saying, see if folks are coalescing around a particular issue, if there's a particular direction we think we ought to go, and see if we can't get a sense of the community as to what the main issues are going forward. And so, we'll start with that vision thing. Where is the industry going to be in five years, in ten years? And then how does a regulatory agency and structure reflect the changes in the industry that we would anticipate? In the shorter term, what is it we need to get to that vision? And so, we'll talk a little bit about how. In the second part, we might do better in terms of implementing the current structure, how we might need to change that regulatory structure. And there, I mean much more process oriented. And in the third part of the discussion, we thought we would put on the table what are sort of the organizational structures that will help us get there. So, that's sort of the logic of the meeting. Where are we going? How can we get there? And then, what structure really will work to back up that sort of vision and mission? I thought to open we would all go around and introduce ourselves and perhaps say a word or two. And I would hope you would all keep this to a sentence or two about what your vision is of the industry, of an industry that's fast changing, of a structure that's fast changing, and then perhaps just a word or so about what you see happens with respect to the regulatory structure and agency. Before we do that, though, I thought it would be good for the group to just agree on some ground rules for the meeting. And so, why don't I suggest the first, and then if other folks would like to suggest some ground rules, I'd like to just get them up there and then see if we can agree to them. I would like first to suggest that we try to build on each other's ideas so that if someone hears an idea that they would like to jump in on, that we try to build on that idea and see where we go with it. One ground rule. Others? Let me just suggest that one person speak at a time, and third, that you don't throw anything at the moderator, and I guess I'm okay to start. Where shall we start? On the right or the left? Alan? Brian, where do you want to start? Go ahead, Alan. If you would introduce yourself, sort of who are you with or what part of the industry you represent, and then a word or two about your vision. MR. CIAMPORCERO: Hi. I'm Alan Ciamporcero with GTE. Kathy, just one ground rule. This always seems to work reasonably well in other places. Maybe if people want to talk, they put their thing up like that. MS. BROWN: That would work. If you want to talk after our introductions, and you just go like this, it's a way for me to recognize you. Thanks, Alan. MR. CIAMPORCERO: And just a sentence about where the industry is going, I guess my sense is that in terms of conversions, "We ain't see nothing yet." We've only seen the very, very tip of the iceberg. The fascinating thing I think in five years, we're literally all going to be in everybody else's business. And so, I think we need rules and structures that not only are fair, but that facilitate that, that cause the economy to be as dynamic as possible, kind of like the computer industry. We want to grow that fast, and we're all going to grow into each other's businesses. MR. ASKIN: Hi. I'm Jonathan Askin. I am the legal counsel for ALTS. And unfortunately, I'm a last minute substitute for my illustrious president, John Windhausen. I want to hammer home on two concepts that I want to borrow from constitutional history. Basically, like liberty, the price of competition is eternal vigilance. I think that the FCC has done a wonderful job, but the job is not done. It seems every time we take two steps forward, something comes along to bring us one step back. You're working hard on the rules at breakneck speed. You're doing a terrific job, but there's a lot more to be done. And even once you've finished the bulk of the rules, you will essentially have given us -- to borrow a second concept from constitutional history -- you will have given us rights without remedies. For that reason, I think it's very important -- I think you've made a wonderful first step by trying to establish an enforcement bureau. I think you should probably take that one step further and try to -- and appoint one of the Commissioners, perhaps the Chairman as an enforcement commissioner, the same way Commissioner Powell is the Defense Commissioner and the Y2K Commissioner. I think it's very important for us -- for the industry to know that someone on the 8th floor really cares about promoting competition and will effectuate the remedies to which you've already given us the rights. Thanks. MS. NEWMAN: I'm Melissa Newman, and I'm at U.S. West. And you know, the one thing I've always thought about this industry, at least on the telecommunications side, we all want to get to the same place, and the question is, how to get there? And my vision would be, except in very limited circumstances, which I think Chairman Kennard outlined, spectrum management, universal service, the best way to get there is to let market forces do what they do best. And in the very few instances where you need to come in, you will. But I would say, when in doubt, don't regulate and stay out. And in the few cases you need to, come in with limited, targeted measures to address those problems and then move on, and hopefully competition will take hold. MR. KOUTSKY: I'm Tom Koutsky with Kovak Communications Company, a not so start-up data CLEC. And I just have a couple perspectives. This is now the third person in a row that just recently left the Commission within the last two years. So, we might -- in this part of the table, you might hear some different grumbling. But to build on what Jonathan said, competition is really a process. It's not an end. It is not something that we can achieve, and it's not something when we're done achieving we should be content about having achieved it. The competitive process is going to be a whole series of intercarrier, fact-related issues. As we have more carriers today than we did before the Act, we're going to obviously have more intercarrier disputes. Those result in a kind of a fact-intensive, almost case by case type approach to trying to figure what is hard to describe other than what is the truth. As a result, I would suggest that the Commission think more of itself as an adjudicatory body. We all know the Commission is a political body at its heart and soul, but it was charged with by Congress with both executive, legislative and judicial resources or authority. I think that we have a lot of things that get done in rulemaking, which perhaps should be done in an adjudicatory fashion, and to think about possible ways of maybe revitalizing or utilizing a modified form of an ALJ process. For a lot of these fact-finding type disputes, I think it's something that should be explored. MR. SEIFFERT: Good afternoon. I'm Grant Seiffert, TI's Vice President of Government Relations. We represent over a thousand small and large manufacturers and vendors of telecommunications equipment. I'd like to say starting out, we endorse everything that our customers around the table support today. No, seriously, we don't fight the telecom wars, we just provide the bullets. And we care about competition. That's what is moving our industry into the convergence world of merging that telephone and the Internet together. Our companies are increasingly becoming more busy around the world. The global market is very important to us. Any way that the Commission can support our activities globally in helping to break down barriers to competition, supporting mutual recognition agreements overseas, so that we can test the things once instead of four times around the world certainly will improve and will reduce the cost to selling our products around the world. Delays, for example, in resolving proceedings, granting product approvals, processing waivers for trials and new technologies, and authorizing new wireless services to contribute to slowing down -- also contributing to slowing down the industry's ability to get those services to all Americans. The industry is just morphing at an incredible speed. I don't have to tell you that, and I commend you for this exercise. I think that a five-year plan may be a little too long the way the industry is moving. And if there's anything we can do to be helpful to move that pace, we certainly will be there to support you all in that effort. MR. SHARK: Good afternoon. I'm Alan Shark. I head the American Mobile Telecom Association and sister group, The International Mobile Telecom Association. So, I guess it's going to be real tough for Brian at the end of this, because I already see that we're converging on some of the thoughts even at this end being number 6. But, as I look at convergence, I look at competition. I have to echo what has been previously said, and that it is a great goal, but it's an ongoing process. What concerns me about competition is that we're seeing trends where there really is less competition as certain entities become larger. And our fear is really for some of the smaller players, the nonconsumer wireless part of this. And so, when we talk about the industry, I step back for a moment. I really question, do we really have an industry, or is the word really a way to describe a series of small industries, whether they're converging or not or coming together, but they really are different. They have different needs. And so, the real, I guess, question, is as things converge, can they coexist? And therefore, what is the regulatory environment that will help them? Number one. Number two, what then will ensure that you have a robust, I would say, small carrier or private carrier or specialized carrier that can exist, because right now they're having a very, very tough time, and that might be on the market side, but also, on the regulatory side, which I hope we'll get to later on, specific things in terms of regulatory reform. MR. TAUKE: I'm Tom Tauke with Bell Atlantic. We commend you for the seriousness with which you are approaching the issue of FCC reform. Five quick points. At the risk of repetition, convergence is real, point number one. Point number two, I think that the convergence is occurring at a very rapid pace. The technologies in the marketplace are moving quickly. Point number three, I believe that the most important thing that the FCC can do is keep its eye on empowering consumers. In order to empower consumers, you have to have open markets. But empowerment of consumers so they can make choices is critical. Four, if you have empowered consumers, then you have a marketplace that works. And a marketplace that works is one that does not need heavy regulation. So, three is empowering consumers. Four, the marketplace works. And five, under those circumstances, the FCC should be an organization that focuses on dispute resolution, enforcement of certain consumer protection requirements. MR. ROBERT: Thank you, Mr. Chairman. My name is Michael Roberts. I'm an owner of a variety of telecommunications properties. We own interest in or controlling interest in about nine television stations. I participated in the C & F block auctions for the PCS wireless. I own one of each. And I also am the affiliate for Sprint PCS for the entire State of Missouri, and I have the entire state except for St. Louis and Kansas City. We have opened up our first store in Jefferson City, Missouri. We have customers and we're doing business. Thank you very much. I think there are a number of issues that as an owner I can present to you that we need to take into consideration. One important one is that we need as owners a greater sense of urgency on the part of the FCC on our issues. It tends to be -- if we write you and ask for help, whether it's in a litigation issue for clarification or policy change, generally when you're in business you need a response because you're setting your budgets, making your plans, hiring your staff, and you're doing a number of things that if we wait too long, larger players can beat us out. And they can get there before we can. And we don't have a clear signal frequently from you as to which way we may need to go, left or right, up or down, or just quit. As we go through our issues, I think we need to make sure that we flush them out. And I think that by doing that, you'll be able to hear not only from the large companies, but hopefully our participation today will allow you to get a feel for what some of the smaller companies are concerned about. I'd be interested a little bit in looking to the views of foreign ownership of telephony opportunities as well as broadcast. I think that's one that's been bouncing around and looming in the minds of a number of us who are seeking financing. In areas that sometimes are not necessarily comfortable here in our country, there may be others who might be interested. I'm particularly interested in this forum looking at opportunities to diversify ownership. Stronger minority participation in ownership will be very key to me and a large part of this country, because as the United States begins to find itself becoming more integrated, the minority is soon to become the majority, and yet, in the ownership halls, we don't necessarily see that. A hundred years ago, had this table been here, it would have been a bunch of folks talking about the future of the industrial society. And this table would have represented the titans for the next hundred years. I think today we have the titans for the next hundred years, but we want to make sure that those titans are well integrated and well represented and reflect the United States. So, those are some of the primary points I'm interested in us exploring, and I want to thank you very much for hosting this. MR. TURETSKY: I'm David Turetsky from Telegen. Telegen is an integrated communications provider. We're building new facilities, base networks, broadband local networks. One crucial goal I think that we all share is competitive marketplace. And that is to try to find common ground between new companies and existing companies, consumers able to make choices. And I agree with Mr. Tauke that that is indeed the standard that we ought to focus on. And for one, we're building as fast as we possibly can. We've launched in 26 markets so far, and we're trying to get to give as many consumers choices as we can. In that regard, a couple of very quick points. One, as much as there's temptation to do so because so many have worked so hard for so long in making this transition successful, we should resist the temptation to declare the transition successful prematurely. There still is hard work to do to sweep away barriers and obstacles. Not all of them are posed by competitors. Some of them are posed from other sources to facilities-based networks. But seeing the job through in spite of whatever political pressure comes about is really crucial. And there is a temptation to declare a success and look past and try to get on with the next stage. And I suggest that it would be a mistake to succumb to that until markets really are competitive and consumers really do have choices. In that regard, we have to keep our eye all the time on why it is we regulate. And I think we regulate mostly because of monopoly or market power. And that means that as unpopular it may be and as easily it can be twisted, means those with no market power shouldn't be regulated in the same way as those with market power. At the same time, we have to recognize that competition is going to advance in a spotty way. And there are incumbents in certain areas who may be deserving of certain kinds of regulatory relief, but we shouldn't throw the baby out with the bath water. And finally, down the road I think, if we ever declare a point where we think we are through this transition, and as I say, we'll be through it in spotty ways. Some markets will be competitive. Others, there won't be choices. There'll be hard decisions then on what the right regulatory level remains. But I think we ought to not overdo the temptation to turn the FCC into a consumer protection agency. When we get to the point of competitive markets, I think that's when we also start to think about turning the consumer protection function over to the agencies that have traditionally done that. Otherwise, we may end up with a temptation to overregulate because we'll have a dedicated agency focused on a particular place. And if it's a competitive marketplace, we shouldn't anticipate that it'll have, you know, so many problems that it warrants a whole agency to deal with it. MR. NEEL: I'm Roy Neel. I represent the U.S. Telephone Association, which represents all the local carriers, large, mid-size and small. Building on what Tom Tauke said, we believe you should recognize convergence is on us today, and that you don't have five years to wait. Not suggesting that you intend to wait five years to implement anything, but that we don't have time to wait. All you have to do is look at AT&T's acquisitions to see that. At least the largest company in the U.S. believes that convergence is on us and is representing a competitive opportunity as well as a threat. We think it's time for the FCC to begin regulating services and not industry segments, because the current way of thinking of segmenting a converged industry into cable, wireless, common carrier and so on ignores that very convergence. And it seems to set up a situation where you appear to be enabling competitors instead of competition. Until you deal with that in a converged environment and look at services regardless of who the carrier is, whether they're an incumbent player or an incumbent carrier or a new carrier, you'll be ignoring the converged environment and the reality of that. Extremely important is the timeliness of decisions. You've been beaten on now for months, if not years on the delay of decisions. And I don't think we can say that enough. And I think all of us would support an effort to get decisions out in a timely way, whether it's on mergers or whatever. So that's absolutely critical. But most important is that you accept convergence is upon us now, and that you should begin reorganizing the Commission in a way that recognizes that and stop regulating industry segments and look at services instead. Thanks. MR. ROBERTSON: Good afternoon, Chairman, Kathy, Mr. Pepper. I appreciate the opportunity to be able to speak to you about the issues that you bring up and offer you some vision. I first want to congratulate you and the rest of the Commission on the approval of portions of the ITTA forbearance petitions that were issued. I'm anxious to read the order. Thanks for that consideration. As an engineer, I may look at this regulatory environment and where we're going maybe a little bit different than a lawyer or others. But I see communications as activities, and your agency is to regulate the provision of those communications or activities. But, historically, we have related a type of a communication with a particular technology. And seeing convergence in a different way, what I think in the future we will have is communications will be technology independent. In fact, the customer or the consumer may not even know what technology he or she is using even for video. And therefore, I think whether we want to accept or whether we want to move fast, slow, or how, I think we have to recognize that the activity that you're regulating and we are providing is rapidly moving to the time where the segmentation of regulation becomes irrelevant. The one thing that I would ask you to do in retooling or looking at your agency, Chairman, is to think of how to be faster, how to be quicker, how to yield decisions in a way that is more consistent with the evolution of the network and the evolution of the manner in which we provide communications. And if we can somehow get the agency to be able to move away from its current role of arbitration between competitive interests and leave that to the courts and other particular agencies that are built, and rules and regulations and laws are built for them, to be able to deal with that and concentrate more on the consumer. And when the consumer, even in consideration of forbearance, rates, tariffs, new services, I would ask you to apply one test. Apply a test that is company-independent and technology-independent. I represent SBC Communications. So if you're considering something of mine in way of application, after you've considered it, and you come to a conclusion, I would ask you to test if this was provided by another provider such as MCI or AT&T, would I see it the same way? Maybe not at first, but eventually when we have a convergence of technology and we get into the point where we are concentrating on the consumer and not the technology. That test should be -- your answer should be fairly simple. It should be the same regardless of who provides the service. Thank you very much for the opportunity to respond, and I look forward to the conversation. MR. SALLET: I'm Jonathan Sallet from MCI Worldcom. First of all, let me commend you, Mr. Chairman and the Commission for undertaking these for us. It's quite forward-looking for any entity, government or private to understand the changes coming and to try to take advantage of that change by looking forward on how it might change its own processes. So the fact that you have invited this kind of discussion is itself helpful reassurance that the Commission will be well suited to take on the challenges of the 21st Century. As we look forward at the changing roles of the Commission, we see it something like a phase change and sort of high school physics when the world is not all water and not all ice, but somewhere in between containing chunks of both. What we think we see right now is a period where there are large icebergs of market and monopoly power drifting through the growing sea of competition. And we think any attempt to think about regulation has to pay attention to the quite distinct difference between market dominance, on the one hand, and competition that is working in a vibrant way on the other. Let me just note three specifics. There are many others in which no doubt will emerge later on in the conversation. The first is the suggestion of the creation of an enforcement bureau, which is exactly right. It's exactly right, first of all, because it is necessary. There are critical enforcement issues that are arising under the current laws. Secondly, because it looks to the function that needs to be served and not just the nature of the entity or the nature of the delivery method that is in question in order to ensure that a function is carried out. And in this regard, may itself be a harbinger of other reforms that the Commission may wish to consider. And third, because it recognizes that we are traveling through space at technology time. Time that is very rapid. So that the institution of a rocket docket speaks specifically to the need to have quick, fast decisions. Second fact, for all the talk of reform which is very important, one ought not forget that there's a great deal of work to be done that is pending at the Commission right now. Remand proceedings, just from my perspective, remand proceedings following the Supreme Court litigation, the kinds of enforcement matters I've mentioned, the kinds of merger reviews that are now pending, and I note from having read the trade press, rumors that there may even be someday 271 applications filed. All of this suggests that whatever is done in terms of reforming the FCC, it's critically important that the strength of the FCC be preserved to be able to take on the quite considerable workload that it faces. And third, the question of merger reviews. The FCC has carved out a quite distinct role for itself. I've been on both sides of this, sometimes a proponent of getting a merger approved, sometimes actually even closing that merger, sometimes the other side. But it seems to me from both perspectives, though it is clear that the public interest test is best served by having the Commission review mergers to see where they, or under what conditions they would serve competition, at the same time to use the public interest to ensure that the danger of market power is not created by a new business combination. So all of this means, we think, that at the time we talk about structural reform or bureau reform or any other forms of restaffing, the critical components is that the FCC be effective and strong enough to take on what one might call the titanic challenges that are at hand. MS. BROWN: You have to see if you can do better than the iceberg analysis. MR. WEINGARDT: I'm going to talk about the star wars, which I haven't seen. My name is Brent Weingardt. I'm Vice President for Government Relations at PCI, Personal Communications Industry Association, and we represent several facets of the wireless industry. And I agree with Alan Shark that there's no one wireless industry, but in general, that industry is widely competitive. And it's only constrained by the laws of physics, which we're always trying to change and the innovation and creativity of the licensees and the manufacturers looking for new products. And just as an example, I asked some of the staff -- you know, I've got a list here, but I only have a minute. What are some of the products that we could mention? And you've heard most of them. The one that I locked in on was the paging industry, which you focus in as an old staid, prosaic industry, one-way numbers, whatever. You know they're going two-way. You know that they're sending services like stock market quotes, et cetera, but there's a call for doing things like having Coke machines, soda machines, being able to page back when they're out of Diet Coke back to the distributor. Something prosaic, not a consumer product, but these are the type of services that we haven't even thought of around this table. Someone is, and we're not even talking about the three G products. Let me just focus briefly, first of all, agreeing with what all 12 of the previous people have said, seconding it. But the idea of convergence. You have a convergence of candidate. You have a product out there that suffers from potential convergence. And that's LMDS and fixed wireless in general. You want them to be the poster child of convergence or bundling. They can offer cable-type products. They can offer Internet access. They can offer voice. They can offer data. They can offer point to point video. And guess what? They would be regulated like all of those things I just mentioned. The Commission said, "You tell us what you're offering, and we'll regulate you that way." And on top of that, if you are a common carrier, you're going to be regulated by the states. These are industries, notwithstanding Teligent and Winstar who are doing fine that have little or no market share, and yet they suffer from potential regulation five, six, seven different ways. And that's the convergence problem. It's not your fault. It's just the convergence is catching up with old categories. And I won't raise all the prosaic issues that we had, but when I look at them on page 2 of my sheet, what I think it is, they all come out to "Please enforce the mandates that you've already established, interconnection, et cetera." Got them all listed. Tower siting, et cetera. So, whoever said we need a cop to enforce the rules or something like that, that are already in place, I second that. MS. BROWN: Thank you. MR. MCDOWELL: I think we're almost at the halfway point. I'm Robert McDowell, Vice President, Assistant General Counsel of the Competitive Telecommunication Association. And I, too, Mr. Chairman, would like to commend the Commission on being so forward-looking at this point. As I understand it, the 21st century actually doesn't begin until the year 2001, so we're a year and a half out, and apparently there was not a Y0K crisis, because there was no Y0. I didn't know that until recently. But, in any case, I'm going to continue unfortunately to the detriment of my colleagues here down the table to continue to use and beat on two words that are being used a lot today. One is convergence. And as technologies and functionalities converge, we see the FCC, the internal bureaucracy of that converging. And then as we make the transition from a monopoly environment to a competitive environment, we see, obviously, the FCC's role diminishing over time as competition in the marketplace make those decisions that the Commission now makes as well. And in the interest of expediency, I will end my comments there. MS. FARQUHAR: I'm Michele Farquhar, counsel for Western Wireless Corporation, which is a relatively small but aggressive wireless carrier, very focused on finding ways to compete effectively with wire line carriers, especially in rural markets and in international countries with similar perspectives like Iceland, Ireland and Haiti. Western would like to offer three goals for the FCC for the future. First, that it should focus more on enforcement, consumer protection, and insuring competition, themes that have been seconded by many people here in the room, and maybe look more like the FTC or the SEC in the future. The second would be to ensure that the FCC becomes more and more efficient. And one way Western would like to see that be done is with the institution of time limits for virtually everything that the FCC does. Not necessarily that everything be done very speedily, because some things need to be done with more care and attention, but there should be a sense, even for large mergers with respect to how soon and how long it will take, whether it be one year or two months. And the third issue is to rethink how the FCC gets input from outside parties, especially with the numbers of parties that they need input from increasing and taking more time for all the FCC staff to have series of meetings and have less time to get their work done during the day as they're meeting with all of these groups. And maybe forums like the one today is a good suggestion, where you have carriers like Western that are based in not Washington, D.C., but Washington state. It's harder for them to effectively compete in this environment and would prefer settings where they can hear and rebut other sides on the various issues that are being presented. And so, therefore, we definitely appreciate the opportunity to be here today. MR. CALI: Len Cali from AT&T. Good afternoon. I think we all agree we're headed to competition in all market segments. We're not there yet. We're in a transition. Much work remains to be done. Clearly, the Commission can restructure and reorganize its work in ways that enhances its ability to deal with this transition. But I think the point I'd like to make is even more important than organization or structural change are really reform in regulatory philosophy. And with that, I'd leave you two points. Where competition does exist and is effective today, I believe the Commission really needs to embrace the deregulatory philosophy. It needs to trust the marketplace. Where it is still necessary, and it is for the Commission to regulate, the Commission should do so giving significant weight to the impact or effect of delay and uncertainty on investment. That's a critical issue increasingly as carriers try to enter markets and be competitive. The Commission faces many competing demands, but giving weight and resolving or addressing regulatory issues to the effects of delay and uncertainty is significant at this point in industry. And with that, I'll pass on. MR. FRITZ: Mr. Chairman, I'm Jerry Fritz with Alburton Communications today representing the National Association of Broadcasters. Kathy, Bob, thanks very much for holding this session. We at the NAB applaud your efforts to keep pace with this change. Having spent some significant part of the last 25 years in and out of the FCC, I've a real passion for doing precisely what you're doing to restructure the Commission to keep face with that change. You have some terrific people that work here, but making the institution of the FCC, from an institutional history perspective, the best that it can be, is a real challenge, and we applaud that. Our vision of the communications marketplace is derivative of your vision that you articulated last month in Las Vegas that the communication marketplace of the future will be marked by a combination of wired and wireless interactive media. That means a plethora of content will be available, substantially diminishing the premise for regulation of content. That's a key premise to our vision of what you should be doing in the future. What activities should the Commission do? As content regulation becomes unnecessary, ownership restrictions become less important, as do other structural industry rules. Spectrum management, however, and interference protections remain your core requirements. Your vision, universal service, consumer protection and spectrum management are a succinct articulation of what the last nine chairmen that I know, this is not a political partisan issue. It's a succinct articulation of their essential vision. I note that that vision -- that being said, that there's a significant derivative point. That regulation is only a surrogate for competition. When that competition is realized, is fulfilled, the Commission needs to back away from the artifacts of regulation, including content and ownership. I'll leave with this point because I have some significant structural suggestions to make in the next panel about how I think we can get there. But true recognition of competition and a mere nod of the head acknowledgement to that competition are two very different things. What we hear candidly is all of the right words. Competition's here. Competition's coming. We need to back away. We don't see the evidence of it to the extent that we think the market justifies it. MR. PAUL: I'm Andy Paul, and I'm the Senior Vice President of the Satellite Broadcasting and Communications Association. And Mr. Chairman and Kathy and Bob, we're very pleased that you're holding this session because we come here with an entirely different perspective I think than perhaps a lot of the other companies or industries around this table. Satellite television is a relatively new participant in the video marketplace. While the C-band satellite television industry has been around since 1980, DBS didn't really start until June of 1994. So, it's barely five years old. So, I think from our perspective, we're just now beginning or we're still fighting to achieve our position in the video marketplace, which you know is a very, very competitive field. So, as a result, one of the first things that we had to do was try to find a way that the satellite television industry was going to get full delegate representation in the FCC. We worked very hard in '93 and '94 with the reinventing of the FCC program. And we were very pleased when in October '94, the Commission formed for the first time the international bureau, which had a very specific assignment, among others, of folding in the satellite television industry, which up to that time had literally been represented in two or three other bureaus in a stratified way. So, number one, we are very appreciative of that, and the people in the bureau are very fine people. We've worked with them very closely on a number of satellite television issues that have come to the fore since this industry and been growing. But remember, we still haven't gotten to that level where we are fully -- a full player in the video marketplace, if you will. So, I will leave you with three points that sort of reflect our perspective. Number one is we needed an advocate in the Commission very badly at the full bureau level. We've gotten that in the form of the international bureau, and we really would not like to see that changed because I think we've gotten very -- they are very good people. And I think finally they -- this is a complex industry to learn, and they've done a very good job of learning how it runs. Secondly, we still believe that the bureau and the Commissioner need it because there are competitive balances that have to be achieved in the video marketplace which aren't there yet. And there are going to be little tweaks and little fine tunes every once in a while that are going to be necessary to maintain that. I think right now there's a feeling or a perception out there that if you subject satellite television to exactly the same rules as cable television, which is the giant video distributor in the marketplace, that you're going to achieve some kind of parity. But, I think the Commission realized when they did the public service obligations for DBS that the satellite television industry is very different structurally than the cable television industry. And it's been -- the Commission's been able to take account of the differences in that structure that has enabled you to fine-tune many of these little things that needed to be done. And third, is something that Tom said in the very beginning, which was his last point, which is in the end, all of our goals is to make sure that consumers have choice. And they will have choice and they'll have diversity if competition flourishes in the marketplace. And after all, that's what our business is, attracting consumers and trying to keep them. So as long as that's the final goal of the Commission, then I think you're doing a good job and doing what you're supposed to be doing. Thank you. MR. ROSE: Good afternoon. I'm John Rose. I'm with OPASTCO, President of OPASTCO. And we represent about 500 small local exchange carriers. I would like to commend the Commission on this effort. The key to this effort is not so much what we come out of this room today, but implementing specific goals. And I think five years is much too long. I think if we're going to get on with restructuring the FCC, you ought to set a goal of more like two years. And this is particularly important for small companies, because we believe that small companies need less regulation. As a previous speaker said, we need quicker response on our issues at the FCC. We need some time limits so we can get things through and make investment decisions. And we also need things looked at in a holistic way. That sometimes decisions are made in one part of the bureau or FCC that really affect us in another part. And I think the idea of enforcement is good as long as it's looked at that people have legitimate differences and businesses, and they have legitimate arguments. And it ought to be more or less an arbitration type thing or some dispute resolution rather than an enforcement bureau. An enforcement bureau said, "You got a good guy and a bad guy." And there are many legitimate business disagreements particularly in this future. And the last thing is that the marketplace -- one thing you can predict is that we're going to -- the marketplace is going to evolve differently than we all think around this table. And I think one of the challenges of the FCC is to be set up in such a way that it doesn't regulate more because the marketplace evolves differently than we thought in the first place. Thank you very much. MR. ZESIGER: Mr. Chairman and Kathy and Bob, thank you again. I like the commendation everyone has given you. This is a signal effort, and I wish you all well. We'll continue to work with you throughout this process. I'm David Zesiger. I represent the ITTA, mid- sized local exchange carriers that are incumbents. I just had a couple of points to some of the things that we've heard up to this point. I won't keep you too long. Obviously, the central theme here is convergence. We could have stated that before coming in here, but we can elaborate that theme. And I think from a mid-sized company perspective, we can note that the realities of convergence do not alleviate the need for differentiated regulation for different sized companies. Size still counts, and that cuts across every industry. And I think you've heard echoes of that through some of the other comments so far. You know that to be the case, of course, in all that you do. Effectively, a one size fits all approach is just going to be too burdensome on some part of those that you regulate and will stifle competition that otherwise you might have been able to realize and ultimately benefits to the consumers. One other point. Effectively, there has been throughout the incredibly busy and a process over the last three and a half years of implementing the Act. There's been little focus on the cost of regulation, something that I think smaller entities are probably a little more sensitive to given that regulatory costs are primarily fixed costs. Our hope is that we move -- as the Commission moves more and more into the -- past the market opening phase of the implementation process into kind of the policeman's role or the enforcement role or however you might describe that, that you would keep a special eye on regulatory costs. They do impose costs even though they affect benefits as well. And also, the bottom line, which will be increasingly true, which is that in a competitive market, regulatory costs could ultimately become outcome determinative. And that's not something that anybody wants either. Thank you. MS. MAHONEY: Thank you, Mr. Chairman, Kathy, Bob. My name is Pat Mahoney. I'm the assistant general counsel at Arridium, L.L.C. And I 'm here today because I'm also chair of the Satellite Industry Association, SIA. SIA represents the unified voice of companies -- U.S. companies engaged in all aspects of the satellite industry, including manufacturing, launch, service provision and equipment. We see two primary influences. One, which I think everybody has mentioned, convergence. And the other one, which hasn't really been discussed too much is globalization of communications. We see these as the two primary influences on the FCC in the future. With respect to what FCC regulations should be, I would like to share with you what the TABD, Telecom Services Group has -- U.S. and Europe have agreed to in the mid-year report, which was just adopted last week. And I'm the comanager for the Telecom Services Group in the U.S. And that is that because of convergence, regulations should be the minimum necessary to ensure full competition, ensure access to essential facilities and allocate scarce resources. SIA also sees the FCC, a very important function should be to provide leadership, expertise, resources and support to foster technological development and promote competition. And most importantly, we must work with other countries. We cannot allocate spectrum in a vacuum. We should work with other countries to create global spectrum policy. For that reason, and because it was one of the issues that really gave impetus to the formation of the Satellite Industry Association in 1995, SIA strongly supports, as does SBCA, the retention of the international bureau. We look at everything that the international bureau has done and the way it was formed in bringing people from five different bureaus to work on satellites all in one bureau. We look upon the international bureau as being a key factor in the success of the WTO negotiations and the TABD activities, the adoption of the GMPCS MOU, two world policy forums, regional seminars where the FCC has brought in regulators from all over the world who have discussions and share U.S. goals of competition and regulation and in successful works that have happened since. And we'd like you to consider maybe that the creation of the international bureau in 1994 was really the first step of a process that you are continuing now in organizing the Commission by function. Thank you. MR. JACOBS: Hi. I'm Bruce Jacobs with Voice on the Net Coalition, a new trade association that includes among its members, 3-Com and SYSCO, Intel, Microsoft and some companies providing service. The focus of the coalition has been on educating policymakers about the use of the Internet and Internet technology to provide enhanced services related to voice. And the Internet has been such a great engine of growth and of consumer benefits over the last few years. It's been building -- the members of the coalition and others have been building these enhanced services for businesses and consumers. They add to competition and, particularly in the international arena, help to make communications cheaper for consumers. The Commission's role during that time has been really to show some restraint and appreciation of the innovation that is being offered by expanding on the Internet to provide these new services. And our perspective on the Commission's five-year plan is probably somewhat unique because the members of the coalition aren't regulated. And so, we're not looking to make the regulation more efficient, so much as try to maintain that status and maintain the spirit with which the Commission has appreciated the innovation that's been going on and recognize that it doesn't need to get involved in every case. We support the vision of the FCC's core functions as outlined in the March 17 report. All of these functions are important ones and should be at the core of the Commission's future efforts. And the restructuring that you've described is certainly consistent with the coalition's goals. We appreciate the opportunity to share our views with you and we're happy to participate. MR. WINSTON: My name is Jim Winston. I'm the Executive Director of NABOB, the National Association of Black Owned Broadcasters. We're a trade association representing the interest of African Americans who own radio stations and television stations and cable television systems across the country. Mr. Chairman, we certainly want to thank you, Kathy, Bob, for inviting me to speak. And it's interesting because as I sat here, I was thinking that NABOB's mission and NABOB's message is a little different from most of the other messages here at the table. And I thought about how that fits into the overall objective of this discussion, which is to determine how the FCC can restructure itself to better serve the American people. And we're looking for, from this group, a vision of that. And it occurs to me that when you begin with the group we're sitting among, we're looking for a vision from a group that doesn't really reflect America in its racial and gender composition. We have two African American, three women, by my count. And so, we're looking at a body that does not reflect America to look for a vision for America. So it seems to me that when I was here at the FCC from '78 to '80, the FCC established its minority-ownership policy to promote ownership, telecommunications facilities by minorities. And in recent years, that policy has been dismantled by the courts and Congress. It seems that we can't get to where we need to be if that's going to be the starting point. So, that when we look at the FCC, it seems to me, where it needs to be, it needs to be reaching back to where it was some time ago. And a large part of that may be beyond the Commission's control, but the future of the FCC must involve shaping the telecommunications revolution so that all American can participate. And convergence and all the other things that we're talking about today are not available to everyone. And so, I think what has to be on the table in the FCC's discussions is how it's still is able to serve all Americans. I hope that will be part of the discussion today. Thank you. MR. PADDEN: I'm Preston Padden with the Walt Disney Company. And just listening to everybody's remarks reminded me of two things. First, just the very existence of this Commission is certainly providing gainful employment in the private sector for a lot of really fine people. And I think your goal should be to be put as many of us out of work as you possibly can as you figure out how to restructure the agency. I mean, we're all out there converging like mad, and the agency is unfortunately stuck with a balkanized statute, which is really not one statute, but a bunch of individual statutes that grew up based on marketplace developments, most of which a long time ago, and then it got all glued together. And as a result, the agency reflects that balkanization. And as we converge and as both from the consumer end of pipelines and from the input supplier end pipelines that look otherwise perfectly identical fall into different pieces of this balkanized statute and agency and end up getting treated differently. I think you've got a very, very tough job ahead of you to try and sort all that out. And of course, the convergence that we're all doing is going to proceed at a pace that there's no government agency that can possibly keep up with. So about the only advice that I've got for you is to do everything you can to defer to market forces. Along the way, try to be on guard to instances where old regulations are inappropriately being kept around on industry sectors that are no longer dominant or no longer have the characteristics that gave rise to those regulations in the first place. And at the same time, be on guard for the emergence of new gatekeepers as all of this convergence unfolds -- gatekeepers that have the potential to impede consumer access to competitive services. MR. DONOVAN: Mr. Chairman, Kathy, Dr. Pepper, I'm happy to hear that Preston comments that we will all have extra free time since we're unemployed to go to Disneyland. But, in the interim for those of us who will still be slogging around Washington, D.C., I'd like to thank you all. My name is David Donovan. I'm with the Association of Local Television Stations. And if I could just divide the comments essentially into two areas. First, is probably a more substantive approach, and the second one is some procedural issues. As I look around and we took about convergence, and I see all my common carrier brethren in which for the last several years, certainly since I was at the Commission, one of the key issues has been universal service. And it's sort of strange for broadcasters to start talking about universal service. But we've had a universal service in the mass media side, certainly in the video side, for the last half century, and it's free over your broadcast television, or it provides people both urban and rural, rich and poor, with access to basic information. As we move forward with the information economy, access to that information will become even more important. We believe that free over-the-air broadcast television serves a more critical role going forward then it has even in the past. As we talk about convergence, as video information becomes more and more a pay-as-you-go product, this government is going to be faced with a conundrum. If you don't have a free basic service like free broadcast television, you either, one, let it become a pay service, which disenfranchises those who do not subscribe. Or, two, you try to work out some form of transfer of payment. The first really is inconsistent with a participatory democracy. The second is fraught with political pitfalls. And I think that the problems that this government for years with concepts of universal service and what it is and how you pay for it, is evidence of that. Free over-the-air television broadcasting solves that problem. And I think, therefore, as you go forward, the regulatory focus certainly on the video side should be to foster the continued development of growth of a free off- the-air transmission system. That sort of gets lost in the milieu. It gets lost in the concepts of convergence as big players move. But the solution to a lot of the problems in the 21st century and for 21st century democracy will, in fact, be the preservation and the continued viability of that system. Now, how does one go forward to preserve that? It seems to us that you have to understand you have a different economic different structure that is based essentially on a single revenue stream of advertising. That means as you go forward, you have to look at rules that impede our ability to compete against the pay services, because whether we like it or not, everybody in this room is going to be in everyone's business. Everyone will be taking eyeballs away from me, and I'll be taking customers away from other people. But the bottom line is that you need to deregulate in those areas that will permit us to harness efficiencies to move forward. I can talk specifically about -- you know, specific rules and regulations later if we want to go into that. But in the ownership area in particular, I think that's something the Commission needs to look at. The second is, and I think the Commission has done a great job of this, is to try to speed the convergence to digital television. And the final thing is, and it just echoes what Jerry has said. As you move forward and convergence takes hold, the idea of specific content regulation on one sector of this converged thing really becomes not only less and less important, but not truly sustainable. If you don't do it -- if local television cannot protect its local markets and cannot compete in this environment, I really think the government, five, ten years out is really in for some serious trouble as to what do you do with the information flow in this country. Now, how does the Commission restructure itself to achieve that end? There have been a lot of discussions in terms of speeding up, you know, mergers and transfers and things of that nature, but I think the first thing that the Commission needs to do is, and hopefully, eventually, this will happen, is to get rid of the sunshine rule, so all of you can talk. If you can talk, it may speed things up, because otherwise you have to deal with former people like me, which were your staff assistants which requires at least two or three conversations before you can actually do anything. That is critical. The second thing is is that when you design your bureaus, however you design it -- I mean, if we're all converged, maybe there's just one bureau, the Convergence Bureau. But understand that as you design your bureaus, you are cutting across competitive lines. Certain bureaus, because they regulate a certain industry may have -- be more knowledgeable about it, but their decisions are going to impact other industries. Decisions by the cable bureau truly impact the broadcast industry. And sometimes I feel there's not a tremendous coordination that goes on here, not just -- I mean, it was there when I was at the Commission. I guess the final thing is and it also deals with enforcement. And that is, I remember when the policy division would come out with a decision, and then the enforcement division was making decisions. For some reason, some of the policy -- the subtleties of the policy never got over to the enforcement division. So if you were setting up an entire enforcement bureau, it is critically important that there is constant communications with the policy end of the division, because the lawyers and the business planners are looking at the policy division as to what's going to happen next. And I guess with that, I'll just end my comments, and thank you very much for inviting us. MR. FONTES: Thank you, Mr. Chairman, Kathy and Bob. I appreciate this opportunity to come together this afternoon and see so many of my former colleagues when I was at the Commission. It's always great as a former professor to hear one of my former students talk about universal service, and particularly, coming from a broadcaster. So, go figure. I have the great opportunity to come at the end here and try to figure out what I could provide that's unique and different. And probably, I'm not going to provide anything unique and different because this has been an issue that's been discussed for many decades and how to reform and structure the FCC. I think, however, it's important that you have convened these meetings to discuss this Commission, this time, these industries as we move forward. I'm sorry. I forget to tell everybody who I am. I'm Brian Fontes. I'm with the Cellular Telecommunication Industry Association. I apologize. The FCC, you have a difficult task before you now, and you have a more difficult task than any previous FCC. Likewise, those who follow you will have even more difficult tasks. In listening to the commenters around the table today, I certainly agree that competition is the goal. In the wireless industry, we believe that we are competitive. And this is something that's relatively new by FCC standards, going back, some would argue, to 1983, and others would argue with the licensing of PCS. And just as we are learning how to become competitors, and it is a learning process, the Commission must also learn how to deal with a competitive environment. And so I believe that competition really is the hallmark of the Telecom Act of 1996. It is, I think, the mission of this Commission and commissions that will follow, just as it has been the mission in some of the previous commissions. I think that an important element to that whole competitive process is a different viewpoint in the role of regulators. What is it? What is the job of a regulator in a competitive market? And I think the difficult task is trying to formulate rules that provide the output without going into details that would require that all competitors in a market perform exactly the same way to achieve the output that the Commission wishes to achieve. I think also, too, in a competitive environment, and I compliment you for bringing up the issue of enforcement. And I think that enforcement is particularly important in competitive environments when you do have market failures. And there are other circumstances where enforcement will also play. But, the difficult task of any agency in a competitive environment is to determine what constitutes a market failure and when to step in to remedy that market failure, either through regulation or through enforcement. So it's a difficult task that you have before you. I would just like to say there are a couple of other folks that would have been interesting to have around the table. Would have been interesting to have some folks from the financial community, and you probably will be talking to these individuals, and also, some folks from the states. The state PUCs. And I know that you have been talking to these individuals almost since day one of your chairmanship, because I think there is an important partnering, believe it or not, with these groups of individuals. And it goes back to the issues that are raised by many others at the table, that you must make your decisions in a timely fashion, because so much depends in the development of a competitive market. And that competitive market depends on the availability of capital to invest in those services, those technologies, et cetera, that will bring competition and benefit to consumers. So it's important to hear from these individuals how your regulatory process affects their decision and how many is allocated. Also, because of the Telecom Act of 1996, the role of the state regulator in the process is increasingly important. And as much as you are working hard today and in the future to reform or restructure the FCC to address the competing converging industries, much of the work at this level may be for naught if there is not a parallel set of activities at the state level to address these similar concerns at the state level. So, hopefully, there will be greater discussions on how best to create reform across the board at all regulatory levels. So, I would hope that as we go through this discussion and perhaps we will talk more specifically about the Commission, I believe wholeheartedly in the mission of this agency. You perform vitally important functions with respect to spectrum management, licensing, international concerns, participation and some of the substantive work that goes into international telecom treaties and so forth. And so, there are very important functions this agency performs. And it is important to recognize this agency has to make those necessary changes to address the competitive environment in some industries that exist today and in others that will exist tomorrow. Thank you. MS. BROWN: Thank you, Brian. I know the Chairman needs to leave at this particular time. Thank you, Bill. CHAIRMAN KENNARD: Thank you. MS. BROWN: As you were all talking, I sort of was trying to make a picture of the themes that are emerging to see if we couldn't start to form a conversation around some of these things and see if we can go into a little depth. According to our schedule, you should have had a break at this point, and then we would come back with a second session. So we have a choice to make. We can go on and talk about some of the things that have been raised for a little while, or we can break and come back. Do I get a sense of the room? Should we go on? Go on. Good. My sense of what I was hearing and you can push back, but let me try and get at least a picture of what you've been saying and maybe then a way to start talking about this, is that there are some pretty powerful forces right now that are pushing change. And I'll adopt something I heard. The two great forces seem to be this notion of convergence, and technology convergence, and this notion of globalization. That those two huge forces are changing the entire way we're thinking about that industry, if there was an industry, or many parts of this industry and what's happening in terms of a transition. And then this notion of globalization, which makes us sort of be aware that we are indeed not an island, but are operating with industries and countries and forces that are worldwide. Sort of the notions around what's happening in sort of the regulatory world, let me try this as a couple of themes that I heard. One, this whole notion of competition and deregulation -- that, in fact, we're moving, and everyone, I think, there's almost consensus that we want to move to a robust competitive market, and that the regulatory response should be to get out of the way, to deregulate. But what I heard was a number of approaches to that. And that is, should one declare that there is now competition in any particular section of the market or in the market, whatever the market is, and how do we define that? Or do we, as someone said, need a phased approach to deregulation? And the very specific questions that at least, or as in my mind are, how would we know? When do we know that there's competition in a market, in a particular market segment? Is there some benchmarking we ought to be doing? If so, what does that look like? Is there some record or reporting kinds of things that we should be doing to actually know when we should get out of the way? How do we know other than just declaring that there is competition? The other sort of theme that I heard was this notion of the gatekeeping role, the regulator, actually making rules, as opposed to, or in addition to, enforcing those rules. And the questions that arise for me there as I listened to you is, all right, if there are rules that we no longer should have, what are those? But what are the core rules that need to continue to ensure that we continue to have an open and competitive market? So, very specifically, what would be the core rules that need to continue? And then on the enforcement side, I heard a little bit of a debate, or I would make it a debate on should enforcement be like litigation? Should it be an adjudication? That is, an ALJ with facts presented and a factfinder making a determination. Or/and, should it be a dispute resolution kind of things where the industry perhaps is brought in to resolve and work out specific issues or maybe global issues on enforcement or on going forward? And I heard some of that. Someone said it should be more dispute resolution like. Then I heard an interesting -- another theme. This notion of customer protection, and I'll oppose it to or maybe and customer empowerment, and the way I was thinking about that is, does the government protect you, or do you protect yourself? And then, how does that happen in an information age? Does the government or the regulator have a role in giving consumers information so that they become empowered? Are there certain things that consumers nevertheless need government to do because they would not be able to resolve that dispute themselves with carriers, et cetera? And what is that about? And then the last theme I heard was really only stated in sort of shorthand, but it is one that I would put on the table. And that is this universal service theme. This notion that we have a ubiquitous system of telecommunication services and broadcast services in this country that really seems to go to our core. And what do we do about that? And I will slash overlay with this notion of opportunity for all. How does everyone in this country, both get served and also be part of this revolution where they get to be the one serving? How do I get to have my stake and be an entrepreneur in this incredible revolution? And how do we make sure that everybody comes along? Now, those were the kind of themes that I heard come out of a lot of things people were saying. This whole notion of convergence as a huge overlay, and I think globalization is the same way, brings up questions around, is there a statutory issue that we need to talk about, or is it a regulatory issue we need to talk about? Are things that need to change in the jurisdiction of the Commission to do certain things given the convergence of technologies? Likewise, with the globalization of our enter enterprise, are there things that we have jurisdiction already to do that we're not doing? Or that are doing and we shouldn't be doing? Or is there something more we should say to Congress, "Look, we think this is the way the industry is going, but we really don't have the authority to do what it is we think that needs to be done." And I think those are huge, big broad things. So, where to start? I think if we start with convergence, that we'll get off on a sort of historical, sociological, economic argument. But let's assume for a moment convergence, and maybe let's look a little at this competition deregulation issue. And I want to just throw out these questions. Well, what rules should stay? What rules should go? When do we know that there's competition? Should there be some sort of test? Should we be looking at data? How do we get that data? Is there a benchmarking approach we should take? And oh, by the way, then what do we do when see it? So, let me just start there. Go ahead. MR. NEEL: To the issue of what's competition, and benchmarking is a scary thought to us because the '96 Act, in particular, rejects the concept of marketplace penetration or any kind of metric test and so on. I mean, you set the rules and the states set the rules to determine a process for disputes between competitors. And if you trust your rules and if you trust the states in the arbitration of those rules, then it seems to me that that's what represents a marketplace that is open for competition. One of the criticisms we've always had is that it seems that you tend to be more concerned about enabling competitors, as opposed to competition. But once the rules have been set, it seems like that should be a benchmark. And it's very dangerous to start thinking, "Well, if AT&T's not in that business, then there's no competition," which has been suggested in the past by some. So, it's a very dangerous thing and a real concern of ours because it takes you down a track that at least an incumbent could never get out of. MS. BROWN: Somebody else? MR. ASKIN: I'd actually like to respond to that for a second. I want to get back to the concept of rights without remedies being no rights at all. And the competitors at this point still don't have the resources to compete in every state against, you know, an entrenched monopolist. And it seems like the only forum most of the competitors at least on the common carrier side have is the FCC. We've got a lot of folks that are trying to deploy innovative services on a national scale, and for them to have to run around arbitrating disputes all over the country is just uneconomical and too difficult particularly when the monopolist has been entrenched in those states and has, you know, basically a lot stronger authority over state commissions. MS. BROWN: But you're not necessarily disagreeing with Roy that there are rules that ought to be enforced, and that's going to be the test of whether there's competitive opportunity? MR. ASKIN: I agree that the rules exist and again, the rules -- there has to be a way of effectuating those rights. And I think the FCC should be the mechanism by which those rules are enforced. MS. BROWN: Alan? Alan, has this cool thing, you know, so do that, because it helps me find you. MR. CIAMPORCERO: Yeah, I wanted to say I'd be -- it's always better to have more data and for a long time, the LEC industry has been asking the Commission to collect more data about CLEC's. But actually I don't think -- that's not what I want to recommend because I feel like that could go off into its own world of collecting and analyzing data like Armis reports who -- you know, somebody reads Armis reports, but I don't think any of you guys do very often. What I -- I think you actually have in the Commission the expertise, I think you understand the data a whole lot better than maybe you all know. And part of the problem is it's scattered around. And I think it -- the separation of the bureaus is a real villain here. I'm not expecting you to mush the bureaus together into one big bureau. I know people will still have separate jobs, but there's got to be some kind of office, and I think something you can do fairly quickly. Maybe it's what Pepper does or could do. Somebody to make sure that each of these -- your product, which are these decisions, that they take into account things that are going on in the other bureaus, and they take it into account specifically and explicitly. I think that's absolutely critical. The other thing that would -- this is just a personal point that I think would also help, and you do very quickly, is change the way that the Commission writes decision. Whoever invented this -- all these numbered paragraphs -- maybe it was Henry Geller. I don't know. But whoever invented it, it's time to get rid of it and write these decisions as a court of appeals would write them in a coherent way in English that people could understand. I know there are administrative law issues, but you can put that in an appendix. Let's start doing that right away making sure somebody reviews all the decisions of the bureaus for consistency before they get to the 8th floor, and making sure somebody writes the things in a way that people can read and understand in less than four hours times for each decision. MS. BROWN: David? MR. TURETSKY: I think it's critical that the Commission monitor what's going on in terms of competition and whether people have choices. I don't see how you can look at a marketplace and understand where there's market power and when there's a need to regulate unless you do that. Roy, I think, was talking about a very focused point when he talked about what Congress intended. I think he was talking about one issue that he didn't identify, which was long distance entry. He thinks, I think, that Congress didn't want you to do market tests there. And let me put that side because Congress never told you not to look at putting long distance entry aside. For decisions about deregulation and how much regulation where you've got flexibility, Congress never told you to ignore market power, market share or any of those things. If regulation really is about how many choices there are, whether people have choices, or whether there's some kind of market power that because of whatever reasons is sustained and can be used in a way that's anticompetitive or bad for consumers. You've got to look at that kind of information. You may not use it for every purpose equally. So I'm trying to sidestep the debate that Roy's talking about. But you have to have that, and you have to analyze that in order to make intelligent decisions. I can't think of a worse regulator than one that doesn't know the marketplace that it is dealing with and to what extent choice is there. And I don't think that's the FCC today, incidentally. I think the FCC does understand that. But it's important that it continue to develop the tools to do that so it can see when deregulation is the right course. MS. BROWN: Jonathan? MR. SALLET: Yeah. I also want to -- I understood your question not to be asking us our view of statutory interpretation. MS. BROWN: Yeah, I didn't mean to do that. MR. SALLET: So I'm not going to refer to the statute, nor am I going to suggest I'm confined by whatever a statute might mean in answering your question. It seems to me in looking at whether there are competitive markets, there are a number of facts to look at. What percentage of a market is addressable by more than one competitor? Not which is won, because it shouldn't be a question of whether somebody actually gets a customer, but to turn it the other way. Do a large percentage of the customers in a marketplace have a choice? That's one indicia of competition. Another indicia, which seems to me important is our people in the marketplace engaged in the kind of profit- pursuing behavior that one would expect in a competitive market? Let me give you an example. People who own facilities -- for all the talk about convergence, people who own facilities have two obvious means of making money off those facilities: retailing and wholesaling. Now, it doesn't mean that everybody will pursue an open-platform model. In the computer industry, we saw quite a divergence in strategies between one computer company who decided to maintain a closed system, as it were, and another that pursued at the time a more open model. But it does seem to me that if one sees across an industry, not just in terms of a single company, a desire to not take the profits that are available from wholesaling one's facility, then that indicates that other competitors in the sector don't have much access to essential facilities necessary to reach goals. It's only one indicia, but it seems to me it's a particularly important one. We have seen, for example, in the long distance industry companies simultaneously acting as retailer and wholesaler. This is an issue that seems to me that ought to be looked at just as one of the factors in any market to see whether or not markets are competitive. As to your question about what kind of rules should survive? I think the word you used -- the adjective was the core rules that ought to exist even when a market is competitive. I would suggest that one -- all one can do is to note three broad categories is because they ought to change. But they, all three, I assert, will exist. There should always be a set of rules ready to address or addressing, continuing vestiges of market power, either to guard against its formation, say, through merger review, or to look at manners in which while a market is still -- is competitive in many parts, nonetheless, still reliant on certain facilities for the delivery of services for their market power rules. Secondly, in any market, consumer protection rules, particularly those that go to information are appropriate. And third, the purchase of social goods is just one rubric for the term universal service and whatever policymakers wish to decide is appropriate for universal service. The purchase of social goods will, by definition, not be efficiently performed by even a competitive marketplace. So, it seems to me these are the three broad categories that one should pursue, although I note that you could probably go into some disagreement around the table about what particular rules should be enforced in each category. MS. BROWN: Jerry, I'm going to go to you for the broadcast side on this. MR. FRITZ: Let me answer it by talking about the implications on the Commission in both its structure and its activities, because I think that's what this is all about. Why are you changing this agency you want to react to the changed circumstances? It's going to differ, as you say, from industry to industry. It is set by statute in certain cases. For example, in broadcasting, you have to review the ownership rules every two years. What is it you're looking at? Basically, it's four essential criteria across all industries. Number one, the number of players. Number two, the number of choices. Number three, the market power, whether it's the LEC's, the broadcast networks, or as Preston Padden said, the gatekeepers, the resulting gatekeepers. And number four, access to offerings, whether it's how many people have digital television sets, what the Internet penetration is, but access to the offerings of communications. You have to look at those four criteria in relation to the numbers when the rules were adopted. And that's the job of the policy divisions of the bureaus, however they are reconfigured, and I have some thoughts on how you can reconfigure those. But it gets it analyzed. Once it's analyzed, you have to do something with it if it's changed. And that I think is the frustration of many people in all the industries that you have the information but you're not doing anything with it. The implications on your structure and activities are critical because it fundamentally results in a sliding scale of waivers. You can come up with a general waiver. You can own one or two broadcast stations in a market. There is going to be a necessity for a waiver because things change over time. I know Roy Stewart doesn't like waivers, but essentially, that's what you're going to end up unless you adopt wholesale duopoly, for example, you're going to have a set of waiver criteria. That's harder for you because it requires more manpower. It requires on a case by case analysis, unless their presumptive waivers are automatic waivers or things like that. But to analyze competition, because it's not -- one day it's a monopoly, the next day it's competition. It's a sliding scale. So, you're going to have to adopt a regime of granting waivers, information that's analyzed by the policy division, and then a criteria of waivers so that you can move along toward a deregulatory environment. MS. BROWN: Thank you, Jerry. Michael, do you want to add? MR. ROBERTS: I have to jump between my wireless hat and my broadcast hat. My broadcast hat is on at the moment. When I first went on the air with my very first television station in 1989, we had permission as a result of the FCC to be carried by all cable companies. Shortly thereafter, the courts took it away. And what we noticed around the country, a number of independent stations like mine, small stations, were, in fact, taken off of the local cable operators. And it wasn't until the must-carry provisions came back that we were able to get past the gatekeepers again and come back on. Actually I have to qualify that. My station was not taken off due to some relationships we had with the local people. But many were. And we lobbied hard to protect the must-carry provisions during that year with Mr. Donovan and also NAB, and of course, Jim Winston, to make that happen. Now, let's look down the road a moment. We have DVD coming or DTV coming along. And our spectrum may be more than one signal. We may have several opportunities there. And the question becomes now as we plan in the future if we have six signals, if you will, or two, more than one, will we have must-carry protection? How should we plan our companies today as they come on the air through a digital system five years from now? Should we be aggressive and assume that we're going to be carried over cable, or should we not? MS. BROWN: What kind of things do you need from a regulatory agency or not need from a regulatory agency to start to make those business kind of decisions? MR. ROBERTS: We need clarification that all of our DTV signals will be carried through a must-carry provision. MS. BROWN: So you want a rule? MR. ROBERTS: Yes. MS. BROWN: Okay. MR. ROBERTS: Thank you. MS. BROWN: Tom? MR. TAUKE: Well, I -- if we can change hats, I'm trying to think of this not as a Bell Atlantic guy, but I'm thinking of it in terms of the way I tried to think about it when we focused, and when I was in public life looked at railroads and trucking and natural gas pipelines and a variety of other industries. And what kind of common rules can you look toward? I think the first question you asked -- I'm going to address three areas. The first was, how do you know when markets are open? And I think it's tough to say that there is a clear standard in knowing when markets are open, but the first and most important test is, can somebody else do business in the market? Can somebody else get in? And I think that when you are looking at market entry, you have to be able to say that somebody else can get in. Now the question that then faces the regulatory agency is, did you try to establish the path by which somebody gets in, or do you simply try to ensure that individuals have the -- or entities have the ability to enter that market? And that gives you a direction as to what kind of regulation you are going to impose, whether you are more trying to resolve disputes, or whether you are going to try to have proactive, if you will, definitional regulation of this is the way it has to occur? But I think market entry is the big key to knowing when markets are open. The second thing that I think you need to look at when you are looking at regulation is, are customers empowered? And when I say customer empowerment, I'm not talking about, do they have enough information to make the right choice, although that is important. What I'm talking about, are customers empowered to make choices? Or, put another way, is somebody using their position in the market to deny customers choice? So, putting it in our industry for a moment, am I as a -- the guy has the wire to the home, am I prohibiting customers from choosing different long distance carriers? Am I, as the person who has the pipeline prohibiting people from getting their gasoline for their filling station from various sellers of gasoline? Am I trying to control what goes in and what comes out at either end? And I'd suggest in our industry, and there are different rules for different industries, but in our industry, ensuring that we have standard interfaces so any CPE can plug in, and ensuring that anybody can put their content in on the other end in simplistic terms is essential to ensuring that I'm not leveraging control of one segment of the market in order to eliminate customer choice in another segment. So I think those two things are essential for open markets. The third point I wanted to make is relating to regulation. And that is, there are different kinds of regulations. We talk about deregulation, open markets, deregulation. But I think that is far too simplistic. I know of no industry, frankly, that is deregulated completely in the country. There is always some form of regulation. But, first, it seems to me, you have to have a bias against economic regulation. And that is, that you shouldn't be trying to control prices. You certainly shouldn't be getting into the internal mechanisms anymore of companies about how you establish your accounting systems. Get rid of a lot of that stuff, the internal stuff. And you should, instead, be looking at outcomes, the outcomes. So get rid of the economic regulation. And I think that if you focus instead on ensuring that the regulation is designed to make certain that markets are open in the two ways I described, that then you will have the right kind of regulation, and then there'll probably be some consumer protection things besides, which we'll get into. MS. BROWN: Thank you, Tom. John? MR. ROSE: The gentleman two down from me mentioned four criteria: number of players, number of choices, market power and access to offerings. I would like to add a fifth choice to that. And that would be the size of the player in the market or the size of the company. And the reason for that, if a small company has the same level and same cost of regulation as the large player does, then that translates in increasing costs to the consumer. And I'd like to add to that the size of the player should have some sort of streamline regulation or less regulation. MS. BROWN: Zeke? MR. ROBERTSON: Thank you, Kathy. My assumption is that virtually everyone around this table here is searching for a way to how to move from where we are to something closer to a competitive market in virtually every area allowing everyone the same opportunity or as close to the same opportunity as possible. And that's what I want to talk about as an idea. You asked the question of how do you deregulate? I would suggest to you in all cases, you don't have to deregulate to have a competitive market. If everyone plays by the rules, notwithstanding the gentleman here from OPASTCO, I'm not suggesting that a large company and a small company all across the world may be in exactly the same position, but certainly in a given market area where similarly situated companies of equal size and capability are offering a similar service, that's where I think you at the FCC have an opportunity to not have one set of rules for one particular company, and another set of rules for another particular provider. I know you're restrained by Title II and Title VI of the Communications Act. And all I'm suggesting is that as a goal, as an objective in this process in your retooling, you try to use a series of thinking to get in areas, in situations, by service, by geographic area as close to parity. When no regulation is necessary for either one of them, then let all of it go, but you don't have to go all the way to deregulation. But make the rules the same such that the consumer has an opportunity to have more than one capable provider by service, by geographic territory or whatever. The tools, I believe, you already have, Kathy. It includes 706, Section 706 of the Act. I think you have the ability to use Section 10, forbearance. I think you have the ability of your binding of review, which is technically a part of Section 10. So my suggestion to you is, and we have talked about this, you and I before. One of the things that you can do that doesn't necessarily require any legislative control or whatever, I'm saying if we concentrate on finding the areas where the rules can be leveled, let the market work. That's the best way to get "a competitive market". Then, deregulation will be easier. MS. BROWN: Mike? MR. CALI: I thought I'd make two points. The first brings us back to the issue of certainty. The Commission has a long history in dealing with assessing market power. The indicia for doing so include market share movements of market share over time. They also include alternatives and a wide variety of issues. The Commission has addressed this in the past, and they know how to address it going forward. The important thing for the marketplace is to ensure all participants know what the rules are. No one carrier is going to receive flexibility. Is it going to be based on a set of rules even absent competitive entry or absent market share shifts? Or is it going to be after there's some demonstration that market share has eroded? Secondly, this concept of parity in a converting environment, and there may be restrictions on what you can do and what you can't do. I think again you go back to the fundamental point is less, to whether cable companies and wireless companies and wireline companies are being regulated the same and by the same bureau, as to whether each is being regulated least consistent with its market position and market power in the public interest. And that can be done. The Commission can move forward in that way, but again, it needs that standard or rule by which it will assess. Does this company have market power? Do I still need to regulate? If I do, what are the right regulations? Is there actual demonstrated need for regulation? MS. BROWN: Let me try -- I know. Let me try to ask yet another question to see if we can broaden this, and let's go to this notion of rules. And we talked a little bit about -- I used the word core rules. But, what are the rules that have to remain? And Tom's point that almost every industry has rules of the road. And so, what does that look like? But then let's juxtapose that with this enforcement notion and talk a little bit about, well, do you make policy an enforcement, or are you enforcing rules that are clear and understood and best made in a rulemaking, and thus, you're enforcing them? Or is there something else that happens in your enforcement process? And then I'd like a little discussion on this notion of, should it be adjudicatory? Should we look at this ALJ process again, and/or should we think of what -- and you have to remember, I'm from New York. Don't cringe. But a collaborative -- a more collaborative kind of approach, where the industry really sits down and tries to work out some things in perhaps a less informal manner to try and get to resolution. And we've seen this here on any number of standards issues, broadcast issues, and you know, even some pricing issues that we tried to do a little bit here/ -- and I'm going to hold this for a minute because all those issues go to the speed question, which I think we want to raise in the second part of our discussion, and what you do about notice and opportunity and input. But hold those notions and just talk a little bit more theoretically about this enforcement rule thing. Anybody? MR. WEINGARDT: Well, obviously, you have to support an ongoing enforcement role. And I'll just pick examples. I'm not going to -- I'm not here to promote one of them, but just as an example. I mean, Congress said in '96 that getting access to the networks is going to be a lot easier than it should have been. And that's called interconnection. It's no longer -- you have a right to interconnect, not if FCC says so and the states say so, and you go through that process. They reversed the paradigm. And yet, a paging company in Tuscaloosa, Alabama and a PCS in Walla-Walla, Washington, and you name it, ask for interconnection from a BOC or whoever the ILEC is in that community. And the answer is "No" or, "We'll get back to you," or "We have a backlog and we can't respond to you." The theoretical concept of whether you sit down, work it out first, go to the states or whatever is, I think, irrelevant, because we're just no policemen. There's just -- I mean, I know Michele faces that in her particular area, and I'm not picking on you, Michele, but what do you do? You know, we think clear rule, violation. They said, "No to interconnection," or they said, "See us next year," or, "You have to follow this 38-page document." There's nowhere to turn for a relatively quick response, whether it's an ALJ or a Commission employee empowered as an ALJ, a fact-finding person who will not be overturned unless there is clear evidence of corruption or incompetence, I think is irrelevant to that person in Tuscaloosa, Alabama. MS. BROWN: Well, let me throw this into the mix. What if contracts -- I've said this before and gotten in trouble once or twice. What if contracts looked much more like supply contracts that had liquidated damages and self- enforcing provisions, and that the role of government perhaps is not to set those, but to make sure they are set before they're approved, for instance? Just a thought. Who was up? The end of the table. Sorry. MR. KOUTSKY: I just have a -- you posed earlier the difference between a collaborative or a litigation-type process. I actually think they really serve two different purposes. The collaborative -- and we've been involved in both of them one way or another. Collaboratives are really good means of -- it's a different approach to rulemaking, in essence, to take what would be a rule and to really clarify what particularly needs to be done. That's why we see in this whole plethora of collaboratives on OSS. You know, the Commission originally ordered electronic bonding on December 31, 1996, I think was the deadline, and we're still kind of in this whole process. So I think the collaboratives really make a lot more sense as an adjunct to the rulemaking process. In terms of resolving disputes, I don't think they ever will work to resolve disputes, in principal part because not everyone can go to collaboratives all the time. And the point about what does the paging company in Tuscaloosa do? I doubt if they're going to be at even the state capital to participate in the collaborative about the interconnection negotiation process and how can we fix it. And I don't think that's going to help, either. This is where I touched on the more adjudicatory role, whereas, that's really more of a fact-finding, truth- seeking type mission. How do we find out those facts? That, you know, in our grand Anglo-American tradition is discovery, subpoenas, motions to compel, testimony, even sometimes. MS. BROWN: Well, let me ask you this. In a commercial environment, would you want a quicker means of dispute resolution? MR. KOUTSKY: Well, that actually can be quick, too. One of the things that the Commission or that the statute did in the common carrier context was to talk about interconnection arbitrations and having states deal with that process. And most states probably when they saw the Act, probably figured, "How am I going to do this in nine months?" Right? And most states have actually stepped up to the plate and not all. And some have done different types of processes. But I think that you can actually manage -- and this doesn't have to be before a judge. It can be before a AAA arbitration panel, too. It doesn't have to necessarily be before -- in a grand scheme. And I think the very basic doctrines that we were all taught in law school -- probably, more than half of us are lawyers here -- about how you find evidence and how you prove a point and getting access. You know, what is exactly somebody's procedure for installing an unbundled loop? There's a written document that's somewhere. That doesn't necessarily come out in collaborative process, and you can't actually require that -- I'll defer to Melissa on this. But how are you going to get to the bottom of what I call the truth-seeking function? MS. BROWN: Brian? MR. FONTES: Brian Fontes -- I certainly think the core responsibilities includes spectrum management, allocation, licensing and maintaining the integrity of the spectrum that's been licensed. In other words, preventing interference. In terms of how to deal with enforcement, in looking at the ALJ approach, for those of us who are old enough to remember, the old ALJ processes here, you know, this can be a multiyear activity. And frequently was a multiyear activity, to be quite truthful about it. So that's clearly a process that if you want to use it as an option, go ahead and use it, and I wish you luck in a competitive environment. So there's got to be other ways to resolve conflict or disputes. I think the enforcement activities, you know, if I visualize what's the role of the enforcement bureau -- I don't see it getting mired down in interference problems or complaints with coordinating among local government agencies for antenna siting or anything else to that nature. I think that'll probably still remain or should remain the function of the bureau. I think the enforcement activities in the enforcement bureau should look at the broader issue in terms of the ability of competition to work, market failure, addressing those broader context issues that will determine the success or failure of a competitive market. So I think that there's a very real difference in the types of activities the enforcement bureau would be engaged in. And I also would hope, too, that certainly the opportunity to come in and to work together with all parties involved in any type of enforcement action short of an ALJ procedure, would be a real viable option. MS. BROWN: Alan? MR. CIAMPORCERO: I just wanted to say that I think the purpose of the Commission in enforcement ought to be -- the goal out to be, what can we do, or should we do that's different from what courts do? That the value in the Commission is that they don't have to do what courts do. We don't need more rules. The enforcement bureau ought to bring a suit like the Justice Department if it's got an -- you know, a problem that won't go away, a bad actor that won't go away. But, that's not what the Commission should do. No more rules. Don't make this thing any more like a court. Go the other way. Let the courts handle that. MS. BROWN: Andrew? MR. PAUL: I just wanted to add something to what Brian said because I think he's getting to a very important point, which is a question of how do you enforce a policy as a policy rather than making it more specific than an adjudicatory function? And I can't answer that question here or right now. But, I think we've got to go back again and say to ourselves -- now, this addresses the speed issue. If the consumer is the person who's going to benefit from all of this at the end -- we're all sitting here saying, "What is my company or what is my industry going to get out of this?" But if it's really in the end the consumer who's going to benefit from this, I think that speed or some kind of a facilitating mechanism that will enable the consumer to be the beneficiary is going to be the right way to do it. And also, secondarily, from a business perspective, if there is going to be a change made or there's going to be some kind of policy enforcement that's going to involve one company or an industry to do something different, that company has a right to know sooner rather than later how and when it's going to have to redesign a particular business practice. MS. BROWN: Preston? MR. PADDEN: I would just echo -- you're going to be really challenged by the need to make decisions in an expeditious fashion. And I would stay as far away from ALJs and adjudications and lawyers as you possibly can. I mean, I was in the Commission room when the Commission voted to move from comparative hearings to lotteries for the major market cellular applications. And you could hear this groan go up from the communications bar in the room, but there is no question this Commission got service out to the American people infinitely faster because of that decision. And I would urge you to stay away from all that stuff. MS. BROWN: Michele? MS. FARQUHAR: I completely agree with Preston's point, and also, I want to argue and kind of building on what Andrew was saying that the FCC should not shy away from getting involved in an informal way before anybody even has to file a formal complaint or an informal complaint or a rocket docket complaint with respect to where the rules are clear, and they're being violated, and talking through that issue with the parties so we don't have a situation where parties are forced to file complaints when they really shouldn't have to in the first instance. And the Commission should just clarify the rules for all the parties involved. The parties can hear that out and make their own decision whether they want to go forward. MS. BROWN: Let me just ask you, though, in a market that is largely unregulated and a supplier has a problem with his customer and vice versa, who do they go to and what do they do to solve the problem? And should we start thinking that way in this industry? Jerry? MR. FRITZ: You have an excellent example of how that's done in the mass media context today. During a political campaign, if a particular candidate, when Mr. Tauke was running, if he had a problem with one of my television stations and he couldn't access, he can call the political branch, and the political branch puts the two parties together and said, "Here's the rule. Do it." With the threat of Commission sanction behind it. So, there is -- MS. BROWN: But they would still be coming to the Commission, that example you're giving me. MR. FRITZ: And certain things will have to come to the Commission. Enforcement of spectrum interference, when pirates -- pirate radio people come up and our television stations are being interfered with, we have to come to some place. Enforcement bureau has two primary functions: a police function and a dispute resolution function. The police function is to enforce the rules that exist, the interference rule and a spot check on compliance with rules, because the Commission has any number of dockets that said, "That we will deregulate, and we will spot-check to make sure your public file is right or whatever." So, you have two functions from a police concept. The other one is dispute resolution. Preston is right. We don't need more lawyers, but you need a rocket docket. You do need fast dispute resolution. MS. BROWN: I want to move to some other questions, but I don't want to -- Jonathan? MR. SALLET: Can I take 10 seconds? MS. BROWN: Yes. MR. SALLET: Here's an advantage of an ALJ system. Just by views of Preston and Michele who know this area better than I do. It dedicates resources to enforcement. Whatever answer you come to about use of dispute resolution or ALJs or any other way of proceeding -- and I don't disagree about the dangers of ALJs -- you've got to focus on the resources that are available for enforcement and not just the process of enforcement, because right now we have circumstances where people have a lot of responsibilities for ongoing rulemaking for generalized policy and for specific enforcement actions. And I think -- I just would like to note the resource issue is a critical, practical need in any avenue of enforcement. MS. BROWN: Len, I think I lost you. MR. CALI: Thank you. It's really just an aside, but a very important related aside. Increasingly, the Commission may find it wants to reassess its public policy positions which is critically important and apart from the enforcement context, but routine applications for authority, routine license transfers, even routine waivers that are consistent with prior practice should not be held up while the Commission reviews its public policy positions. It may well be warranted that public policy changes, but if a carrier cannot move and the market's moving, but the carrier cannot move because one of its requests, whether it be an application or a transfer or waiver, is being held up while the Commission reviews policy, there is a problem. MS. BROWN: Zeke? MR. ROBERTSON: Very briefly to answer your question on should you start moving more like other industries, how much of this should the FCC continue to do? My belief is that where there is a valid contract executable and could be handled by a court of law, there are other vehicles by which people could get relief. And therefore, I think that could take a great burden off of you. In situations where simply someone is claiming a rule violation or whatever, you have to deal with it. You're the appropriate place. So I think -- I would suggest to you where there is a contract, where there is something to be executed by another agency or the courts, you should shed it. Get to the things that just deal with your rules. MS. BROWN: Robert? And this will be the last on this if -- oh, okay. Sorry, Tom. We'll get to you. MR. MCDOWELL: Just real briefly back to the resources argument. Tied into that is deadlines regardless of whether it's the ALJ model or something else, if you have tight, quick, rocket docket-style deadlines, that's going to benefit everybody if the industry moves with great speed. But that's also going to benefit the entrepreneurs who don't necessarily have the resources to win long, drawn out wars of attrition against bigger entities. You can go quicker than a court of law. You're the expert agency. All you have to do is reform your process and you can get these things out the door a lot faster. MS. BROWN: Tom? The last on this, Tom. MR. TAUKE: You did ask the question about should the enforcement process be tied to a rulemaking process, and I think that it's important that enforcement not be rulemaking. That enforcement should be simply looking at outcomes, assessing penalties if outcomes are not achieved, but it should not get into the business of defining the methodology by which the outcome is achieved. MS. BROWN: Thank you. I'd like to put another question out on this vision thing, take about 10 minutes with it, and then shift to this efficiency and structure question that we asked just to sort of finish up. But, I'd like to talk for a minute about this issue of how this economic revolution, this technology revolution, this telecommunications revolution reaches all Americans, both the customers throughout the United States, and those citizens who are receiving services now in a ubiquitous way, and how do we ensure that as this pie grows, that all of our people are able to participate as entrepreneurs, as new vendors, as new owners, as new workers in this revolution? And what, if anything, does the FCC have to say about that or do about it? Anyone? MR. CIAMPORCERO: I just wanted to say the first thing I think is that we ought to have -- is to approach this with a respect for the past. In this country, we've got the best communication system in the world. That was the result of a good policy, 40, 50, 60 years of a very good policy. I'm not going to get into the future because I would be prejudiced, but respect what has happened, and that we've done it right. And keep that in mind as we go forward. MS. BROWN: Could you say a little more about what that policy is? MR. CIAMPORCERO: The policy of you know, moving hell or high water to have universal service at an affordable level for people. MS. BROWN: David? MR. DONOVAN: I think for us, some of the frustration has been that the Commission has done a superb job at promoting competitive services in other areas with different economic structures. In order to help competition in local phone companies, everyone celebrated cable clustering, which is terrific from that standpoint. Of course, it does have an impact on the broadcast model, as well, which I really don't think was given a whole lot of weight in those decisions. The bottom line is, is that if you want to have an advertiser-based free system, you have to also understand that we are competing day to day with someone that has two revenue streams that is pulling away eyeballs, pulling away advertising and revenues. And if you want to keep the free system going forward, which I think really solves a lot of problems for you all, is you go forward with universal service, you have to recognize that we do compete with these people. And some of the broadcast specific rules that you now have really have to be not only reexamined, but frankly, relaxed. In particular, you know, I'm looking at the local ownership rules, which I think most -- a lot of efficiencies can be harnessed if you permitted common ownership in the same market. At the same time, I think we all have to be sympathetic to Jim's concerns, as well. Participation is important. The policy such as the tax certificates and what have you worked very well in this country, and frankly, should be brought back. I don't think there's any dispute among that. But I am very much afraid that if we don't permit sort of relaxation of the economic aspects of this industry, the service, which really comes to the core of what people need in this country, the ability to access top quality information and programming, will suffer on a going-forward basis, not to mention the ability to take this industry to the next digital step, because there are a lot of entities out there that right now the economics just aren't there to do it, particularly among the smaller broadcasters. And so, I wish you would in a going-forward basis, look at your broadcast industry specific rules and work very hard, frankly, to relax them so we can compete in the multichannel environment. Mr. Pepper knows this. He wrote an article in '91 about this whole issue. MS. BROWN: Jim? MR. WINSTON: If you look at the broadcast industry, as I mentioned before and as David pointed out, there were policies in place to promote minority ownership. And those were policies adopted by the Commission after extensive consideration of the industry that was before it in the late '70s. What was recognized was that specifically in the broadcast industry, and as industries converge, it's going to be interesting to see how -- whether someone will look at the converging industries in the same manner. But the whole concept in broadcasting was that the broadcast industry is the mechanism by which the American public asserts its First Amendment rights, and that if we are going to have a free and open exchange of ideas in this country, then the broadcast industry has to reflect the American population in terms of who controls the airwaves. That concept has fallen in disfavor among some in Washington now, and we've seen those policies falling apart. So I guess the question is, is the Commission in a position to be able to influence reopening that debate? I know the Chairman has been trying to, and he's been meeting a lot of stiff opposition in trying to do so. I guess the question here is, is there any possibility for the people in this room see some reason for including that in the debate as we talk about convergence, as we talk about all these industries competing with one another? Is there a recognition that the American public is not a monolith, and that technology is in the control of those who have access to capital to take control of that technology? So if we're going to talk about this industry in that fashion, then there should be something in this discussion that says for those who don't have access to capital, for those who don't have the ability to take an idea from the initial stages to business fruition, is there some role for the Commission in that process? Is there some ability for the Commission to influence the access to capital? Right now, the Commission has a telecommunication development fund, which is a nice idea, which has yet to move beyond the idea stage in terms of producing some results. So it seems to me that that's one of the issues, the tax certificate that David talked about, which, of course, requires congressional action to bring back, is another that had some ability to bring diversity, a viewpoint of diversity of voices to the industry. I would think that's another area that this group should look at. And specifically because we're talking about convergence, it seems to me that it's time to talk about a tax certificate in a context broader than broadcasting because the delivery of information to the home is now becoming a business much broader than broadcasting. MS. BROWN: Thank you. John? MR. ROBERTS: I'd like to echo what the gentleman said about universal services. Policies of the Commission in the past have worked really well for universal service and rural areas. And we believe that the Commission should continue to take that care. And one way of taking that care is to make sure all the policies of the Commission, not just those directly with the universal service or the universal service fund, that they're coordinated together to make a really coherent policy that works well. MS. BROWN: Thank you. Michael? MR. ROBERTS: Thank you. I think Jim and Dave brought up some issues that are dear to my heart. And I think we have to put -- it's a structure. It's a skeleton, but let's put a little meat on it and apply the reality. The reality is, are there television stations and radio stations available to even be purchased? Number one. You have DTV licenses that are going out, but eventually analog licenses that'll be returned that may subsequently may be sold again or used again in some way. How might you approach those licenses in a more aggressive way to allow for the diversity that we're looking for here? Clearly, we have a disproportionate impact going on. There are many less folk owning broadcast stations than watching broadcast stations, from that standpoint. You have rules today that have allowed for one radio station company to dominate a market, just literally dominate a market. And I'm on Jim's board of directors, and I've watched a number of those radio -- black-owned radio stations look to potentially either going out of business because the competition's just too great, or they had to sell in order just to survive financially. In the television industry, you have the duopoly issue that's before you. You were seeing LMAs all over the United States, and fellas who were out getting around the rules and owning more than one station in the market. And if you change the duopoly laws and allow them to own more than one, that's going yet again to dry up the opportunities for minorities to own television stations. So, I think you have to look at the real meat here and determine, what are we talking about? Are there licenses that are even available, and what would be the incentive to sell them since there is no more spectrum, per se, to sell them to minority individuals? What would be the benefits for the seller to sell to them? That's where you get into the tax credit issues and perhaps some others. I raise the question of foreign ownership. For example, what if a Canadian television company interested in coming in could team with a minority, we might allow them to move to say, 40 percent ownership. And they would back that minority-owned business person and allow them to own 60 percent. But we would have the financing necessary to buy a much larger, perhaps a network level operation in some of the larger markets. Little concepts that I'd like for you to bounce around, Kathy. MS. BROWN: David, did you want to -- MR. DONOVAN: I promise I'll be brief. I think there's a couple of things that are important. Broadcasting does not exist by itself. All of us here at this table know that. We're all competing against one another. If you're looking at a mechanism to enhance the diversity of the ownership structure, and that mechanism is to put an artificial restraint on the entire industry, in my particular instance, the ownership restriction, what you end up doing essentially is sending capital to other video industries. I don't think in the end that helps anybody. In today's free -- in the market of today's free over-the-air television market, to have -- to pursue a policy to the nth degree where you have every single individual owner may be wonderful in a perfect world. It may be desirable. But what it means is is that the service that's being provided to the consumer goes down. And the evidence of LMAs across this country, frankly, I think, proves it. Every single one of those LMAs has improved service to the communities that they are located in. MS. BROWN: And now, I'm going to ask you to make sure we don't argue -- MR. DONOVAN: Exactly. That's why I want to abstract this to a more general discussion. I think what it means, though, is that you have to -- if you're trying to promote a goal, whether it's diversity ownership or any other Commission goal, you have to look at where the capital is going to go. And imposing restrictions on one segment means money goes elsewhere. To impose rules on the ownership of two stations in the market means Jerry's boss, Mr. Allbritton, takes his resources and starts a cable channel, to which people have to pay to see. MS. BROWN: I'd be very interested in folks' reaction to Jim's notion that a tax certificate should go further than just one segment of the -- Patricia? MS. MAHONEY: Thank you. I, actually -- I wanted to respond to both of your original questions and first, to respond as Chair of the Satellite Industry Association and then secondly, to respond as a past national president of American Women in Radio and Television, if I could. How does the revolution reach all Americans? That is happening. I don't believe that we have what you could call universal service with free over-the-air television because geographically, not everybody can receive it. But with satellite, eventually, you will have the ability -- well, with satellite, for the first time, you do have the ability of all Americans to eventually become beneficiaries of the communications revolution, whether its DBS, DARS, wireless, voice data, and eventually, broadband Internet services. With respect to Jim's point, I think that on behalf of, or as former leader with an organization that fought for many years for tax certificates and preferences for female ownership, that I think it was generally known and accepted that the tax certificate program was the one that was really beneficial because that's where you had an opportunity to get potentially good stations. But I think when I spoke earlier that one of the roles of the FCC has beyond the regulatory role, providing leadership, expertise, resources, and support, I think this is an area where because access to capital is the issue, where the FCC can have a role. And I think back in the early '80s when especially Commissioner Dawson took a leadership role in convening and having conferences that brought together bankers such as Commissioner Ness and brought together program suppliers and all different aspects of -- was primarily video and audio media, that it resulted in an information flow and inspiration and education that ultimately led to ownership opportunities. Maybe not everybody can own a station, but maybe they learned that they could own a program production company or some -- and they made good contacts through these conferences. So I think that there are things that the FCC can do. As much as I hate to say it, I don't think that it's likely that there are going to be -- well, certainly there won't be comparative preferences anymore, and I don't think there'll be other programs that will benefit women. But educating the financial community will benefit, I think, everybody. All services, certainly in the satellite area where the financial community may not be as sophisticated as we are, and needs to hear the expertise of the Commission of the technology, of the risks involved and issues like that. MS. BROWN: Thank you. Michele? MS. FARQUHAR: The problem, as you know with bringing advance technologies to the rural areas is that there really only -- it's very expensive. And there really are only a few ways to make that work, including subsidies and the universal service program, in particular, or to encourage greater competition or some combination of the two. And the problem is that at the moment, we really only have one incumbent being subsidized in these areas. And it's going to take even more subsidies to bring them up to a level of providing the advanced services that rural customers are beginning to demand and need. And so the Commission and the state commissions need to work more aggressively in finding new combinations to encourage subsidies and new entries for other technologies and providers who can bring more benefits to rural consumers. And that may require looking at other types of ways to subsidize. It could be grant programs. It could be tax certificates. There could be any number of tools out there that have not been looked at yet because people have been very caught up in the universal service debate in that one form. But the Commission should be open to looking at ways so that during this hiatus while the Commission has put the rural areas on hold in terms of universal service reform, there could be other ways to still encourage competitive entry and get that advance service out to the rural consumers. MS. BROWN: Thank you. And I think Preston, and then I'd like to move you to some more mundane things like process. MR. PADDEN: I just wanted to say I believe there is widespread industry support for a broadly applicable tax certificate program. And I think everyone would agree that profit maximizing free market forces will achieve any goal, any goal infinitely faster than any bureaucratic attempt to make it happen. So I think the government ought to decide what it thinks the proper social goals are, and then arrange the economic rewards of private market activity to favor those results. And I think you'll achieve them faster than any attempt by the agency to force it to happen itself. MS. BROWN: Thank you. Go ahead. MR. SHARK: I've been searching for a way to get into this discussion, only the sense that as I said earlier in my one minute comment, we represent really the nonconsumer wireless areas, the small business carrier. But now we're in the nuts-and-bolts area, so maybe I can make a contribution there. If there is one thing that I heard throughout this discussion is this whole issue of timeliness of getting decisions made. And I think most of us would agree we'd rather deal with a bad decision than no decision. And at least that's something you can say and fight against or argue against or appeal. And so, I think the one thing that I would like to recommend that I think would go a long way in the next century, is to really have a system, maybe call it something like universal filing and tracking system. And I'm sure some of your computer people are already thinking along those lines. But it would help all of us, I think, if we had a tracking system that when an item is filed, that we know where it is, who has ownership for it, what is the priority, and what is the path I can't think of anything more important than something like that on the nuts and bolts area, because things get lost. And when I look at some of the issues that you have raised in your paper about losing good staff when I talk to the good staff, and there's so many of them, they don't have ownership. They have a lack of incentive. It goes from one desk to another. When people from the outside call in, it's lost. It's gone. Or, it's at someone's desk. We have no response as to when. No accountability as to what the path is. No sense of what the priority is. "Well, it's a congressional mandate. We can't get to that right now." If that was something on the Internet, and I think the FCC has been terrific on getting more and more on the Net. If that's something that we could look at, then we would have a common point from which to see where we are at any given proceeding, see the path. In other words, how many desks does it have to go to? How many bureaus? How many people have to sign off on it? What priority is it? Why is it given the lowest priority? At least then, somebody has an opportunity to argue for it or see why it isn't a higher priority. And what is the date? When is this thing going to come out? I mean, if I can track a package from Springfield, Virginia out to California on my Net -- on my computer, there's no reason why we can't do it in this building right here. MS. BROWN: Well, this is a great segue out of the wonderful conversation we could keep having about the vision of the future and the industry, to how can we do better. And so, let's take another 15, 20 minutes to talk about how can we do better. And I'll just say some of the things I've already heard you say, so that perhaps you don't have to repeat them. And then, maybe talk just for the last little bit of our time together about any structural kind of recommendations you might have. Here's what I've heard thus far. Speed is a huge issue. Speed. So I've heard suggestions that we ought to have more deadlines. And whether they be statutory deadlines or perhaps our own internal regulatory deadlines, I heard you say that was a good thing. I heard you say that the sunshine rule may be a barrier to discussion and thus resolution of an issue. I heard people say they would rather have a decision then not have a decision. And that's very interesting since I've seen how decisions are sometimes not made by pressures that are not only internal, but sometimes external. And so, it'll be interesting to think about that. I also heard folks talk about our ex parte proceedings, and I guess I have a bias here. Is this one on one ex parte kind of regime that we have a helpful one? Is it one that causes more time because other parties don't know what the other party said, and so, how can they respond? Is that something we ought to look at? Then I heard someone raise issues about our remand proceedings. And I would be interested in hearing anything more about your view of what ought we be doing on remand. So, that all went to speed. I then heard issues about -- and I think Alan just raised it -- about sort of process and tracking, and where are things? And what's the priority level? And who has them? Then I heard some folks talk about regulatory costs, which I would be very interested in hearing a little more about. Let's assume you do have to do filing or you have to do tracking. Is there a way to reduce costs around this? And one suggestion obviously is to do more on the Net. And you know, how could we actually effectuate that? And then I heard someone say, "Yeah, we hear all this great talk about competition and deregulation, but basically, are you walking the walk?" You know, what are doing here to actually get that done? So, those are the process issues I heard. And then I heard some structural things, which I would hold except I know you're going to jump into this anyway, so I might as well tell you what I've heard already. I heard that the international bureau is a good thing. I heard that people need to walk and talk across bureaus. I'd be interested in hearing whether people really think that requires a total reorganization or whether it requires a different kind of process, because you can do things by process or by organization, structure process. And a lot of organizations flip back and forth, sometimes at a fantastic rate about how they try to get at those things. And I heard some thing on the mass media side that would suggest that there's some real relationships between the cable and mass media bureaus that ought to be explored. I would be interested in hearing similarly on the sort of telecom side. And then, for those of you at the table who don't want to be regulated at all, but sort of come into the convergence milieu, "What about you?" And then, finally, I heard people say that somehow the staff needs to feel more empowered to actually get things done for you. So that's the sort of things I've already heard. Build on that or add more. I just wanted you to know that I've got that, and then ask you for any further discussion on this. Jerry? MR. FRITZ: Kathy, kudos to the staff and the organization that you've done so far. Mary Beth Richards and her people have moved the Commission significantly along toward a more efficient process, and I think the goal where you're heading is absolutely correct. You asked a question in the written questions, how would you prioritize the FCC's current workload? And I would give it these six priorities: number one, licensing, number two, licensing, number three, licensing, number four, interference protection, number five, elimination of regulatory artifacts, and finally, number six, promotion of your statutory goals, which frankly, you're not going to be changing. And those statutory goals include things like preserving universal free over the air television. That having been said, there are some other things, some specific suggestions that I'll make aside from the ones that you've already articulated like getting -- proposing to the Congress to get rid of the Sunshine Act. It's a terrible waste of Commission resources and time and decision-making. Engineering certification outsourcing. You can save a substantial amount of time and license processing if you will go to a certification process for outside engineers, giving them the complete ability to give a certified engineering statement. That has to be coupled with enforcement so that if they're wrong, more than one or two times, they lose their certification, because that's your only check on getting accurate and complete information. It works in the CPA industry. It will work in the engineering industry, as well. That will substantially help in terms of your overall number of people employed at the Commission. Time limits on application, we have suggested for a long time bar codes for application processing so that we can monitor that on the Net. The same could be true for your agenda items, so that people wouldn't constantly call you and find out where their agenda items are. Once they're in the system, they can be coded and we could track which offices, especially on a circulation system. Number three, common integrated forms and a single point of contact. It makes no sense for us in the broadcasting business to have to go to the Mass Media Bureau to get our broadcast license, go to the Wireless Bureau to get our auxiliary license, go to the International Bureau to get our satellite uplinks, go to the Wireless Bureau to get OFS in a different bureaucracy, and go to OET in combination with Mass Media for DTV or Part 68. There needs to be a common licensing bureau. And I know that's where Mary Beth is taking the agency. In terms of the Wireless Bureau, you need a licensing bureau. I don't care where you locate it, but there needs to be a common licensing bureau that has common integrated forms so that we can go to one-stop shopping on everything from CARS applications to auxiliary applications. This is an extremely inefficient process the way it's being done cross-bureau. Another suggestion, exemption from SES pay grade levels to attract competent managers. You can petition to the government to get that SES exemption to get competent people, and I would urge you to do so. Greater discretion for all managers to hire competent people would also go a long way to get you to people that you need. I will stop. I have a set of suggestions with respect to this licensing bureau, a streamline mass media bureau, a telecom bureau and adjunct offices, but I'll wait and give other people a chance. MS. BROWN: And I'll invite anyone at the end of this to give me in writing, frankly, anything else they'd like to. Brian? Let me just remind folks for your own time, it's about 20 to five. So, if you could keep your comments to a time limit so that everybody gets an opportunity, I think that'd be good. Brian? MR. FONTES: I'll be very brief. I think yourself and Jerry both have articulated some very exciting, interesting concepts and streamlining. There's just a couple of other points I'd like to make. In a competitive industry, whenever there's information sought by that industry before the Commission, the industry has to go, in my case in parallel track, seeking confidentiality for the information, and then submitting the information that the Commission has requested. In a competitive environment, it's very important to recognize the nature of the confidentiality and the market sensitivity of the information that is submitted. And so, you may want to take a look at how you allow for confidentiality of information from those who represent competitive industries across the board. Then, a challenge. I think that Congress did give the FCC a great opportunity through the exercise or the ability to exercise forbearance. The challenge would be to have each of the operating or functioning bureaus identify at least three areas in which they believe that they can forbear. I think that in that process, you do a lot. First off, you, obviously, forbear from regulation that no longer needs to be in place. But secondly, I think you begin the process of understanding the reliance on competitive markets and the opportunity to use your enforcement power to assure that the competitive markets are functioning. And like Jerry, I will also provide a list of other issues. MS. BROWN: Thank you, Brian. Brent? MR. WEINGARDT: I agree with Alan. No decision -- I mean, a bad decision is better than no decision. I think a second decision delayed is even worse. We would like a hard look at the recon process. Either doing away with it, which might sound extreme, or really shortening it. One, put yourself under a deadline or go up to Congress and suggest there should be a deadline. Two, don't have to respond to every matter. What's the term? Position denied is the term, because without that petition denied, courts won't act. We don't have final say. I mean, it's one thing to bust your butt to get the first report and order out. Your clients are happy. And then, two years later, say, "Oh, we just lost at recon," Or, "We got to modify at recon," or whatever. Then, the court case starts. And I've used the process, but I can't live with it. I mean, I think it's absurd that we have a recon process that really destroys all the hard work in the first report and the second report and the third report. And I know it might require statutory change, but that's one really worth looking at. I'd like to hear what the other folks have to say, because it works both ways. MS. BROWN: I'd be interested as well if folks started getting, you know, no new issues raised. This has already been addressed, denied. You know, what the reaction would be. It'd be very interesting. Go ahead. MR. SEIFFERT: Sure. I was just going to build on the conformity assessment body and endorse that wholeheartedly. It would certainly improve the manufacturers' and vendors' lives if we could streamline the duplicative process. It's happening internationally. TIA's worked for MIA negotiation all over the world along with the FCC. We certainly would like to see the FCC allocate the proper resources to get FCC staff to these negotiations over in other parts of the world. It's certainly going to make - - get our product out the door a lot faster and tapping the market is critical to the industry if the life cycle is shortened every day. MS. BROWN: David? MR. ZESIGER: I'd just like to echo Brian's and Brent's comments and really reinforce the effectiveness that you can have in moving forward more quickly using tools like the forbearance process. We've just been through that and it was a very successful process. And you know, I think that that's something -- as much as these larger issues are important and necessary to get the word out on, if we could take some time to have discussion on what kind of timeframe are you going to be able to keep up with the changes in the industry. There's some things you can do right now as almost a quick damage control kind of quick intervention to free things up and to move people into a more competitive posture as you did with some of our companies. And just to underscore the immediate effect of that or impact of that, I had a call today from one of my companies who commented on some of the things that were done earlier this week by the Commission in the forbearance issue refile. And he said to me somewhat puzzled, "Well, I've been up talking to my marketing and operational folks. And frankly, the ball's in their court now. We've got to move them. And we've called their bluff." And this is a real company with a real service they're going to be providing. And it moves -- it changed dynamics within a company. And that kind of thing you can do right now using the tools you already have, that's Section 10, Section 11, Section 706, which were cited earlier. MS. BROWN: Andy? MR. PAUL: I want to take what Jerry said about cross-bureau process and just raise it to a little -- a slightly more "macro" level, if you will. And that is -- and, I want to be very careful how I say this because I don't want to be critical, but I do want to try to illustrate in a general fashion what I think is something that should be paid attention to. And that is, one bureau may decide that a particular action or a particular type of proceeding or a direction with regard to a industry would be a healthy one without consulting another bureau, which may have either the competitive responsibility or the developmental responsibility for that industry and without overlaying on its decision the policies that have already been decided for. And I don't want to get too specific because there are already some proceedings that implicate that, but I can give you an example of something that happened say, seven or eight years ago when microwave users were moved out of the 2 gigahertz band because they wanted to make way for LMDS. And there was a proposal to put them into the -- into a satellite downlink band because there was a conception that perhaps technologically that could be done. But no consideration was given to the competitive policy with regard to the satellite users and downlinkers in that band, what effect it would have on subscribers to satellite television, and what impact it could have over what that kind of interference would have overall to the development of a competitor. And I'm just saying that is an example of -- I would say a lack of communication or say, lack of overlay of policies that have been established by the Commission which are very, very important. So, I just want to leave that out there as a potential for things to happen that I think you'd want to look at. MS. BROWN: As you're thinking about this in talking to me, if you could also just someone address this ex parte issue and also the very paper-intensive processes of this Commission, which seem to me that all of you are writing paper. I can't imagine that you're all reading each other's paper. I know I don't read all of the paper that you're all filing, and so, I'm relying a lot on summaries of what your reading. And then, the question being, do you hear each other? So that in a situation -- just let's take this example that one part of the industry would understand and know that another part of the industry is being affected so that you get some dialogue on that. So if anybody has a view of that, I'd be also interested. Michele? MS. FARQUHAR: Three quick points. One, with respect to time limits and deadlines, which Western had mentioned earlier. They should also have teeth so that one way to approach that is to say that something is granted unless the Commission acts within a certain amount of time. And I know that's very difficult to set up a process like that. But, in most cases, it would work. And in most cases where the Commission has dealt with processes like that in the past, they've met that goal. Second, is to cut off the ex parte process, going to the question you just asked, and maybe have fewer -- allow for fewer meetings after the papers have been filed and say that only -- you can have so many bites of the apple, and that's it. And I know, that too, is very difficult to implement, but that's one way. Or, have one or two big meetings that would bring all the parties together and invite all the relevant participants at the FCC to give them a chance to hear the parties. But, difficult as it is, it may not bias as much parties who are based outside of Washington who have less resources to lobby the FCC. And finally, one way to restructure the bureau is, if you are going to reorganize them, might be around their missions, as opposed to even their functions, so that you might have a bureau that deals with competition and with universal service, with public safety, with spectrum planning, with enforcement, with licensing, et cetera. And within those bureaus, they can look at individual slices of the industry. But, one problem right now, it's only the Commissioners, the Office of Plans and Policy, the General Counsel and you, Kathy, who are looking at issues from an overarching, holistic context, taking into account convergence. And everybody else is looking at a slice of the industry here at the FCC. MS. BROWN: All right. I'm just going to try and go around. Patricia, I still see you, but I'm going to go this way. MR. WEINGARDT: I think I'd like today to extend an invitation to the Commission to perhaps come out with a notice for implementing deadlines on a variety of perhaps all of the kinds of proceedings. You have might have petition for declaratory ruling, petition for rulemakings, et cetera. And even in that, you could just sort of start the ball rolling, let's say, within 90 days after reply comments are received, "We will have an answer for you on such and such a date," and fix those. Obviously, there are going to be come exceptions where you're going to need more time in compelling circumstances, but I invite you to do that perhaps as a result of this meeting, because that does seem to be one area where all the diversion interests here are in agreement. Secondly also, regarding tracking, we've heard a lot today about empowering consumers. Heck, let's empower your staff a little bit, too. Let's have one person who is the shepherd of various proceedings or a particular proceeding whom we can contact, someone who knows where it is. It can be electronically, as well, of course, on the Net, but one human being, as well. Empower that one employee as much as we want to empower consumers. MR. ROBERTSON: Kathy, very quickly, you have to understand that most of the people sitting around this table are lawyers, and they get paid for filing paper. And so, it goes to the gentleman from Disney. I mean, this is a reality we have to face. And so, if you're paid for it, and your client's willing to do it and can be convinced that your interests have to be protected, that will take place. The other thing that you need to know, and I think you recognize, is that I'll bet there's not a single person sitting around this table that hasn't been contacted by your staff and asked to file a position on those particular dockets. So it's not -- it's not necessarily something that we all want to do. And I'm not -- you know, I'm not dissing the lawyers, but I'm just saying that's the way our world's set up. If we can figure out some way to move beyond that. MS. BROWN: Well, that goes to my other question, that if there's a decision-maker who needs input, are there ways of getting input that are not onerous or are cumbersome or burdensome to you? The input is needed, so how's the best, most efficient way to get it? Larry, welcome. MR. SARGEANT: Thank you. On three points, first, efficiency. Part of being able to be more efficient is going to be dictated by where you can bring the resources and where you bring the focus. And so, I would suggest that instead of the Commission looking to do more, it should look to do less. And more and more decision are turning on, does the Commission have jurisdiction, or doesn't the Commission have jurisdiction? So rather then looking to expand your jurisdiction, and I would say never again use 4(i). Look to do those things that you must do, that the statute says you must do this, rather than looking for those things you might be able to do depending upon whether a court defers to the expertise of the agency. So that would be one. On the issue of cross bureau versus structural, I think it's inevitable because it is just human nature that as long as you have bureaus tied to particular segments of the industry, people who work in those bureaus are going to have a certain ownership for what goes on in that industry. And there will be policy determinations related to that segment of the industry that they will have a bias towards. In a truly converged world where the whole goal is to bring in all the factors across multiple industries, I don't think cross-industry processes work as well as having people come to the table understanding that their mandate is to look across all industries and not have an ownership interest in any one industry. On the issue of ex parte, I don't know that we can avoid the paper. One of the things I was struck with when I first came to Washington in '86 and was a trial lawyer before that, this agency doesn't differentiate argument from evidence. And as long as you allow argument, you will have an inundation of paper. It's just unavoidable. I'm not arguing for going to evidentiary hearings because that is problematic in and of itself. But I do think we could be more diligent in differentiating real evidence from argument because there's an awful lot of argument but often very little evidence. MS. BROWN: Thank you, Larry. David? MR. TURETSKY: There are a couple management challenges in the questions that are out there as we talk about moving toward, you know, greater convergence or cross bureau dealings and the rest. Let me just share with you one observation I made, in dealing with a situation where there was cross-bureau responsibility a couple years ago. I was very surprised that the bureau that didn't seem to have the pen ultimately, but was charged with the responsibility for helping develop the item really didn't view it as serious a commitment as all the other work before them, because it didn't clear away the things that were on their plate. It didn't seem like that was what they were going to be evaluated on and the like. And so, as you try to cross lines and you don't dissolve the actual bureau lines, important management challenge is how to keep responsibility and accountability in the places that you want it so that all of the groups involved take it just as seriously as each other group. And that's not an easy thing. In business, you know, we struggle with that, as well. Second kind of management issue is this deadline issue. And it sounds great. We're all sitting here saying, "Boy, you got to get those decisions out. Pump it out. Set the deadlines." Well, what I learned in government was there are resource issues. Every time I told one of the sections that I wanted to get these two items out in a certain time, you know, I respected the managers who had the courage to come back to me and say, "Well, that means that we won't get these other two things out." So it's a resource and priority issue, and we shouldn't pretend that it isn't. And so, if we want those decisions made pretty quickly, we either better come to grips with what you shouldn't be doing, and I know plenty of people around the table probably will argue what you shouldn't do, or we've got to support resources for the agency so they have enough resources to do that. So I want to speak to support the resources to do that, because it involves choices. It doesn't involve just do it. It involves choices, every one of those decisions. The last point on the paper and ex parte and the rest is, you know, it's a big industry, and there's going to be a lot of paper filed. I don't really see any way realistically around that. There are times that I have been disappointed because I realize that unless you follow up with a visit, it seems like your paper may have been read at one level, but never comes to the attention of any other level. And that's disappointing. And it's also disappointing when in a major proceeding, you're getting right near the time that everyone knows the decision is going to come, and you know, you get word back that you've got to get into the FCC to lobby about this particular issue, which wasn't even covered in the pleadings because there's now this compromise on the table that looks nothing like anything that was proposed before. So there's this whole animal that's come to life that you got to go address at the last minute that's not reflected in those papers. And I'll admit just as a participant occasionally, that's a little bit frustrating because the smaller companies get the impression that something's gone on that doesn't have quite as much light of day on it as the papers that were filed. MS. BROWN: Thank you. Brian? MR. FONTES: This is on the ex parte issue. I absolutely agree with everything you just mentioned. One thing that may be helpful in the ex parte and just focusing the information that comes in to the Commission is when the staff has an opportunity to read the record, and if they do have specific questions, post those questions to the parties that filed in the record, so that the comments that come back, either in the form of ex parte or reply comments, whatever, is more focused to the information that's needed. MS. BROWN: Patricia? MS. MAHONEY: Yes, speed is the huge issue. It's most important in licensing and especially on transfers and assignments. And one thing I wanted to mention, that I was recently in a meeting that involved a bureau other than the International Bureau, and a bureau I hadn't had recent experience with where the staff person expressed the opinion that a written decision would be required by the staff even in an uncontested situation. And from my broadcast days, I would say if it's uncontested, there's no need to have any decision, just get it done. Just grant it. The time's up. Time for recons or review past. Time to grant the application. That would definitely speed things up. I think reconsideration is important often to correct the record, but what happens is after the petitions for recon are filed, that it seems to be that there is a big rush to get the decision out, so the recons come. So that's something that starts on a new timeline and it'll be handled a couple years later. And so, like Brent says, you know, everybody's operating for a couple years on the premise of the rule is one thing, and then, all of a sudden it changes. In the situation of applications for review, it seems that, unless the rules have changed recently, that the rules were written to be almost like a petition for cert. That you would write a small application for review, and a cert. would be granted or denied. Review would granted or denied. If it was granted, then you would file a brief. We've gotten away from that, so there's a longer period of time to act on applications for review. If, for recon and review, if you got fast decisions out, these are the only issues that were mentioned, review denied or recon denied, and that's it. Then that lets the parties know that a decision has been reached and they can move on from there. They can decide if they want to go to court. They can decide, if it's a staff decision, to take it to the Commission. And on the status -- on tracking, I don't think that you need to know all the details that have been suggested, but certainly need to know when you can expect action. Now we have this open proceedings report and the releases. That's great, but it doesn't really tell you anything other than that the proceedings are open. It would be good if it told you when you expect them to be closed. That's what people want to know. This is men, women, banks. Everybody wants to know. When can we expect this to happen? On ex parte contacts, we recently participated in a way of handling that that I thought was -- showed innovation, and everyone agreed that it was fruitful. And that was all the applicants were brought in. There was a meeting, discussed the things that the bureau was considering before it was going to release an NPRM. And then, it gave everybody essentially a week to come in and meet independently and discuss -- they didn't make anybody say what their opinion was on the record or at this meeting, but come in and your ex parte meetings, and you had a week to do it. I think they should have the freedom to do things like that, that are innovative and should be encouraged to do things. I don't think there's talking across bureaus. Maybe there is on some things, but recently there was an issue where -- or there's a situation where two NPRMs came out on the same day. One bureau was common to the two, and then each one involved another bureau. And I think that people who have looked at the two and realized they both exist think that they are going in completely different directions. And then, finally, definitely interested resources are an issue. We don't understand why some bureaus have the ability to hire from the outside and other bureaus don't. And we think if there is a time when there's an ability to hire from the outside, it should apply to all bureaus. And I guess that's about it. MS. BROWN: Thank you. Does anybody -- go ahead. MR. SEIFFERT: Sure. I'd just like -- since we're talking about resources and we've talked about convergence and how technology is moving everything and converging everything together, I think something we haven't touched on, and I know Bob probably has -- certainly cares about this and has tried to work in the Commission to hire more technologists, engineers, business savvy folks that have been out there. And I don't know we do a better job helping you all track people that can help. Maybe speed up the decision-making process because they know the industry. They're better educated. They understand the technical complexities. It certainly affects our folks when we work with the OET guys, and they do a wonderful job. But they're overworked. And it delays again the path to market. MS. BROWN: Is there anything that wasn't asked that's on your mind that you walked in here and wanted to say and didn't get to say? Jonathan? MR. SALLET: In the discussion about Commission process, paper, no paper, the evil of lawyers, the relative malevolence of lawyers -- I'll tell you what I think is the problem I see in the Commission decision-making. It's the difficulty in getting issues joined. Getting two sides or 14 sides to address the same question, whether it's factual, legal or policy at the same time in front of a group of decision-makers who are all focused on the issue at that point. That is a major managerial challenge, I think. The Commission does the best it can, but it's a big challenge. I would suggest that whatever you do to restructure the agency, you keep that as a paramount concern. Let me give you three examples it might be done without restructuring bureaus, although that might be a good idea in and of itself. The bureau -- the Commission, relatively rarely, brings different sides to a dispute into one room at one time. I've been part of processes where that's been done a couple of times in the last year. And in all of those instances, we have found it useful, because it inevitably forces issues to be joined because somebody across the table is making a point that you've got to respond to. Secondly, to deal with the issue that David Turetsky rightly raises, and this mostly occurs in sort of legislative type proceedings, rulemakings where there's a big issue on the table, and then someone comes up with a compromise down the road. Nothing illegitimate about that. I would personally like to see the Commission use more notice proceeding, but very short comment periods. In other words, if you're halfway down a process and somebody's coming with a suggestion that seems to have merit, but that really wasn't noticed and comment on it, put out a notice and give people 10 days to respond to it. It's a transparent process. It lets everybody come in and it just says, frankly, "Look, this is an idea we're not going to tell you would have been legally infirm to go forward." But, we are going to say, "We're going to put it out for everybody." The third, I think is Brian's suggestion, which is very good and goes to the same point, which is, in a proceeding where there are just critical questions, post five questions. Give everybody a relatively short period of time on the Net. Set up a chat room for interested parties, so that lawyers who are running short of papers will still have something to do, perhaps. But this will also help join issues because it will tell people where the Commission or the bureau is heading. It will focus people's attention and in a relatively short document. I mean, you know, one way to do it is, for example, say you can't submit anything to the Commission that's not in Powerpoint. That's the way we talk internally in our companies anyway. What the heck? But, it would in short answers, actually get people to talk to each other. So these are just three suggestions, but they go to what I have seen to be really the central challenge to decision-making in the Commission. MS. BROWN: Anyone else? Yes, Alan. MR. CIAMPORCERO: I just wanted to agree with that. I think that the biggest problem is being ambushed by disputes -- by evidence or arguments that you don't even know are going on. And I think another way to address that is try to have something like this for every major docket, a few weeks before sunshine, so we all know what everyone else is arguing. But I absolutely agree. It's very hard to fight the phantom that goes in and out before you when you have very little idea what they say. And the ex parte notifications never work. They're never sufficiently detailed. MS. BROWN: Well -- MR. ROBERTS: Can I just say this hopefully in conclusion? Would you allow those of us lawyers around here who are interested in drafting other thoughts to be submitted as official record to this meeting at a subsequent date? MS. BROWN: Yes. But be careful! Let me go through my closing remarks and tell you what I hope will be follow-up here unless someone else has something more they want to add today. First of all, I just want to thank you all very much for the quality of the discussion. You know, when you embark on these things and we talk to staff, the question is always to put you, well, is this just for the record, or is it for real? And I just want to assure you that this is very much for real. I thought we heard a lot of things today that were actually very helpful to us and some frankly, new recommendations and thoughts that I think we're going to take back and look at right away. But beyond that, if we mean what we say and say what we mean, then we mean we want to be more responsive to the folks we serve, both consumers in general, the American public and also the American industry that we serve here in all the difference facets. And so, we really truly want to know how we can do better. We think -- I think that we probably have one of the most expert professional staffs in Washington. I don't know about all you, although I know about a bunch of you because you were here, but -- you know, when one recommends well, what federal agency would you ever want to go work for, the FCC is very, very high on the list because just as the level of expertise that's here, the level of professionalism, integrity, and really the heart of what we do here. So we come to this with a really deep appreciation for our own professionalism. And being professionals, our need to sort of meet the challenges of the future. And so, that's what this discussion is about. How can we best meet the challenges of the future and do better with what we have now? And we intend to take all of this input. We have today's forum. We will have a consumer forum, which I invite any and all of you to come and attend on June 2. We will then have another meeting with sort of the academics, sort of organizational types, you know. Given this kind of thing, how do you think about organization and efficiency? And then, we will have one more internal meeting, which we haven't noticed, but that I will hold with our folks internally to talk about how to think about the future, and how to put together what ultimately will be our own strategic plan that we will give to Congress. We do it both for ourselves and of course, for Congress in the whole reauthorization process, so that they have our best thinking on this. Certainly, the Congress is doing its own thinking on this and its own exploration. But we felt we should give them our best thinking. And our best thinking has to be informed by the people we serve. So, again, I really thank you very much for participating today. We had set up -- is it a Web site or an e-mail address? MS. SOCKETT: It's a new FCC at FCC.gov. It's an e-mail. MS. BROWN: So it's an e-mail address, newfcc@fcc.gov to accept any other further remarks you would like to give us. We feel this is an open way for you to see it. Under the Government Performance Review Act, we are authorized to take input from all of our customers, if you will, all the folks who we serve, and it will be there for you to take a look at. So, we don't have to notice it, if you will. We can take that input, and you can have a good look at it. So please feel free to add to your remarks if you'd like. What you have given us today, there's a transcript of. I don't think it's fair to say you won't see your particular piece in our report. You know, such and such person from such and such said this. But I hope you will see that we will take the input and in our report try to be responsive to that. And we will also certainly say that you participated with us. There's some things that you mentioned that we obviously do not need to wait for a report to Congress to think about. And as some of you well know, we've been very busy trying to meet with various segments of the industry and consumer groups to see what we can get done now to use the tools we currently have to try and do the kinds of things that the Chairman, frankly, has told us to do. And that is to streamline, to think about convergence, to think about new and better ways to do things, to be innovative, to ensure that we have the widest possible input for our decision-making. So, even as we go through this process, I hope we can continue this dialogue. We will continue talking with you. All of the bureau chiefs, all of the offices are well involved in this process. We have met together. We will keep meeting together. We are collaboratively putting together our strategic plan. It is not Dr. Pepper and I sitting writing it, but rather -- rather, all of our bureau heads and offices who are together putting together a plan that we hope will reflect what we heard today, which is, frankly, an extraordinarily exciting future. So, again, I thank you all for being here and please make sure -- our phones, you know what they are. And it's fcc.gov. You can reach us anyway on e-mail. So, thanks to each and all of you. (Whereupon, at 5:10 p.m., the hearing concluded.) // // // // // // // // // // // // // REPORTER'S CERTIFICATE FCC DOCKET NO.: N/A CASE TITLE: A NEW FCC FOR THE 21ST CENTURY HEARING DATE: May 20, 1999 LOCATION: Washington, D.C. I hereby certify that the proceedings and evidence are contained fully and accurately on the tapes and notes reported by me at the hearing in the above case before the Federal Communications Commission. Date: __5-20-99_ ___Joel Rosenthal____________ Official Reporter Heritage Reporting Corporation 1220 "L" Street, N.W. Washington, D.C. 20005 TRANSCRIBER'S CERTIFICATE I hereby certify that the proceedings and evidence were fully and accurately transcribed from the tapes and notes provided by the above named reporter in the above case before the Federal Communications Commission. Date: __5-28-99_ ___Nancy McHugh_______________ Official Transcriber Heritage Reporting Corporation PROOFREADER'S CERTIFICATE I hereby certify that the transcript of the proceedings and evidence in the above referenced case that was held before the Federal Communications Commission was proofread on the date specified below. Date: __6-1-99__ __George McGrath______________ Official Proofreader Heritage Reporting Corporation