SPEECH BY REED HUNDT

CHAIRMAN
FEDERAL COMMUNICATIONS COMMISSION

CELLULAR TELECOMMUNICATIONS INDUSTRY ASSOCIATION
DALLAS, TEXAS

(AS PREPARED FOR DELIVERY)

MARCH 26, 1996

TO LOOP OR NOT TO LOOP:  IS THAT THE QUESTION?


Thank you, Tom, for that kind introduction.  It's always a pleasure to be with you and with
your great industry.

Your rooms, your crowds, your guest list gets bigger and better all the time.  I'm glad I'm
still able to hang on to my spot on the list.

Even if it is only because you cancelled Don Imus.

The big flap in Washington last week was shockjock Don Imus' impossibly rude treatment of 
the Washington media at the Radio and TV Correspondent's Dinner.

Incidentally, as some reporters added, Imus insulted the President too.

This story shows that contrary to their reputation TV journalists are innocent and naive.  
They are the only people on the planet who could conceivably have thought Don Imus 
would not be offensive.

But, I didn't think the headline should have been that Imus took a shot at Peter Jennings. It
should have been that I, the chairman of the FCC, walked out on Don Imus.  

Yes, I stood up and walked out. I wasn't going to listen to that stuff.

Here's what the TV News story should have been: Imus insults President and First Lady; FCC
Chairman Hundt courageously stands up for Administration and America by walking out in
protest.

It is true that I left before Imus started talking.  That's because I can't stay awake past
10:30pm.

But what do facts have to do with this?

We're talking TV news here.

At any rate, the key lesson of the Imus story is don't invite a shockjock for your party and
expect him to be polite to the hosts.  People stick with what works for them.

And what works for our country's communications policy is competition.

How's that for a seque?

Here's what competition is doing for the wireless industry -- astonishing subscriber growth.

Last year alone you added more subscribers than Don Imus has listeners: 10 million.

Now that the political reporters are united on the subject of Imus' rudeness, he will probably
surge ahead in audience share for a while. But at your current annual subscriber growth of
40% he can't keep up.

The growth rate of wireless is surely the most astounding fact about this industry.

Within 10 years, half the people in the United States will have wireless phones.  Wireless
subscribers will then equal the total number of wire-based phone lines currently installed 
in the U.S.

Wireless will then be our 21st century telephone company.

And we will see not just one wireless firm per market, but a pack of raiders pouncing on
every conceivable customer.

Here's the best part -- wireless is now, and will remain, the industry that competition built. 
Your success is proven daily in the competitive marketplace. That's your strength and your
challenge.

Your current astronomical growth rate is a direct result of your commitment to competition.

Our commitment at the FCC must be to promote competition by fighting off unnecessary
regulation of your business.

That's why we preempted state price regulation.  That's why we are preempting local
regulations that affect cell construction.

And we should promote our competition goal by auctioning licenses.

Our auctions are probably the single most successful experiment the federal government has
ever conducted.  Congratulations to Gina Keeney and Michelle Farquhar, her successor. These
wireless bureau chiefs and their teams spent some long nights and worked hard days to
manage the eight auctions we've started so far.

And there's more to come. The remaining PCS licenses -- the 10 MHz D, E, and F blocks --
will be auctioned starting in July.

In the future we will be looking for ways to start and end these auctions more quickly.

I am also concerned about the level of the bidding in the C block auction.  I'm indifferent to
the prices: people are bidding of their own free will.  But I have heard that some bidders
believe that the FCC will forgive the down payment due when the auction is over, and even
may forgive the principal payments which begin six years later.

In the event that anyone knows anyone who thinks such thoughts, I have some advice you
can pass on to them:

Forget about it.

And what if there are defaults? We have long had plans to re-auction defaulted licenses right
away.

And if the reauctioned licenses fetch less than the original amounts, we'll go after the
original winner for the difference, plus a penalty.

In any event, we intend to continue to promote competition by putting new spectrum on the
market.

We should also promote competition by guaranteeing spectrum flexibility for all licenses. 
The markets, not bureaucrats, will tell you what to do with the spectrum. If that means PCS 
spectrum will be used for fixed wireless local loops at costs way below the copper local loop,
so much the better.

And competition policy means we should also be flexible about standards as well as
applications.  AMPS, TDMA, and CDMA are in a war of religious dimension.  We could have
stopped it by picking a single standard at the FCC.  But how could we have made the right
call if the industry can't agree? And what would be the cost to the economy of cutting off
experiments in the market place?  If you're for competition, you have to trust that markets
will settle even fights about standards.

Of course markets can fail. That's why we need fair rules that bar monopolization or
warehousing of spectrum.

I also think we should help small businesses identify spectrum availability. By using the
Internet, anyone should be able to get that information from us.  That is a lot better than
hiring lawyers and lobbyists to winkle licenses out of Gettysburg.

But basically, for competition we trust in auctions: they're fast, fair and efficient.  They have
jumpstarted in wireless the biggest single investment in a new technology in history: the
$20-50 billion that will ultimately be put into PCS.

Plainly the amount we raise in the auctions is of much less significance than the amount of
investment generated. Although, we have raised more than $18 billion.

It's something to make more money than Bill Gates.

Of course he gets to keep it.

At any rate, we want not just competition in communications; we also want public benefits
from communications.

For the first time in our history the new telecommunications law makes it our country's goal
to guarantee affordable communications to every American. And that includes every teacher
and every child in everyone of the 2 million classrooms in the country.

Already the wireless industry has shown its commitment to these goals by starting to
network
classrooms.

West Junior High in Richardson, Texas, a few miles from here, is the first cellular school in
the country.

When I met with the students there last year they were just getting on the network.

Yesterday they gave me and Commissioners Ness and Chong a detailed report on their
progress.

It turns out education can get into the 21st century just like the rest of us.  Education
needs to skip the 20th century to do it.  We're talking about going from Abe Lincoln's chalk
and slate straight to cyberspace.








But look at the results from the West school because of communications: 

--Teacher efficiency is up;

--Discipline problems are down;

--Curriculums have been expanded;

--Teacher-parent coordination has increased;

Thanks to you, the West school is also a candidate to be the magnet technology school in its
district.

And by the way, just by coincidence, at our visit with the kids, Miss America 1996 was
present.

What do you think of  Tom Wheeler's guest list?  Miss America, Colin Powell and Nelson
Mandela.  Tom can get anybody to be here.  So I am announcing today the headline speakers
for next year's convention - Elvis, Judge Crater and me.  You can count on me at any rate.

Meeting Shantel Smith, Miss America 1996, reminded me of the commitment to
communications made by her predecessor Heather Whitestone, Miss America 1995.   Heather
is profoundly deaf.  She first heard her mother's voice by means of cellular technology.  Last
year she worked with the FCC and CTIA to highlight the role of communications technology in
helping people with learning disabilities participate fully in our society.

Even now CTIA is working closely with us and the hearing aid community to guarantee that
the new PCS technologies will be compatible with hearing aids.

I like the attitude and the prospects of the CEO whose company is backing TDMA. He told me
-- "I not only want to solve the compatibility problem, I'd like every hearing aid user to
know we solved it so they subscribe first to my phones." --  Now that's both public spirit
and competition at work.

CTIA also deserves congratulations for its efforts to make enhanced 911 services available to
all wireless subscribers over the next five years.

Competition also leads to constant change in the marketplace.  For example, 80 percent of
all wireless calls terminate on landlines. The landline telcos use their market power to
advantage by charging about ten times cost for termination of wireless calls. That
termination charge makes up at least 10 percent of wireless costs. This is a terrific tax on
your business.



So along comes Sprint Spectrum in Washington D.C., a characteristically creative Shelle
enterprise.  And suddenly the cards are redealt. By making the first minute of incoming
calls free, and providing caller ID and longer battery life, Sprint now is trading traffic in
nearly equal balance with Bell Atlantic's wire network.

But without or without balanced traffic, what are the limits on termination charges under
the new telecommunications law. Can the FCC impose "Bill and Keep" on all states?  Legions
of lawyers are presenting their views on the regrettably inexact statutory language.

We will tee up the issue in a forthcoming notice on sections 251 and 252, as we have already
advertised, and everyone will take their best shots in writing.   We're going to do the fairest
job we can in implementing the new law.   

We all know that the true judges of competition in communications aren't the FCC
Commissioners .  The judges are the capital markets.

According to Wall Street, our rules are important, but the twin keys to wireless success are
subscription and revenue per subscriber. The Street's ten year predictions for these two
parameters are defining today's wireless business.

Imus is predictable and The Street is predictable. And it is predictable that the Street would
rely on predictions.

At present wireless voice traffic is only 2% of wireline volume, so there's plenty of room for
growth there.

But wireless' future does not depend on whether it substitutes for wireline phone calls. 
Fundamentally, wireless communication has the extra dimension denied to conventional,
stationary communication --  Wireless lets you move around.  Its advantage is that people
will pay a lot to be in touch while on the move.   And wireless' future success will lie, I
suspect, in adding layers of features on top of this fundamental fact:

--data transfer from one laptop PC to another is a new layer of mobile communication;

--video communication from one PC to another;

--Internet access;

--downloading aplets of Hot Java over-the-air; and

--more layers of mobility.

The new applications of mobility will take imagination to invent, skill to market, capacity to
deliver, and investors to fund.

But the whole world is your oyster.

Wireless will be the dominant worldwide communications medium as the globe spins into the
information age.

Meanwhile, right here at home, I can't tell you how grateful the country is for the thousands
of new jobs you have created.

Your competition highway is not an easy road.

But it's a scenic route, featuring high-tech glitz, high powered marketing, saving  lines,
changing society, teaching kids.  It will be great fun to take this trip with  you, I'll look
forward to celebrating your successes again next year.

   -FCC-