NEWS Commissioner Chong Addresses Federal Communications Bar Association January 19, 1995 Washington D.C. FCC Commissioner Rachelle B. Chong addressed the Federal Communications Bar Association today. Commissioner Chong, herself a member of the FCBA, challenged communications policy makers to "think outside the box" in order to creatively address the issues facing the communications industry. She urged policymakers to "have the courage to sweep out antiquated policies and replace them with innovative ones." In discussing her regulatory philosophy, the Commissioner described herself as a regulatory pragmatist. She called for simple, pragmatic regulation that would provide both flexibility and certainty to regulatees. She also emphasized the importance of efficient government and called for narrowly tailored regulations. As a supporter of competitive markets, Commissioner Chong said "we must use our creativity to reach the long term goal of similar levels of regulation for competitors who provide similar services. I look forward to a day when there is full competition -- when any entity can enter any sector of the communications market and compete according to the same ground rules." - FCC - REMARKS OF COMMISSIONER RACHELLE CHONG TO THE FCBA January 19, 1995 Good afternoon. It's a great pleasure to talk again to my fellow FCBA members. Last July, many of you welcomed me at a terrific reception. In November, I met more of you at Martha's Table, where we snapped green beans and made dozens of peanut butter and jelly sandwiches together. I must say, I feel at home with this group, so put your feet up and let's chat. I thought some of you might be wondering if I have learned anything in my eight months on the job. Why, yes. Yes, I have. First, I've learned that -- on the rare occasion that I am at a loss for words at a Commission meeting -- one should always lapse into California Val-speak. "Like, you know, I think it's, like, a totally rad item. Like, you dig, Mr. Chair-dude?" I've also learned that most reporters don't really want to talk about cable reregulation or the theory of price caps. They'd rather talk about "Star Trek." As a Vulcan might say, "Fascinating, captain. But highly illogical." And when travelling abroad, I've also learned that dignitaries address me oh-so- formally as "Madame Commissioner." And my mail comes addressed to the "Honorable Rachelle Chong." Hey, in Stockton where I come from, being a "madame" isn't considered something particularly honorable! In truth, what I really have learned is that this is a totally cool, albeit formidable and tiring, job. Yes, I'm having the time of my life, and I've found that not taking myself too seriously is a great way to keep my perspective. I came here today to talk about three things: first, to lay down a challenge to communications policymakers and to you; second, to set forth my regulatory philosophy; and finally, to muse upon the Commission's processes and to suggest some improvements. Thinking Outside the Box First, the way I see it, the current challenge for communications policymakers is to have the courage to sweep out antiquated policies and replace them with innovative ones -- ones that will make sense for the Information Age. To meet this challenge, I would like to suggest that policymakers, including our colleagues on the Hill, strive to do what I call "think outside of the box." I'm talking here about a physical box -- B - O - X, the kind that holds things, not the Bell Operating Companies. Now, a box may seem like an odd metaphor for a speech on communications issues. Please allow me to explain what I mean by this phrase and why it is relevant. Before I had the privilege of serving as an FCC commissioner, I was a communications lawyer in San Francisco, you know that pretty city with all those bridges and hills and that totally unstoppable football team. Anyway, in my practice, I learned a lesson from one of my clients that I wanted to share with you today. You see, whenever this client was faced with existing regulations or people's mindsets that seemed to constrain its ambitious business vision, a common cry of the company's employees would be, "Think outside of the box!" When asked about this curious expression, employees told me this company saying came from a "conceptual block busting" exercise at a leadership retreat. It's a puzzle, which I will show to you. [Fig. 1] It's a connect-the-dot type of puzzle. There are nine dots in three equally spaced rows. There are two rules: First, you must connect all nine dots by drawing no more than four straight lines. Second, once you have placed your pen on the paper to draw the first line, you cannot lift the pen until you are done drawing all four lines. Hey, this puzzle isn't easy. Here's some typical unsuccessful attempts to solve it. [Fig. 2] You see, the puzzle can only be solved with some daring. You have to be willing to draw lines that extend outside of the box created by the nine dots. Here is one of many answers. [Fig. 3.] The saying "think outside of the box" reminded my client to think boldly and creatively to deal with the many obstacles facing the company. It reminded everyone to challenge traditional thinking, old assumptions, and rigid hierarchies. It was a call to imaginatively strive to change outdated laws and regulations to achieve its cutting edge business vision. I believe this manner of approaching a problem -- "thinking outside of the box" -- has particular relevance for us in today's changing communications world. Far too often, we find ourselves in a box, so to speak. Having absorbed traditional notions about appropriate approaches to policy, we tend to engage in habitual thought patterns when considering solutions for the future. I fear that the traditional assumptions and thinking that we bring to the job can act like walls that box us in. Those walls can constrain our thinking. They can stifle our creativity. They can prevent us from proactively shaping a new regulatory landscape governing converging communications technologies. But walls can give way if we just push a bit, with enough force and with the conviction of knowing the wall should come down to make way for something new and for something better. And so my main message today is this: I encourage us to break out of any "boxes" that constrain our vision for an exciting future -- a future in which all Americans will benefit from the Information Age. We need to push beyond traditional policy approaches and take a fresh look at the communications world. We must trust our intuition and our imagination to help us meet the knotty problems posed in this pivotal era. So I leave this topic with a challenge to you to "think outside the box" in the coming years, to dare to be innovative, so that we can create an Information Age that we all will be proud of. Regulatory Philosophy Let me shift gears slightly now and talk more directly about my role at the Commission. As many of you may have noticed, I am clearly the "serious" Commissioner. All right, all right, I have tried to liven up the 8th Floor with Aloha Shirts and Halloween costume parties. But in addition to this important morale boosting, my staff and I have been working very hard to promote efficient regulation. I consider myself an independent thinker -- a regulatory pragmatist. I try to be a consensus builder among my colleagues. I have found that many of the problems that the Commissioners deal with don't lend themselves to easy answers. You simply can't make everybody happy. But, it's the FCC's job to make the hard decisions in the public interest. Because our decisions tend to be difficult, I believe it is important to weigh each decision against my basic regulatory philosophy. At our public meetings, I have made it a point to discuss my decisions in the context of my regulatory philosophy, which I would like to summarize for you. The first plank is simple, pragmatic regulation. We must remember that our regulations have a very real and direct impact on our licensees' businesses. I realize that our licensees have their hands full running their communications businesses. For this reason, I believe that any regulation we impose should be as simple and pragmatic as we can make it. Along this same line, my second plank is that our regulations must be flexible enough keep up with technology. In the past, I have worked with clients whose very livelihoods depended on winning in the marketplace through creative service offerings. They developed those offerings by keeping pace with technology. One of my most difficult tasks was to tell my former clients that they could not implement innovative market plans or technology without time-consuming regulatory approval. It frustrated them; it frustrated me. Regulation should not frustrate entrepreneurial spirit. Rather, regulations must be flexible enough to keep up with market and technological changes. At the risk of sounding like I am contradicting myself, I also believe that even flexible regulation must provide certainty. To me, this means two things. It means that our rules should be clear and that they should enunciate a reasonable rationale. It also means that the Commission has an obligation to ensure that our rules are as legally defensible as possible. Yes, this is where my lawyer training comes out. There is no benefit to regulations that are put into place today -- only to be overturned by the courts a year later. Of course, in reality, these two points go hand in hand. Rules that are clear and well explained are upheld on appeal. My next plank has to do with efficiency in government. In November, Americans indicated that they want less government interference in their daily lives. I join in that call. To achieve this end, we should tailor our regulation as narrowly as possible to reach our public interest goal. Too often, government regulation feeds on itself -- it can grow like Topsy. Thus, I believe that we must have a regular review of the FCC's regulations to ensure that our rules still make sense in the current regulatory environment. Given convergence, we must look anew at our historical style of regulation and think outside of the box. We must use our creativity to reach the long term goal of similar levels of regulation for competitors who provide similar services. I look forward to a day when there is full competition -- when any entity can enter any sector of the communications market and compete according to the same ground rules. We are moving this way. Recently, we relaxed AT&T tariff regulations so that our regulations could reflect more competitive market realities. We are considering relaxing our TV ownership rules. We have revamped our CMRS rules to equalize levels of regulation between competing wireless providers. I strongly support this work, but I fear our work may be too slow. The final plank in my regulatory philosophy is really an overlay on all our decisions. I have been quite active on the international scene thus far, and I have listened very carefully to our foreign friends, who have much to share with us. Given that the U.S. plays an important role as a world leader in the communications field, I believe that we must consider global impacts in our decisions. Although many issues that we decide may seem limited to the domestic scene, many in fact have worldwide impacts. We must consider those impacts carefully. The Commission's Processes On to my last subject -- the Commission's processes. First, let me turn the topic for a moment from regulations to service -- as in old-fashioned customer service. One important concept I learned from my law firm days is the importance of customer service. I came to D.C. with the sincere belief that our licensees and the public deserve prompt, efficient and courteous service from the Commission. To further that objective, my fellow Commissioners and I have encouraged the FCC staff to keep working to improve our service record -- to eliminate backlogs, to be more responsive to public information requests, and to minimize burdensome information requests made to our licensees. In preparation for this speech, I asked each of the Bureau and Office Chiefs to tell me what initiatives they are taking to improve service. And here are some highlights of what they told me: The Commission now puts our press releases and daily notices out on the Internet so that they are more accessible to the public no matter where they are. As many of you know, I surf the 'Net too. So, I recognize that putting more information on the 'Net will help everyone be more informed on these issues. Several of the Bureaus reported that they have brought people from different divisions and branches together to work on special projects to reduce those miserable backlogs and get the work out faster. In my view, this breaking down of traditional lines of command is a terrific example of "thinking outside of the box." The Bureaus also tell me that they have started working with industry groups to identify ways that we can improve customer service. As I have said before, I believe that government should be aware of the practical consequences of regulation. It is not easy for us to know what those consequences are; you and your clients should tell us. The Bureaus also reported lots of little changes they have implemented to speed processing of applications. For example, the International Bureau tells me that they have totally eliminated the need to write orders to approve routine matters. How? By simply stamping "granted" on the application! Of all the reports I got, my personal favorite was the fact that we now accept credit card payment of FCC fees and soon, for the payment of forfeitures. I can see it now: "Hmm . . . This is a pretty serious violation. Would you like to put that on your Visa, Mastercard or Discover card?" My point here is that the Commission is aware that there is a need to work continually to improve our service. Eighth Floor Issues On the topic of service, I am now going to do something considered somewhat taboo at the FCC. I am going to comment on the process of getting action on the Eighth Floor from the Commissioners. Let's first take circulate decisions. It is no secret that the Commission deals with many of the issues before it on so-called "circulation." This means that routine decisions get sent up to the Commissioners' offices, and they literally "circulate" around the floor to be voted on without a meeting. Each Commissioner's office looks at the proposed order and, in due course, resolves any concerns that they may have, and then enters a vote into the FCC's computer. Due to the press of work, these "routine" circulate decisions tend to slip to the bottom of the priority list. I realize, however, that these decisions are very important to your clients and their day-to-day operations. After all, your clients are anxious to have their licenses granted, to have their transfers or tariffs approved, or to have their disputes adjudicated. For several months now, I have been encouraging my fellow Commissioners and their staffs to put deadlines on circulate items. If all the offices make this commitment, the FCC's decisions will be timely. Speaking about timeliness, let's talk about the release of FCC agenda items. As you may know, there was a GAO report a little while ago that criticized the FCC for slow release of its agenda decisions. I strongly support reform to speed up release of these items -- preferably within a few days of the public meeting. Now, we have made progress on this in the past few months. Of the twenty items decided at the last three Commission meetings, six have been released in eight days or less. In fact, two of the orders were released on the day of the meeting. Moreover, two of the six items that we voted just last week have already been released. Now, I admit that we still have a ways to go, but I want you to know that we are trying. I would also like to make another observation based on my "vast" experience of the past eight months. I believe that there are times that the sunshine law does not serve our decision making process very well. Especially on big picture or complex matters, the sunshine law can encumber and even delay our decisionmaking, since not more than two commissioners can meet at one time outside of a publicly noticed meeting. While I generally support the rationale for the sunshine law, I merely note that in some cases, it results in inefficient decisionmaking. I wonder if we can "think outside of the box" and relieve this situation while safeguarding the purpose of the rule. One final thought and I will mercifully end. From the day I arrived at the Commission in late May and jumped right into the frying pan of PCS proceedings, I have been searching ceaselessly for the true meaning of PCS. I've finally figured it out: PCS stands for "Please call Spock." Thank you for your kind attention.