Good morning. About 120 years ago two Colorado mayors had a big decision to make. One was the Mayor of Aspen. The other: the Mayor of Ashcroft. The railroads were expanding through the West. The Union Pacific had to decide where to route its tracks through Colorado. Should they go through Ashcroft? Or should they go through that smaller town about twenty miles away? As the story goes, the Mayor of Aspen saw the future. He sold the Union Pacific on the virtues of his town. And that's why today, when you think of ski resorts, dinner theaters, buying jeans at Boogie's and vacation homes for Barbra Streisand, you think of Aspen. Ashcroft? Literally off the beaten track; it's a ghost town.
The President has often said that the choice we face as a nation is whether to embrace the opportunity for change or try to hold it at arms' length, hoping we last long enough to survive.
That's not much of a choice. And the President's decision has been clear.
When the President fought successfully -- without a single Republican vote -- for a real program of budget deficit reduction, it was because he understood that the challenges we face require enormous change -- and concrete action. Action that has brought lower unemployment, low inflation, solid growth and more jobs.
When the President fought successfully, against strong political opposition, for NAFTA, it was because he understood that our only hope in the marketplace of global competition is to compete, not retreat. And that's what we are doing.
When Congress returns before the end of the year to approve the GATT agreement, it will follow the course that President Clinton has set out -- to base our future on the simple belief that American companies can be the most competitive and American workers the very best in the world -- and that we must master change if we are to be the masters of our fate.
Are we prepared to take advantage of the coming information revolution?
In today's -- and tomorrow's -- marketplace, no information company will be able to stand intransigently in the path of change. To be rooted in one spot will be, inevitably, to become rooted in the past.
And among all the trends, there is one inexorable shift that we ignore at our peril -- the shift from monopoly competition.
In an era in which the Soviet Union has fallen and capitalism is ascendant in Eastern Europe, it should be no surprise that competition is about to reach even our local telephone exchanges. Competitive access providers are increasingly providing interstate telephony service to businesses that were once the sole domain of local telephone companies. Cable companies are seeking authority to provide local telephone service, and a recent survey reports that a third of cable subscribers would be willing to subscribe to comparably-priced telephone services provided by their cable company.
New technologies offer the promise of competition. Consider the growth of wireless services. The number of cellular subscribers in the United States is expected to double by 1998, while entrepreneurs are planning to ring the Earth with satellites that will bring telephone services to people everywhere on the planet.
The auction of PCS spectrum that begins in December, as a result of this Administration's leadership, may well reshape the structure of the marketplace by introducing wireless telephony competitive with traditional telephone wires.
Some believe that, by the end of the decade, wireless telephone service could offer service at prices broadly competitive for some customers with traditional, wire-line telephone companies. That change alone would bring additional competition into the local and log- distance telephone markets.
In the long run, competition will come. But we must confront, as well, the short run - - a time when significant regulatory monopolies exist and when policy makers must confront the choice: Towards competition or towards monopoly?
What would happen if we tried to resist the trend to competition? First, technology and innovation would suffer. The opening of the long-distance market to competition drove down prices, improved quality, fostered innovative services and spurred the deployment of new national fiber-optic networks.
Second, and perhaps more importantly, failure to end monopolies might, in fact, bring higher prices to residential telephone users.
Surprised? You shouldn't be. State regulators are, quite rightly, permitting alternative carriers to provide telephone service to business customers == a trend that will continue even in the absence of new federal, deregulating regulation.
But partial deregulation, if it stopped there, could actually lead to increased upward pressure on residential rates, as local telephone companies seek to replace lost business revenues. Residential customers could find themselves occupying the worst place in the marketplace -- isolated from the innovation and lower prices of competition but tied to an increasingly unprofitable monopoly provider That would not be in the public interest.
We cannot return to the past and we cannot go halfway. The market for computers exemplifies the advantages of competition -- a high-technology product with increasing power and lower prices. Consumers for information products want what consumers always want -- higher quality, lower prices and more choice.
The only viable path is towards competition. But as we have recently discovered, the right course is not easy to attain.
I was tremendously disappointed by the failure of reform legislation in this Congress. Throughout the year, the content of legislation increasingly conformed to the Administration's goals. The House of Representatives, led by Chairmen Dingell and Brooks, and Congressmen Markey and Fields, passed reform legislation by votes of 423 to 5 and 423 to 4. The Senate Commerce Committee approved S. 1822 with strong, bi-partisan support.
Then reform came to a stop under a barrage of special-interest attacks and "non- negotiable" demands. No one was immune from special-interest appeals.
I have often talked about a little girl in my home town of Carthage, Tennessee sitting at her computer and traveling the information highway to explore the vast resources of the Library of Congress. But this September that little girl could have found in her parents' mail a letter from her local telephone company. "Please," it said, "keep S. 1822 from coming to a vote this year." Even as the telephone companies were engaged in what they described as serious, good-faith negotiations, this telephone company tried to disconnect its customers from the future.
But those tactics won't work. Regulatory change will come. Because this fight is not being fought for the benefit of particular competitors, even competitors with entrenched market interests. It's being fought for consumers.
It's not being fought for partisan advantage, either. One of the two main House bills was cosponsored by a Democrat, Ed Markey, and a Republican, Jack Fields; support on the House floor came from Democrats and Republicans, including Newt Gingrich. Seven of the nine Republicans on the Senate Commerce Committee voted to approve S. 1822.
But the change that we seek must truly lead us to a world of real competition.
How do we do that?
In particular, how can we resolve the interests of the Regional Bell Operating Companies and their potential competitors?
The RBOCs legitimately want to use their expertise to compete in other markets -- providing long-distance telephony, manufacturing equipment, supplying video programs. They worry that they will become "hollow monopolies" -- the purveyor of local telephone services, but only to customers that others do not wish to serve.
On the other hand, their potential competitors, including long-distance and cable companies, are suspicious of the RBOCs. These companies fear that if the power of local telephone companies if unleashed before there is effective competition, they will become prey to RBOC monopolists.
This debate is at the heart of the matter.
Some would solve this conflict by having government declare "hands-off" and not trouble itself with the consequences. But unleashing monopoly power is not a path to competition.
Senator Dole, in his list of "non-negotiable" amendments, proposed another approach. He suggests, for example, that regulatory monopolies be freed from most regulation when one -- just one -- competitor enters their marketplace. That means that a telephone company with 99% of the market would be treated as if it had no market power at all. That's not realistic, and it's certainly not real competition.
We must do better than that, to protect the public interest and to promote private competition.
We should begin with the basic principles that this Administration advocates as the basis for legislative reform -- private investment, real competition, open access, flexible governmental action and a commitment to universal service.
Most fundamentally, we must remove barriers to entry, allowing competition for the delivery of local telephone service.
But our experience, and the experience of regulators around the world, demonstrates that free entry will not by itself be enough.
Interconnection and unbundling will be critical. Additional governmental action may be required to secure viable competitive opportunities for new entrants into local telephone markets. For example, we have proposed that companies lacking market power be exempt from the kind of price regulation that my be legitimately applied to companies that retain significant market power.
The creation of competition in the local telephone exchanges is not just the business of Washington. Around the nation, progressive states -- New York is one -- are experimenting with methods of bringing the advantages of competition to their residents. Just last week, New York State approved the "Rochester Plan," which allows new competitors, like Time Warner, to provide local telephone service in Rochester while ensuring that local telephone rates will not rise for at least seven years.
That's great. By bringing competition to consumers, states can help their consumers right now. By experimenting with different forms of regulation, states can provide valuable experience on how real competition can be achieved. By action now, states can demonstrate the inevitability of competition.
That lesson is the most crucial of all. Because competition in the local telephone exchanges is a fundamental component of competition in the information marketplace at large. We do no impose competition as a punishment on those companies that have been granted regulatory monopolies, whether in telephony or cable or anywhere else. Rather we promote competition as an achievement in which they will be able to share. For example, local telephone companies must themselves be able to enter the long-distance markets, to manufacture equipment, and to supply video services. With safeguards to prevent the abuse of continuing market power, we will be on our way to the information marketplace that I described earlier this year -- one in which any company will be able to provide any service to any potential customer.
But the marketplace, and the interests of consumers, cannot wait. That is why we must push forward on all fronts. Let me mention just a few.
First, the Administration will work with the states -- with governors, state legislatures, and state regulatory commissions -- to encourage competition in the local loop. We are planning a Federal-State-Local Government Telecom Summit to take place in early 1995, an occasion to meet and voluntarily discuss both state and federal telecommunications policies. We will consider participating in state proceedings as well.
Second, the Administration will also support measures by the FCC to promote competition by opening up interstate markets, promoting number assignments and portability, and fostering interstate interconnection. We will urge the Commission to move forward on these initiatives.
We will also encourage the Commission to work with the States in order to facilitate an interoperable, accessible National Information Infrastructure.
Both state and FCC action will help to create the conditions for reform. Businesses that face new markets and new competitors will be willing, I believe, to get down to the business of change.
Third, we will continue to press for federal legislation in the next Congress. And we will join efforts with state governments and industry participants that have demonstrated their commitment to competition.
The passage of federal legislation remains absolutely necessary. Technology may bring some additional competition in the near future, but not enough and certainly not fast enough. In a world of 18-month product cycles, innovation delayed is innovation denied. Legislation is necessary to serve the public interest in opening markets now, and to ensure the achievement of our other basic goals, including universal services and flexible government action. Legislation is necessary to ensure that the United States adopts national principles that permit it to remain a global leader in information technology. How ironic it would be if, from the vantage point of a Global Information Infrastructure, we faced a untied Europe but a fractured United States?
Finally, we will continue to work toward our goal of connecting every classroom, library, hospital and clinic to the NII by the year 2000.
Last January I challenged the private sector to work with us to realize this goal and I repeat that challenge today. The private sector, as much as any citizen, has a stake in the education and good health of every American. We must work together, if not voluntarily, then through progressive legislation.
I have talked today about markets. But the impact of our reforms will be felt by people.
This Administration will work hard to free up markets for competition and profits.
This Administration will work equally hard to ensure that our children and our workers and our citizens in general enjoy the benefits of information technology to build better lives and better communities.
We are not embarked just on grand technology policy nor even economic policy. When a pregnant mother can be monitored by her doctor from home, or parents buy educational software for their children, or workers are able to be more productive because of new information technologies, then we have used innovative technology to pursue the American dream.
This is our tradition.
We must make sure that our national information highway bypasses no one. We cannot allow this country, or any community within our country, to become a communications ghost town. For to be left off the beaten track in the information age is to be cut off from the future.