Press Conference of FCC Chairman William Kennard.
Re: Broadband Internet access, AT&T - TCI merger, separate subsidiaries issue, the Supreme Court decision in AT&T v. Iowa Utilities Board, and related issues.
Location: AARP Convention at Willard Hotel.
Date: February 4, 1999.

Editor's Notes: FCC Chairman William Kennard held an impromptu press conference with about a seven members of the press, comprised mostly of telecommunications writers. The meeting took place immediately after his address to the American Association of Retired People. It was held in a lobby of the Willard Hotel in Washington DC on Thursday morning, February 4, 1999. Tech Law Journal was present and recorded the conference. This document is a transcription of that audio recording.

Kennard. Well, I am not going to comment on who is ganging up on who. In this business everybody is ganging up on everybody else. Some of that is good, because a lot of people are competing in the marketplace, and that is healthy competition. Last week, as you may know, the FCC did address this issue -- open access to the AT&T network -- and we indicated, I indicated, it is a serious issue. We are going to continue to study it and monitor it. But at this point, because the Internet is still in its infancy, we decided it was not appropriate for us to today write rules that are going to govern how this network should be developed.  But it is an issue that we are going to be dealing with over the next several months.

Press. Do you see a difference between what they are talking about as an upgraded cable modem line going into a house? Did you see a difference between that line and, say, a phone line, and a standard cable line?

Kennard. Well ...

Press. Their argument is, we are paying the cash to upgrade these lines. We are not putting them in to be dumb pats for everyone to use.

Kennard. Well, certainly, from the consumers' standpoint, they are getting a new service. They are getting high speed Internet access that they cannot get over a standard telephone line. And, that is a great thing. That will open up a whole new horizon of electronic commerce for consumers. And, consumers will not have the frustration of having high speed access at work, and then going home, and having to wait a long time to download information. So, of course, its a different purpose.

Press. And so consumers who don't necessarily want it or need it -- they will still be charged the forty dollars for the line. Is that ...

Kennard. Well, I don't know exactly how they are going to be marketing this service, but, you know, ideally, consumers will have choice. We want to have these high speed broadband services deployed to consumers. We want to have it done in a procompetitive way. It would be a shame if the consumers of the future only have one high speed line into the home. Ideally, you want two or three wires, and ideally, some wireless providers, providing access into the home.

Press. Is the potential that AT&T is going to being footing the bill for upgrading these lines -- does that give them any wiggle room, any leeway? The fact that, you know, they are coming up with the case to upgrade this, maybe it is their to be able to control content.

Kennard. Well, we certainly want investment in broadband access. That is a good thing for the country. We need these networks deployed quickly. If the government is not going to do it, somebody has got to pay for it.  The FCC should not -- nobody in government should be depressing investment in broadband facilities, because consumers want this.  It is good for them. It is good for the economy.

Press. So, if they pay for it, it is theirs?

Kennard. Not necessarily.  This is an issue, as I said, that we are going to monitor. Here is the key thing, that I am interested in understanding more. And that is, what is the cost of delay? If we do not act immediately in this area, will it be difficult or impossible to go back later and ensure that there is access to these networks? That is an issue that -- that is kind of the next step in our analysis of this issue.

Press. Great. Thank you.

Press. Are you going to move ahead with the ILEC proposal about separate subsidiaries? To offer advanced data services?

Kennard. Oh yes. We had to remove that from the agenda because of the Supreme Court decision.  But, that was not a change in course. That was just a change in analysis, because on January 25th, you know, all of the jurisdictional lines shifted. And we have been living in a post 8th Circuit world. And now we are living in a post Supreme Court world.

Press. But part of the decision is also on the unbundling question. Are you taking a second look as to whether you can force the Bell Companies and GTE to unbundle DSL type related ...

Kennard. You mean the Rule 319 issue?

Press. Yea.

Kennard. Oh yea. We will have to. I mean, that rule has been -- it has been remanded for further consideration. That is something that we are going to have to look at.

Press. Have you had a chance to really think about it?

Kennard. No, we have not thought through all the issues yet. I am not prepared to tell you what the cuts are.

Press. On the AT&T TCI merger, is the unbundling question dead?

Kennard. It is not going to be considered as part of the merger, and I will tell you why. If we were to impose a condition on two merging parties, then it would be problematic for other cable operators who want to provide the same service. So, it is an issue, that in my view, needs to be considered in a more comprehensive way, an industry wide way, as opposed singling out just two single players.

Press. If they charged -- you said you weren't planning to do that -- in the short term -- you're not planning to take a -- rule making? (This was a barely audible question.  It may not be transcribed correctly.)

Kennard. Yeah. We have some background work today before we make that step. See, what I don't want the agency to do is to compose a set of rules until we have a better understanding of how this marketplace is going to develop. This marketplace is still in its infancy. Remember, we need to have a certain amount of humility to recognize that we cannot predict exactly where it is going. If you cannot predict exactly where a market is going, you cannot presume to have a regulatory solution for every problem that is going to arise. Got to go. See you guys.

Press. Thank you.