The Telecom Act,
the Internet, and Higher Education
by Reed Hundt
I
want to talk about the Internet. The Internet is really big. I was in
Ireland telling a group of folks about the Internet, and I told them
that when I became the chairman of the FCC a long, long time ago in
1993 we had just a few people on the Internet and that when I left we
had ten times that number. I told them that there were a few hundred
thousand Web sites in the whole world when I became the chairman of
the FCC and that now we have almost uncountable millions. This year,
for the very first time, there was more e-mail than actual postal mail
in the United States, and that will never be changed. It will continue
to be the case that the entire country will communicate fundamentally
by e-mail. And I went through all of these different things, and I said
that the Internet really is a new media and that it is the proof of
what Marshall McLuhan taught us thirty years earlier -- it is a new
media that subsumes all previous media and that extends all the senses
in infinite directions -- and at this point somebody in the back interrupted,
and he said "I -- I have a question." "Yes," I said. He said, "Can you
pour Guinness over the Internet?" "No," I said. He said, "Ah, then there'll
always be an Ireland."
Well, there will
always be a Washington. There will always be a national government,
and we'll always have the pleasure of criticizing it. There's a historical
truth here in this great democracy of ours: we've always criticized
Washington. Mark Twain said the following: "Suppose you're a congressman.
Suppose you're an idiot. But I repeat myself." That's not a very nice
thing to say, is it? But I didn't say it, Mark Twain said it.
My particular time
in government, by coincidence, was the time of the Gingrich-versus-Clinton
battle from November 1994 to, in fact, just a few months ago. And this
battle was, I think it's fair to say, the most partisan, the most aggressive,
the most scandal-ridden, the most no-holds-barred, down-and-dirty, use-any-process-you-can-to-win,
the most controversial political period in this country since the beginning
of the New Deal. We could come together in this time period on almost
nothing, and there was nothing unsayable about the enemy -- from either
side. There was nothing undoable. And you can look back at this period
that we have only barely escaped from, in my judgment, and you can say,
What actually was accomplished?
Somehow or other,
in this time period, we completely reversed the monopoly era in communications
and instead embraced a period of competition and innovation and experimentation
such as no other industry sector has ever seen in any other economy
in the world. And better than that, somehow in this time period, the
nation began the largest single national program ever to better education
from K through 12 -- the largest single ever for K through 12 -- and
that is the Snowe-Rockefeller Amendment to the 1996 Telecommunications
Act, which at this very moment is causing $4 billion dollars in new
money to be spent to put the Internet in every classroom in the country.
In 1994 we had 9 percent of all classrooms online. Today it's 54 percent.
The president in 1994, 1995, and 1997 restated in the State of the Union
address the national goal of getting the Internet in every classroom
by the beginning of 2001, and we've got a shot at it. How in the world
did this happen? It was not the least bit easy, and it was not an accident.
First of all, fundamentally
the most important reason why this impossibility in fact became an inevitability
was the communications revolution itself -- this beckoning, exciting,
magnetic thing. It has at least three dimensions: technological, economic,
and political. The technological dimension is the advances in fiber
communication and in switching and in software all coming together at
the same time to make possible multimedia transmission at a fantastically
low price per bit. The telegraph, when invented by SamuelMorse on a
government grant, was described by Nathaniel Hawthorne as a thing that
would wrap the world in a great nerve of intelligence. And the reason
this did not happen, except in the high-end business community, and
the reason the telegraph was fundamentally used by railroads and insurance
agents and armies as opposed to people and education is that throughout
the nineteenth century, the average price for communication by telegraph
was one dollar per word. The great revolution that we have now has that
technological character but also has an economic character. The price
per bit is fantastically low. In fact Jim Crowe of Level Three Communications
is going around the country telling people that with his long-distance
communications technology, pure IP end-to-end, soft-switch technology,
designed by Lucent, merging voice and data on the same network, he believes
that he will be able to deliver a new cost basis for communication that
is 1/27th the current price for long-distance communication. So there's
a technological dimension to this revolution, there's an economic dimension
to this revolution, and there is -- and this actually is the most important
-- a political dimension to this revolution. And the political dimension
is that somehow or other in this country and in Mexico and in other
countries, the idea of competition and innovation and invention and
revolution and entrepreneurship has been embraced instead of regulated.
The history of
government in technological areas is the following. Government has normally
been used in every country by the established infrastructure, the established
economic structure, to stifle innovation, reduce investment, limit competition,
and ensure absolute reliability at the expense of all those other values.
That's the normal history. And somehow, and it's complicated as to how,
we have reversed that. The result is that we have, in this country and
in Mexico and around the world, unleashed technological change, opened
the door to economic transformation, turned upside down all structures;
we have, in a word, revealed the Internet. I love this part in particular.
The 1996 Telecom Act mentions the Internet in two places. First, it's
unlawful for anyone to use it for obscene purposes. It took less than
two months for the courts to strike that down. And then there's this
other phrase about the Internet in the 1996 Telecom Act: the FCC should
promote it. Oh, they never should have said that. We took as much opportunity
to do that as we possibly could. The price for Internet access for ten
hours a month in the United States is half of what it is in Europe and
one-third of what it is in Asia. The price for unlimited, always-online,
ubiquitous, pervasive Internet access in the United States is more like
one-tenth of what it is in Europe and one-hundredth of what it is in
Asia. That is because we twisted many pretzels of logic, and we created
many, many loopholes so that we would be pro-data and anti-voice, pro-entrepreneurship
and anti-the recovery of historic cost, pro-revolution and anti-the
status quo. It seemed like the right thing to do. Why?
When I was sworn
in to the FCC by -- and this is just a coincidence -- my high school
classmate Al Gore (my law school classmate Bill Clinton was busy that
day, that was just a coincidence), I talked about a true story in my
family: my grandmother, my father's mother, in the middle of the depression
was a widow. She was out of work, and they faced very hard times, and
there didn't seem to be any particular way that my father could finish
high school. He wouldn't have been able to go on to the University of
Wisconsin in Madison, and so she got a job in the new communications
revolution. She became a switchboard operator, a job that had never
existed before, a job that doesn't exist now, but a job that employed
hundreds of thousands of unskilled people, largely women, in the United
States. Because of the size and the dexterity of their hands, businesses
thought they could be trained in this new technology, and this is how
she got her family through the depression years. And so in my speech
when I was sworn in (when you're getting sworn in, you're giving this
speech, and it's the one time you can make the vice-president sit and
listen to you, or the president, or whomever you have swearing you in),
I said I hope that we will be able to create at least one new job and
somehow have that story passed on. When I was done, Al took me by the
arm and took me aside, and he said: "Only one new job? You set the bar
really low."
Since that date,
eight million new jobs were created in the information sector in the
United States -- two out of three of all the new jobs created in the
United States. This is a fantastic story. But while the economy is changing,
it is also the case that the education world -- that every other sector
of the country -- is also changing radically. When you have a public
job -- it can be at a public university or a public school or it can
be in public government -- you get to the job, and you have no idea
at all what to do, but you have ten thousand people who are happy to
tell you. So everybody troops in. There are ten thousand communication
lobbyists in the United States, and they all came in to my office one
after the other, then they came in groups, and then they came in larger
groups, and then they formed whole armies that marched upon us at the
FCC, and they all had an agenda. This is the way democracy works. It
doesn't give you, if you're in an office, any time to think at all.
But fortunately for me, because of my high school classmate, I had --
and this is a completely true story -- in 1984 been sitting in his office
in the United States Senate, and Al Gore said, "I want to make sure
that every schoolgirl in Carthage, Tennessee, can go to the Library
of Congress." And I thought to myself, so we're having a bus-ticket
voucher program? What is he talking about? And he began to talk about
fiber-optic cable and the information highway -- a term that no one
had ever heard of, and I certainly had never heard of -- and then he
said to me: "How many bits a second is really what it takes to communicate
in distance learning from one place to another? How many bits a second?"
I said, "I'll go look it up, Senator." I had no idea, and I did not
look it up. I couldn't. I did ask everybody for the next fifteen years,
and finally Jim Crowe of Level Three actually gave me the answer: full
3-D high-definition communication over some distance person-to-person
is 15 terrabits per second, which means at today's prices, with today's
network in the United States, you could have five such conversations
going on, and it would cost $1 billion an hour. But all of that is changing
as rapidly as it can possibly be imagined.
So with Al's idea
that somehow everyone in education would somehow be connected to everything
that they would ever need to be educated about and to every person who
would ever care about education, we set about, in government in 1994,
to write this provision to the new Telecom Act. It was kind of a deal,
in our mind. We were going to deregulate on the business side, and somehow
we were going to squeeze the great business sector just enough to get
the money out to put into the fund to connect all the classrooms. And
we thought that the federal side of the contribution was, roughly speaking,
$2.25 billion per year on a base in the communication companies alone
of $250 billion, so that's about 1 percent. And from the education perspective,
it's even a smaller percentage of the total spending on education in
the United States: roughly all spending in education is between $300
billion and $400 billion a year. And the $2.25 billion we were aiming
for on the technology side would be a declining percentage as these
other two denominators would grow bigger year over year. And we thought,
that's asking not that much, but just enough. The consulting group McKinsey,
where I have the happy chance to now be working in the private sector,
did a study for us, for free, and determined that if we could get that
kind of spending going, we'd be able to get everybody connected to the
Internet by the year 2001. And so that was where the number came from,
and that was the plan, and that 1 percent -- you would have thought
that it was a religious war. And I'm not going to tell you all the story
because the rest of it is in the book that I'm publishing in January
-- I need you each to buy ten copies because I need the money.
But this much is
true. This particular provision had the following history in brief.
In November 1994 a new Congress came in and said it wanted to eliminate
the Department of Education. It didn't want any new programs in the
education area at all, which wasn't a good thing for our idea. Olympia
Snowe, a Republican senator from Maine and someone who knew everything
that there was to know about really needing to get educated in a remote
area and not having an economic base in your state to pay for even an
up-to-date library, joined hands with Jay Rockefeller from West Virginia,
who knew the same things and also knew from three generations the obligation
of the rich to give something to society. Those two senators took the
lead on the Senate side. The Gingrich Congress refused to put anything
on the subject in the House Telecommunications bill because ideologically
it was the wrong thing to do. All education should be paid for only
by people in local areas, and if the neighborhood was rich houses and
the property taxes were high, then that was good for the kids who happened
to live there. If I sound like I'm partisan, I was there. And so what
happened was that Senator Snowe and Senator Rockefeller fought this
out in the Senate Commerce Committee, and this provision passed by one
vote -- Senator Snowe's vote. She crossed party lines. It would have
been 9 to 9. She made it 10 to 8, and then the bill went to the Conference
Committee -- you remember it wasn't in the House side at all -- and
the vice-president said the president would veto the legislation if
this provision did not survive the Conference Committee, and all the
folks on the Republican side said that he was just bluffing, and he
said that he was not bluffing, and Senator Snowe said: "This has nothing
to do with party. I will publicly terrorize you if this doesn't happen."
And they all backed down.
So that's how it
got into the law, and after it got into the law, then we had to get
it passed by all the state regulatory commissioners, and then we had
to get it passed by the FCC, and that took a year and a half. The American
Library Association was incredibly helpful. The National Education Association,
the NEA, was incredibly helpful. George Lucas was helpful. George Lucas,
of Star Wars fame past and Star Wars fame present, picked up the phone
and called me and said, "Don't they understand that with the new technology
the whole nature of education will be changed?" He said, "Doesn't anyone
understand the only power that really exists is the power of the idea?"
I said, "Is that the same thing as the force?" He said, "Yes." He said:
"That's why their little wand is invisible. Don't you get it?" This
really happened. I said, "Would you tell this to the other commissioners
of the FCC?" "Sure," he said. He called them up, and they said George
Lucas and Jay Rockefeller in the same day -- lots of strange vectors
are colliding. Somehow or other -- somehow or other -- we got this rule
passed at the FCC.
Ninety percent
of all the school districts in the country have applied for this in
the last twelve months. Ninety percent. That is one heck of a take-up
rate. The mayor of Philadelphia told me that this particular feature
was the most important thing done in the federal government for education
in his lifetime. The mayor of New York, Rudy Giuliani, told me that
this would transform education in New York. In Los Angeles, in Chicago,
all around the country, I have been told the exact same thing by all
the urban city mayors. In rural areas, the exact same message is coming
forth. It is a transformation for education, K through 12. We have always
followed the following view. Teachers should be isolated with students.
Theyshould not be able to be reached. They should not talk to other
teachers. Paren ts should never be able to schedule meetings with them.
We never really stated the rules this way, but this is the way they
were. All PTA meetings should be scheduled at times that are impossible
for anyone to attend. We should never have up-to-date information on
any child, whether Johnny has lost his lunch money or Jane doesn't feel
well. It should be impossible to have a dialogue between parents and
teachers on how kids are doing. Information should be hoarded, concealed,
hidden, shredded, or destroyed. It should not be built, created, shared,
developed, or learned from. We should make distance learning extremely
expensive and hard to accomplish, awkward technologically, and economically
insurmountably impossible to implement. We should make sure that when
you have children with disabilities, you teach them somewhere else at
fantastic expense instead of using technology to mainstream them in
any way whatsoever. This is what we have done if you really describe
it the way it has been -- not that anyone ever said this is the way
we want it, it's just that it's the way it was.
I'd like to mention
the technology and disability center at Stanford. It's a trip worth
taking. There is no kind of physical or learning disability that they
are not working on, as far as I can tell. And it is absolutely awe-inspiring
and heartrending to see, as I saw, a quadriplegic, an individual who
can breathe a little bit and barely move his eyes, and who with technology
is totally mainstreamed in education in every particular respect. By
moving his eyes, he types. By moving his eyes, he makes anything happen
on that computer, and that's just one example of dozens and dozens of
examples of the way that just that particular issue is addressed by
technology. That's why these technologies need to be absolutely everywhere,
available to absolutely everybody. We all know this. We've treated education
like a commodity. In fact, it's the most specialized product ever invented.
We all know this. We believe in standards in schools, but what we should
not believe in is standardized tests. We should believe that everyone
should meet certain standards, but we should not trust standardized
tests to tell us how to teach a child or to tell us that child's potential
because we know statistically that's not what they reveal.
The other day I
was out in Silicon Valley, and I was talking to an Angel financier,
and she was telling me about a new business she'd invested in: a Starbuck's
for college preparatory courses. Meaning, there's all these little offices
or shopfronts, and you go in there, and there's somebody who uses the
Net as a base for developing all the techniques, and you get a cram
course for how to do well on the SAT, and it only costs $2,500. I listened
to this story, and I thought, this is awful. This is not good. This
is awful. For $2,500, you can use education to get a jump up on everybody
else. This is only for people who are willing to find $2,500 or who
can afford to find $2,500 to get the preparation.
We all know how
much higher education is going to be changed. In the course of doing
the advocacy for the Snowe-Rockefeller provision, I went to many colleges
and universities. The number one, the first one I went to, is the one
that taught me the most -- Virginia Tech in Blacksburg, Virginia. It's
all about extending these networks from higher education to everybody
in the community. Here are some of the places I visited: Duke, Brooklyn,
Yale, Harvard, Princeton, Berkeley, Stanford, UCLA, USC, Northwestern,
Kishwaukee Junior College, Virginia Tech, GW, Columbia, Penn, many others.
And I've got to tell you the truth: I really didn't find anybody in
higher education that wanted to do anything at all to help Snowe-Rockefeller.
That's the truth. I'm sorry to tell you. I couldn't find anybody. Maybe
I went to the wrong places. Maybe I said the wrong thing. I couldn't
find anybody. It just wasn't an issue. It wasn't an interest.
The Internet is
all about community. In phase one, the Internet was about connection,
any kind of connection. But in phase two, the one we're entering into
now, it's all about community. New software creates new communities.
Identity software, the privacy issues, are really all about a way in
which technologists and businesses are trying to invent new products,
put them into the marketplace for the purpose of creating new communities.
What are portals except the rudimentary versions of the kinds of Internet
communities that will be shaped by technology? And what is a university
if it isn't a community? The Internet is the biggest threat to the system
of higher education in this country that that system has ever seen,
and it is a welcome, healthy threat.
So I went back
to my old school, Yale, and the dean of one of the professional schools
told me the following. He said, "Well, I've been in education all my
life, and I've given a lot of thought to education, and I think the
following. I think that, number one, the historic, primary purpose of
the university was to have a library so that scholars could gather around
it. And second, it was about a place where scholars could meet other
scholars and work and talk to them. And third, it was about a place
in which there would be a validation system so that smart people would
be stamped: grade A, Yale; grade A, University of Wisconsin at Madison
-- whatever. And next and fourth, it's about a place of quiet contemplation."
And he said: "As far as I can figure out, all four of these purposes
of a university are not just jeopardized but are probably invalid in
the information age. No particular reason to go anywhere to have a library
when the libraries of the world are available at your fingertips. No
particular reason for scholars to actually physically meet with scholars.
When you look at the reality in higher education today, the communities
of scholars that interact with each other are on the Net; they're not
in person anymore. That's the reality. In terms of validation, how long
will a validation system last when fundamentally the Internet disintermediates
those systems? And last, in terms of quiet contemplation, it doesn't
get any more quiet than if you live exactly where you want to live,
Hawaii would be nice, and you get on the Net and serve all the other
purposes that the academy can provide. And that's real quiet compared
with being on any campus in the country." So he said as far as he could
tell, the whole idea of, in his case, Yale University, was threatened,
and he just wondered whether there was anyone to talk to about that
because it was kind of an interesting idea as we get into the twenty-first
century.
The Internet changes
everything. It absolutely disintermediates everything. Everywhere, the
Internet goes to the intermediary and says, do you really serve a purpose?
And insofar as the university itself is the retailer of knowledge to
the consumer, the student, it is disintermediated. It is threatened.
Now all that's necessary is for people to be able to trust the new Internet
system of education to bring down that old system. All that's necessary
is for people to be willing to -- well, let's stretch our imagination
-- imagine that to buy something, you would go on the Internet, and
you would get acquainted with somebody whom you didn't know and were
never going to see, and then you would buy a product that you couldn't
touch, see, or in any way have any sensory impression of, and you would
negotiate the price, and you would be happy. And that's eBay, with a
market cap of $20 billion dollars, I think, as of yesterday. And of
course again and again, business after business, transaction after transaction,
the Internet eliminates the intermediary.
So what in the
world are the intermediaries of higher education going to do about it?
First of all, they ought to be darn glad that we are inventing a way
to democratize education because that's fundamentally what this is all
about: empowering the people who are ultimately the purpose of education,
and that is the next generation, and disempowering those who have a
role but it is a servant role, and that is the role of passing on the
education to the next generation -- empowering the individual scholar
and disempowering the institutions that the individual scholar should
be served by and not have to serve. That is what the Internet is all
about. And so the Internet is also an assault on elites. One of the
top three Ivy Schools reported the other day it was a little worried
about the skewing of students with respect to the income base. A little
worried. Here was the statistic. Eighty-five percent of the students
at this top Ivy League school, 85 percent, were from upper-income families
or higher. Higher -- what is higher? Gates is higher. Eighty-five percent
-- and it was a little worried that maybe it was a little skewed. It's
high time for the highest level of education to be democratized in this
country.
Fundamentally,
the finest schools are really collections of the people with the finest
capability to achieve and the finest ability to contribute. And ultimately,
the glory of education in America is the ability of education to serve
everyone and to serve the community and to serve the idea of America.
And the great thing about America is that we have never had a recognized,
a real separation between the academy and the rest of the world. It
has fundamentally always been the case that we have seen and prized
the integration and the melding of the purposes of the academy and the
rest of the country. Jorge Luis Borges wrote a story called "The Library
of Babel." It's a story in which there's a marvelous library, and it's
a library that has many impediments to its use. I won't try to tell
the story -- he tells it brilliantly -- but this is the end of it: "Even
if the human species were extinguished, the library would endure. Illuminated,
solitary, infinite, perfectly motionless, equipped with precious volumes,
useless, incorruptible, secret." And this image, this wonderful image,
this frightening image of the academy is exactly what is impossible
to sustain, even unintentionally, in the Internet age. Thank goodness.
So since we know
this story is going to come out right, let's all lift our heads up and
look precisely at what our goals need to be. The poverty level in the
United States is about as high as it was in 1978. For every one person
in the world in a rich country, there are five in a poor country, and
the trend lines indicate that by the time my ten-year-old daughter is
my age, for every one person in a rich country there will be ten people
in a poor country. The gaps are widening. We have had in the last ten
years the greatest increase of wealth in the history of humanity and
simultaneously the greatest increase in the quantity of poverty in human
history. We have in the United States very low unemployment, just a
little bit lower than it was in 1973. We have at last attained productivity
gains that in fact finally resemble the productivity gains that we averaged
from 1870 to 1970. We have, in fact, median family income that's only
5 percent higher in the United States now, adjusted for inflation, than
it was in 1973. We, in fact, are just beginning to bring back fully
to life and to meaning the American Dream, after twenty-five years of
wondering whether it would survive. This is a pretty good place to be
as we approach the twenty-first century, but we've got a lot of work
to do here in the United States, and on a global basis, to lift everyone
up to the kind of promise of opportunity and fulfillment that the information
age can bring us.
Note: This speech
was presented on April 29, 1999, at the Networking '99 conference in
Washington, D.C.
Reed Hundt
is a senior adviser on communications and technology to McKinsey & Company,
a worldwide management consulting firm. From 1993 to 1997, he served
as Chairman of the Federal Communications Commission (FCC), presiding
over the implementation of the Telecommunications Act of 1996 and helping
to negotiate the World Trade Organization Telecommunications Agreement.
