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.