Well, I've waited my turn to come before this august assemblage and I am honored to be here, but I'm not so sure about the timing. This morning's headlines on telecom financing and yesterday's story about tensions in the Commission don't create quite the uplifting atmosphere I hoped to cultivate, but I guess that's Washington on a hot summer's day. Looking around the room, I see many friends, old and new, who I've had the pleasure of meeting and working with during my first year at the Commission. Hard to believe, but I just celebrated my first anniversary a few weeks ago.

And what a year it's been! During this year, we've either teed up on our own, or had remanded to us by the courts, almost every media ownership rule within our purview. We've issued far-reaching proceedings to determine how broadband is going to be deployed and how it will, or will not, be regulated. We've opened several states to long distance telephone competition by approving a number of Section 271 applications. We're in the midst of fundamentally rethinking how spectrum should be allocated. We've done lots of interesting things on auctions -- holding some, postponing others, fighting in court on a few. We've begun looking at some far-reaching merger proposals. We've authorized multiple new services. We've reorganized the Commission, seen some Bureau heads depart and new ones arrive. The list goes on.

And that was just inside the Commission. All the while, in the great world outside 445-12th St., SW, the economy was performing sub-par and we witnessed the wholesale demolition of the dot.coms and many CLECs. Even some of the big guys got in over their heads, suggesting that maybe their business plans weren't so great either. And then came September 11 and the fundamental reorientation of U.S. Government policies, agency priorities and your and my personal and family lifestyles. No one of us would like to relive that year, but it was one for the history books.

Let's begin with the biggest event - September 11. The horrid events of that day added a whole new dimension to everything we were doing. Suddenly, not only were we dealing with the problems of a depressed advertising market, a burst internet bubble, and the demise of many communications companies - problems that had seemed like the worst possible crises themselves only months ago - but we faced a huge and totally unprecedented threat to our country's safety and security.

A major unfinished task before the Commission this year is to strengthen homeland security in the wake of the terrorist attacks of September 11 and in preparation for quite possibly worse to come. Before I go any farther, I want to say to all of you what I have already said to some of you about the performance of America's communications industries on that terrible day. Television, radio, cable, newspapers, newsmagazines, satellite, the Internet -- all performed commendably, often heroically. Americans owe your industries, your workers, your leaders a huge debt of gratitude for the actions and sacrifices made during those trying days. Mobilizing immediately, you kept us in touch with one another, helped us locate loved ones, expedited countless rescue operations, and generally brought us together as a nation and as a world as never before. And you willingly endured significant revenue losses as you went about serving the public interest.

The Commission responded to the events of September 11 by establishing a Homeland Security Policy Council, re-chartering the Network Reliability and Interoperability Council for telecom and, just recently, establishing a new Media Security and Reliability Council with membership from media companies and related industries. I was pleased to see so many media company CEOs at the first meeting of this group last month. So these are good steps and I applaud them, but I'd like to see us do even more. I want the FCC to be as aggressive as we can possibly be on homeland security. I have a real sense of urgency about this. I'm looking to Dennis FitzSimmons and his faithful companion Shaun Sheehan to mobilize and push their Council to early action. They're can-do guys, and I'm confident I won't be disappointed. Their early action will push the Commission to early action. When terror bears its murderous face again, I don't want the tiniest opening for anyone to say that the Commission or the industry was timid in any of its efforts.

I know there are those who worry that an independent agency not get too involved with policy making, but that's an argument without a case. We are the agency charged by Title I of our statute to provide for the people's safety through better communications. So as the powers that be in Washington begin putting together a new Cabinet department for homeland security -- a process that will take months at best -- I want the Commission to move out and move fast. I want us to come up quickly with action plans for industry and the Commission to implement. We should have milestones along the way, and recommendations to implement with industry whenever that is feasible, or to suggest to Congress or the Administration where the options might go beyond the purview of the Commission to implement. If the Commission needs more resources to do what needs to be done, we should ask for them. Homeland security is not something likely to be under-funded. By the way, I'd also like to see the Commissioners encouraged to be more involved in the workings of the Homeland Security Policy Council.

There is, of course, another critical dimension to homeland security, and it is one that The Media Institute knows as well as anyone. Wars and national emergencies produce challenges to basic Constitutional freedoms. This time, these freedoms are being weighed against the new threat of terrorism. The potential for well-intentioned homeland security efforts to stray beyond the bounds of the Constitution may be greater in this emergency than in any other because terrorism is so insidious and because it can originate from so many places in so many different ways. By and large, the country has performed well since September 11 in safeguarding fundamental liberties. But there have been a few disquieting episodes and even more disquieting suggestions. And should, God forbid, the terrorists strike again, there would be those calling for draconian curbs on individual liberties, on freedom in the media, on our system of justice. America's media serve the public interest by being especially vigilant on these freedom issues. They have historically done so. Now you need to be alert again and ready to act again. Once more, you are called upon to stand tall for your freedoms, our freedoms, and for safeguarding the great American marketplace of ideas. These freedoms are, after all, what we are fighting for when we fight against terrorism. I know you won't permit them to become casualties of the war.

The marketplace of ideas I just mentioned is central to our freedoms. It is the vital exchange of opinion that nourishes our democracy. It is diversity. It is the clash of ideas. It is the multiplicity of voices rising up from every nook and cranny across this land to debate the issues and give direction to our future. It is what makes us different from so much of the rest of the world.

Some argue, I think with great force, that this great marketplace of ideas is protected not only by the First Amendment, but also by structural regulations. These regulations -- regulations on the number and type of outlets one owner may control, or the amount of its own programming that an operator can carry, to name but two -- were designed to promote diversity and competition in the marketplace of ideas. In the months just ahead, as we take steps to rebuild our towers and networks and as we work together to protect our nation's security, we need to be mindful that what we do in one area, like media ownership, can have vast and perhaps unintended consequences in many other areas. More on this later.

The sad plight of so many telecom and dot.com companies was the other great macro event I watched from the Commission this past year. But I must tell you that I am, in spite of it all, and without qualm or doubt, an optimist about the future of communications technologies. Right now, in the world of business analysts and pundits and the handicappers of the stock market, that puts me in the minority, I know, because most of these experts are still mired in doom and gloom. But tracking great technological change -- historical change, really -- is different than tracking stocks. Two years ago, the guys and gals supposedly in the know were in high orbit, extolling the end of the business cycle, prosperity forever, with telecom leading the way into a brave new world. Then recession hit, and they went from irrational exuberance to doomsday pessimism on the turn of a dime. I think they were wrong both times. Sure, the business plans of many of the dot.coms and start-ups were often faulty, but the technologies behind them not only remain - they are proliferating. The "boom-bust-and-boom-again" cycle has accompanied other great technology and infrastructure roll-outs throughout history, canals and railroads being two examples. There's excess enthusiasm and risky investment at the outset and the bubble bursts, but the infrastructure need endures, the technology is viable, and growth returns. It won't be tomorrow, but I think it will be sooner than many of the pundits predict.

There's another factor at work here: we're not adequately differentiating the factors at work. in today's economy. I'm no economist, but I do believe a good case can be made that the shake-out in telecoms, insofar as factors internal to telecom are concerned, has about run its course. Driving the market's - and the sector's -- decline now are corporate governance problems, accounting depredations, and a fundamental disconnect between the stock market and the basic good health of the American economy. I don't think we can blame the technology for all of this.

Nor is the FCC entirely blameless. Part of the market's problem is uncertainty about policy directions on such things as broadband deployment. Earlier this year we reached some tentative conclusions in our broadband transmission proceedings. Some analysts have interpreted this as indicative of where the final policy will end up. I think that conclusion is premature, but the uncertainty created is yet another destabilizing factor in a situation that needs no further volatility. Put all this under the category of "personal opinion," and I offer it up primarily to give you something a little different to ponder.

Anyhow, even though today's headlines don't make this the best day to say so, I do believe that our communications future is bright. More than that, it is transformative because it is going to change the ways we live, work, play, care for ourselves, govern ourselves, you name it. What's coming down the road is going to make all the dramatic changes of the past century -- and they were dramatic -- pale by comparison. Communications industries will not only be a part of America's 21st century prosperity - they will lead the parade. And the changes they bring will be startling.

Anyone who was at the huge Consumer Electronics Show or the Wireless Exposition or the NAB or Cable shows earlier this year caught a glimpse -- a teasing taste -- of some of the new technologies coming our way. Digital Television and High Definition TV for openers. Homes -- yours and mine -- with all their electrical gadgets and appliances networked by wireless. That's already here for some folks. They can move their desktop computer from room to room without the need to plug in anything. The home of the future has a refrigerator that takes inventory of its stock while you're at work, and tells you to stop for milk or o.j. on the way home because you're running low. I saw a wireless phone that took my picture while I was examining it and set up an e-mail back to my office across the continent. Someone handed me a ballpoint pen and a little ruled yellow note pad at one of these shows and told me to write something on it. I did, in the inimitable handwriting that often even I can't read, and then I asked what I had just done. They said I had just set up a wireless e-mail. A few of months ago, I met with members of a consortium of colleges and leading-edge companies that are building the next Internet generation -- Internet 2. They told me about a world soon coming our way wherein the conversations you are having with people hundreds of miles away will be transformed into face-to-face encounters in the same room -- not through a computer monitor or a TV screen, but through a hologram of that person sitting in the chair across from you. Meanwhile, researchers at my old graduate school alma mater -- the University of North Carolina at Chapel Hill -- are figuring out how to transmit the sense of touch over the Net, so you can reach out and touch someone who's thousands of miles away. Imagine the impact that will have on international business or government negotiations or educational exchanges! You can seal the deal by reaching out and shaking hands with that hologram sitting across from you.

So you can see why I am excited about these industries and about my job as a Commissioner. To be an active participant in the deliberations of the FCC as the communications revolution transforms our lives and remakes our world is a totally engrossing experience.

Apart from 9/11 and the vicissitudes of the economy, there is no lack of other challenges to our communications industries. So let's step back inside the Commission for the remaining moments of my remarks and look at a couple of issues that I think are at the top of the pile when it comes to their potential impact on industry, consumers and the nation.

There is a stark and growing challenge to competition. The goal of fostering competition is laid out very clearly in the Telecommunications Act. Congress did not seek to establish competition merely for its own sake, of course. Rather, it recognized the power of competition to give choices to consumers - choices of services, choices of technology, choices of providers, and -- what is too often left out -- choices of sources of content.

Perhaps the two biggest challenges we face in this area are convergence and consolidation.

First convergence. Technology is changing so rapidly that it is difficult to figure out what should be deregulated, and how, and what should continue to be regulated. Let me be specific. Nowadays, we are seeing competition not only within delivery platforms, but also among delivery platforms. Not just competition between television networks, but video programming delivered over-the-air, by cable, by DBS, and by competing video programming distributors. We have seen the consolidation of studios with television networks, of cable systems with programmers, of Internet service providers with content producers. We have seen the assumption of new functions by old media. Traditional video distributors - particularly cable - are using their networks for the delivery of data and even telephony. We see audio content delivered not only by radio but also over the Internet and satellite radio. Telephone via the Internet is fast becoming reality.

William Safire's "urge to converge" has created new combinations that take advantage of existing functions -- radio station groups leveraging their advertising sales departments into billboard advertising; movie studios distributing their programming not only through their cable programming services but through video rental stores; Internet services using their subscriber model - and lists- to sell "old economy" media such as magazine subscriptions.

Looking for efficiencies, corporations combine diverse business units to take advantage of common functions - advertising, subscribers, and content. This sort of creative convergence has led to the development of mega-media corporations - one stop shopping for program production, packaging, sales and distribution. While the potential synergies are attractive, many have been asking - where will it stop?

Imagine the challenge that convergence presents to a regulatory agency like the FCC. The traditional phone companies are regulated as common carriers under Title II of the Act; cable is regulated much differently under Title VI; and the Internet is regulated hardly at all. When each one of these is offering telephone service, should the same regulatory requirements apply to all? Some say: "Sure, similar services should mean similar regulatory requirements." But then others caution: "Wait a minute. The Internet developed in a free, open and robust competitive environment where Internet service providers had a lot of access and where regulations were few. But the major phone companies are still in the process of shedding their monopoly heritage and they still have a lot of economic power to slow the forces of competition. Should they be given the same hands-off treatment as the start-up ISP? If they are, won't they just re-monopolize?" Tough questions. But the time is here to stop theorizing about them and about all the other problems presented by convergence and to start dealing with them.

I don't believe we will ever get to a one-size-fits-all regulatory regime, but certainly we should move away from having very different regulatory regimes for increasingly similar technologies and services. And certainly we should eliminate opportunities to profit from dissimilarities in regulatory requirements, so-called regulatory arbitrage. But let's also recognize the world as it is and base our actions on facts, not theory or, worse, ideology.

Industry consolidation is the other competition issue. The Nineties brought new rules permitting increased consolidation in the broadcasting industry, on the premise that broadcasters needed more flexibility in order to compete effectively. These rules paved the way for tremendous consolidation in the industry -- going far beyond, I think, what anyone expected at the time. For those of you in radio, many of you are now affiliated with groups of dozens, even hundreds, of stations. More and more of your programming originates outside of your station's studio. These changes create efficiencies that allow you to operate more profitably and on a scale unimaginable just a few years ago. They may even have kept some of you in business, allowing stations to remain on the air when they otherwise might have gone dark. But they also raise profound questions of public policy. How far should such combinations be allowed to go? Do they generally serve the interests of the citizenry? What is their impact on localism, diversity and the availability of choices to consumers? How do we judge these things?

We all realize that the world has changed. That bigness is not necessarily badness. That we live in a globalized economy where the pressures of competition are extreme. We cannot turn the clock back to a simpler past which never was, truth be told, quite that simple. So mergers are not inherently bad.

That being said, however, the American people have always harbored a deep distrust of excessive industrial consolidation, and they have always posted sentinels at the gate to guard against it. That skepticism persists. As I talk to Members of Congress, I hear widespread, and surprisingly bipartisan, concern about consolidation. There is concern about too much economic power. And there is concern that diversity in the marketplace of ideas is threatened. So it strikes me as bedrock that our review of proposed consolidations must venture beyond economic efficiencies if we are to ensure that combinations serve the public interest.

I believe that each proposed combination needs to be looked at on its own merits within its own individual set of circumstances. I also believe that the public interest test must be rigorously applied to each proposed transaction, and this is what I have attempted to do in my first months at the Commission. With this approach, I have voted to approve some merger deals and to deny others.

I would add that these are especially critical times for this whole issue of industry consolidation because an economy in recession usually gives rise to more voices advocating consolidation in the name of economic recovery. I'm hearing these voices every day. I'll bet you are, too. Last year there were over 330 such consolidations, to the tune of more than $110 billion. Adding fuel to the fire is the current deregulatory climate that is increasingly obvious to most of us in Washington. Some of those analysts I talked about earlier have already concluded that ownership caps and limits are history. Here, too, I think their judgment is wrong. It is surely premature.

It is difficult to over-estimate the importance of the decisions that are going to be made on the ownership issues. As I noted earlier, almost all of our ownership rules are up for grabs right now, either through remand or by our own regular review processes. In the next 12-18 months, all these rules will be voted upon. We will decide whether to keep, modify or scrap them. Talk about important decisions -- there is the potential here to remake our entire media landscape, for better or for worse. So the stakes are enormous.

We need to take our time with this, and to make sure that we have the kind of data and analysis we need to arrive at the best public interest determinations. I am encouraged that the Chairman has formed a Media Ownership Task Force to study the many ramifications of this issue. I hope this Task Force will have the resources and the time it needs to conduct studies that must be both broad and deep. The jury is still out on that. In any event, the Task Force is going to need a lot of help. So much is at stake. If we remove all the limits and that turns out to be a mistake, we should all realize that we won't be able to put the genie back in the bottle once he's out. There aren't too many more important issues facing the Commission, or the country, right now.

We need, we truly need, a national dialogue on this issue. We need it in Congress, at the Commission, among the concerned industries, and all across America with as many stakeholders as possible taking part -- and, in truth, every American is a stakeholder in the great Communications revolution of our time. Some don't realize it. I was struck to read a poll last week that a majority of people didn't even realize that the airwaves were public property. Maybe this popular misapprehension derives from too much talk by the analysts, by industry, and even by some at the Commission that spectrum is something that should be traded like pork bellies on the commodity exchanges. I suspect, I hope, that more people will get involved in the future of the spectrum when they realize they really are stakeholders -- in every sense of the word.

On the positive side, however, we may be seeing the first little spark for a national dialogue. In the last month or two, we have begun to see press reports questioning the added value of consolidation; probing whether the market's devaluation of major media corporations may result in part from the unwieldy size of these merged corporations and the enormous debts they assumed to reach that size; and asking whether such consolidation serves the public interest. .

The combination of the slow-down in the economy and the advertising markets and questions raised about the size of converged corporations has given all of us -industry, Wall Street, government, and citizens - a moment to consider whether perhaps there is a point at which big is too big. And whether we have reached that point.

Congress has given us guidelines for determining what is in the public interest for the purposes of media ownership. Our job over the next year will be to evaluate whether the current rules of the road protect the public interest or whether they stand in the way of such public interest goals as localism and diversity. Let's work together to get it right.

Finally, I'd like to take this opportunity to talk with you about one other matter that is important to me: protecting against indecency in the media. I know this is controversial, but it goes right to the subject of responsibility to the community that I talked about earlier. Every day I hear from Americans who are fed up with the patently offensive programming coming their way so much of the time. I hear from parents frustrated with the lack of choices available for their children. I even hear from broadcast station owners that something needs to be done about the quality of some of the programming they are running. I had a high-powered TV executive in my office a few months ago who told me he doesn't let his children watch television unless he's there to man the remote. I found that kind of sad.

I've referred to a "race to the bottom," but recently I'm beginning to wonder if there even is a bottom to it. I'm reminded of Charles Dickens' Tale of Two Cities. It is the best of times; it is the worst of times. On our TV screens today we have some of the best television ever. And we have undoubtedly the worst.

I believe that, as a society, we have a responsibility to protect children from content that is inappropriate for them. And when it comes to the broadcast media, the Federal Communications Commission has the statutory obligation --the legal mandate -- to protect children from obscene and indecent programming. I take this responsibility with utmost seriousness.

Our nation has enacted laws -Constitutionally sanctioned laws - to protect young people from these excesses. But the process by which the FCC has enforced these laws has long placed inordinate responsibility upon the complaining citizen. When someone sends in a complaint, he or she is usually told to supply a recording of the program or a transcript of the offending statement before the Commission can even proceed. That's just wrong. It is the Commission's responsibility to investigate complaints that the law has been violated, not the citizen's responsibility to prove the violations.

I have suggested that broadcasters voluntarily retain tapes of their broadcasts for a reasonable period of time, like 60 or 90 days. Many broadcasters, particularly in TV, already retain such recordings, but I believe that all broadcasters should do so. I am not suggesting that broadcasters forward those tapes to Washington or Big Brother Copps or some other bureaucrat so we can pour over everything said on the airwaves. I am suggesting that tapes or transcripts be kept for a period of time so that when someone complains about what went out on the public airwaves we can have a record to see how those airwaves were used -- or abused. Michael Eisner, Chairman and CEO of the Walt Disney Company, visited with me and we discussed this. He went back and talked with his executive team and then wrote me a letter committing that Disney would retain recordings of its radio stations' programming for 60 days. That was corporate good citizenship, and I hope that other broadcasters will step up to the plate and do what Disney has done. I hope it's industry-wide, and I hope it happens soon. It needs to.

While I continue to work on this -- I hope with your help -- I am pleased that the Commission seems to be coming around to the idea that a tape or transcript is not in every case required if enough other information is available. Recently we levied a fine for an indecent broadcast without requiring a tape. That's still not as far as we need to go, but it is forward movement at least, and I'm pleased that I am beginning to see some flexibility from my colleagues.

The problem goes far beyond tapes and transcripts, however, and so do broadcaster responsibilities. If they took more responsibility for what they broadcast, particularly when children are likely to be watching, broadcast companies -- and cable companies, too -- could make a huge contribution to our children and to our society. I am suggesting that they adopt -- you adopt -- a voluntary Broadcast Code of Conduct. Actually, "readopt" would be a better word to use, because such a code was in place for many years, until 1983 when it was struck down on narrow antitrust grounds. It dated back to the 1950s for television and the 1920s for radio. Through enlightened self-regulation, the industry clamped restrictions on the presentations of sexual material, violence, liquor, drug addiction, even on excessive advertising. The Code also affirmed broadcaster responsibilities toward children, community issues, and public affairs. It didn't always work perfectly, but it was a serious effort premised on the idea that we can be well entertained at levels several cuts above the lowest common denominator that now dictates so much programming. It would be infinitely preferable, and far quicker, to go the voluntary route rather than to have to travel down the usual Washington road of legislation, regulation and adjudication, with the years of legal suits, counter-suits and appeals that these inevitably generate. But it's a long road. I had an excellent conversation about this with Lowell Paxson who heads Paxson Communications. This is a company that does a lot of family-oriented programming. He assured me it is indeed possible to make money with high quality programming without descending into the sorry race to the bottom that we are all being subjected to on our TV screens. And he's willing to help, but I think it will take a real outpouring of concern, and some not-so-subtle demands, from the American people to make it happen. I believe that our radio and television and cable chieftains could come together and craft a new code, perfectly able to pass court muster, and one that would serve the needs of their businesses as well as those of concerned families. I hope some of you will help. What leaders some of our industry trade associations could be if they called together a group of broadcast and cable CEOs and other industry stakeholders to see if they couldn't find some common ground here for the common good.

The vast majority of broadcasters are good corporate citizens. You don't have to convince me of that. But each of us needs to take a moment to think about how we can do a better job of stewardship when it comes to what our children hear and see on the media.

I've mentioned only a few of the matters of common interest that I hope we can work on together. There are many others. I look at all these challenges and I see a lot of work to be done. But I believe - I really do - that we can and we will get it done. Together. As I said before, I am an optimist.

I am an optimist about our country. I don't see how anyone could be otherwise if you look at the unity, the compassion and the patriotism that have poured forth from every city, town and hamlet in this country over the past nine months - from sea to shining sea.

I am an optimist about our communications industries because I know we can use these new technologies as tools to pry open the doors of economic opportunity for all our citizens.

And I am an optimist about or ability to work together to get the job done. Each of us has a role to play, whether as citizen, businessperson or public servant. Most of you who know me know the high value I place upon the public sector and the private sector working together to overcome the many challenges we face. I have spent most of my 30-plus years in Washington trying to build such partnerships, out of a bedrock conviction that we best serve the common good when we come together, reason together and pull together. I came here today to say how much I am looking forward to working with you and pulling with you to make it all happen.

Thank you.