It is a pleasure to join you in the golden state of California -- the land of pioneers.

I am so pleased that my colleague and good friend, Commissioner Michael Powell, is here and will address you tomorrow. He is terrific and I know that you will enjoy his remarks. I am also delighted that my former colleague, Commissioner James Quello will regale you with his stories at lunch tomorrow. It's good to see you, Jim.

Combing the audience, I am especially pleased to see a number of broadcasters with whom I worked during my former life as a communications lender. I've shared your aspirations and excitement as you competed fiercely in the marketplace to win the loyalty of your listeners and viewers and advertisers.

I love broadcasting. It is an exceptional service. Free over-the-air broadcasting plays a critical role in our society. It is an "any-time-any-place" medium. For the majority of Americans, you are the primary source of news, information and entertainment. As stewards of the airwaves, you provide a local link, keeping your communities informed and in touch.

I have a special fondness for radio. Like many of you, I worked at my college radio station. WRSU just celebrated its 50th pioneering year on the air. In my student days, WRSU was an AM carrier current facility, using World War II surplus equipment.

Needless to say, our enthusiasm was far greater than our audience reach. We covered the events of the tumultuous sixties with dedication and determination. I even was dispatched to cover the opening of Expo '67 in Montreal. Imagine. There I was at the first press briefing -- WRSU Radio -- side by side with Walter Cronkite and Danish Television. Heady times.

Radio and television broadcasting have come a long way since then. And what a magnificent location we are in today to talk about the future of this industry as it crosses the digital threshold.

California -- Land of Pioneers

Californians are, by definition, pioneers.

Of course, California is where television was invented. Philo Taylor Farnsworth, a transplanted Californian from Utah, came up with the idea of sending pictures through the air the same way as sound.

In his book, Please Stand By, Michael Ritchie recalls how the young Farnsworth needed to build a model in order to apply for a patent. He rented a house in San Francisco for his laboratory. To keep his work secret, he kept the curtains drawn tight. Well, it was during the period of Prohibition, and such behavior was viewed suspiciously. The neighbors called in the police to search the premises. Being a pioneer has its drawbacks.

Farnsworth needed more money for his research. He convinced the San Francisco banker, W. W. Crocker, to invest $25,000 in his work. At the time, Farnsworth was just twenty years old. The first picture he transmitted was a stationary image painted on glass. A Crocker banker complained, "when are we going to see some dollars in this thing?" So the story goes, Farnsworth flipped a switch, and his second electronic TV image popped up. It was a dollar sign.

Television has seen many dollar signs since then.

In addition to the invention of the television, California was also the home of the Gold Rush. That event, about 150 years ago, reminds us of the risks and rewards of new challenges.

Once gold was discovered at Sutter's Mill, thousands of daring folks left their homes in the East, traversed the country in wagons, on horse and on foot, endured hardship and uncertainties to try to strike it rich. And some did.

For the majority that didn't hit the motherlode, however, there were some hard times and tough decisions. What emerged, however, was a new generation of shopkeepers, ranchers and farmers -- all settlers of a new "golden" state.

Of course, it was not just 49ers who ventured to California. Pirates notoriously inhabited the waters off the coast, seeking their fortunes in, shall I say, less peaceful ways.

The problem exists today, with pirate radio operators piercing the airwaves. While we love competition, the FCC has no tolerance for illegal transmissions. Some pirates are even interfering with air traffic control, creating potentially life-threatening situations.

I am pleased to report that the FCC is shutting down the pirates and seizing their equipment -- 200 unlicensed operations have been shut down over the past year. One of the most notorious was Stephen Dunifer, transmitting in his own backyard. With the full support of the U.S. District Court in San Francisco, his operation has now been terminated.

The Digital Era

With almost as much drama, we are on the verge of a national -- no, global -- transformation from analog to digital. Digital offers enormous capacity and flexibility. The convergence of multimedia and telephony that we have talked about for years is at our shores today.

It is stunning to think that just a handful of years ago, the World Wide Web didn't exist. Today, most of you have websites (and the rest of you don't want to admit that you do not). More and more we rely on the Internet for information gathering and communicating. It truly has permeated our lives in ways that could not have been imagined before. And it will continue to alter how we do business tomorrow.

Just about all communications systems are making the transition from analog to digital. The cable industry is rebuilding its plant to provide digital television and broadband connection to the home. Satellite already is transmitting in digital. And now both radio and television broadcasters are preparing to embark upon the digital challenge.

Will it be a boom or a bust? That only the marketplace can answer.

But it certainly is a time of new costs, technological risks, and uncertain rewards.

For radio, the transformation may go more smoothly if "in band on channel" digital transmission proves workable. Consumers will enjoy a transparent change from analog to digital and will be able to find their favorite stations on their familiar frequencies.

Television viewers, however, may face a good deal of confusion: a numbing array of new television sets, new digital formats, new services, and questions about whether these new sets will work with other electronic gear in their homes.

These are big stakes -- but I believe the commitment and cooperation of broadcasters and the other industries involved will successfully take us through this transition.

It took many years for Philo Farnsworth to perfect the television set; it took years for some of the "49ers' " to make it across the country; and it will take years for digital television to supplant analog and digital radio to dominate the band. But I submit -- it is worth the effort. Broadcasters must not be left behind.

Digital Television

Let's take a moment to focus first on digital television -- to see how far we've come and what's yet to be done.

Already, over a dozen stations are on the air digitally, either with a construction permit or with experimental authority. I applaud the pioneering efforts of these stations, and recognize the commitment of the 24 stations that have volunteered to build and be on the air in digital by November 1, 1998. Almost all of those volunteers will meet or beat that deadline.

It is heartening to see broadcasters taking these deadlines seriously and moving forward with dispatch.

Just a year and a half ago, when the outlook appeared bleak for agreement on a transmission standard, I stepped in and helped forge a consensus that ultimately was adopted. I did so because I believed that digital broadcasting, with its huge broadband "pipe" to every home, will offer a wealth of new programming and innovative services to the public.

And I did so because I believed that broadcasters should have the opportunity to remain competitive and transition their service from analog to digital in a manner that best serves the public.

Of all the tasks before the Commission, the conversion from analog to digital broadcasting is perhaps the most challenging, because it will profoundly affect each and every consumer -- your viewers.

Remember, the introduction of color did not render black and white sets obsolete -- or require consumers to purchase converter boxes. Yet the DTV transition will have this effect. We are asking consumers to give up an analog system that has served them well.

It is essential that the transition go as smoothly as possible. Government only has a small role to play.

Beginning last winter, I have used the "bully pulpit" to cajole cable operators into agreeing that the advanced digital decoder boxes will be compatible with digital broadcasting. I believe these boxes must be capable of passing through all of the DTV formats -- not just those that a particular cable operator selects for distribution.

I voiced no opinion as to whether 720p or 1080i or some other format is "best", as long as consumers are not misled about what is high definition. The Commission's adoption of the ATSC standard -- which was supported by the cable industry -- very deliberately left the choice of format up to the broadcasters.

Now, those broadcaster decisions should not be undermined by the unilateral actions of a cable operator or other distributor.

I have also tried for months to alert the public to the fact that the first generation of DTV receivers will generally not be able to work with cable because the standard for the IEEE 1394 "FireWire" connector is not complete.

This glitch has highlighted the pressing need for broadcasters, cable, consumer electronics, and computer interests, and program owners to work together.

An unprecedented level of technical cooperation among all of these industries is essential -- it must be done to capture the support of your viewers, your advertisers, your consumers -- the public.

So, I was delighted to see that the Consumer Electronics Manufacturers Association (CEMA) and the National Association of Broadcasters (NAB) are jointly sponsoring a series of DTV meetings in 10 major cities around the country this summer to help the consumer electronics retailers and broadcasters address consumer digital television issues.

And I am heartened that Cable Labs has pledged that the next generation of OpenCable set tops will deliver whatever high definition formats broadcasters choose to transmit.

Tower construction is another critical issue. Fortunately, most of the early digital broadcasters appear to be moving forward with constructing their systems without local government problems.

Many of you have heeded our suggestion that well before you undertake to construct or modify your tower, you work with officials in your communities. Industry is also embarked on an education program to introduce digital television to local opinion leaders and government officials. That will help.

But there are times when concerns about the health and safety of towers can stall efforts to construct digital television. And at the urging of the NAB, MSTV, and an advisory committee of state and local officials, the FCC has established a team of FCC experts to work closely with local communities to answer their questions to jumpstart the transition to digital television.

At the end of the day, the success or failure of DTV is up to you and to the consumers you serve. Government has a role in the process, but it is limited.

The Commission must grapple with some remaining important issues -- among them "must-carry." Two weeks ago, we initiated the rulemaking to determine to what extent broadcasters' "second" signals must be carried by cable systems during the transition years.

We have heard strong arguments on both sides: total broadcast expenditures on new digital facilities will reach billions of dollars. Many stations -- especially smaller stations -- may not be able to reach their audiences without cable carriage.

Cable operators counter that they face the prospect of having to drop cable networks to deliver digital broadcast signals -- but to only a handful of cable subscribers with DTV sets. They allege that other subscribers will have a blank screen where they once had a programming choice.

I have no preconceived view of how the Commission should answer the many, many questions we've asked. I plan to carefully study the record.

But I suspect the solution is somewhere in the middle of the polar extremes. As cable rapidly converts to digital and upgrades its plant, it will have greater capacity to carry broadcast digital signals. And not all broadcasters are likely to begin digital broadcasts at once.

Moreover, the dual carriage problem will only exist as long as stations are broadcasting two signals. So it is a transitional problem that will have an endpoint. The endpoint will occur when digital has sufficiently penetrated the country -- including through cable television delivery.

Therefore, it is in the self-interest of cable operators to cooperate with broadcasters to expedite the deployment and popularity of digital programming.

At the end of the day, the success or failure of digital television will rest upon winning the hearts and minds of the consumer. It is up to you to make that happen with compelling programming and innovative services.

Digital Radio

As I noted at the outset, the digital conversion applies both to radio and television.

The continuing development of "In Band On Channel" (IBOC) technology should help to make the radio introduction of digital much smoother for the consumer. No additional grant of spectrum from the government will be needed for radio stations to add a second digital signal on their channel.

While there are separate and competing systems under development, they all will permit listeners to continue to tune their radios to their favorite stations on their familiar channels.

For many years I have followed the work on IBOC. It now appears that much progress has been made towards commercial introduction of one or more of these systems.

One of the first things I learned about radio is that it is incredibly good at responding to its listeners changing needs and tastes. Listeners today have become sophisticated about the quality of the sound they select.

We've become accustomed to CD quality over surround-sound speakers -- even in our cars. I am confident that radio broadcasters will continue to provide the best quality sound to draw and retain audiences.

CONCLUSION

The digital world is upon us. The new "Gold Rush" may create some "boom and bust" services and products, but I am also confident it will establish a golden state of digital broadcasting.

Broadcasting is strong; it is vibrant; it is full of promise.

Remember: there once was a time in the seventies when broadcasters reluctantly accepted assignments on the new FM band.

Remember: there was a time in the 1980's when digital technology looked like it was beyond the reach of terrestrial radio and television stations. Many thought that digital services would only be offered by cable and satellite.

Think how disheartening it would be for broadcasters to stand by while other industries launched digital services that impressed audiences with their quality and new features. Instead, conventional radio and television broadcasters are now in the forefront of the digital conversion.

I want to applaud you and other broadcasters around the country for all your hard work to date. I encourage you to become digital pioneers. Embrace the challenge to make this ambitious transition to digital a huge consumer success.

Have a great conference!