Prepared Remarks of
U.S. Representative Edward J. Markey (D-MA)
Ranking Democrat, House Subcommittee on
Telecommunications and the Internet
June 10, 2002
I want to thank Mitch Adams of the Massachusetts Technology Collaborative, Joyce Plotkin of the Massachusetts Software Council, as well as our hosts today - Sun Microsystems - for inviting me and for all of the work they put into making this conference this morning happen.
I also want to thank all the people - and this room is full of them - who have joined me in key policy fights over the years - both here and in D.C. - to help create ever more opportunities for telecommunications competition - resulting in new services, new equipment, new entrepreneurial activity and job creation. Your assistance has often proven invaluable to me in the successes that have been achieved thus far and I thank you. I don't have to tell this group how important these battles have been for our state economy. We certainly have more to do but I always believe that for vital industry segments and community stakeholders the key has been to get involved and stay plugged in.
Rather than sitting around waiting for the next digital revolution to happen, all of you in this room have wisely joined in our efforts to secure for Massachusetts the most competitive, most innovative, most affordable, ubiquitously available broadband infrastructure in the country.
Broadband Deployment & Availability
I want to begin my remarks about broadband by stipulating that we still have some way to go in making sure that every resident and business in Massachusetts has access to broadband technology. There are places out in the western part of the state as well as places here in eastern Massachusetts where broadband is still not available. Deployment is important and I think we will continue to see broadband deployment.
We do have to keep things in context, however, and remember that in 1996, when Congress passed the Telecommunications Act, no one had DSL service or cable modems. It wasn't until after Congress put in place a new policy --a competition-promotion policy - that we started to see deployment. And in relative terms, depending upon the numbers you cite, we've gone from zero availability in 1996 to around 70 percent availability in 6 years. And that's with the Bells taking the law and rules to court a number of times and with the dot-com bubble bursting. From zero to 70 percent availability. That's not a crisis in my view - that's remarkable.
We should certainly commit ourselves to the task of taking care of the 30 percent or so who still can't get broadband at all. I believe the marketplace will continue to induce deployment in some areas - through phone networks, cable networks, by satellite or through other wireless means.
And in those areas where it may not be economical for competitive deployment, we will have to come up with a private-public mix of policies, including universal service, to ensure that those areas or marginalized markets also get broadband service. There are also innovative programs that can serve as models, such as Berkshire Connect and others, that aggregate customer demand and make broadband possible. I will continue to battle in Washington to make sure every American gets the access to the Internet and eventually to broadband technology and that we continue our policy of democratizing access to opportunity. The Internet is the mass medium of the future and we have to begin by stipulating that our policies must reflect that fact.
Yet even as we make additional efforts to ensure that the final 30 percent have broadband available in Massachusetts and the nation, we have to look closer at the marketplace today and ask what kind of policy we want to have to achieve our goals both here in Massachusetts and across the country.
One thing I want to emphasize is that the broadband debate is going to continue to evolve over the next few months from a deployment debate to an acceptance-rate debate. We're already seeing this in Washington. Once we get beyond the "availability" question in broadband we have to look at the "affordability" question.
Broadband Affordability & Applications
The reason is because of another set of numbers. Among the 70 percent who actually have access, only 10 percent or so actually subscribe. If broadband is such a great asset, then why are so few people who can obtain it actually subscribing? The short answer is the current cost related to the current applications doesn't compel consumer buy-in. Is it worth $50 a month for broadband at home if all you're really going to use your home connection for is to check your email? Clearly the numbers indicate that the overwhelming majority of consumers do not see value in broadband at the current price.
So, if we all agree and believe that broadband is indispensable to future economic growth, if it is vital for classrooms and public libraries -- and I helped to build in the E-rate program into Telecomm Act to ensure that it got into every K-12 classroom - then how will policy address the low subscription rate? What applications will induce more consumers to buy the service? At what price will people begin to subscribe?
Part of the answer may require action in Congress on intellectual property rights, technological mechanisms prohibiting unauthorized or illegal use of digital content - all part of an increasingly complex debate that also invokes consumer fair use rights in the Internet era.
Yet I believe that beyond copyright-related content issues, much of the answer will come from marketplace itself. But a marketplace needs competitors. A monopoly doesn't price service competitively. Neither does a duopoly. And they don't introduce new innovative services in a timely fashion either.
I believe we must renew our commitment to a competitive broadband marketplace. Unfortunately, in Washington, many of the efforts are heading in the other direction. There are legislative efforts, which I am confident will fail in this session of Congress, that are designed to gut many of the pro-competitive provisions of the Telecomm Act and to put a big dark cloud over the financial prospects of competitors in the capital markets. There are proposals to regulate voice services and data services differently even though they all fly through the same infrastructure jointly. And there are proposals at the FCC to redefine the pro-competitive intent of Congress through re-definition of the services covered by the law. The FCC proposes to do so in a way that promotes the interests of a small handful of corporate behemoths against the interests of new entrants and entrepreneurs.
An E-Commerce E Pluribus Unum Policy?
The emerging e-commerce policy from the FCC appears to be what I call the "E Pluribus Unum" policy. "E Pluribus Unum" - which means in Latin "Out of Many, One" -- is a great motto for our country, but it is lousy telecommunications policy. What we're getting is "out of many competitors, one provider." It is an anti-entrepreneur, anti-consumer consolidation policy that only the "communications colossi" can love. The FCC proposals amount to a stunning reversal of Congressional intent through regulatory activism.
The intent of the Telecomm Act, which was the culmination of Congressional efforts over the previous quarter century, is not to enhance the power of a dominant provider, but instead, to achieve the exact opposite. Our policy goal was not "E Pluribus Unum," but rather, what you may permit this former Latin student to call the "Ex Uno Plures" policy: "out of one, many."
Out of Ma Bell, we first created 7 Baby Bells, manufacturing competition, and long distance competition. Out of the Baby Bells' local marketplace, we have tried to promote competition from DSL providers and others. Out of one monopoly cable provider in each market, we have promoted digital 18-inch satellite as well as wireline competition, such as from RCN. My view is that we ought to continue our "Ex Uno Plures" policy of breaking open monopoly barriers to competition. And many of you here have joined my battle to keep the revolution going because we recognize that once broadband deployment is achieved in an area, we'll need competition to address the lingering issues of affordability and applications issues that I mentioned earlier.
Deployment vs. Competition: the False Choice
The larger companies want us to believe that we can't have one without the other. They tell policymakers that if we really want deployment to reach everyone, then we can't have too much competition. I believe it is exactly the opposite that is true -- and that the arguments for less competition ring as hollow today as they did in 1996 or 1984.
In order to have a successful broadband deployment and consumer subscription policy, I think we need to reinvigorate competition -- and policymakers and regulators must make it crystal clear that we will not waver from our commitment to policies that establish a climate where competition can take root and flourish. The capital markets need to see that we are serious and that we won't reverse course. Because only when we have sufficient competitors out there can we be sure that innovation will continue and not stultify. This competitive platform for ever-evolving, creating- and destroying-type innovation is critical for our state and our nation.
As Joseph Shumpeter said, "Without innovations, no entrepreneurs; without entrepreneurial achievement, no capitalist returns and no capitalist propulsion."
And I would add the Markey addendum to Shumpeter, without the innovation, entrepreneurial achievement, and capitalist returns he mentions, no new jobs, lower prices, or other consumer benefits either.
Competition & Digital Divide
I would also assert that unless we continue to pursue policies that promote competitive broadband deployment and investment we will see a perpetuation of a digital divide in Internet access. That's because prices in a non-competitive marketplace will remain unnecessarily high, subscription rates will remain low and we will lock in a digital divide disparity in Internet access and broadband subscriber rates. This would invariably dampen the prospects for a NASDAQ revival in the short term.
In the absence of a pro-competition policy efforts locally and nationally that over time ameliorate the divide, we'll wind up with fewer competitors and a growing number of proposals to have the government regulate our way to broadband acceptance. I hope we don't reach that point and in order to stave off that prospect we must get the FCC to respect the will of Congress and not substitute its own judgment for that of duly elected officials in the national legislature.
The Commission's evolving new policy will be to rely more upon what people call "inter-modal" competition.
"Inter-modal" competition essentially means competition between different "modes" of delivering telecommunications services, such as the phone wire versus the cable wire versus a wireless mode of delivery. Let me be clear: there's absolutely nothing wrong with inter-modal competition. I fully support it, have fought to make it a reality, and it exists in many areas of Massachusetts today. But that simply can't be all there is. That's certainly not the vision for our high tech future that Congress enacted in the Telecommunications Act.
Plains, Trains, & Trucks
Relying solely upon intermodal competition is sort of like a "planes, trains, and trucks" view of telecommunications policy. In other words, you'd have one airline, competing against one train company, competing against one trucking line. And the airline owns the airport, the train company owns the tracks, and the trucking line controls the roads. Yes, the sole airline, and the only train enterprise, and the lone trucking company, each compete against each other to deliver goods and people to distant places. That's fine.
But can't we have multiple airlines and multiple cars and trucks on the highways? Does the fact that we permit more than one airline at Logan mean that the dominant airline -- which in this analogy also owns the airport -- will no longer invest in new airplanes because other airlines are allowed to use the runway and terminals? That's a preposterous notion. We can certainly have a policy that embraces additional competition within each mode and we should. Moreover, it's precisely what Congress intended for our national telecommunications policy.
For Massachusetts especially, given our high tech base, we desire and require competition within each mode. Massachusetts high tech manufacturers and service providers must have more than just the phone guy and the cable guy to sell products and services to.
The reality is that we want Verizon to be a strong competitor and meeting consumer demand. We need AT&T Broadband to be a strong competitor as well. It is essential to recognize, however, that simply having one marquee Massachusetts match-up of Verizon versus AT&T Broadband will simply result in a "digital détente." Such a marketplace won't be ruthlessly competitive - nor will timely innovation occur with that kind of duopoly.
We know this from our experience with the cellular industry. When we just had a cellular duopoly, we had over-priced analog technology. When I worked in Congress to move 200 Megahertz of spectrum over to the FCC from the government in 1993 and we created the 3rd, 4th, 5th and 6th wireless competitor in each market, we saw prices plummet and the technology went digital.
This is why current policy embraces competition from CLECs and other telecommunications service providers building off of, and reaching consumers on the Verizon network. Consumers deserve such choices. After all, consumers already paid for that network and the loop connection to their home and have a right to expect a "competitive return" on their multi-year investment in that infrastructure.
I have also repeatedly called upon the FCC to fully implement the Telecomm Act to secure additional choices on the cable wire as well. As many of you know, I have worked with AT&T over the last few months to ensure they keep their commitment to have multiple, unaffiliated Internet Service Providers (ISPs) available to cable modem subscribers in timely fashion here in Massachusetts. This was a commitment that had been negotiated due to the valiant efforts of Chris Grace and Thaleia Schlesinger and other consumers interested in broadband ISP choice back in 2000. And should Comcast succeed in obtaining approval to acquire AT&T's broadband systems, I have a commitment to me from Comcast President Brian Roberts that Comcast will similarly honor that pledge.
Wireless- Spectrum Commons
I would also mention briefly important efforts the Congress and FCC can undertake with respect to wireless policy and spectrum reform. These additional initiatives may succeed in making wireless a more promising way of delivering the Internet to residences and businesses. I have introduced legislation in the Congress (H.R. 4641) to promote a "Spectrum Commons." High tech manufacturers, entrepreneurs and the proverbial `kid in the garage' could make more robust use of wireless communications if sufficient spectrum were available in unlicensed form for the general public.
The bill requires the FCC to establish a 20 Megahertz band of contiguous frequencies below 2 Gigahertz as well as between 3 to 500 Megahertz between 2 Gigahertz and 6 Gigahertz - a swath of the airwaves that would remain open to the public and unlicensed. Such a public set-aside could foster the formation of an open platform for innovation, entrepreneurial activity, and public communications. It would also militate against unhealthy consolidation of spectrum in the hands of too few providers.
An unlicensed area of the airwaves will permit the public, through the use of `smart' radio technology and better receiver equipment, to harness the airwaves for countless applications if the government is willing to give back to the public a portion of its own airwaves in such an unlicensed format. From "wi-fi" ("wireless fidelity") technology and low power "Bluetooth" wireless connections, to so-called "802.11" protocols, wireless local area networks and Net connections, utilization of publicly available airwaves can help connect people and businesses in cost-effective and spectrum efficient ways. I believe the "Spectrum Commons" will also help to propel economic growth and innovation by opening up the airwaves to new marketplace entry by individuals and entities unaffiliated with established network providers.
I think the Spectrum Commons, combined with our other competitive broadband efforts, is what is necessary to give the NASDAQ a much-needed shot in the arm. You guys remember the NASDAQ don't you? Well, we need to think of our efforts here as a part of a plan to help get the NASDAQ humming again.
The bottom line is that we have made significant progress thus far in breaking open markets to competition. We still have much progress to make, however, toward achieving the fulfillment of our competitive policy. The MassBroadband report unveiled today provides an excellent encapsulation of many of the issues that confront Massachusetts at the state and local level in the broadband issue. It contains a number of helpful suggestions with respect to community aggregation efforts, model practices with respect to municipal rights-of-way management and wireless tower siting issues. I believe it represents an important document upon which we can discuss and build further consensus on how to handle such issues here in the Commonwealth.
At the national level, I will continue to push for 1) increased fines and penalties for, and stepped up enforcement of, violations of the Telecomm Act, 2) equitable resolution of content-related copyright issues, 3) policies that promote competition to bridge the digital divide -- but that recognize that such divide exists and competition alone may not reach all constituencies with essential infrastructure and services, and finally, 4) reform of wireless spectrum policy so that we achieve a spectrum commons designation for the next stage of the wireless revolution.
Again, I want to thank Joyce Plotkin and Mitch Adams, Bruce Holbein, Peter Pratt and the rest of the staff who helped to make this morning special.
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[Posted here on satn.org because it wasn't available yet on Representative Markey's web site and we wanted to link to it. The text was received in an email from one of his Congressional Aides.]