Copyright 1999 Federal News Service, Inc.
Federal News Service
JUNE 24, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
970 words
HEADLINE: PREPARED STATEMENT OF
MR. ALEX
V. NETCHVOLODOFF
VICE PRESIDENT, PUBLIC POLICY
COX ENTERPRISES
BEFORE THE HOUSE COMMERCE COMMITTEE
TELECOMMUNICATIONS,
TRADE
AND CONSUMER PROTECTION SUBCOMMITTEE
BODY:
Chairman Tauzin and distinguished members of this Committee, I
appreciate the opportunity to appear here today representing Cox Communications,
a subsidiary of Cox Enterprises, Inc. When it comes to deployment of data
services, here's what Cox Communications is providing to its customers-fast,
cheap, high quality, competitive Internet access with national and local
content. And we're connecting schools and libraries to the Internet...for free.
Mr. Chairman, many industries--telephone, cable, wireless, electric utility
and satellite-will be investing tens, perhaps hundreds, of billions of dollars
in private risk capital in the next few years to deploy broadband
infrastructure. Injecting new government regulation into the way competitive
high bandwidth Internet access services are provided would have an entirely
predictable result-it would slow investment and hinder deployment. Indeed, one
winning strategy for government to accelerate the deployment of advanced
services would be to reduce regulatory burdens not increase them.
Just
consider the dynamic nature of today's marketplace. The cable industry's annual
spending on two-way broadband facilities is about $10 billion. Since the '96
Act, Cox alone has invested more than $4 billion. For the industry, the number
of high-speed data homes passed will exceed 35 million by December 31.
The
phone industry is answering this competitive cable challenge by spending
billions of dollars of its own to activate high bandwidth DSL
capable loops. By year-end, Bell Atlantic has announced 8 million lines, SBC 8.4
million, Pacific Bell 5.2 million, and Bell South 5 million. The most current
ARMIS data from 1997 reveal that almost a year and a half ago ILECs had 831,000
high-bandwidth, customer- terminated T1 lines yielding about $11 billion in
annual revenue. US West alone has told analysts that it would add 80,000
DSL customers this year to a total industry subscriber base
that is growing at a substantial rate.
Sprint has plans to offer its
broadband Integrated On-Demand Network (ION) in 27 major markets and, to that
end, is spending hundreds of millions of dollars on wireless spectrum to create
broadband access. Last month, MCI Worldcom agreed to purchase CAI Wireless to
launch broadband access. Motorola and Cisco have formed a wireless joint venture
to provide high-speed access. Winstar, Nextel, and Microsoft have joined this
broadband parade. And certainly smaller facilities- based players are not
excluded. In Seattle, ReFlex Communications and TUT Systems have formed a
venture to offer Multiple Dwelling Units high-speed access using microwave
spectrum and fiber optic rings.
The satellite industry is emerging as a very
major part of the marketplace for broadband access. Hughes is spending $1.4
billion to launch two-way access. And AOL has just announced a $1.5 billion
investment in Hughes. Not to be outdone, Lockheed Martin/TRW is spending $3.5
billion.
Electric utilities are joining with RCN to offer broadband services
along the east and west coasts passing 40% of U.S. households.
And finally,
3rd generation PCS broadband capability will start to be deployed next year.
I am not trying to suggest that the entirety of this business activity and
the billions of dollars of venture capital that it represents will all bear
fruit. But much of it will. In the last several months, there simply has been an
undeniable and unprecedented amount of time, effort and money committed by
dozens of unaffiliated stakeholders to the task of providing broadband Internet
access. Under these circumstances robust competition is inevitable. And it is
important to note that this will not be competition reliant on repackaging or
reselling. This competition will result from deployment of facilities by
numerous unaffiliated industries. It will lower costs for end users and provide
a rich array of broadband choices specifically related to intended uses.
Mr.
Chairman, the cable industry is taking on enormous risk to provide new digital
services to its customers. In the case of broadband data, I can tell you that
even with a carefully integrated service like
Home the details of both
technology and business relationships have proven to be extremely complicated.
The gating factor for Cox is not consumer demand, it's execution in a way that
delivers a dependable product. From a public policy standpoint, the proposition
that government should never attempt to regulate a nascent and competitive
consumer product like broadband data service is apparent on its face. From an
operational standpoint, such regulation can only introduce cost and complexity
for the consumer into an already costly and complex offering. And from a
governmental standpoint, as Chairman Kennard has noted, the imposition of
seamless access regulation can only be accomplished through a prolonged and
difficult cost-of-service proceeding to determine how to price the myriad
network elements and business services that are involved. Such a regulatory
thicket is precisely what the '96 Act aggressively discourages.
In
conclusion it would be a pity if, instead of a nation of facilities-based
communications providers, we became a nation primarily of resellers and
re-packagers. Global competitiveness will not be furthered by policymaking that
creates heavy incentives for resale instead of promoting facilities-based
business strategies. As I have just noted, a highly regulatory, cost-based,
rate-of-return unbundling of competitive cable Internet access facilities has no
public policy or legal predicate. High bandwidth Internet access is now and will
continue to be highly competitive. In this context, cable controls no essential
facility. Old-fashioned regulation is the last thing needed for the Internet to
continue to flourish.
END
LOAD-DATE: June 29,
1999 
