Copyright 2000 Federal News Service, Inc.
Federal News Service
July 18, 2000, Tuesday
SECTION: PREPARED TESTIMONY
LENGTH: 2442 words
HEADLINE:
PREPARED TESTIMONY OF RANDALL B. LOWE EXECUTIVE VICE PRESIDENT AND CHIEF LEGAL
OFFICER PRISM COMMUNICATION SERVICES, INC.
BEFORE THE
HOUSE COMMITTEE ON THE JUDICIARY
SUBJECT - H.R.
1686 -- THE "INTERNET FREEDOM ACT" AND H.R. 1685 -- THE "INTERNET GROWTH AND
DEVELOPMENT ACT"
BODY:
Good Morning, Mr.
Chairman, members of the Committee. Thank you for the opportunity to appear
before your Committee as it examines the "Internet Freedom Act" and the
"Internet Growth and Development Act of 1999." My name is Randall B. Lowe. I am
the Executive Vice President and Chief Legal Officer of Prism Communication
Services, Inc. I also serve as a Board Member for CompTel, the Competitive
Telecommunications Association, of which Prism is a member. Prism is also an
active member of ALTS, the Association for Local Telecommunications Services.
Prism is a facilities-based competitive local exchange carrier and
Internet service provider offering innovative broadband data and voice solutions
to customers nationwide. Founded in 1997 in direct response to the passage of
the Telecommunications Act of 1996 (the " '96 Act"), Prism is precisely the kind
of entrepreneurial, integrated communications carrier that Congress sought to
nurture by adoption of the '96 Act. Prism is fulfilling the Act's vision by
building a national communications network to meet the exploding demand for
broadband services, integrated with traditional voice offerings.
Mr.
Chairman, you have asked me to testify today concerning the deployment of
broadband services as addressed by two specific pieces of legislation, the
"Internet Freedom Act" and the "Internet Growth and Development Act of 1999."
However, before doing so, I want to first summarize Prism's principal message.
In my experience as a veteran involved with the opening of the marketplace for
long distance services, competition is the key to lower prices and innovative
services for the consumer. Prism's experience with the opening of the
marketplace for broadband services is no exception. Competition is the force
that is driving broadband deployment today in the local
telecommunications market. It is clear, therefore, that the best means of
accomplishing rapid deployment of broadband services is to stay the course set
forth in the '96 Act -- that is, open up monopoly local networks to competition.
Stated differently, stricter enforcement of the pro-competitive provisions of
the '96 Act, not deregulating monopolies, is critical to the rapid deployment of
broadband services to all Americans -- just as Congress intended. Indeed, it
would be tragically ironic if the very monopolists who have been slowing the
deployment of broadband services by constantly litigating the interpretation and
application of the '96 Act, are granted the relief provided by HR 1686 and HR
1685.
In my testimony today, I will first review the significant impact
competition has made on the deployment of broadband services. I will also
discuss the significant, inevitable harm to both consumers and competition in
the broadband services marketplace should HR 1686 and HR 1685 pass.
I.
COMPETITIVE CARRIERS ARE DRIVING RAPID, UBIQUITOUS BROADBAND
DEPLOYMENT, NOT MONOPOLIES.
In the four years since the passage
of the '96 Act, it has been competitive carriers like Prism that have invested
in, built and deployed broadband networks nationwide to deliver innovative
consumer broadband offerings.
Competitors have invested over
$30 billion in new networks and are now investing more than
$1 billion every month. (Source: PaineWebber, New Paradigm
Resources Group). As a result, even the most rural states, including Alaska,
Montana and West Virginia, have at least one competitive carrier and the
'average' state currently has 20 to 30 competitive carriers. (Source: The
Association for Local Telecommunications Services).
Prism alone has
spent over $400 million in the past one and one half years on
the build-out of its facilities-based high-speed communications network. In
doing so, Prism has taken no shortcuts. Instead, the company has built an
advanced digital ATM network to support simultaneous voice, data and Internet
access and to guarantee its customers speed, simplicity and a choice of
services.
Prism launched its services in January 1999 and as shown by
the attached map, the company's national footprint at the completion of its
expansion will include 33 markets and 27 states and the District of Columbia.
Prism's network is comprised of switches and proprietary advanced digital
technology that will ultimately reach over 57 million phone lines.
Prism's state-of-the-art network is also particularly well suited to
bringing the rapid deployment of broadband services to urban areas and inner
cities because it uses a technology that is cheaper and more efficient than the
technology used by the incumbents. As a result, Prism can more quickly and
easily reach those communities where affordable high-speed access was previously
out of reach. These include areas such as Washington, DC, Chicago, San
Francisco, Philadelphia, Dallas, Miami, Los Angeles, San Francisco, Newark and
New York -- markets where Prism is already or will soon be providing its
services.
In short, and as pointed out in the 1999 Economic Report of
the President, the Council of Economic Advisers, it is the broadband service
carriers like Prism, and not the monopolies, which bring about dynamic
technological innovation and widespread deployment.
"The incumbents'
decision finally to offer DSL service followed closely the emergence of
competitive pressure from cable television networks delivering similar
high-speed services, and the entry of new direct competitors attempting to use
the local-competition provisions of the Telecommunications Act of 1996 to
provide DSL over the incumbents' facilities."
What all this tells us is
that competition is the fastest and most effective way for consumers to get
broadband services, and is precisely the type of movement -- competition driving
innovation and rapid deployment -- that Congress intended. Considering that the
economic strength of this country is founded on this principle, it comes as no
surprise.
II. BROADBAND BILLS THAT DEREGULATE MONOPOLIES REVERSE THE
PRESENT COMPETITIVE MOVEMENT AND HARM CONSUMERS.
The companion monopoly
deregulation bills, HR 1686 and HR 1685, though well-intended by its sponsors,
effectively reverse the dynamic course I discussed earlier -- the movement
towards innovation and widespread broadband deployment that
competitors have put into place. Both bills would no less than repeal the core
pro-competitive provisions of the '96 Act that drive deployment of broadband
services today and that ensure viable, open telecommunications markets.
The bills would allow incumbents to immediately send data across LATA
boundaries by exempting data from the definition of interLATA services, and thus
from the long distance checklist requirements of Section 271 of the '96 Act.
Section 271, however, is critical to competitive carriers since it requires
incumbents to interconnect with other broadband carriers before competing in the
long distance market. Without the leverage of Section 271 as expertly understood
and crafted by Congress, the monopoly has no incentive to interconnect with
competitive carriers.
Because competitive carriers must interconnect
with the incumbents' network in order to connect with their customers,
eliminating these requirements seriously jeopardizes broadband competition and
the benefits it brings to the consumer. Moreover, since voice traffic can
readily be "packetized" or converted to data traffic, an exemption for data is
an exemption for voice.
The proposed legislation would also prevent
connection to the consumer by competitive broadband carriers by repealing the
monopolies' unbundling and resale obligations under the '96 Act for facilities
and services used for broadband offerings. Competitive broadband carriers like
Prism are dependent upon these obligations because they allow access to the
incumbent monopoly's local network and services. Without access to these key
bottlenecks, a carrier such as Prism would not be able to access its customers
or provide any of its services. There are no alternatives. The suggestion that
competitors might build out their own duplicative local network is not an option
-- even assuming it is not cost prohibitive, it is extremely difficult for most
carriers to justify the expense duplicating a telecommunications network built
on the backs of American ratepayers.
Ironically, while Congress
considers scrapping the '96 Act's key unbundling protections which have so aptly
brought about competition, the European Commission (EC), in an attempt to catch
up to the United States in e-commerce, has made local loop unbundling a
centerpiece of its telecommunications policy. Not surprisingly, the EC's formal
proposal includes the requirement that incumbents provide operators with "full
and shared unbundled access to their local copper loops on fair, reasonable and
nondiscriminatory terms," as well as "cost- oriented" access.(1)
The
bills would also allow the monopolists to avoid state and federal rate
regulation by simply submitting a plan to provide broadband services only when
they are "economically reasonable and technically feasible." Thus, charges for
the critical facilities used by carriers such as Prism to interconnect to the
incumbents' network and to deploy broadband services will no longer be
cost-based.
In addition, the bills do nothing to address the deployment
of broadband services to rural areas and inner cities. Instead, the bills
actually permit the monopolists to avoid providing broadband services to any
rural area or inner city by claiming that serving any such area is not
"economically reasonable and technically feasible."
Of equal importance,
a monopolist is freed entirely from any deployment obligations if just one
competitor offers service in a telephone exchange, or if the monopolist offers
DSL over 70% of the phone lines in an exchange area. Consumers would inevitably
see higher prices, reduced service offerings, lower quality of service, and
slower deployment of broadband services.
The current Internet
marketplace is highly competitive, with users enjoying a choice of many
providers. The proposed legislation will only serve to deter broadband
deployment and harm consumers. Not only will competitive broadband
providers be unable to adequately serve their customers, but a change by
Congress in the rules mid-stream will create great uncertainty in financial
markets and jeopardize the ability of new and existing competitors to raise the
capital needed to build and sustain their networks.
CONCLUSION
Prism urges the Committee to stay the course set forth in the '96 Act as
the best means of accomplishing rapid deployment of broadband services. The
choice at hand is whether you trust a monopoly provider over a robust, open,
competitive marketplace to offer services. Ultimately, what is best for the
consumer? It is the consumer, not the monopoly, that deserves "freedom" --
freedom to choose a provider and freedom from local monopoly control. Let's
allow competition to pick the winners and the losers in the race to provide
broadband deployment.
Thank you.
*************
Summary of Testimony of Randall B. Lowe
Mr. Chairman, members of
the Committee. Thank you for the opportunity to appear before your Committee as
it examines the "Internet Freedom Act," HR 1686, and the "Internet Growth and
Development Act of 1999," HR 1685. I am Randy Lowe, Executive Vice President and
Chief Legal Officer of Prism Communication Services, Inc. Prism is a facilities-
based competitive local exchange carrier and Internet service provider offering
innovative data and voice solutions. Founded in 1997, Prism is precisely the
kind of entrepreneurial, integrated communications provider that Congress sought
to nurture by adoption of the Telecommunications Act of 1996 (the "'96 Act").
Prism is fulfilling the '96 Act's vision by building a national communications
network to meet the exploding demand for bandwidth, integrated with traditional
voice service offerings.
In my experience as a veteran involved with the
opening of the marketplace for long distance services, competition is the key to
lower prices and innovative services for the consumer. Prism's experience with
the opening of the marketplace for broadband services is no exception.
Competition is the force that is driving broadband deployment
today in the local telecommunications market. In the four years since the
passage of the '96 Act, it has been competitive carriers like Prism that have
invested in, built and deployed high speed Internet access services nationwide
to deliver innovative consumer broadband offerings. Competitors have invested
over $30 billion in new networks and are now investing more
than $1 billion every month. Prism alone has spent over 400
million dollars over the past one and one half years on the build-out of its
facilities-based high-speed communications network into 33 markets and 28
states. This fury of investment and deployment by competitive carriers has
spurred incumbent local exchange companies ("ILECs") to upgrade their own
systems in response to competitive pressure. What all this tells us is that
local competition is the fastest and most effective way for consumers to get
broadband services.
The companion bills HR 1686 and 1685, though
well-intended, effectively reverse this dynamic course by repealing the core
pro- competitive provisions of the '96 Act that drive deployment of broadband
services today and that ensure viable, open telecommunications markets. By
repealing market-opening requirements of the '96 Act, the bills restrict
competitors from accessing key network bottlenecks and adequately serving their
customers, and effectively remove any ILEC incentive to cooperate with
competitors. They also create uncertainty in financial markets and jeopardize
the ability of new and existing competitors to raise the capital needed to build
and sustain networks.
Prism urges the Committee to stay the course set
forth in the '96 Act as the best means of accomplishing rapid deployment of
broadband services. The choice at hand is whether you trust a monopoly provider
over a robust, open, competitive market to offer services. Ultimately, what is
best for the consumer? It is the consumer, not the monopoly that deserves
"freedom" -- freedom to choose a provider and freedom from local monopoly
control. Let's allow competition, rather than Congress, to pick the winners and
the losers in the race to provide broadband deployment.
FOOTNOTES:
(1) Keith Nuthall, "EC piles pressure on Europe's
telcos," Total Telecom (July 12, 2000).
http://www.totaltele.com/view.asp?ArticleID=28936$pub=tt&categoryid=0.
END
LOAD-DATE: July 20, 2000
