Copyright 2000 Federal News Service, Inc.
Federal News Service
July 18, 2000, Tuesday
SECTION: PREPARED TESTIMONY
LENGTH: 2595 words
HEADLINE:
PREPARED TESTIMONY OF MIKE MCCURRY CO-CHAIR IADVANCE
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:
Thank you,
Mr.Chairman. On behalf of my co-Chair, Susan Molinari, and the members of
iAdvance, I appreciate the opportunity to testify before the Judiciary Committee
today.
Mr. Chairman, a copy of my testimony and other background
materials has been submitted to the Committee and I ask that that material be
included in the hearing record.
Mr. Chairman, our economy is in the
midst of the greatest economic expansion in history. This boom has already
created more than 1 million jobs and over $300 billion in
estimated Internet revenue. The impact of information technology has been so
dramatic that many economists now believe that the US economy can sustain this
growth for years to come, if the Internet is allowed to grow. But this growth is
in jeopardy because of bandwidth constraints and a lack of access to high-speed
Internet backbone hubs. iAdvance believes that the challenge of universal,
high-speed access can be answered, in part, by the lifting outdated regulatory
restrictions that prohibit local telephone companies from investing in broadband
technologies. As we reported in our first study, "Breaking the Backbone,"(1)
restrictions, which were never designed to apply to the Internet, have slowed
the growth and diffusion of high-speed Internet backbone across the country.
At stake are not only economic prosperity, but also new forms of
empowerment and engagement. From the elderly woman who can be examined by a
distant specialist in the comfort of her home, to the farmer who takes distance
learning classes from the university that is hundreds of miles away, to the
grassroots voices that can come together from all points of the country to be
heard by Congress, the Internet is creating a digital revolution.
Just
as it essential to ensure that every American has access to a high-speed
connection to the Internet, it is also vital to ensure consumer access to the
robust content that can be carried by this medium. Technology and business
models that discriminate against content and content providers are less likely
to empower individuals and communities.
iAdvance is a coalition of
computer companies, public interest groups, high-tech organizations, Internet
companies, telecommunications companies and other groups at the forefront of the
new economy. We are a diverse group, but we have a common vision. Our members
believe that investment, innovation, choice and competition in the high-tech
marketplace will keep our country and our communities connected and competitive
in the rapidly expanding global economy.
iAdvance supports H.R. 1686 and
H.R. 1685 and we applaud Representatives Bob Goodlatte and Rick Boucher for
their leadership and their vision. The National Journal recently dubbed them
"the country boys of high tech." We think the country they were referring to
extends well beyond the Shenandoah Valley and New River Valley that cut through
their Virginia districts.
Although it has been only four years since
Congress passed the 1996 Telecommunications Act, the world has changed in ways
that we could not have envisioned. Technological convergence has blurred the
distinction between local and long distance telephone service. And wireless
services are, for many, a realistic alternative for residential phone service;
so much so that AT&T proclaims in its advertising that your wireless
telephone is the only one you need.
Of the top 50 global technology and
telecom companies today, four are wireless companies and eight are traditional
local or long distance companies. The four wireless companies have a market
capitalization of one trillion dollars while the other companies are only worth
a combined $670 billion.
The dramatic growth of the
wireless industry is a result, in part, of the soft touch of government
regulation. The FCC manages the spectrum, and sets broad requirements for
technical standards and interconnection. But it does not micromanage how
industry achieves these goals. The results, measured by falling prices and new
technologies, have been astounding.
This stands in marked contrast to
the high-speed Internet market. Here we strictly regulate everything from which
companies can invest in Internet backbone to the prices charged for
interconnection and wholesale services. It is micro management at its worst.
As a consequence, although the data carrying business has grown
dramatically, it is still dominated by three major Tier 1 providers-- WorldCom,
Sprint, and Cable and Wireless. AT&T is a close fourth. Although they
control the market, or, perhaps, because they control the market, these
companies are not deploying Internet backbone to meet growing demand, nor are
they investing in Internet backbone facilities in rural America. And they are
discriminating in the provision of top tier backbone services. The best service,
the quickest connections, and the most attractive pricing are reserved for the
largest corporate customers.
A recent article in Forbes magazine titled
"Backbone Bullies" (see attached) describes the real, day-to-day realities of
life on the Internet. It discusses how a few major providers of Internet
backbone services have transformed the Internet into a hierarchical network of
networks where the fastest, most reliable service is only available to the
largest and most profitable customers.
The Internet is a complex web of
big and small fiber-optic networks, private interconnection and carriage
agreements, and public "peering" or traffic exchange points where all bits and
bytes are not equal. ISPs, small businesses, schools, small and rural
communities, and consumers that have to rely on overcrowded public connections
to the Internet surf at horse and buggy speeds.
According to the
article:
"The big carriers serve who and where they want and require
everyone who deals with them to keep the terms secret. Nor do they fear
competition from their most formidable natural rivals, the regional Bell
companies, because the Bells are barred from carrying traffic long
distance."(emphasis added)
Isn't it time to put a little fear in their
hearts the good, old- fashioned American way -- competition?
While fiber
optic cable is being rolled out at a record pace it is barely keeping up with
overall bandwidth demand. "In the next five years we don't see any ability of
service providers in the US to keep up with the demand," according to Mouli
Ramani, director of strategic marketing for the optical Internet at Nortel
Networks.
To quote a preliminary report by AT&T researchers
released last week, "We do not think the carrying capacity of the network, at
least the long haul national backbone network(s), can or will grow to
accommodate arbitrary traffic growth rates. In fact we believe that if traffic
grows by factors of more than two or three a year for any sustained period, the
transport backbones are likely to become a very serious bottleneck."(2)
These researchers speculate that Internet traffic is likely to settle at
a doubling every year. At the same time, however, they also acknowledge that
what they call "disruptive innovations," including bandwidth-intensive
applications, may generate huge amounts of traffic and have serious impact on
major networks. What AT&T calls "disruptive innovations" are just the kind
of new applications and content that we want to see on the Internet.
Given the uncertainty of what is to come, we must ensure that
telemedicine, distance learning, streaming media and the many other applications
of the Internet that we can not even imagine today are universally available.
There is evidence those who are developing high bandwidth applications
are holding back due to the delays in broadband deployment. As
yet, no broadband online entertainment companies have gone public and many, such
as Digital Entertainment Network, have shed staff and re-focused their business
models away from creating original broadband content. Yahoo and Lycos have
scaled back content and service plans for broadband users, citing the basic fact
that for every broadband user there are 50 with basic access. At a time when the
Internet is just beginning to realize its great potential as an economic and
social tool, its growth is being stifled.
The shortage of Internet
backbone and high-speed local facilities persists, in part, because government
restrictions impede investment in new backbone facilities. Local telephone
companies are prohibited from carrying the high-speed data traffic beyond the
communities they serve. The result is an Internet backbone that is too skeletal
and backbone networks that are controlled by too few companies. It is these same
companies that, not surprisingly, are the most vocal opponents of what we at
iAdvance are trying to achieve.
Backbone access problems are
particularly acute for rural America. A recent report issued by the Departments
of Commerce and Agriculture concludes that rural areas are currently lagging far
behind urban areas in broadband availability. An urban Internet Service
Providers providing broadband services to its customers will typically spend
between $3,000 and $5,000 a month on local
loop circuits to connect to an Internet hub. A rural ISP which desires to supply
the same level of broadband cannot buy the same connections, but those who can
are typically forced to cross a LATA boundary, which forces rural ISPs to spend
between $41,000 and $45,000 a month.
Numerous studies from the Department of Commerce, Milken Institute, and
the Progressive Policy Institute, and iAdvance have concluded the same thing:
some areas of the country and certain segments of the population are
ill-positioned to take advantage and succeed in the Internet economy. These
problems of a lack of broadband access and transport facilities are well
documented. According to the Competitive Broadband Coalition, more than 53
million Americans in urban areas will have access to broadband technologies
compared to less than 1 million in rural America. This means that urban
Americans are 18 times more likely to be offered broadband services than rural
Americans.
A recent posting on a news group that hosts a running
discussion on access to broadband services highlights this problem. Let me
quote:
Broadband is a myth. I live in an area where my normal connection
rate is 26 kilobytes per second using the best 56k X2 V.90 modem available.
There are no plans for the local cable company to bring in cable modem access
nor does the phone company even consider offering ISP services. (Do) I live in
an isolated rural community? Wrong...I live in the 4th largest city in New
Mexico. Broadband will bypass us and content heavy Web sites will continue to be
too slow to even consider visiting. Any web developers who buy into the
broadband myth will find themselves excluding a large part of the webizens and
the market that could most use contact with the outside world.
That is
from someone who lives in the 4th largest city in New Mexico. The problem is
even more acute in rural communities which are touched by less than 10 percent
of high-speed, redundant connections.
The major barrier to investment in
new technology for rural areas are regulations that prohibit the regional Bell
companies - companies that serve two-thirds of rural America - from owning
Internet backbone facilities. Without interLATA data restrictions many more
rural communities would be served. Moreover, the provision of local access is
also heavily regulated. Regulated pricing, corporate structure and forced resale
at regulated rates skew investment decisions. Without such restrictions, the
regional Bell companies would have a greater incentive to invest in rural and
local communities, their existing client-base.
Lifting the interLATA
data restriction and other regulations is an important component of a strategy
to bring affordable high-speed access to all of Americas small cities and towns,
farms and mountain hollows. But it is not the only component. Wireless,
satellite and microwave technologies will also be important part of the
strategy. We will also rely upon those tools that were used to bring 20th
Century technologies--basic telephone service, electricity, and other
infrastructure--to rural communities. These include tools such as cooperative
arrangements and publicly supported investments.
But Congress can start
to address this widening gap today by allowing the regional Bell companies to
build and operate 21st Century Internet facilities without regard to lines drawn
on a map in the 20th Century.
The divide is not only between rural and
urban areas. High-speed service providers are increasingly choosing private
high-capacity networks to deliver their services to subscriber-based audiences
because of Internet limitations. This growing number of closed networks is a
disturbing trend and threatens the democratic nature of the Internet. Some may
get to participate and reap the benefits from the next generation Internet,
others may not.
Similarly, if those who control the conduit choose only
to allow access to some content, the democratic ideal is lost. Technological
advances now allow for discriminatory routing and caching of information. Some
information may not be as easily accessible as other information. Other
information may not be accessible at all. In short, consumers may only see what
an Internet provider wants them to see.
As the New York Times stated in
an editorial following a dispute in May involving Time Warner and ABC:
Democracy requires an open communication environment. Monopoly control
over cable access threatens the flow of ideas and opinion that feeds the
democratic process, not to mention the emerging electronic economy. For now,
perhaps only the principle of non-discrimination can be declared, with the rule
book to be written as conditions require.(3)
The Internet knows no
borders or boundaries. The members of iAdvance believe that we should be doing
everything we can to encourage, not discourage, investment in Internet backbone.
We believe, with NIT's Nicholas Negroponte that, "the absence of bandwidth will
be more isolating than the densest forest or largest desert."
The
promise of a bandwidth rich society, one in which every home, every school, and
every small business has a high speed, high bandwidth connection to the Internet
is almost beyond our ability to imagine. The toys and tools we use on the
Internet today will seem archaic when the Internet backbone is ubiquitous. With
nondiscriminatory access not only to the technology, but also to the information
it can provide, the Internet will empower and enrich our lives in ways that we
can only guess at today. Not only will commerce be redefined, but so to will
learning, health care, entertainment, and how we interact on a daily basis with
our friends, our family members and our community.
Now is the time to
begin to work towards this vision of the future. By removing outdated
regulations that stifle investment and innovation in the Internet backbone and
by ensuring access to the information that traverses its pipes, we can help
overcome digital divides, empower consumers and strengthen democracy.
Thank you.
1. "Breaking the Backbone" and "A 21st Century
Internet for All Americans" are available on the iAdvance web site,
www.iAdvance.org
2. Internet growth: Is there a "Moore's Law" for data
traffic?, K. G. Coffman and A. M. Odlyzko. http://www.research.att.com/.
amo/doc/networks.html.
3. "Time Warner's Power Play," The New York
Times, May 5, 2000, p. A25.
END
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