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Search Terms: telecommunications act of 1996, House or Senate or Joint

Document 50 of 383.

July 18, 2000, Tuesday

SECTION: PREPARED TESTIMONY

LENGTH: 2928 words

HEADLINE: PREPARED TESTIMONY OF CONGRESSMAN W.J. "BILLY" TAUZIN CHAIRMAN, SUBCOMMITTEE ON TELECOMMUNICATIONS, TRADE, AND CONSUMER PROTECTION

BEFORE THE HOUSE COMMITTEE ON JUDICIARY

SUBJECT - H.R. 1685 AND 1686

BODY:
Good morning, and thank you Chairman Hyde, for inviting me to testify before the full Judiciary Committee today regarding an issue that is very important: Access to high-speed Internet services. I am honored to be here, and I am encouraged that many of my colleagues on this distinguished Committee feel just as strongly about this issue as I do.

My good friends, Messrs. Boucher and Goodlatte, both of Virginia, have really helped John Dingell and I gain momentum in the House for creating full-scale competition in our Internet backbone infrastructure markets as the best way to ensure that the Internet does not further balkanize society into haves and have-nots.

That being said, I am here today to make three simple points which I believe should serve as the guidelines by which Congress adopts broadband-related policy:

The federal government should not mandate the terms of open-access. This has been my primary difference with Messrs. Boucher and Goodlatte in this debate, and we are continuing to discuss the issue;

The high concentration of Internet backbone control in the US is, as you hold this hearing Chairman Hyde, effectively disenfranchising many Americans, not only in rural areas, but in under-served and poor urban areas as well; and There is a glaring need to update the Telecommunications Act of 1996 in a way that makes our legal framework compatible with technological advances and the pace of business in the new economy.

The Debate over Open Access

I support H.R. 1685 and 1686, introduced by Messrs. Boucher and Goodlatte respectively, to the extent that both bills call for InterLATA relief for the provision of Bell Company data services. However, I do not support the provisions of these bills which mandate open access to high-speed broadband networks, though I understand that Mr. Goodlatte has changed H.R. 1686 to require only an open-access study. This, of course, brings H.R. 1686 very close to H.R. 2420, the bill I introduced with Mr. Dingell, which does not mandate open- access. This bill, I might add, now enjoys the support of 222 members of the House.

As I have expressed before, government mandated access to broadband networks runs counter to the notion of deregulating our Internet backbone infrastructure market altogether. Let me explain. Because there are so many diverse providers of content and services out there today, the only open-access provision that Congress can realistically pass is one that is broad and general. Passage of such a provision, of course, would only set the stage for the Federal Communications Commission (FCC) to come in, under the Common Carrier banner no less, and set onerous, ad hoc rules for open-access rates, peering agreements and rates, what constitutes a "Telecommunications" service, and preemption of cable franchising authority jurisdiction. You name it, and the FCC will do it!

We saw this happen when we set the terms for interconnection in the '96 Act. We set up a two page 14 point checklist, and the FCC proceeded to produce about 850 pages of regulations . . . which were challenged in the Supreme Court. In the process, the Common Carrier Bureau postured itself as perhaps the most powerful, legislative-type agency bureau that our nation has ever seen. Even Reed Hundt, former FCC Chairman, has publicly stated in his book-- and if you don't have a copy, please don't buy one . . . I'll lend you mine-- that the '96 Act's generality allowed the Commission to "create its own intent" when interpreting it. Well, the FCC created its own intent no doubt, and as a result the Common Carrier Bureau has more control over the development of local phone service competition than even Congress.

What I urge is that we not make the same mistake in the context of Internet service that we made in the context of local and long- distance voice service. Mandating open-access in legislation . . . and I can just see it now . . . will lead to the creation of a BACKBONE BUREAU down at the FCC that will mirror the Common Carrier Bureau in every way except with respect to the carriers it regulates. And, in a few years, telecommunications networks will be so dependent upon backbone access/capacity, that such a bureau will have produced reams of regulations making it the central arbiter of telecommunications policy for years to come.

While I appreciate why some may favor open-access preliminarily . . . and I think it's out of fear that the surging consolidation in the content industry may prevent many telecommunications and information service providers from having access to the quality content that their consumers demand . . . I believe that the open-access dilemma will be solved if we simply create more competition amongst backbone providers. Once the backbone industry is fully competitive, carriers, networks, and the like will see the full economic value of providing customers with as broad an array of content as possible. Thus, they will understand the benefits of open-access.

In the last hearing my Subcommittee had on this issue, Mr. Boucher pointed out that Time Warner has already adopted an admirable platform for open-access to its cable system. So we can see evidence that open- access is beginning to take shape without FCC intervention.

So, I urge you all to ask yourselves whether it is wise for us to mandate open-access and subject Internet companies to the cyclical common carrier regulation that has caused us all some heartburn for so many years. We now have our chance to avoid this dire circumstance. But, if we mandate open-access, I fear that we will be headed back down that all too familiar path of common carrier regulation, this time for information-based services. It would be such a shame for us to voluntarily entertain notions again like "interconnection," "collocation," and "reciprocal compensation" when formulating Internet-related policy.

So please, I beg of you, think outside the box with me on this one. We should not regulate the cable industry's provision of high-speed data services. Instead, we should leave these services unregulated while deregulating similar services offered by telephone companies.

Closing the Digital Divide

Turning to the digital divide, it's no secret that a huge sector of our nation is not receiving . . . or is not capable of receiving true high speed broadband services. The reason is because hundreds of communities are not near any of the hubs that enable access to Internet backbones -- the real information super highways. Moreover, very few companies are building high-speed gathering lines all the way from the backbone points of access to the rural, remote, and impoverished areas because it is too expensive and not profitable enough.

There is the case of John Brown in Albequerque, New Mexico who runs a small ISP called IHIGHWAY.

To quote a recent article about Mr. Brown in Forbes Magazine:

"He'd like to give his clients the fastest possible link to the rest of the Web world -- but he can't. That is because Uunet and the few other giant data haulers that dominate Internet traffic don't have the fat, 45- megabit lines in Albuquerque . . . . And Brown can't afford $120,000 a year to lease a pipe running 330 miles to the Uunet hub in Phoenix."

There is also the case of Shelton Jefferson-- the CEO of Netcom, an Internet service provider serving residential and business customers in the New York area. To quote from his own testimony given before my Subcommittee:

"My company is locked out of the broadband Internet market via cable. . . . Not only can I not get access to local cable facilities, I must pay inflated prices for transit to the Internet backbone. These prices are so high because of the concentration of ownership of Internet backbone in the hands of a few long-distance and cable companies."

Or, how about Dr. David Kushner of the Children's National Medical Center here in Washington. He testified before my Subcommittee that even in Northwest D.C., many impoverished residential areas. . . including the 100 block of Michigan Avenue . . . just right up the road from here . . . have no direct links to an Internet backbone facility, much less to an Internet point of presence or POP, despite that the nation's capital is the most, and I repeat, the MOST, wired city in the United States today.

What this means, of course, is that those living in areas that are not near POPS, or that are not tied into a backbone facility via a gathering line are being disenfranchised of the fruits of our new economy. Without a high-speed connection to the Internet backbone, these Americans in our rural areas and inner-cities are relegated to a Narrowband Dirt Road that is so incompatible with the rest of our high-speed infrastructure that the flow of communications across our national web-based infrastructures will be significantly impeded. You see, without a Uunet, Sprint, Cable & Wireless, or AT&T, an email that is sent through standard dial-up access must pass through a poky, congested public access point, rather than zap through a broadband hub. Emails back-up quickly . . . Web pages freeze and fold . . . and you can forget streaming video right now. If we all do not operate at high-speeds, then the Internet cannot evolve into the fluid, nation- wide communications network that all of us are hoping it will be. Instead, ISP subscribers will continue to encounter service disruptions and data-transfer delays in every instance where broadband facilitated, high-speed traffic is thrust upon narrowband, slower- speed infrastructure that was designed to carry only voice traffic for short intervals as opposed to large volumes of data for extended intervals.

So, we have this digital divide in the U.S. because many people don't have access to backbone, because of where they live, and the dial-up access that they are limited to affords them only narrowband Internet services.

Now there are many out there who claim to know how to close the digital divide. The FCC has proposed a few things, like targeted InterLATA relief for the Bells to reach areas that clearly have no high-speed choices. Frankly, there are probably many long-term solutions to the problem that we have not even thought of yet.

But I will tell you right now what will do the most to close the digital divide most efficiently for the short-term: enacting into law the InterLATA relief provisions of H.R. 2420, and 1685 and 1686. Why, you might ask?

Well, today, as this hearing proceeds, the Bell Companies already have a great deal of fiber in the ground extending from most of these rural and inner-city communities to Internet hubs where critical backbone infrastructure exists. The problem is, however, that these fiber lines traverse across these awful 20th Century LATA lines drawn by the courts almost 20 years ago. Those regulations and LATA boundaries were implemented to separate local and long distance calling areas for purposes of regulating VOICE TELEPHONY. They have nothing to do with the data services that are revolutionizing American communications, but nontheless, the Bells cannot utilize their fiber lines to haul data traffic across these constructed boundaries under the FCC's interpretation of the law.

How extensive is Bell Company fiber in the states? Well let's take a look.(Explain the Louisiana chart-- emphasize that none of the fiber, which covers every inch of these states, can be used by Bells because they cross blue-colored LATA lines. Also, point out to Chairman Hyde that there is no better example of how LATA lines carve up a state than in Illinois. Tell him you will get the Illinois chart and submit it into the record.)

Despite the existence of this Bell Company infrastructure in the states, the FCC still treats the LATA restriction as an effective club to use in forcing the Bell Companies to agree to market-opening conditions that are not contemplated in the Act. The FCC seems unconcerned, in the meantime, Mr. Chairman, that many of our constituents in Louisiana and Illinois, are being left out of the broadband revolution. My ultimate fear is that by the time these areas have high-speed access, it will be too late for them when you consider the pace of today's Internet economy.

The Need to Update the Act

We are reminded almost daily that privacy and security are matters of paramount concern to users . . . we are also reminded daily that the "digital divide" I've discussed seperates huge geographic segments of our nation from the easy and economical access to high-speed services enjoyed by others who are, by design or serendipity, located in strategic proximity to the backbone on-ramps and wired neighborhoods scattered around our cities and states.

Yet, despite these problems, all we hear from those who oppose bills like H.R. 2420, 1685, and 1686 is that the Act is working so we should leave it alone! They are just petrified at the prospect of "re-opening the Telecommunications Act of 1996," as if it were, in fact, the Magna Carta.

They act as if Congress, in its inestimable wisdom, took care of every possible policy nuance that could conceivably arise in this entirely new communications era. To revisit the Act, they contend, would be like some admission that we overlooked something. Never mind the phenomenal growth of the Internet since '96 and its potential to displace or disrupt nearly every other traditional communications delivery medium -- including telephone, cable, broadcast, newspaper, movie theatre, and back-fence gossip monger.

Let me take you back to 1995, the year we spent crafting the legislation that would become the Act. Seventy (70) witnesses appeared before the House and Senate Commerce Committees. They represented local and long-distance telephone companies, cable and broadcast entities, think tanks and the federal and state governments.

Not one of those 70 witnesses was a small Internet service provider or a company whose primary business was operating an Internet backbone. Why weren't those providers up here protecting their new growing digital businesses?

It's because they understood that the Act wasn't about them. Instead, the Act's primary purpose was to open the publicly switched telephone network (PSTN) to competition. The Internet was not on our radar screen. When we were debating the Act, there was no AOL, Hotmail, or PSINet. The Internet is only mentioned in the Act a few times, and this Webster's Dictionary, published in 1995, the same year we wrote the Act, doesn't even contain a definition of the Internet.

In light of this, I do not propose re-opening the Act. Rather, I feel that it must be updated to account for the recent explosion of data service provision that is taking the country by storm.

We can learn some lessons from our struggle to produce the Act, however. One of the underlying premises of this historic legislation was that the American public would benefit from more choice and lower prices brought on by competition in all telecommunications service marketplaces.

We need only look at the positive results of the Act with respect to the wireless industry to understand how best to structure the rules of the game for advanced data services.

To our credit, we recognized that wireless networks were different than the PSTN, facilitated multiple providers, and posed no bottleneck to entry by new competitors. We deemed wireless services as "Incidental" because the Bells exercised no monopoly over the wireless marketplace, and we therefore allowed them to immediately begin offering wireless services subject to no InterLATA restrictions. As a result, consumers are now offered more choices, vibrant alternatives, and lower prices for cellular phone services.

In my view, the same tests we employed for the wireless industry apply to the Internet as well -- a network of networks that the FCC has deemed "technologically and operationally distinct" from the PSTN. If we had understood the nature of the Internet in '95, it would have been treated more like wireless was in the '96 Act.

If we fail to miss this important opportunity to update the Act properly . . . if we continue to allow our fear of doing anything "BAD" to the Internet prevail at all costs, then we will have kept in place the incoherent and incomplete regulatory structure that has inadvertently created the digital divide, bandwidth capacity shortages, backbone peering problems, open access dilemmas, and an FCC that is entirely out of control.

To that end, the Congress has a great deal of interest in beginning a very specific examination of the Internet, the regulation and deregulation thereof, and the adoption of a coherent high-speed broadband policy for this country that places the consumer on a pedestal.

In the Act we covered everything but advanced services. The Act was enacted to ensure that ILECs no longer exercised monopolies over the PSTN as a condition of providing further competition to traditional IXCs in the InterLATA voice market. Our mission now is to complete the job of full deregulation for data so that the backbone market is fully competitive and serves the entire nation as opposed to only the cherry-picked business markets targeted by the major backbone providers. Only then will we truly be able to say that we carried out the stated purpose of the '96 Act:

To promote competition and reduce regulation in order to secure lower prices and higher quality services for American consumers and encourage the rapid deployment of new telecommunications technologies.

END

LOAD-DATE: July 26, 2000

Document 50 of 383.


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