Copyright 1999 Federal News Service, Inc.
Federal News Service
APRIL 13, 1999, TUESDAY
SECTION: IN THE NEWS
LENGTH:
997 words
HEADLINE: PREPARED TESTIMONY OF
JAMES O.
ROBBINS
PRESIDENT AND CEO COX COMMUNICATIONS, INC.
BEFORE THE
SENATE COMMERCE, SCIENCE AND TRANSPORTATION COMMITTEE
SUBJECT- BROADBAND AND CONSUMER ACCESS TO THE INTERNET
BODY:
Chairman McCain and distinguished members
of this Committee, I appreciate the opportunity to appear here today
representing Cox Communications and the cable industry. When it comes to
Internet access, here's what cable is providing to its customers--fast, cheap,
high quality, competitive Internet access with national and local content. And
we're the ones who are connecting schools and libraries to the Internet...for
free.
Mr. Chairman, I have just one point to make this morning: many
industries-telephone, cable, wireless, electric utility and satellite--are
investing billions of dollars in private risk capital to deploy broadband
infrastructure. Injecting the government into the way competitive high bandwidth
Internet access services are provided would have an entirely predictable
result--into slow their investment and deployment.
More bluntly, the old
style cost-of-service government regulation that surely would emerge from the
calls by AOL for government intervention would only increase the cost of high
bandwidth Internet access to customers. There is no bottleneck or essential
facility for access to the Internet--and regulation has no place in this
vibrant, rapidly developing sector of the American economy.
Mr. Chairman,
Cox alone has invested more than $4 billion to expand the bandwidth and activate
the return path of its cable platforms. This year the cable industry is pouring
more than $10 billion into similar network upgrades. These investments, which
will take several years to complete, are not made under a guaranteed
rate-of-return. This is venture capital at Work. The mere suggestion from
government that such risky investments could be subjected to old fashioned cost-
of-service regulation would have a chilling effect on going-forward investments
and would slow down the roll-out of these new advanced Internet services.
Moreover, a so called unbundling obligation, or a government regulation by
any other name, requiting access to cable networks for some 6000 third-party
ISPs would raise the cost of high bandwidth Internet access for consumers in two
ways. First, it would require, at great cost, the deployment and management of
untried and untested network equipment. Second, it would create a "dumb pipe"
that would be more expensive to operate because cable generated data advertising
and transaction revenue would no longer help pay the cost of infrastructure.
Make no mistake--this is not an argument about open access, it is an
argument between competing business interests. On the one hand, ISPs with
content like AOL say they want the same business arrangement with cable as @Home
or RoadRunner, but they show up without the necessary facilities and are
unwilling to share advertising and transaction revenue in any meaningful way. On
the other hand ISPs without content add no value for the consumer.
The
deployment of advanced services is an extraordinarily complicated task which
includes network management, billing and collection, and customer service.
Provision of these services requires very close coordination between MSOs and
their Internet access and national content providers, @Home and RoadRunner. For
example, Cox/@Home is a single, integrated service in which the costs of
transport and content are reduced as a result of the integration. Introduction
of third parties into this process can only make an already complicated task
virtually unmanageable and more expensive to end users. And it would require the
separate pricing of these integrated services through cost-of-service regulation
that would curl your hair.
If there were only one pathway to the Internet,
regulation might be warranted. But as AOL has so often pointed out, narrowband
access to the Internet will be the access of choice for a high percentage of
consumers for some time to come. And numerous high bandwidth Internet access
providers are rapidly emerging. There is considerable evidence to support this
conclusion. Today there are about half a million cable modem users and perhaps
two hundred thousand Digital Subscriber Line Telephone users. But the phone
companies have announced plans for some 25 million DSL capable
lines by the end of this year. Nextlink and others have invested billions to
develop local multipoint distribution system (LMDS) high bandwidth access
serving 95 percent of the households in the top 30 markets. Hughes has just
announced a $1.4 billion plan for a North American Satellite high bandwidth
network that will reach both major and rural markets. MCI is spending more than
half a billion dollars acquiring multichannel multipoint distribution system
(MMDS) spectrum for high speed Internet access. New third generation digital
wireless telephone technology will begin offering high bandwidth access within
the next 3 to 5 years. And, electric utility companies are also entering the
high bandwidth facilities sweepstakes. Surely these technologies and others yet
to be identified should be encouraged not threatened by the heavy hand of
government regulation.
Mr. Chairman, in conclusion it would be a pity if,
instead of a nation of facilitiesbased communications providers, we became a
nation primarily of resellers and repackagers. Global competitiveness will not
be furthered by policymaking that creates heavy incentives for resale over
facilities-based business strategies. It is my view that 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. Government intrusion in the form of unbundling
this facility is the regulatory camel's nose under the Internet tent. Everyone
who hopes to keep the Internet free from regulatory burdens should resist this.
Old-fashioned regulation is the last thing needed for the Internet to continue
to flourish.
END
LOAD-DATE: April 14, 1999
