December 19, 2001

Ms. Josephine Scarlett

Office of the Chief Counsel

National Telecommunications and Information Administration

Room 4713 HCHB

1401 Constitution Ave., NW

Washington, DC20230

Re: Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications; Docket No. 011109273-1273-01

Dear Ms. Scarlett:

This letter is submitted in response to the National Telecommunications and Information Administration’s Notice inviting comment concerning broadband deployment in the United States.[1] In the Notice, NTIA solicits comments on the “supply and demand for broadband services” and “the technical, economic, or regulatory barriers to broadband deployment.”

The Progress & Freedom Foundation (“PFF” or “Foundation”) is a private, non-profit, non-partisan research institution which was established in 1993 to study the digital revolution and its implications for public policy.As befits an institution devoted to studying the digital revolution, the foundation has dedicated a substantial amount of its resources to examining issues which relate to broadband deployment. This is because the foundation’s policy experts have long been in agreement with FCC Chairman Michael Powell’s recent statement that: “It is widely believed that ubiquitous broadband deployment will bring valuable new services to consumers, stimulate economic activity, improve national productivity, and advance many other worthy objectives—such as improving education, and advancing economic opportunity for more Americans.”[2]

In light of our recognition of the importance of the subject, we filed extensive initial comments on September 24, 2001, in the FCC’s most recent Section 706 proceeding investigating broadband deployment, and we also filed reply comments on October 5, 2001.[3] In those comments and reply comments, we addressed almost all of the issues raised in NTIA’s Notice. Rather than repeating all that information here, we are attaching the initial and reply comments as Appendices A and B respectively and ask that those comments be included in NTIA’s record.

Our views, as explained fully in the attached FCC comments, may be summarized succinctly:

·The country will benefit economically and socially, and the national security will be strengthened, from a more rapid pace of broadband deployment.

· A uniform deregulatory regime for broadband services would spur needed investment in advanced facilities and encourage technological innovation. While the Telecommunications Act created the basis for such a regime, additional legislation would advance efforts to achieve this end.

·  Irrespective of statutory change, the Federal Communications Commission possesses the discretion to take deregulatory actions to spur investment in broadband services, including the discretion to forbear from imposing unbundling and rate regulation requirements on broadband services.[4]

We welcome NTIA’s inquiry if it is one that leads — hopefully, expeditiously — to the formulation of Administration policy supportive of a broadband regime that is uniformly deregulatory. That Administration support should come in the form of urging the FCC to move in a decidedly deregulatory direction, as well as voicing support for legislation that would specifically eliminate regulatory requirements that curtail the incentives of the incumbent telephone companies from building out new broadband facilities. For example, now that the FCC has initiated still another proceeding to examine the regulatory treatment of the incumbent carriers’ broadband services, the Administration should formally urge the Commission to adopt a deregulatory broadband regime and to do so expeditiously, rather than allowing the new proceeding to become merely another opportunity for delaying reform.[5]

Indeed, Jeffrey A. Eisenach, PFF’s President, joined with seven other nationally-prominent economists in a December 4, 2001 letter to four high-level Administration officials with responsibility for economic policymaking, including Secretary of Commerce Evans, urging that the Administration focus on broadband policy as a matter of high importance.We are attaching a copy of that letter as Appendix C.[6] In closing here, it is appropriate to summarize the points explicated more fully in that attached letter:

·Growth of the IT sector was crucial to the economic expansion of the late 1990s, and its decline is a key element of the current slowdown.

·Current Federal Communications Commission rules create substantial disincentives to needed investment in the telecommunications infrastructure.

·Upgrades to the telecommunications infrastructure are important to the IT sector because they will allow it to create and market “next generation” products and services that can only be made available over broadband connections.

·The Administration should aggressively promote steps to eliminate disincentives to investment by accelerating telecom deregulation as rapidly as possible.

We very much appreciate the opportunities to submit these views and attached materials for the record. Please do not hesitate to contact us if you have any questions.

Sincerely,

Jeffrey A. EisenachRandolph J. May

PresidentSenior Fellow and

Director of Communications

Policy Studies

Enclosures

[1] Request for Comments on Deployment of Broadband Networks and Advanced Telecommunications Services, Docket No. 011109273-1273-01, 66 Fed. Reg. 5794, November 19, 2001.
[2] “Digital Broadband Migration—Part II”, Press Statement, October 23, 2001.
[3] Comments of The Progress & Freedom Foundation, Inquiry Concerning the Deployment of Advanced Telecommunications Capability to all Americans, CC Docket No. 98-146, September 24, 2001; Reply Comments of The Progress & Freedom Foundation, Inquiry Concerning the Deployment of Advanced Telecommunications Capability to all Americans, CC Docket No. 98-146, October 5, 2001.
[4] On this last point, this is not to say that it would not be very helpful for Congress to clarify the Commission’s authority to establish a uniformly deregulatory regime by passing legislation along the lines of H.R. 1542, the “Internet Freedom and Broadband Deployment Act of 2001.” It is only to say that we believe the FCC already possesses substantial authority to deregulate the telephone companies’ broadband services which it thus far has chosen not to employ.
[5] See News Release, “FCC Initiate Proceeding to Examine Regulatory Treatment of Incumbent Carrier’s Broadband Services,” December 12, 2001.The Commission is also initiating a proceeding to review its local network unbundling policies. See News Release, “Federal Communications Commission Initiates Review of Local Phone Network Unbundling Policies,” December 12, 2001. As with the FCC’s new broadband proceeding, we are hopeful that the Commission will use it to reduce the excessive sharing requirements presently applicable to the incumbent carriers. But we have some concerns that the proceeding will be used by opponents of reform as a means to delay changes in the Commission’s present unbundling policies.It has already been three years, with essentially no material change in policy, since the Supreme Court held that the Commission’s UNE requirements were unlawful because they required unrestricted sharing. See AT&T v. Iowa Utilities Board, 525 U.S. 366 (1999).
[6] In the interest of completeness, we are including as Appendices D and E a rebuttal letter dated December 11, 2001, to the Administration taking issue with the call for broadband deregulation contained in the December 4 letter, and a brief reply, dated December 18, 2001, from the original authors.