Copyright 2001 Federal News Service, Inc. Federal News Service
May 24, 2001, Thursday
SECTION: PREPARED TESTIMONY
LENGTH: 1463 words
HEADLINE:
PREPARED TESTIMONY OF SUSAN MCADAMS VICE PRESIDENT FOR EXTERNAL AND LEGAL
AFFAIRS NEW EDGE NETWORKS
BEFORE THE HOUSE
SMALL BUSINESS COMMITTEE REGULATORY REFORM AND OVERSIGHT SUBCOMMITTEE RURAL
ENTERPRISES, AGRICULTURE AND TECHNOLOGY SUBCOMMITTEE
SUBJECT - ELIMINATING THE DIGITAL DIVIDE: WHO WILL WIRE RURAL
AMERICA?
BODY: Good morning Mr.
Chairmen and members of the Subcommittees. I am Susan McAdams, Vice President
for External and Legal Affairs, for New Edge Networks, a competitive broadband
provider headquartered in Vancouver, Washington. I especially appreciate the
opportunity to testify on this important topic. New Edge Networks is committed
to bridging the "digital divide" by bringing broadband telecommunications
services to Hometown, USA.
New Edge Networks is the
largest national broadband services provider that primarily focuses on small and
mid-sized cities and towns. We generally serve communities with population
ranges between 5,000 and 250,000. We were founded less than two years ago, and
consider ourselves a success story of the 1996 Telecommunications Act. To date,
we offer services to customers in 400 cities and towns in 29 states.
Most incumbent telephone companies and other broadband
providers have chosen to target customers for high speed Internet services in
the 'NFL cities.' New Edge Networks and a number of similar competitive local
exchange providers (CLECs) have taken a different approach. We've chosen to
focus on smaller markets because we believe there is a large unmet demand for
advanced services in these areas. In fact, New Edge Networks believes that
broadband services are even more vital in small communities than in urban
centers.
Information is a driving force behind a new
economic revival in small town USA. Small businesses outside of major
metropolitan areas now can ride high-speed data lines to burst through old
barriers of time and distance. Today's global economy is a virtual meeting place
in which small town businesses can be full participants through electronic
transactions. Rural and suburban residents can work from home, linked to
commercial centers over high-speed lines to the Internet. Rural health clinics
and schools can access specialized resources and information formerly obtainable
only in big cities.
In short, companies like New Edge
Networks have exploded on the scene to narrow the digital divide.In a recent
letter to Representative Cannon, the American Corn Growers Association put it
this way: "The bottom line is that high-speed Internet access is necessary if
rural businesses and communities are to fully participate in, and contribute to
the growth of, the American economy."
This general
observation is reflected in the comments of one small businessman, Marcus
Wilcox, whose company Cascade Energy Engineering is located in the small town of
Walla Walla, Washington:
Our engineering firm makes
heavy use of the Internet, from e-mail to transferring large (computer-aided
design) files and spreadsheets. Our 56k modem connection was having a
significant effect on our productivity (and sanity!) ... (W)ith our choice to
set up shop in a small eastern-Washington town, slow Internet access was assumed
to be a way of life ... When New Edge Networks and our ISP, Blue Mountain
Internet, offered us DSL, it seemed too good to be true. Installation took 30
minutes and it has worked flawlessly. We get all the bandwidth we were promised,
and were able to eliminate a costly business phone line. Going to DSL actually
saved us money!
Since passage of the 1996
Telecommunications Act, New Edge and other competitive providers have been
working hard - and as quickly as the market will allow - to deploy broadband
services throughout the country. Understandably, many providers focus on the
populated urban areas, but CLECs have also begun to deploy broadband to
Americans in less populated communities. In fact, about 50 percent of Americans
can access DSL services today as a result of the tremendous investments by
CLECs. A moment ago, I referred to an information-powered economic revival in
small town USA. Unfortunately, the revival tent in which this miracle is taking
place is listing in the wind and may be in danger of toppling over. Some
proposals before this Congress, if enacted, threaten continued competitive
deployment of advanced telecommunications services, especially in smaller
markets.
New Edge Networks and other competitive
providers of high-speed Internet access over digital subscriber line (DSL)
technology utilize existing telephone lines that we connect to our own
state-of-the-art digital transmission equipment. We obtain these lines and
related facilities from incumbent telephone companies as "unbundled network
elements" under cost-based wholesale rates as provided by the Telecommunications
Act of 1996. Some argue that the traditional telephone companies should be
relieved of their obligation to make available these lines and other unbundled
network elements for use in delivering high-speed data services. I believe that
this proposal is ill-advised, would delay further broadband
deployment, and would have the result of condemning rural small businesses
to a regime of perpetual monopoly over wireline broadband services.
The 1996 Telecommunications Act did something very simple;
it set in motion a framework for competition in the telecommunication
marketplace. Congress chose to promote competition for local telecommunications
services as the best engine for deployment of advanced technologies. The promise
of the Act was to bring competitive prices, increased innovation, and improved
customer service. To achieve these objectives, Congress carefully crafted the
transition from monopoly to a competitive market structure. Central to this
design is the requirement that new entrants be allowed to interconnect with
traditional networks that were financed over the last one hundred years by
monopoly ratepayers.
In only a few short years
competitive providers have produced astonishing results:
- $56 billion invested since 1997 in network infrastructure - 16
million access lines served - 8,200 central offices DSL equipped - 500,000 DSL
lines provided
What the Committee is most interested
in, I'm sure, is what we believe this Congress should and can do to address the
issue of broadband deployment to rural America. I would
suggest the following:
- Stay the course that Congress
charted in 1996 with the Telecommunications Act;
- Make
monies available for targeted subsidies and grants - made on a competitive basis
- so providers can have access to resources needed to build out networks in our
highly capital intensive industry; - Give the FCC stronger enforcement tools
such as the ability to impose higher, self-enforcing financial penalties on
violators of the 1996 Telecommunications Act, particularly on those providers
who fail to adequately open up their markets to competition (this is a provision
that is supported by FCC Chairman Michael Powell). Additionally, provisions
should be made for damages and punitive penalties to be paid to CLECs that are
harmed;
- Urge timely FCC action on a pending petition
that would set clear performance intervals and standards for loop provisioning.
Competitive providers must have efficient, timely, and cost-based
'interconnection' with ILEC networks. The FCC set these kinds of standards for
'collocation' in central offices that has helped speed one phase of deployment.
Quicker loop provisioning will speed deployment of high speed DSL service;
- Consider requiring full structural separation of large
incumbent telephone companies into distinct wholesale and retail
telecommunications providers. This is the only real way to eliminate incumbent
incentives to favor their own retail operations;And finally, send a clear
message to Wall Street and other institutional investors that Congress supports
the framework for competition required by the 1996 Telecommunications Act. The
longer Congress grapples with legislative proposals that turn back the provision
in the Act, the more difficult it will be for providers to have access to needed
capital markets for offering innovative services in the telecommunications
marketplace.
New Edge is proud to have demonstrated a
strong track record of bridging the digital divide. We are deeply concerned,
however, by some legislative proposals currently before this Congress. These
proposals would actually widen the digital divide by abandoning competition as
the driving force for innovation and broadband deployment. We
must not turn back the clock to a tune when monopoly providers unilaterally
determined which services would be available to customers in small markets.
The House Small Business Committee has a critical stake in
this debate. We applaud you for holding hearings on this important issue. We
urge you to continue to monitor telecommunications developments. You are in a
unique position to assure that any legislation before Congress empowers small
businesses as full participants in today's information economy.
Document 31 of 55. 