March 7, 2001

Thank you Gary for that kind introduction. It is great to see you my friend, and all of the good people at USTA. I thank you for inviting me here today; it is always a pleasure to be among such good company.

The last time I spoke formally at a USTA event, the "T" in your name stood for "telephone." Now, I am told, that "T" stands for "telecom." Times do change. In fact, I’ve been around this town long enough to remember when that "T" stood for telegraph. But I haven’t been around as long as Strom Thurmond. He remembers when it stood for tom-tom.

On its face, the name change seems rather innocuous. But it really does symbolize a shift in your industry that is significant. It marks a recognition that technological convergence has arrived, and is changing the way each of you does business.

Gone are the days when you could afford to be the carrier of last resort, simply providing "plain old telephone service" to every taker. Advanced telecom services are quickly becoming a staple in many household budgets, and companies across the technological spectrum are racing to capture their share of the market.

Today it doesn’t matter if you are a telephone company, a wireless carrier, a cable or satellite operator, or even a broadcaster. Each of these companies now has the ability to deliver huge amounts of digital content to consumers. And each one is competing in the same race: to capture the public’s attention with the latest technology at the lowest cost.

From a policymaker’s point of view, this technological revolution is a dream come true. More players means better services at lower prices. And all other things being equal, the American public is the winner. Unfortunately, as you know too well, all other things are not equal. Far from it. Because from a regulatory perspective, the sad truth is all companies are not created equal, even when they are vying to provide the same services.

The fact is that while companies like yours are striving to provide services designed for the next generation, the FCC continues to apply regulations designed for the last one.

That is why FCC reform is one of the top priorities of the Energy and Commerce Committee. Too often, the FCC is hamstrung by dint of its antiquated design. Separate bureaus assigned to each segment of the industry may have worked well enough in days gone by. But today the FCC’s smokestack mentality is simply a relic, ill-equipped to handle the convergence of technologies that are at the heart of your modern industry.

Not only does the FCC’s outdated structure create tremendous administrative inefficiencies in the timely processing of rules, license applications, and the various petitions before it, but also the outcome of those proceedings are often unfair to one segment of the industry or another. And the structure itself perpetuates the ability of some players to game the system by advocating more or less regulation based not on the type of service offered, but rather on the type of company providing it.

I have high hopes that Chairman Powell will undertake a retooling of the agency to more fairly and efficiently handle the pressing needs before it. And if, for some reason, he can’t make the necessary changes, I am confident that we will lend him a helping hand.

In addition to FCC structural reform, there are important efforts underway in the Committee to provide targeted regulatory relief where it is badly needed. Last week we passed the so-called "2% bill" that will remove unnecessary FCC burdens that disproportionately affect smaller and mid-size companies.

It is a bill that will provide real benefits to 2% companies in the form of reduced administrative costs, as well as the ability to meet competition more efficiently and with significantly less red tape.

Just as important, I believe the bill can help open a dialogue in Congress with respect to whether these regulatory burdens should be lifted for larger companies as well. If we can show that the sky is not falling after enactment of this bill, I believe similar regulatory relief will be that much easier for the rest of the industry. It is an important first step, and I am hopeful it can lead to the further removal of legacy regulation that simply raises costs for industry and consumers alike.

Another important issue that affects rural companies in particular is the future of universal service. As many of you are aware, there are increasing pressures in Congress to reduce the overall subsidies in the system. That would be a huge mistake, and I will continue to fight any effort that threatens the ability of Americans, regardless of where they live, to have access to affordable phone service.

As you know, the Telecom Act instructed the FCC to make these universal service subsidies explicit. However, it most emphatically did not authorize a fundamental change in the longstanding policy of subsidizing high cost and rural service.

Universal service policy has served this country extremely well for the better part of the last century. We have the highest telephone penetration rate in the world, which inures to the benefit of us all, both urban and rural dwellers alike. My advice to you is to remain vigilant, and be prepared to head off any attempt to restructure the subsidies in a way that reduces funding and compromises the future viability of universal service.

The final issue I want to discuss is one that is near and dear to my heart – and that is broadband regulatory reform. As many of you know, Chairman Tauzin and I introduced H.R. 2420 last Congress, which I thought was a perfectly sensible bill. In fact, over 220 of my colleagues in the House agreed. Unfortunately, one gentleman, in particular, did not – and the bill languished in Committee.

I am pleased to say that a new day has arrived, and with it a reconstituted Committee. Chairman Tauzin and I intend to re-introduce broadband legislation in the very near future, and I have high hopes that this time around we will get a fair hearing on the bill.

If ever there was a living example of the need for regulatory reform, this is it. It makes no sense whatsoever that regulatory obstacles should stand in the way of bringing broadband services to the American public. What makes even less sense is that these obstacles are randomly applied to some distribution platforms, but not

to others. In my view, all barriers should come down, and the sooner the better. This effort is simply too important to ignore.

Certainly it is true that many of your companies would benefit from regulatory relief in this area. But, more important is the tremendous growth and stability it would provide to the now languishing "New Economy." When Billy Tauzin and I began drafting this legislation nearly two years ago, the dot.com stocks were soaring into the stratosphere. I’m just a Polish lawyer from Detroit, but even I could see that these companies were destined for a major fall. What they desperately needed was the infrastructure to provide the technological support that was key to their businesses.

Unfortunately, the broadband connections that were essential to sustaining the e-commerce marketplace did not arrive in time. However, all is not lost. We still have an opportunity to rebuild, but it is absolutely imperative that a regulatory paradigm is established that will encourage rapid and ubiquitous broadband deployment.

I believe the Tauzin-Dingell bill will do just that. It is our best hope for getting the New Economy up and running again. But I would be less than frank if I told you that final passage would be a slam dunk.

Despite the widespread support for Tauzin-Dingell in the House last year, the opposition has been quite effective at portraying this effort as a "Bell company bill." You’ve heard the arguments that the legislation is an end-run around the market-opening provisions of the Telecom Act. Nothing could be further from the truth.

Anyone who reads the bill understands that it does absolutely nothing to roll back the mandates in the Act with regard to opening the local telephone market to competition. The essential requirements for unbundling, resale, collocation and interconnection are all left perfectly intact, and the FCC is free to continue enforcing compliance using any and all means at the agency’s disposal.

What the Tauzin-Dingell bill does address is entirely forward-looking. The legislation simply draws a line in the sand when it comes to the regulation of advanced services such as high-speed Internet connections. The idea is to establish a regulatory-free zone so that telephone companies can compete with cable companies and others on a level playing field. I am convinced that regulatory parity is critical if we are ever going to get the benefits of robust competition in the broadband marketplace.

For many of you, I know I am preaching to the choir. But the message must be crystal clear if we hope to prevail. And, just as important, your companies need to stick together to make sure Members of Congress fully understand what is at stake.

This is an effort to stimulate broadband deployment, plain and simple. You must be careful to avoid the holy wars of the past. The opposition would like to characterize this effort as a fight between local and long distance companies, because those battle lines are easily drawn. But to do so misses the point of this legislation and, in my view, shortchanges the American public.

The fact is that the distinction between local and long distance telephone service will become increasingly irrelevant in the days to come. It is an artificial distinction based on geography that means little in a world of fiber optics and packet-switched networks. What is tremendously important, however, is the future success of broadband connections, both at home and around the world.

With your help, I am confident we can put the New Economy back on track, and the American public will experience the full potential of the digital age.

Thank you for your attention, and the opportunity to be with you this morning.