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Unfortunately, the case for making broadband deployment a priority of a

[Page: S5046]  GPO's PDF

   Last week I released a white paper entitled Broadband : A 21st Century Technology and Productivity Strategy and today I introduce the National Broadband Strategy Act of 2002. The white paper analyzes the challenges. The legislation will compel us to meet them, requiring the Administration to develop a national broadband strategy within six months of passage.

   Taken together, and working in conjunction with insightful leaders and groups in the tech community, I am confident these measures can spark the development and implementation of a coherent, cross-agency strategy to eliminate obstacles, create incentives, and encourage industry innovation.

   In the upcoming months, I'll follow up this report and legislation with proposals on how to reach truly advanced broadband , the speed I mentioned before, upwards of 10 megabits per second. There is no focus on this need now, and that's where government particularly needs to lead and seed.

   The follow-up legislation I'll propose in the coming months will call on the FCC to develop a regulatory framework to meet the challenges of the next generation Net: propose tax credits for the deployment of advanced broadband , encourage research and development on advanced broadband infrastructure that will enable this technology to reach into all the corners and crevices of the country, and present a program to incentivize research and development on major applications in areas where government plays a central role, including education, healthcare, and e-government.

   The public sector cannot and should not manage this effort. Our future will fortunately be in the hands of thousands of individual innovators. Nor should the government be choosing winners and losers. To benefit consumers, government must be pro-broadband , but technology neutral about how business gets there, by encouraging innovation and maximizing competition. Government must clear the path so that business innovators can march forward.

   I urge my colleagues to join me in supporting this important piece of legislation. I request unanimous consent that the introductory materials to my whitepaper and the text of the bill be printed in the RECORD. I note to my colleagues that the full text of the whitepaper is available on my web site, http://lieberman.senate.gov.

   There being no objection, the material was ordered to be printed in the RECORD, as follows:

    Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

   SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Broadband Strategy Act of 2002''.

   SEC. 2. FINDINGS.

    Congress makes the following findings:

    (1) The United States needs to develop a long-term investment and growth strategy that will restore the unprecedented gains in structural economic productivity with high employment growth experienced by the United States in the late 1990s.

    (2) The gains in structural productivity with high employment growth in the late 1990s resulted from unprecedented investments in information and communication technology.

    (3) It was the precipitous decline in these investments that took the United States economy into recession before September 11, 2001.

    (4) The United States needs to focus on stimulating resurgence in these investments to regain vibrant growth in structural productivity and high employment growth.

    (5) If productivity increases at the rate of 1.5 percent per year, the standard of living will double about every 46 years, or about every two generations. On the other hand, if productivity increases at the rate of 3 percent per year, the standard of living will double about every 23 years, or about every generation. This difference results from the so-called miracle of compounding. To take advantage of compounding, a long-term economic strategy for the United States must focus on structural productivity growth.

    (6) Productivity growth has enabled American workers to produce 30 times as much in goods and services in 1999 as they produced in 1899, with only 5 times as many workers. This growth in productivity has increased the standard of living in the United States from $4,200 in 1899 to $33,740 in 1999 (expressed in 1999 dollars). Growth in structural productivity will bring about growth in wages and salaries, profits, and government tax receipts.

    (7) The productivity gains of the United States in the late 1990s broke a 25-year trend. From the early 1970s to the mid-1990s, United States productivity grew sluggishly, at an annual rate of about 1.5 percent. During the final 5 years of the 20th Century, it grew at nearly double that rate.

    (8) The high cyclical productivity growth the United States has experienced in 2001 and 2002 results for the most part from a reduction in employment and increased utilization of existing capacity.

    (9) The United States needs a strategy to generate structural productivity growth arising from the development and deployment of new technology that enhances both efficiency and employment.

    (10) The United States needs to prepare now for the retirement of the Baby Boom generation. If the United States does nothing regarding Social Security, it is estimated that by 2030 the annual shortfall between amounts in the Social Security Trust Fund and the amount required to meet obligations of the Fund will reach $814,000,000,000 (in 1999 dollars). The United States has approximately $7,4000,000,000,000 in obligations coming due, and it advisable to have our fiscal house in order, hopefully with no national debt, when these obligations must be paid. Restoring structural productivity and high employment growth is essential to ensure that the United States can honor these obligations.

    (11) Making affordable, high speed broadband Internet connections of 10 Mbps-100 Mbps available to all American homes and small businesses has the potential to restore structural productivity and employment growth.

    (12) High speed broadband Internet applications for voice, data, graphics, and video will revolutionize many aspects of life at home, school, and work. High speed broadband Internet will transform health care, commerce, government, and education. The benefits of a successful high speed broadband Internet deployment strategy to the quality of life and economy of the United States will be immeasurable.

    (13) Traditionally, the United States is considered the world leader in the development and commercialization of new innovations and technologies. However, the United States lags far behind other countries in broadband deployment , including South Korea, Canada, and Sweden. By 2005, the United States is projected to fall to ninth place in broadband deployment , surpassed by Asian markets in Hong Kong and Singapore, the Scandinavian countries Denmark and Norway, and the Netherlands.

    (14) The United States will need high speed broadband Internet for public health, education, and economic welfare, just as the United States now needs universal telephone service. High speed broadband Internet applications are capable of revitalizing the economy and solving countless problems for average Americans. The applications fall into the areas of e-education, e-health, e-commerce, e-government, and e-entertainment.

    (15) The benefits that will arise from development and implementation of a national high speed broadband Internet strategy amply justify a priority for such a strategy. The Federal Government will act one way or another on many of the key policy issues affecting broadband deployment . The only question is whether it acts in accordance with a strategy, or piecemeal.

    (15) Adopting a national strategy for broadband deployment is consistent with the strategies the United States has adopted to speed deployment of other essential infrastructure, including railroads, electric power, telephone service, and radio and television. Each of those technologies has been the focus of a national economic strategy. There is a consensus that the Northwest Ordinance, Morrill Land-Grant Act, and GI bill, and laws for transcontinental railroads, rural electrification, and the interstate highway system, embodied useful and successful strategies for the future of the United States.

    (16) In facilitating high speed broadband Internet deployment , the United States should rely on markets and entrepreneurs and minimize the intrusion of government. Americans need to be creative and innovative when government acts to make sure that it provides value added.

    (17) In crafting a comprehensive strategy to advance deployment of high speed broadband Internet, a broad range of policy options should be addressed, and the Administration needs to provide leadership in developing these options and establishing a priority among them.

   SEC. 3. NATIONAL STRATEGY FOR HIGH SPEED BROADBAND INTERNET DEPLOYMENT .

    (a) STRATEGY FOR INCREASING STRUCTURAL PRODUCTIVITY AND EMPLOYMENT GROWTH.--Not later than six months after the date of the enactment of this Act, the President shall submit to Congress a report setting

[Page: S5047]  GPO's PDF

    (b) ELEMENTS.--The report under subsection (a) shall include the following:

    (1) A goal for the deployment of broadband telecommunications services nationwide, including a goal regarding the speeds necessary to facilitate applications needed to stimulate structural productivity and employment growth.

    (2) A proposal for policies to foster and maintain competition among firms offering broadband telecommunications service, including competition to deploy high speed broadband Internet of 10 Mbps-100 Mbps.

    (3) A proposal for incentives to enhance demand for high speed broadband Internet telecommunications service, including demand for purposes of serving Federal mission areas such as homeland security, distance learning, health, scientific collaboration, and electronic commerce.

    (4) A proposal for incentives to facilitate and enhance the supply of high speed broadband Internet telecommunications service.

    (5) A proposal to enhance global electronic commerce.

    (6) A proposal for the optimal allocation of Federal Government resources on research and development regarding high speed broadband Internet telecommunications service, including recommendations for the allocation and prioritization of Federal funds.

    (7) A proposal for the optimal allocation of spectrum in furtherance of the deployment of high speed broadband Internet telecommunications service.

    (8) An assessment of various limitations to the deployment of high speed broadband Internet telecommunications service, including matters relating to taxation, privacy, security, spamming, content, intellectual property, and rights-of-way, and proposals for eliminating or alleviating such limitations.

    (9) An assessment of the impact of the proposals under this subsection on structural productivity and employment growth in the United States and on the international economic competitiveness of the United States.

    (10) Any other proposals or matters on the deployment of high speed broadband Internet telecommunications services that the President considers appropriate.

    (c) FORM.--The report under subsection (a) shall include a draft proposal of any legislation required to implement the goal described in paragraph (1) of subsection (b), and of any of the proposals set forth under paragraphs (2) through (8) and (10) of that subsection (b).

--

   Broadband : A 21st Century Technology and Productivity Strategy

   Over one hundred and fifty years ago, a new technology emerged that grabbed the imaginations of the public and the purse strings of investors. It was a technology that promised to bring people closer together and to greatly stimulate the economy of that time. In order to succeed, that new technology required that the land be crisscrossed with a network upon which news could be carried and goods could be traded.

   Bankers funded hundreds of startup companies that were built to take advantage of the new network. Investors clamored to purchase shares at rapidly rising prices. And then, after little more than a decade of overbuilding the infrastructure, it all fell apart as shares plunged 85% and hundreds of businesses and banks went under.

   The technology was steam-driven railroad and this is the story told in the May 13th issue of Business Week. The analogies to the Information Technology boom of the 1990s are unmistakable and the lessons are invaluable. But the most important part of the story is what happened after the railroad bubble burst.

   Within two decades, railroads were carrying four times as many people as they had at the height of the boom. The tracks were cleared, leaving the most solid companies and the best of the rail technologies to survive. According to W. Brian Arthur, an economist at the Santa Fe Institute, the survivors then developed new strategies that resulted in the industry's greatest growth and had the greatest impact on business and society of that time.

   We now find ourselves in the same situation that the railroads were in as they developed their new strategies, except the technology is now broadband . It is clear that broadband will revolutionize business and society in our time, just as the railroads did in theirs. But it is also a confusing time, as many different interests emerge with many different agendas. The issues to be faced are many and they are complex. For some, there will be no easy answers. But it is time for us to have a national strategy that addresses these issues in a coherent and comprehensive manner.

   My staff has assembled this report over the past ten months with extensive input from industry, academia, and government. It was no small undertaking and I particularly thank Skip Watts and Chuck Ludlam of my office. While there have been numerous bills offered in Congress dealing with isolated components of broadband policy, this report is the first to identify the full range of issues that must be considered as part of a national broadband strategy designed to stimulate economic expansion.

   As the first in a series of legislative initiatives, I will introduce the National Broadband Strategy Act of 2002 next week. This bill highlights the need for a carefully planned national strategy to provide universal availability of broadband and to motivate research and advances in broadband applications and content. It calls upon the Administration to recommend a coherent, cross-agency national broadband strategy in a series of key government policy areas, to Congress.

   I want to emphasize that while there is an ongoing competitive scramble to reach the lower broadband speeds, we need to also pay real attention to advanced broadband and to attaining those much higher speeds. The report's Executive Summary identifies four key elements that will be integral to advanced broadband deployment . The elements include an FCC regulatory plan, tax incentives, research on advanced infrastructure technology, and deployment of applications.

   As with the railroads of the mid-1800s, broadband is now poised to whistle in a new period of economic growth. We must do all that we can to nurture this emerging technology and to stimulate the development of new killer applications in the fields of education, medicine, government, and science. Commerce and entertainment will not trail far behind. The tracks of rail are now the ``pipes'' of broadband .

   EXECUTIVE SUMMARY

   Broadband deployment must become a national priority. Major economic growth and productivity gains can be realized by making affordable high-speed broadband Internet connections--which are already enjoyed by many universities and large businesses--widely available to American homes, schools, and small businesses.

   In a soft economic climate with limited prospects for near-term recovery, broadband deployment is a necessary condition for the restoration of capital spending in the information technology sector. Such investments were the critical drivers of the non-inflationary growth that characterized the late 1990s. Broadband , which can play a pivotal role in encouraging investments in information technology, has the potential to transform education, health care, government, entertainment, and commerce.

   Of course, embracing broadband as a vehicle for economic growth raises the question, ``How fast is fast enough for truly advanced emerging applications?'' The telecom, cable, and satellite industries are now providing Internet access at speeds typically less than 1.5 megabits per second (Mbps). A review of existing and likely technologies, however, suggests that we have only achieved the first level of broadband speeds. On the foreseeable horizon are technologies that offer advanced broadband speeds of 10 Mbps in the near-term, and 100 Mbps in the medium-term. A national strategy needs to focus on this advanced broadband opportunity. Arguably, it will be at these advanced speed ranges that the greatest benefits from broadband will come.

   A successful strategy to accelerate the deployment of broadband will lead to immeasurable benefits to the quality of life and economy of the American people. But a successful strategy must encompass various issues in a comprehensive and coherent manner, and the debate must not become mired in any one debate. What we need is a sensible, intelligent approach that addresses the full range of issues within the context of an interrelated framework, not the piecemeal process that has brought us to the present confusion and controversies.

   This strategy must recognize a truth that sometimes becomes lost in the multiplicity of debates over such issues as the regulation of telephone and cable companies. What is overlooked--and must be recognized--is that demand will drive the next phase of broadband expansion. Strong demand from consumers, smaller businesses, and even big businesses that currently have high-speed Internet connectivity, will produce a cycle of innovation and growth. But demand, in turn, requires that applications of real value be developed. It requires, in other words, ``killer applications'' that justify, in the minds of consumers, the price of progressively faster broadband connections.

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