Keynote Luncheon Speech by
Assistant Secretary Nancy J. Victory
As prepared for delivery to the
European Institute Seminar on
"U.S. and European Approaches to the
Future of Broadband"
Wednesday, June 19, 2002
Thank you, Mike, for your very kind introduction and this opportunity to speak to so many distinguished colleagues from both sides of the Atlantic representing government and industry.
I appreciate the role that the European Institute and its members play in furthering transatlantic understanding and cooperation. The Institute has been at the forefront of identifying new methods for transatlantic cooperation, particularly in the area of communications policy. I am pleased to play a part in your efforts to highlight how the U.S. and Europe can work together to achieve the best results for our communications industries and citizens, particularly in the area of broadband communications.
We are unified by a common quest - bringing the best of services to our citizens and the world. The wonder of the world wide web is its ability to link instantly everyone to everyone else - rendering distance irrelevant and access to information and ideas ubiquitous. The key, of course, is the deployment of high speed broadband on-ramps and off-ramps to make our dreams a reality.
Before turning to the key challenges ahead, I should give you a clearer picture about my role in telecommunications for the Administration. I have a somewhat unique position that involves wearing two hats. As Assistant Secretary of Commerce for Communications and Information, I directly report to Secretary of Commerce Don Evans. As head of the National Telecommunications and Information Administration, I also directly report to the President of the United States.
My most visible duties fall into three basic areas. First, I serve as the President's advisor on domestic and international communications and information policies. This obviously involves a wide swath of potential issues.
Second, I serve as the manager of federal government spectrum. As you know, the FCC under Chairman Michael Powell manages the non-federal spectrum. Since spectrum is often shared, NTIA and the FCC regularly engage in coordination of spectrum uses and spectrum policies.
Third, I have broad responsibilities for Internet domain name management. This includes awarding and overseeing the contract for the .us top-level domain as well as dealing with ICANN's responsibilities and practices. There are a host of Internet-related questions that get subsumed within the scope of those NTIA duties.
All three of my primary responsibilities are relevant to maximizing the benefits of broadband for our citizens. As you know, creating the right policy climate for broadband to thrive is key to realizing broadband's potential. Further, we need to get spectrum management right to ensure that adequate frequencies are available for innovative wireless services, such as potential wireless broadband offerings. And finally, for the promise of broadband to be realized, we must ensure that the Internet - and the domain name management system that guides its operation - functions in a stable and secure manner. Let me elaborate further about what is happening in each of these areas.
One issue that has clearly captured our attention is broadband - a lightning fast means of data transmission that could revolutionize the way we all send and receive information. In addition to enhancing business efficiencies and broadening commercial opportunities, broadband holds the promise of expanding educational opportunities, improving health care, increasing governments' responsiveness to its citizens, and generally enhancing our global competitiveness. Thousands of new jobs could result from greater broadband deployment, both directly through network construction, and indirectly through industries related to advanced networks and services. Not surprisingly, then, broadband is an important potential source of growth and investment for our country and for others around the world.
But right now, only a small segment of the American population is enjoying the benefits of broadband. A recent report co-authored by NTIA and the Economic and Statistics Administration, titled "A Nation Online: How Americans Are Expanding Their Use of the Internet ," found that 54% of Americans are currently using the Internet. However, of those, only roughly 20% have broadband access (that's only about 10% of the overall population). Clearly, that is not sufficient to realize broadband's full potential.
As President Bush emphasized last week, "[t]his country must be aggressive about the expansion of broadband." And indeed, the Administration has been taking a number of steps to create incentives for investment, to stimulate demand and usage, and to remove unnecessary government impediments to competition and deployment. In order to create incentives to deployment, the Administration has:
- extended the Internet tax moratorium;
- successfully urged Congress to modify the tax depreciation schedules to allow companies to depreciate the capital costs associated with broadband roll-out over a shorter time period; and
- extended the research and experimentation tax credit (and we continue to urge Congress to make it permanent).
The Administration has also taken steps to help promote demand for these exciting new services by:
- making e-government a priority for all agencies, leveraging $52 billion in federal IT procurement to make government run more efficiently;
- making broadband demand a priority of the President's Committee of Advisors on Science & Technology;
- holding workshops on key demand issues, such as digital rights management and the benefits of broadband for small business; and
- exploring ways to expand telework opportunities.
The Administration, has also been working to identify and eliminate unnecessary government impediments to broadband competition and deployment. One issue where NTIA is taking the lead is on rights-of-way management. This is one issue where all sectors of the broadband industry - Bell Operating Companies, CLECs, cable providers, cable companies, overbuilders, and wireless providers - actually share the same point-of-view. All participants are concerned that restrictions by certain municipalities and federal government landowners on accessing public rights-of-way and tower sites might be inhibiting or at least delaying broadband network construction. While the industry admits that the problems seem to lie with only a small number of jurisdictions, due to the nature of networks, a few bad actors can have a disproportionately adverse effect on the roll-out of national, statewide or regional advanced services networks. Conversely, public rights-of-way managers have also raised problems they maintain are created by some service providers.
To ensure that rights-of-way regulation is appropriate and not an impediment to broadband deployment, NTIA is working closely with the National Association of Regulatory Utility Commissioners (NARUC), and particularly its Rights-of-Way Study Committee, to help identify best practices and recommendations for state actions to streamline the current process. NTIA is also meeting with representatives of the cities and their associations, such as the National Association of Telecommunications Officers and the National League of Cities, to identify means for improving and simplifying their current processes, while ensuring sufficient flexibility for municipalities to best serve their citizens. NTIA is also launching an initiative to streamline and improve the rights-of-way oversight practices of federal government agencies. We want to see the federal government be a leader on this issue.
Meanwhile, the FCC is moving on all fronts with proposals for broadband regulatory reform. The agency presently has open three key proceedings that could dramatically change the broadband landscape:
- Nondominance Proceeding. The first of these raises the question of whether telephone companies should be considered "dominant" in the provision of broadband services - right now most surveys indicate that cable companies have the lion's share of the broadband market. The answer to this question is important, because if the telephone companies are found to be nondominant, their broadband services will be exempt from a number of strict regulations and reporting requirements, including the filing of tariffs. In essence, this FCC proceeding is looking at the appropriateness of deregulating the "retail" provision of Internet access.
- UNE Triennial Review Proceeding. The second FCC proceeding focuses upon the right mix of regulation and deregulation of the broadband wholesale market. To what extent should ILEC competitors have the right to demand and receive "pieces" of the ILEC's network at special discounted rates under TELRIC pricing? As you might anticipate, the ILECs are making their case for shortening the current list of network elements subject to unbundling, while the CLECs are arguing for maintaining or expanding the list.
- Proceeding to Define ILEC Internet Access. The third FCC rulemaking is looking at the legal "definitional" status of ILEC broadband services. For example, is DSL a regulated telephone service under Title II of the Act? Or, is DSL an "information" services that falls within the less regulatory Title I of the Act? Just as importantly, the Commission is asking for industry views as to the practical consequences of classifying Internet access in one legal cubbyhole as opposed to the other.
The general betting line is that the FCC will be taking action in one or all of the broadband proceedings by the end of the year. As the agency moves ahead with its efforts, NTIA will be assessing when and where its views could contribute to a better outcome for competition, deregulation and the American consumer.
In the transatlantic context, I want to underscore our eagerness to work with interested countries to achieve the many potential benefits that can result from broadband deployment. These benefits are by no means limited to our borders, and by their very nature can be increased by the use and spread of these technical innovations around the world. We are having bilateral communications discussions with the United Kingdom this week on a number of topics - one of the most important will be to exchange ideas on policies that have worked (or failed) in pursuing deployment and take-up of broadband technologies in our markets.
While, up to this point, broadband has been most often thought of as a wired technology, wireless broadband seems destined to be a part of the broadband future. Broadband services are beginning to be delivered via terrestrial wireless and satellite systems. Ad hoc services using 802.11 or WiFi technology are also proliferating. All of these innovative new services and technologies require spectrum for delivery. A pressing challenge for those of us who manage spectrum is ensuring that adequate frequencies are available to fuel future wireless growth (including for broadband services), as well as to provide the increasingly indispensable infrastructure for our military, law enforcement and public safety needs.
We at NTIA have been trying to look at longterm policy and process shifts to better accommodate the dynamic nature of wireless technologies and wireless needs. Toward that end, in early April I hosted a two-day Spectrum Summit with joint participation by Chairman Powell and his FCC colleagues. Our objective was to hear from the experts as to the successes and failures of current spectrum management policies, as well as how to further improve the process.
The results of the Spectrum Summit were very revealing. Among the major problems identified with the current process were:
- Gaps in governmental coordination between the three responsible U.S. agencies - NTIA, FCC and the State Department;
- Length and complexity of the allocation process;
- Inefficient uses of spectrum and the absence of efficiency stimulating incentives;
- Challenges in making "room" or "home" for new services and technologies; and
- Lack of clarity about spectrum rights and the federal spectrum management process.
The Future of Spectrum Management
From the Summit, I believe several basic spectrum management goals emerged:
- First, the U.S. Government agencies involved in spectrum management - NTIA, FCC and the State Department - must work collaboratively as "one spectrum team" to serve our nation's collective interest. Chairman Powell and I have taken the first steps to improve our interagency communications and to take a more forward-looking approach to accommodate advances in technology within our domestic spectrum. Chairman Powell, Deputy Assistant Secretary Gross, and I have also been discussing how we can better coordinate to improve our international outreach as we prepare for international fora, like the World Radiocommunication Conferences held every three years.
- Secondly, we should develop policies that encourage spectrum efficiency. NTIA has long advocated and required the use of spectrum efficient technologies by Federal agencies. For example, NTIA has developed, and the Federal agencies are now implementing, a transition to narrowband technology to relieve the congestion in the land mobile radio bands used by the Government. NTIA and the Federal public safety agencies have also adopted technical standards for receivers to minimize interference and increase overall spectrum efficiency. We are also exploring innovative new technologies, including those that will permit radios to select their operating frequencies, decrease power, and adjust coverage, based on sensing the operating environment and dynamically selecting unused channels.
- Third, we must establish forward-looking policies that enable technological advances and eliminate legacy regulations that stand in the way of innovation. One such promising reform in this area is the FCC's proceeding on creating secondary markets that would permit parties to "lease" their spectrum to others, to put otherwise unused spectrum to its most efficient use. Another is the accommodation of frequency flexible wireless systems, such as those under the 802.11 standard, on an unlicensed basis. Taking steps to make room for new technologies is key, including through migration or relocation to higher frequency bands. NTIA recently published rules for Federal agencies to be reimbursed  by the private sector for relocation costs, and is currently working on a legislative proposal (referenced in the President's 2003 budget) to create a reimbursement fund from spectrum auction proceeds.
- And fourth, we should ensure that we have policies that assure the deployment of robust wireless networks that are prepared for the worst of crises and able to deliver the very best of services to the American people. The events of September 11, 2001, demonstrated how critically important communications capabilities are for our nation's first-responders. Interoperability among these agencies is essential to their ultimate success. NTIA is attempting to assist in achieving this goal through research at our Boulder, Colorado lab , and through education and outreach. Last week, NTIA and the Public Safety Wireless Network Program co-hosted a summit  here in Washington to focus on current and emerging solutions for achieving interoperability.
While we wrestle with building a sound spectrum management framework for the future, the demands of the present increase unabated. The search for new homes for new services - whether new allocations, relocation of incumbents, or advanced sharing techniques - involve inherently nettlesome issues. Let me identify several of the key challenges that are facing all of us involved in spectrum decision-making:
- Third Generation Wireless (3G). Since 2000, NTIA, the FCC and the Federal agencies have been working cooperatively to take certain actions to identify spectrum for 3G services. After extensive public outreach and work with industry and affected agencies on technical analyses of the various band options, NTIA and the Federal agencies are now focusing specifically on the 1710-1770 MHz band, while the FCC is focusing on the 2110-2170 MHz band. A viability assessment on making both of these bands available for 3G is scheduled for release later this month.
- Digital Defense of National Security. The events at home and abroad have underscored the importance of wireless communications capabilities to our national defense and critical infrastructure. The digital era of electronic links is a mission critical component of our military and security systems. Every branch of the Armed Services depends on radios and spectrum-dependent systems to conduct its missions. Our Department of Defense has predicted that its spectrum usage will grow by more than 90% by 2005. These requirements need to be recognized and addressed as we move forward in encouraging innovation and efficiencies in the public sector.
- 700 MHz Band. The Administration welcomed Congress' action  last evening to facilitate the postponement of the auction of most of the spectrum in the 700 MHz band. This affords time for the FCC to develop the policies necessary to ensure certainty as to when and how this spectrum will become available for new wireless service. The Administration recognizes the important role that broadcasting continues to play in the lives of all Americans and the challenges associated with the conversion to digital broadcasting. Yet, at the same time, spectrum is needed for new wireless services that provide new communications opportunities. We are searching for an equitable and efficient solution for relocating incumbents in these bands.
Again, this is an area where we hope to learn from the innovative policies of other countries. The United Kingdom has been on the cutting-edge of efficiency-promoting spectrum policies, and I am looking forward to exchanging ideas and experiences with them at our discussion this week.
I want to mention one more topic that is very important to broadband Internet traffic. The global domain name system - the system that translates names into Internet addresses in order to enable communications to reach the desired destination - is receiving increasing attention in Internet circles. Why is NTIA interested?
Well, the Internet has permeated our lives both socially and economically - it has become an important means of doing research, communicating with each other, and conducting business. Given the Internet's importance in all of these facets of daily life and general global economic well-being, it is essential that the Internet - and its underlying domain name management system - remains stable and secure. This is the primary concern of the Department of Commerce.
The Department, and particularly NTIA, serves as the steward of critical elements of the domain name system during the transition from U.S. government to private sector management. ICANN was formed by private sector interests in 1998 to bring more coordination and sustainability to the domain name management system, as the Internet grew into a large-scale global network. The Department entered into a Memorandum of Understanding with ICANN  to carry out these functions. Recently, there have been calls for ICANN to review its mission, structure and processes for their efficacy and appropriateness in light of the needs of today's Internet. ICANN itself has initiated its own process of reform.
The Department believes these discussions are healthy and essential to ensuring the best path for stable and secure Internet management in the future. My goal is to ensure that ICANN reforms take place in a timely manner, are focused on core DNS management activities, and instill confidence and legitimacy in ICANN's operations.
ICANN has accomplished a great deal in its first few years of existence, yet all would agree that the road has been far from smooth. It is incumbent upon governments and private sector companies and users on both sides of the Atlantic to work towards establishing a mechanism for managing the Internet domain name system that is sustainable over the long term. The Internet is too important a resource for all of us to do otherwise.
In conclusion, high technology and advanced telecommunications, such as broadband, have the capacity to dramatically increase productivity and social welfare on both sides of the Atlantic. The United States also believes information and communications technologies are a catalyst for trade, information sharing, and social welfare enhancement throughout the world. Seminars, such as the one you have been participating in today, help us to advance our thinking and expose us to new ideas and fresh perspectives on how to sustain and grow these technologies.
Thank you for this opportunity to share with you some of the Bush Administration's thoughts on these important issues.