Keynote Address of Assistant Secretary Victory at the National Summit on Broadband Deployment

Good morning. I am very excited to be here to open the National Summit on Broadband Deployment. I'd like to commend Brett Perlman and the many people who put this conference together, despite the tragic devastation that occurred at the World Trade Center and the Pentagon a little over one month ago. And thank you, members of the audience, for coming here from all over the country to participate in this National Summit. I think it shows the tremendous resilience of the American people and the determination to continue our way of life. I applaud you all.

Commerce Secretary Donald Evans asked me to express his regrets that he is unable to join you today. On his behalf, and mine, thank you to the National Association of Regulatory Utility Commissioners (NARUC) and the National Exchange Carriers Association (NECA) for the invitation to speak about an issue of great importance to our nation, and of great interest to President Bush - broadband deployment.

As many of you may know, the Bush Administration is a believer that new technologies and the deployment of high-speed networks are crucial to promoting America's economic growth and our nation's social well-being. President Bush has already taken a number of actions designed to enhance the ability of Americans to benefit from technology:

· Understanding that educational policies will enhance our technical success, President Bush has proposed investing $1 billion over 5 years to improve the K-12 math and science curricula.

· He has established an Office of the 21^st Century Workforce to provide workers with skills for the digital future.

· And he has called for a permanent R&D tax credit.

· Recognizing the importance of the Internet and high-speed access, President Bush has also called for an e-government initiative fund to bring more government services online.

· He has initiated new guidelines for federal sites to ensure access by those with disabilities;

· And allocated $80 million in matching grants for community technology centers.

· In addition, President Bush has strongly advocated for an extension of the moratorium on discriminatory taxation of the Internet and on Internet access. This extension will provide additional time to analyze the impact of e-commerce on local and state receipts, while ensuring that the growth of the Internet is not slowed by new taxes.

Facilitating broadband deployment fits right in to this high tech agenda. If you believe even a small portion of the hype, this promising technology has the potential to revolutionize our lives by energizing e-commerce, augmenting educational opportunities, advancing health care and much much more. It's not surprising then that broadband deployment issues have captured the keen attention of NTIA and others in the Administration. Over the last few months, the Bush broadband team has been hard at work understanding the problems with broadband deployment and developing a position on what role, if any, government should play in facilitating its roll-out. Although I would love to be able to unveil the Administration's broadband policy for you today, it remains a work in progress. What I can tell you today, however, is where we have been, where we are going, and how we're going to get there.

Where we have been

Interestingly, the "where we have been" part of this - or at least the "where I have been" part of this - started shortly before my confirmation a little more than two months ago. As I made my visits to members of the Senate Commerce Committee, their top interests in the telecommunications area were almost uniform - broadband and spectrum, broadband and spectrum. Not surprisingly, these were the major areas of inquiry at my confirmation hearing. But it was broadband that turned out to be my way to bond with the Senators present that day. It turned out that we all lived in areas where broadband was not available and we all seemed to be very interested in getting it.

Upon arriving at NTIA, I quickly found that this keen interest in broadband was shared by my colleagues in the Administration. Accordingly, I have made one of NTIA's very top priorities aggressively exploring what role government should play in removing roadblocks to broadband deployment. Particularly as the "new kid on the block," I've been working to learn quickly about the status of broadband deployment throughout the country, and to understand better what is impeding or might help spur deployment in areas where it may be lagging. As a policymaker, I believe that it is best to listen and learn before action - to know the nature of a problem before attempting to solve it.

And I do practice what I preach. Over the last few months, I have had many many meetings with industry representatives, consumer advocates, and other stakeholders, and they have been so informative. I should also note that so too have the numerous "Brad Ramsey Grams" I have received that provide the important perspective of NARUC and its members. As state utility commissioners, you are on the front lines grappling daily with complex telecommunications issues affecting where and how companies provide broadband service. Your input in this process is invaluable.

One of the things made clear in the various discussions I have had on broadband policy, is that there is a whole spectrum of differing viewpoints. In an effort to get many of them in one room and compare and contrast them, I recently dedicated an entire day to a Broadband Forum to bring together a diverse group of stakeholders for a spirited dialogue about supply and demand for broadband and the possible need for policy prescriptions to advance deployment. Those of you who attended know that no moderator was needed to stimulate this lively discussion.

Our goal at the Forum was to ask critical questions and challenge underlying presumptions to better inform our thinking. We started at the beginning - Is there an unmet need for broadband? If so, is this a problem of supply or demand? Second, what should government's role, if any, be in this process? Is the market working? Is it working in some, but not all, areas? And what policies, if any, should government advocate in response?

We heard from a variety of broadband providers, including incumbent LECs, competitive LECs, wireless providers, broadcasters, satellite operators, and cable providers. We also invited state and local representatives, community leaders, consumer representatives, academics, financial analysts, and others who have been thinking about these issues. Brett Perlman was one of our able, and very effective, participants.

Not surprisingly, the answers to the questions we asked were as varied as the participants. Most agreed that broadband has been rolling out at a relatively fast pace nationally. Currently, studies show that some 70 percent of Americans have access to broadband services over DSL and/or cable. Looking only at rural areas, broadband service over such platforms is available to a somewhat lesser, but still significant 50 - 60 percent of homes and businesses. These numbers suggest that the pace of rollout for broadband has far exceeded the rates for other technologies and services, such as VCRs, the Internet, TV, or telephones. Then what is the problem? Why are we all here today?

Well, despite the overall good news, the participants raised a number of concerns. First, while service availability is high, the actual take rate is still low - apparently less than 10 percent in most areas. Some suggested that this was because prices are still high and getting higher, because new killer applications have not yet been developed, or because some communities still do not recognize the utility of broadband. In other words, the problem may be one of marketing, not of the marketplace.

Other participants contended that the problem is not one of demand, but of supply. Several providers maintained that certain barriers have prevented them from reaching economies of scale necessary to bring down prices. Some parties cited unbundling requirements as barriers to investing in higher-speed broadband services, such as fiber, as well as in rural and hard-to-serve markets. Many also identified diverging state regulations and local rights-of-way obligations as barriers to deployment.

Most agreed that, if government did anything, it should do so in a cautious, limited way. The market appears to be working in rolling out broadband to most areas. If anything, there was a call for government to remove those regulations that appear to pose barriers to deployment. Additionally, a number called for government action where the market fails.

I can't emphasize enough how valuable the Forum was in helping us understand the problems associated with broadband deployment and craft an appropriate policy for the government's role in facilitating this exciting new technology. I would like to think it was similarly enlightening for many of the participants.

Where are we going and how are we going to get there

This brings me to where we are going and how we are going to get there. Well, the goal is the development of a Bush Administration policy for facilitating, or at least not impeding, the deployment of broadband technology. Given the enormous breadth and importance of this issue, tackling it requires a principled and holistic approach. Because of all of the detailed and difficult sub-issues under the broadband umbrella, it is often tempting to look at each one in a vacuum. However, the problem with doing so is that it can lead to inconsistencies and inequities within the overall broadband plan. Accordingly, NTIA has tried to first develop guideposts on which to frame the specific policy directives. It is our hope that these markers will help us to develop sound, principled policies that will let the market, not government, regulate broadband deployment.

Based upon input from the Broadband Forum and other venues, the following concepts have emerged:

· First, we agree with Chairman Powell that government policy responses should not be driven by consumer adoption rates. Consumer wants and needs often cannot be anticipated and can change on a dime and, let's face it, government can't always react quickly enough. Government's role, therefore, should be to facilitate the deployment of new technologies by removing any unnecessary roadblocks to that deployment. Then it's up to the market - both in terms of carriers' decisions to deploy and consumers' decisions to subscribe.

· Second, policies that promote rational facilities investment should be pursued. Facilities-based competition has always been a desired means for achieving a robustly competitive market. Obviously, there should be reasonable opportunities for resale competition as well. But as we saw on September 11^th, there are network reliability and security advantages to having multiple facilities-based competitors.

· Third, where possible, competition should be promoted using a technology-neutral paradigm. As you all know, broadband services can be deployed over telephony, cable, wireless and satellite platforms. The differing histories and regulations surrounding each type of platform makes absolute regulatory parity difficult to achieve, but it is important to try to regulate comparable services in a manner that does not interfere with marketplace outcomes.

· Fourth, we should be mindful that the market might not always work in all areas, particularly in rural and certain urban areas. In developing policy, we need to be aware of the differing forces and needs in those areas.

· Finally, once the right regulatory framework has been established, effective enforcement is critical to making it work. Regulations must have teeth and penalties must deter non-compliance.

To date, NTIA and the Administration have made lots of progress in understanding the problems associated with broadband deployment as well as developing potential means for correcting them. Nevertheless, we have more work to do.

In completing that effort, we will continue to reach out to the experts and stakeholders in this debate. We at NTIA will continue to meet with interested parties. I am planning to release a Request for Public Comment in the next few weeks to open the record for written comments and suggestions on a variety of broadband issues. We still need the advice and experience of policy-makers, such as yourselves, in answering a number of difficult questions. I invite you all to help us wade through these difficult questions and share your experiences at the state level. We will have the Request for Comment posted on our website and published in the Federal Register in early to mid-November. We look forward to hearing from you. States have served as the laboratories of innovative ideas and solutions, and the federal government can learn from you about what has, and has not, worked.

In addition, I very much recognize that federal, state and local governments all have a hand in the creation and implementation of a successful broadband policy. I therefore believe it is imperative for us all to work together to review and address this issue. NTIA would be a very willing partner with NARUC and local governments in such an endeavor. I'd like to take this opportunity to extend a formal invitation to the states to work together with us at NTIA as partners on this issue. Brett and Brad, be on notice that I will be contacting you shortly to discuss how such a partnership could work.

Conclusion

In conclusion, I want to thank you all for participating in this summit. President Bush has asked us to return to our normal, daily activities - even if it means debating appropriate broadband policies - and you have answered that call. All of us being here today demonstrates our tremendous interest in broadband and its potential to improve the lives of all Americans. Working together, we have the ability to develop policies that will enable us to fully realize these benefits. I look forward to working together to achieve our common goal.
 

Thank you.