Opening Statement of Chairman Ted Stevens
Competition and Convergence Hearing
March 30, 2006
Over the course of our series of 14 hearings, our Committee has heard from the wireless, wireline, competitive, cable, internet, satellite and content industries as well as consumer groups and academic groups on a wide range of communications issues.
Today, we ant to discuss the phenomenon of convergence and how it is changing the competitive landscape in today’s market. Cell phone companies, Bells, C-LECs, cable companies and satellite providers are capable of providing the same or similar services. Our Committee wants to look at what that means for each of these industry segments and their consumers.
Already, consumers are clamoring for a quadruple play of local, long distance, video, and data service on a single platform.
Soon, consumers will be able to reach their video recording devices from their cell phones to either watch or record TV programs while on the move.
These technological changes will impact how regulations are applied. Certainly, we have all heard about the importance of setting a level playing field as phone providers move into the video marketplace. Currently, the same bundles are often regulated differently depending on the platform that delivers it.
It is our hope that as we level the playing field, we will seek the most deregulatory approach possible consistent with the public interest.
Going forward, it will be necessary to ensure that regulations are flexible to readily allow for the innovation that consumers demand.
Convergence and other forces are also contributing to the mergers we have seen in the communications marketplace. Wireless, wireline and cable have all seen significant transactions in the last couple of years with the combination of
• AT&T-BellSouth and
• the Comcast-Time Warner-Adelphia deal.
With respect to the wireline mergers, one concern that has been raised is not just the impact for residential users but the impact on the business market. The special access lines that provide high capacity access to businesses are largely controlled by the Bells, but are crucial to competing in the business market. This is one area where intermodal competition may not be enough. We plan to schedule a hearing on mergers in the future, so we can examine them all in some detail.
This is the last communications hearing scheduled prior to that mark-up of our "Communications Package". I have appreciated the participation of all you here at the table and I look forward to your testimony here. I don’t know when we’ll be able to look at the intermodal competition subject, but we will do our best to do so before we ask the Committee to report the bill.
Daniel K. InouyeSenator
This is a transformative period for communications services in our country. While many of the changes are encouraging, it is important that this Committee keep a close watch on the state of competition in the communications marketplace.
The proposed AT&T-BellSouth merger would certainly alter the communications landscape in this country, and is likely to trigger additional transactions. Whether or not such consolidation would improve competition remains to be seen. Given the enormous impact of this merger, I would like to see the Committee examine it specifically.
Nonetheless, convergence is creating a new generation of communication service providers and a new set of options for consumers. In many respects, this is what we had envisioned when we drafted the 1996 Telecommunications Act. The law was premised on convergence. Cable companies would offer phone services, phone companies would offer cable services and, both would offer data services. With the explosion of satellite video services and wireless technologies, the options have expanded even further.
In addition to this competition between different types of network operators, the rapid evolution of the Internet and the steady growth of broadband technology has also resulted in new, non-network communications service providers like Vonage, Microsoft, and Google, who are beginning to offer consumers new ways of transmitting information and communicating with each other.
But while convergence promises great benefits, we should similarly recognize that it is performance, not promise, that matters. Despite the development of alternative broadband platforms, cable and phone platforms are clearly the dominant players in this market controlling 98.7 percent of the today's broadband market.
We need to be mindful that the most important type of competition is the competition that occurs in a consumer's backyard. In too many parts of the country, Americans still lack a real choice of competitive broadband alternatives. As the marketplace changes, we need to be sure that rural areas and tribal communities that currently lack services do not fall even further behind. We have heard promises in the past that competition would lead to service in these communities only to see those promises go unfulfilled.
We also need to be sure that broadband network operators play fair and do not use their control over physical infrastructure to disadvantage their competitors. We often forget that it was not a "hands-off" government policy that gave birth to the Internet. Instead, it was nurtured by principles of openness and nondiscrimination that have been part of the Communications Act since 1934 and that have prevented network operators from seizing proprietary control of its operation. As a result, this hearing allows us to get beyond the sounds bites and dig a little deeper to determine what statutory changes will ensure that communications policy continues to promote vigorous competition in all communications markets.
I look forward to today’s discussion and hope that our witnesses can shed some light on these challenging questions.
Witness Panel 1
Mr. Kyle McSlarrowPresident and CEONational Cable & Telecommunications Association
Mr. Earl ComstockPresident and Chief Executive OfficerCompTel
Mr. Walter McCormickPresident and CEOUnited States Telecom Association
Dr. Jerry ElligSenior Research Fellow, Mercatus CenterGeorge Mason University
Mr. Mark N. CooperDirector of ResearchConsumer Federation of America