Commerce Committee Chairman Ted Stevens Addresses the Wachovia Forum on Behalf of Securities Equity Research Firms

Remarks Focused on Review of the 1996 Telecom Act

February 8, 2006

WASHINGTON, DC – Focusing on the Senate Commerce Committee’s comprehensive review of the 1996 Telecom Act, Committee Chairman Ted Stevens (R-Alaska) addressed the Wachovia Forum on Behalf of Securities Equity Research Firms, telling the group that the Committee’s goal should be to get government out of the way, to encourage revenue growth, lower costs, cut red tape, and minimize government intervention in private agreements between entrepreneurs and their banks.

Following are Chairman Stevens’ remarks:

Thank you very much Jennifer. Sorry I was running a little late. It was a timely entrance anyway. It’s nice to see you all here. I see some of our Committee staff is here, so after I leave you can get the true skinny from all of them, as we used to say.

Today is the 10th Anniversary of the 1996 Telecommunications Act. I believe that that Act stimulated competition, increased consumer choice, reduced prices, and spurred an era of unprecedented innovation.

Our nation had one long distance carrier at that time,10 years ago. Now we have over 300; and the number of television networks has more than doubled. None of that would have been possible without private investment, without risk-taking, without dreamers who made much of it come true.

Much of this has changed in just the past decade. Technology has advanced more in those 10 years than in the 62 years between the 1934 Communications Act and the 1996 Act – iPods, Blackberries, Wi-Fis and much more are now part of the American lexicon.

Our Commerce Committee is undertaking, as you know, a comprehensive review of the 1996 Act to determine if and how that law should be updated. Co-Chairman Inouye and I have embarked upon this comprehensive review. We began with listening sessions and will culminate with a series of about 15 hearings that are ongoing now on a broad range of communications topics. Our final hearing, in some ways the most important, will be with Wall Street investors.

Congress can write laws, but if we fail to assure how this legislation will affect the American economy, we fail to achieve our mission. It has taken 10 years because of regulatory and court delays for investors to have the certainty they sought after the ‘96 Act. As we seek to craft a new law, we’re going to try to see if we can shorten the inevitable delay which occurs after additional provisions or new laws are enacted.

Our goal should be to get government out of the way, to encourage revenue growth, lower costs, cut red tape, and minimize government intervention in private agreements between entrepreneurs and their banks. We want to encourage risk-taking. It’s essential that that be part of this result.

In streamlining this process, Congress still has the obligation to ensure commitments to 911, to law enforcement access, and the protection of consumer phone records are kept – those must be kept from invasion. We’re going to have a hearing today on that.

Some issues, like net neutrality, that we dealt with that yesterday, and franchising reform involve the largest companies in America going head to head. We have decisions to make that could affect their investment decisions for years to come. It’s not possible to accurately predict where our Committee will come out on some of these monumental decisions. I think I can delineate to you some of the issues our Committee will have to resolve. They’re not easy.

Both the National Association of Broadcasters and the National Cable Television Association are here I understand. So, let me ask you the question, should Congress allow cable companies the right to downconvert the broadcast signal they receive over the air as part of the digital transition? If this is not permitted, cable will probably require billions of dollars in additional investment just for set-top boxes – not for any change, not for any innovation.

In deciding the extent to which cable must carry broadcasters multi-cast channels, Congress will determine whether broadcasters or cable companies will garner the advertising revenues from new programming and new access. Within the world of digital content, our legislation has to protect copyright laws and prohibit indiscriminate redistribution, while also meeting consumer expectations and assuring fair use.

Our Committee is also developing legislation to increase the fines broadcasters who violate decency standards will face. Broadcasters argue excessive fines and penalties chill investment in their broadcasting companies.

AT&T, now one of the Bell companies, and CompTel also may be here. Yesterday’s testimony on net neutrality raised the question of whether Bells and cable should be able to charge companies like Google a premium for faster and better service in delivering their content to consumers. So, the question is, should this legislation allow cable and the Bells the opportunity to increase their revenues, which in turn will drive investment in their systems? Or should it assure a free and unfettered Internet to favor developing additional companies like Amazon, Google, and eBay or Vonage.

Congress must also determine if the barriers to entry for Bell companies who enter the video marketplace should be eliminated. Should we do this to spur competition and cut costs to consumers? If so, should build-out requirements be established, and how will those new entrants get the capital required to meet such requirements? Now all of these decisions not only affect investment in the Bell companies, but probably affect investment in everything from fiber manufacturers to content producers in the whole industry.

Other issues require consideration and one of them is whether local governments are allowed to establish broadband networks and to decide if that is good for consumers, and whether doing so constitutes unfair competition to investor-owned entities which will be affected.

For me, among the most important decisions, is to ensure that rural Americans have the same benefits of the digital revolution as urban Americans. After all, I do come from a state that’s one-fifth the size of the United States and has less than a million people. Without affordable communications and unfettered access to the web, rural Americans would be relegated to the backburner of this red-hot economy.

Most applications depend on spectrum to function the acquisition of which can be a significant barrier to entry. Senator Inouye and I started the concept of auctioning spectrum. Should we change the laws governing spectrum auctions or eliminate auctions completely by setting aside a neighborhood of innovation with unlicensed spectrum?

If broadband permits outsourcing and online education in India and China, should it bring the same opportunity to the people in rural communities of America?

Before making these final decisions on our legislation, our Committee will hear from the investors, as I said, at the very end of our hearings. After all, those of you who represent the investors here really provide the economic engine for all of this innovation.

In the face of high wages, a litigious society, and spiraling health costs that consume 15 percent of our GDP now, it is our technological advantage that keeps Americans on the competitive edge. Slowly but surely, that edge is being lost. Increasingly American companies like Microsoft seek their creative talent overseas in places like China, India, and Ireland.

I hope you’re all familiar with the report from the group headed by Norman Augustine, called Rising Above the Gathering Storm. It detailed these challenges and made recommendations on how to turn the tide. The President outlined some of them in his State of the Union address. And I think we are mindful now that education and research are essential to maintaining our position in the world.

There have been three separate bills introduced now in the Senate going to three separate Committees and having secondary referrals. I am proceeding now to try and convince the leadership in both the House and the Senate to create a joint committee to look at this initiative and see if we can get it above the turf protection concepts that we all face and have one committee in the House and one committee in the Senate address all of the concepts that are outlined in the Augustine Report. If you’re not familiar with it, I urge you to study it. I think it’s the key to our survival in terms of being the world’s leader in technology.

As Co-Chairs of the Commerce, Science, and Transportation Committee, Senator Inouye and I are most interested in this legislation. We believe it could expand our investment in basic science and research and development and that the federal government should take the lead in ensuring that that takes place. That, in my opinion, takes a joint committee initiative to put it right on the front burner and get it done this year.

Thank you for inviting me.