Chairman Stevens Addresses CompTel Conference

March 21, 2006

SAN DIEGO, Calif. – Senate Committee on Commerce, Science, and Transportation Chairman Ted Stevens (R-Alaska) yesterday addressed participants at CompTel’s 2006 Spring Convention being held in San Diego, Calif.


Chairman Stevens spoke generally on a broad range of telecom reform topics, including municipal networks, net neutrality, the Universal Service Fund, and decency.


The following is the text of Chairman Stevens’ speech as delivered:


Thank you very much, Earl. I was standing behind that screen. It looks better from the other side. I am delighted to have a chance to be with you and congratulate you on this celebration of CompTel’s 25th birthday.


I promise to talk about mileposts – that’s what we call them – annual recognition, or recognition of mileage. We call them mileposts. We don’t talk about bridges anymore. As a matter of fact, last month was the 10th anniversary of the ‘96 Telecommunications Act. That Act stimulated competition, increased consumer choice, reduced prices, and spurred on an era of unprecedented innovation.


Much 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 part of the American lexicon and all relate to communication.


Through our review of existing communications laws, our Senate Commerce Committee, that I chair now and co-chair with Senator Dan Inouye of Hawaii, is trying to create new legislation which is technology-neutral, so that it will be able to withstand changes in technology for a long period of time.


As our Committee has learned lessons from the past, we’re trying to fit them into what we should do for the future. According to former FCC Commissioner Furchtgott-Roth’s book, A Tough Act to Follow, I hope some of you are familiar with it, he pointed out that two-thirds of the rules that were adopted to implement the 1996 Act have been either completely or partially overturned.


And, some rules that Congress specifically spelled out for the Commission have never even been enacted.


Now our goal should be to get government as much out of the way as much as reasonably possible, to encourage revenue growth, lower costs, cut the red tape of regulation, and minimize government intervention in private agreements between entrepreneurs and their banks. Further, we very much want to encourage risk-taking.


But, in streamlining this process, we want to ensure that certain social obligations remain: access to 911, and the protection of consumer phone records, and others that you know so well.


Some of these issues have been addressed separately. Our Committee addressed 911 in our VoIP bill, which was reported out of Committee. It’s pending before the Senate and someone has a hold on it. We’re trying to figure that out. We hope that we are able to move on that bill very soon. An important concept of that piece of legislation is making sure that VoIP providers do not have unreasonable obstacles when trying to access the public safety answering points.


Consumers who place VoIP calls are increasing, and I applaud the innovation in this field and applaud those of you who are in this room today who are leaders in this field. Dan and I still, however, feel strongly that consumers still expect this system to fulfill certain social obligations such as 911. In that vein, Senator Inouye and I will work with our Senate colleagues to try and approve this bill, and I think our Senate bill has the right approach to this issue.


Our Committee is scheduled to address the bill on the protection of consumer’s phone records next week when we return from this recess.


During our review of the nation’s communications laws, the Senate Commerce Committee has had both listening sessions and a series of hearings on the record. The hearings have covered a wide span of issues, such as state and local issues and municipal networks, focusing on various local issues. Our Committee reviewed whether preemption of the state law is necessary in any instance, especially in instances relating to the wireless industries. We specifically asked the question of whether there should there be 50 different standards for phone records and privacy or in the font size of consumers’ bills? There’s an enormous difference in approach on the local level on such issues.


Municipal networks were also discussed with some of the local communities. The City of Philadelphia, for instance, had a witness testify concerning their offering of broadband to their residents. Several bills have been introduced on this issue, which take widely different approaches. One bans any state from forbidding a municipality from deploying a municipal network. On the other side of that spectrum, another bill would provide that municipalities cannot compete with private companies in Wi-Fi. It is my hope that our Committee will develop a compromise approach to allow municipalities to offer these networks while ensuring fair competition with private business. And we would welcome any further comments you might have in that regard.


Some of your members, I’m told, are interested in working with the municipalities to provide these services and I commend those of you for your innovation in this process. Dan Inouye and I look forward to working with you and others to find ways to make these concepts not only work in big cities but also in small communities in rural America. I’ll have another comment about rural America.


We also had a hearing recently on Wall Street’s perspective as far as this legislation is concerned. At the hearing we had analysts and experts testify that this was a critical piece of communications law, and it became clear that laws and the FCC regulations certainly do impact all the industry’s financing capabilities. They told us that regulatory uncertainty was one of the chief problems in this field. We hope to pursue further consultation with the Wall Street witnesses to see what they think should be the specifics of our bill with regard to their perspectives.


Now net neutrality is one of those matters that has been covered by our hearings that I realize is of particular interest to your part of the industry. At that hearing on net neutrality, the witnesses raised important questions on many aspects, and this, particularly, was one of the issues raised by Wall Street.


The question was raised whether the Bells and cable should be able to charge companies like Google a premium for faster and better service in delivering their content to consumers. And, we have had questions as to whether mandates should be included in this legislation to ensure that free and unfettered Internet will favor developing new companies like Amazon, Google, and Ebay or Vonage, as they come into this spectrum.


As you know, the FCC addressed net neutrality principles last year setting forth the following guidelines. First, they said that consumers are entitled to access the lawful Internet content of their choice. Second, consumers are entitled to run applications and services of their choice, subject to the needs of law enforcement. Third, consumers are entitled to connect their choice of legal devices that do not harm the network. And, finally, consumers are entitled to competition among network providers, application and service providers, and content providers.


The FCC did not adopt rules for those principles, but has incorporated the principles into its ongoing policymaking activities. And the FCC noted that the principles are subject to reasonable network management.


Now some of our Members consider these principles to be adequate as articulated by the FCC. Others now say that we should take some action to codify these principles in the communications law we’re working on, so as to give the FCC mechanisms for enforcement of the principles they’ve enunciated.


There are also others who think that the principles do not go far enough. This view is broader than the FCC’s, really, with the belief that interconnection, nondiscriminatory service and access by competing content and service providers are essential for keeping the Internet working properly. That’s particularly the approach by some of the younger, new Senators on our Committee.


Other Senators believe that net neutrality should not be mandated by Congress and they fear that legislation could dampen private investment in networks for the future.


There are others who apparently take the view that doing “nothing” is a position that we could take as well. The fear is that the Internet could ultimately be controlled by large companies which own the pipes, and the fear is that they could reduce creativity and innovation on the Internet.


These are all very serious issues that really have us sort of contemplating where we should go now. Net neutrality is one of the most difficult issues our Committee faces in this process because of the extreme views on the Committee that go across the whole spectrum of views that could be held. I really think that there are more differences on our Committee on this one issue than on any other issue.


But we’ve also heard a theme throughout the hearings that the need is to speed deployment of broadband in America. That concept is a goal of the legislation we are working on and I think that we have great support and great unanimity in that regard.


It’s my hope that you’re all familiar with a report from the group headed by Norman Augustine, called Rising Above the Gathering Storm. According to that report, the United States ranks 12th in the world for the number of broadband connections per 100 inhabitants. That report also pointed out that while India produces 200,000 engineers, and China 500,000 engineers per year, we produce 70,000 now. And it has urged Congress to take on the task of finding some ways to spur the interest of our young people in science and engineering and technology.


We have looked at the broadband issue in multiple ways. It became apparent in our video franchise hearing that if barriers to entry are taken down for video, phone companies will have incentives to deploy broadband. And we’ve come to believe that the largest barrier to broadband entry is the current franchising structure. This forces a new entrant to negotiate with 10,000 or more different franchise authorities.


We’ve been asked to review a national franchise approach, and, there again, many issues have been raised on this issue. It is again my belief that our Committee will come to agreement regarding many of these issues, such as the percentage of revenue available to the localities, whether there should be a uniform standard for the number of PEG channels, and a determination of how to address public rights-of-way.


All in all, our main goal is to make sure that this legislation assures a level playing field. I just remarked to the Chairman, Chairman Martin, that everyone is talking about a level playing field, but I think what we have now is sort of like a 12-story building with people playing on each level and some people wanting to go from floor two to 12 and come back to three and still say they are on the same playing field. The rules on each level of that building are different and the question is whether we should have a Communications Act or whether we should have a Telecommunications Act or whether we should have a Communications/Telecommunications and Information Act. I personally favor a Communications Act.


I think we should have a Communications Act and I do so particularly because of my interest in assuring that rural Americans have the same benefits of the digital revolution as any other Americans. Hawaii also, from my colleague, is really an enormous state when you think about those isolated islands that they have. Alaska is one-fifth the size of the United States and we have less than a million people. We have formidable challenges for communications. We still have about 140 of our villages that do not have access to high-speed Internet and they can have access only by calling long distance. Without affordable communications and unfettered access to the web, rural Americans will be relegated to the backburner of a red-hot global economy. And what’s more, the costs of keeping them up, bringing them into the system will be very great for the taxpayers. The highest-cost people for the federal system now to get aid to them, assistance to them, are the people who live in rural America. We take the position that communications is the key for them to be part of the global economy.


Senator Inouye and I have always been strong supporters of Universal Service and as a matter of fact, sort of initiated Universal Service when we asked the industry, the long-distance telephone industry, to take some action to resolve the problem that was caused by the television ads in those days that said, “These rates apply everywhere except Alaska and Hawaii.” We asked them to integrate the rates and that rate integration took place over a period of time and what resulted was the interstate fund for equalization of those rates, and ultimately that become known as Universal Service.


Now this has been a particular focus of the Committee during these hearings, and as we move forward, we want to make sure the base for Universal Service contributions is broadened. That is one reason I would like to deal with communications and call this the Communications Act. By removing the distinction between interstate and intrastate revenue and by supporting a numbers or connections approach, we could have a reduced cost to anyone involved and yet have a contribution from anyone that is involved in the communication system to support the concept that every American is entitled to access to the basic means of communication for the future, and that is the Internet. The assessment, obviously, must be made on a uniform basis, regardless of what transmission is used for communication.


It is important not only to reform the Universal Service Fund, but to make sure our bill requires that Universal Service funds are used more efficiently and that there be transparency in the use of these funds. One concept that has been discussed in our hearings is instituting a random audit system that would apply to not only the high-cost fund areas, but also to the E-rate program. To me and, I think, most Members of our Committee, this seems like a fair approach.


And I know that in the House of Representatives Chairman Barton also has an interest in reforming Universal Service. I wholeheartedly agree with him that the more steps we take to make certain that the Fund is efficient and is true to its purpose, the better chance the Fund will have of surviving and thriving in the future and providing the service that rural Americans need.


Now let me comment briefly on the issue or decency or indecency, whatever you want to call it. In addition to two hearings on the subject, we also convened a day-long summit which included a wide range of interest groups and industries.


Since that time developments in the marketplace have changed the scene. Both cable and satellite companies have announced family tiers. I believe that this is a positive development, although some Members have expressed concern that family tiers do not include sports programs. As a matter of fact, the ratings systems are such that the use of the control mechanisms is impossible unless a program is rated. And since sports programs currently are not rated, they cannot be blocked by the blocking mechanisms.


In addition to the announcement of family tiers, at my request Jack Valenti organized a coalition which is putting together an aggressive ad campaign to educate parents on how they can protect their children from content they do not want them to be exposed to through the use of blocking technology. That education campaign is just beginning and it is my hope that Members of Congress who are working on this legislation with us will permit that campaign to run for a while to determine whether this education of the public really will result in a better understanding of how to protect children without legislation. We ought to assess the need for such legislation, I think, after the marketplace has worked. It has worked so far in connection, I believe, with what’s gone on so far with both satellite and cable companies announcing their family tiers and I think this education campaign plus what the FCC just recently did should show us that the existing law is really the best way to continue the protection of our families. I fear we could go too far and once again end up with a decision that what we attempt to do is unconstitutional and ruin the progress that we’ve already achieved.


This is going to be a busy part of the year for us in the Commerce Committee. We’lll hold our final communications hearing on March 30th. I want to ask the Committee to have multiple titles in one bill. As I said, I want to convince the Committee to have a new Communications Act and to have a goal of a final draft to be ready to be marked up by the Committee right after the Easter recess.


As we have conducted this review of the communications laws, I’ve had conversations with Chairman Martin, I just had the privilege of having lunch with him, to discuss what ideas he may have and find out what tools the FCC will need from the Congress as we modify the communications laws, to streamline them, and to make them more responsive to the marketplace.


I really am pleased that the Chairman is here and I look forward to listening to his remarks as he gives us an update on what he has planned for the FCC in the coming months.


I also would point out to you that we just reported to the Senate floor, the nomination of the President, the fifth FCC Commissioner, Robert McDowell. I know you know him very well. He is here today also. We are trying to work with Senate leadership so we can make sure that his nomination gets quickly cleared through the full Senate so that Chairman Martin will have a full Commission to work with as we work together in this modification process to modernize our communication laws.


Now I’ve gone through a lot of things here today and in view of the fact that Chairman Martin is going to have a question-and-answer session, it reminds me of a story I learned once about a young man that had a little bit too much to drink. As he went home he put his key in the door and started to try to open up the door. None of you guys have done this obviously. He put the key in and it wouldn’t work and suddenly his wife on the other side opened the door and he fell flat on his face. She said, “What do you have to say for yourself?” And he said, “Well under the circumstances I’m going dispense with further remarks and take questions from the floor.” I’ll avoid that problem with you and give you the opportunity to listen to Chairman Martin later this afternoon and he will answer your questions I hope. And I’ll be very interested to listen to him. Thank you very much.