July 27, 2000

Thank you, Mr. Chairman, for holding this hearing. I would also like to thank the Chairman of the Full Committee, Mr. Bliley, for his help in scheduling this important hearing today on H.R. 2420, the Internet Freedom and Broadband Deployment Act.

Chairman Tauzin and I introduced this legislation just over a year ago. Many changes have taken place in the telecommunications marketplace since then, but at least one thing has remained constant. Consumers are still chomping at the bit for faster access to the Internet, and continue to bemoan the ever-increasing "World Wide Wait."

Despite the tremendous growth in the sale of broadband Internet connections over the past year – both in the form of cable modem and DSL services – the clamor for higher surfing speed persists. The president of IP services for Nortel Networks put it best when he said, and I quote, "having a broadband pipe doesn't guarantee a broadband experience."

The reason for this disconnect (so to speak) is that the Internet is growing increasingly congested. And any connection between two points is only as fast as its slowest link. Experts say the solution to this problem lies in strengthening the most vulnerable points of the network. H.R. 2420 is designed to do just that.

By allowing Bell companies to transport data across LATA boundaries, this legislation will unlock the vast potential of existing fiber networks that are already built, in the ground, and ready to go. These existing networks are capable of alleviating the severe bottleneck that U.S. Internet traffic faces today. Unfortunately, the current regulatory scheme prevents these companies from fully utilizing this valuable investment and, in the process, deprives consumers of the benefits additional competitors would bring to this market.

Opponents of H.R. 2420, argue that allowing Bells to transport interLATA data will reduce the incentive for them to comply with the market-opening provisions of the Telecom Act. This is illogical, irrational, and simply at odds with the facts. It is not surprising that more than 220 Members of the House recognize the fallacy of this argument and flatly reject it.

First, Congress need not provide an "incentive" for any person to obey the law. The Bell companies are required by statute to open their local networks to competition through various means. If they break the law, stiff penalties can and should be imposed swiftly. I would point out that non-Bell incumbent local exchange carriers, such as the former GTE, Frontier, Alltel, Sprint and others are all subject to the same Telecom Act mandates, but are not prohibited from offering long distance service. As one might expect, these companies are fully complying with the law without the need for any so-called "incentives" to keep them honest. The threat of heavy fines, adverse publicity, and the loss of goodwill are more than enough to do the trick.

Second, the long distance voice market generates nearly $100 billion in revenue each year. Any Bell company that leaves that much money on the table by not aggressively pursuing Section 271 entry into this market will be dealt with harshly by the financial markets and is likely to suffer the ultimate punishment for bad management.

Finally, those who say the Bell companies will purposefully avoid Section 271 long distance entry by offering voice telephone service over the Internet simply ignore the cardinal rule of doing business: which is, always make sure you get paid. H.R. 2420 flatly prohibits Bell companies from billing, collecting, or marketing voice long distance service. If a Bell company also is forbidden from spending a dime on TV commercials, telemarketers, frequent flier miles or rebate checks, how many customers is it likely to steal away from AT&T or WorldCom – each of whom spends millions each year just to convince consumers to switch carriers?

H.R. 2420 is a sensible solution to a serious problem confronting consumers and policymakers today. The New Economy simply will not survive and prosper in a 56K dial-up environment. Congress must remove obstacles to the deployment of broadband technologies whenever and wherever it finds them.