April 25, 2001

Thank you, Mr. Chairman, for holding this hearing today on the newly re-introduced "Internet Freedom and Broadband Deployment Act." I am happy to have worked with you on the drafting of this legislation, because I believe it is right, it is fair, and it will provide great benefits both to the public and the economy as a whole.

The bill will make sure that competition for broadband Internet service is strong; that high speed Internet connections are delivered to American consumers quickly; and, above all else, that no single sector of the industry is given a de facto monopoly when it comes to providing consumers with broadband Internet access.

Today’s hearing marks the fifth time we have held hearings on broadband deployment in less than two years. The first four hearings were held in the Telecommunications Subcommittee, and I want to commend you for calling today’s session before the Full Committee. This is an important legislative issue for many reasons, and it is critical that all Members have the opportunity to learn first-hand about the need for regulatory reform in this area.

Five years ago Congress passed the most substantial rewrite of the nation’s communications laws since 1934. That Act was quite an achievement. Unfortunately, not all of our hopes have materialized. Like all legislation, the Telecom Act simply reflected Congress’s best policy judgments based on facts we knew or anticipated at that moment in time. But now, in the Information Age, facts change more rapidly than ever before. And for those who operate on "Internet time," the last five years seems like an eternity.

With the benefit of 20/20 hindsight, perhaps the most glaring oversight of the Telecom Act was its failure to create, with certainty, the proper regulatory environment for the Internet. As a result, even with its explosive growth, the Internet is still, in many ways, grinding along in low gear. While we hear a great deal about the benefits of the Information Superhighway, the truth is most Americans are relegated to the slow lane.

It is astounding to me that only 5 percent of Americans have broadband, or high-speed Internet service today. That means 95 percent of the country’s Internet users are still stuck with low-speed, dial-up service. If there is any realistic hope that the New Economy will be resuscitated, these numbers must change dramatically – and fast.

What is even more astounding is how that 5 percent number breaks down. First, you must be lucky enough to live in an area where broadband service is offered. Second, you must be fortunate enough to afford it. And if you surmount those hurdles, you are three times more likely to subscribe to cable modem service than to DSL. The troubling fact is that cable companies now control more than 70 percent of the broadband Internet market.

One must ask why there is such a major discrepancy in market shares. Is it because cable companies provide a vastly superior service? That is a most unlikely explanation – since most technical reports say the service qualities of cable modems versus DSL are largely comparable.

It is much more likely that the discrepancy in market share is due to the tremendous competitive advantage cable companies enjoy in the broadband marketplace. Since the Telecom Act removed virtually all Federal regulation of cable companies, these companies are now free to invest in advanced broadband services without any requirement whatsoever that new investments or facilities be shared with competitors. When it comes to cable, the law contains no interconnection requirements, no resale requirements, and certainly no requirement to lease proprietary network facilities to competitors at cost-based rates.

I am quite certain that if, in fact, cable companies were required to share their property with competitors, AT&T would not have spent more than $100 billion to acquire broadband facilities. No bank would have lent them the money, and their shareholders would have staged a revolt. The investment simply would not have been recovered.

However, that is precisely the situation that the nation’s local telephone companies find themselves. They are the best positioned and most likely competitors to cable – willing and able to provide effective competition for broadband Internet services. But they remain saddled with common carrier regulations designed for another time and another purpose. While these regulations continue to be necessary to open local telephone networks to competition, they are an absolute impediment to realizing healthy competition in the broadband Internet market.

The truth is the Tauzin-Dingell bill will do nothing to roll back the market-opening provisions contained in the law. What the bill will do is remove regulatory obstacles that substantially hinder investment in broadband technologies. In my view, that is the single best way to get the New Economy back on track, and give the American public a real choice when it comes to faster, cheaper Internet access.