STATEMENT OF CONGRESSMAN JOHN D. DINGELL
RANKING MEMBER
COMMITTEE ON ENERGY AND COMMERCE

Good morning, Chairman Hollings, Senator McCain, and Members of the Committee. Thank you for inviting us to testify about H.R. 1542, the "Internet Freedom and Broadband Deployment Act." As you know, the bill recently passed the House with both a majority of Democrats and Republicans voting for it.

When my friend, Chairman Tauzin, and I first introduced this bill back in 1999, the notion of "broadband" was little known and even less understood. Much has changed since then. High speed Internet connections are now believed to be crucial in getting high technology companies back on their feet, creating over a million new high paying jobs for American workers, and paving the way for more robust content to make its way to the Information Superhighway.

The debate is no longer whether broadband connections are needed, but how best to get it done. This is a huge step forward. And we even have new terms that have recently entered the lexicon of this debate. Some argue that the so-called "supply-push" approach is the best way to spur broadband deployment; others say that the "demand-pull" approach is the better solution.

The supply-push proponents say that more facilities need to be constructed, and that will happen only with greater investment incentives and less regulation of the broadband industry. These concepts are, of course, at the core of the Tauzin-Dingell bill.

The demand-pull advocates argue that the way to stimulate broadband is to give greater intellectual property protections to content owners so that more high value content will be available on the Web. When that happens, they say, more people will subscribe to high speed Internet service, and the resulting demand stimulus will spur deployment.

In my judgment, both groups are right; they are two sides of the same coin. I would observe that this is not a chicken or the egg question where one thing will necessarily drive the other; the two approaches are inextricably linked.

Focusing solely on content protections won’t do the job because the current state of technology will not allow the richest applications to traverse the net. The pipes simply aren’t fat enough. And, if left only to the cable companies, they may never be. Head-to-head competition between facilities providers, both cable and telephone, is critical. We must foster an environment where innovation and investment will constantly drive Internet speeds faster and faster. And without effective competition, cable companies not only will have little incentive to innovate, but they actually have a disincentive to do so. Because as Internet speeds increase, cable broadband service will begin to steal revenues from their traditional cable television business.

That is why H.R. 1542 must be a critical component of any national broadband policy. The bill will create regulatory parity between cable and telephone companies so that each will have similar incentives to innovate and invest. The Rush-Sawyer amendment will require telephone companies to build-out broadband service to 100% of their serving areas within five years. That provision alone is the most important step Congress has taken to close the digital divide since the inception of the Internet. And it will mandate that telephone companies provide "open access" to unaffiliated Internet Service Providers, or "ISPs", like AOL, Mindspring or Earthlink. That will give consumers the freedom to choose their favorite ISP, something they currently do not enjoy when they subscribe to broadband service from most cable companies.

The current regulatory scheme for broadband Internet service is in disarray. The FCC is partly to blame, but so are we. When Congress wrote the 1996 Act, we established a panoply of rules designed to open the Bell companies’ monopoly local phone networks to competition. And that was the right thing to do. What we didn’t contemplate was that at some point in the future these same rules would be applied to brand new, advanced services for which no monopoly exists.

Similarly, in the 1996 Act, Congress deregulated cable companies. Not just for the cable television services that constituted their main business at the time, but for anything and everything they might offer in the future. In my view, this approach to regulation was a mistake: Congress imposed a regulatory scheme based not on the type of service provided, but on the type of company providing it.

Now we find ourselves in the awkward situation of having telephone and cable companies offering virtually identical services – high speed Internet – but under very different sets of rules. It is simply bad telecommunications policy – it results in significant economic distortions and, just as important, it deprives the public of the enormous benefits that normally come from fair and fierce competition between firms offering similar services to consumers.

Mr. Chairman, I congratulate you for holding this hearing today. It is a first step toward creating a fair and rational broadband policy, which is so important for the health of the economy and the public good. I hope and believe we can strike the right balance quickly and with minimal discord if we work together toward this common goal.

I look forward to answering any questions the Committee may have.

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(Contact: Laura Sheehan, 202-225-3641)