February 26, 2003

I would like to thank Chairman Upton for holding this hearing, and I would like to thank the Chairman and Commissioners of the Federal Communications Commission for being here today.

Last week, the Commission concluded the Triennial Review of its unbundled network elements rules. In that proceeding, the Commission had the opportunity to issue a set of local competition rules that could have had an enormous and positive impact on the telecom sector -- a sector currently plagued by bankruptcies, layoffs, decreasing revenues, and declining investment. I had high hopes that this Commission, after being reversed twice by federal courts, would finally get it right.

More specifically, I had hoped that the Commission would eliminate the unbundled network element platform -- a terrible policy -- and one I can assure you was never contemplated by those of us who actually wrote the law. I had also hoped the Commission would follow our direction to write the rules themselves and not simply -- and illegally -- delegate its authority to the states. But a misguided majority of the Commission failed on both counts.

The central goal of the 1996 Act was facilities-based local competition, because only facilities-based competition is sustainable. By allowing the unbundled network element platform to continue, the Commission has eliminated any incentive that certain companies might otherwise have to build their own networks. Moreover, by ensuring that local phone prices will be set artificially low by the states, you have made it much more difficult for companies that seek to build their own facilities to compete in the local marketplace.

Unfortunately, the courts, once again, will have to sort through this mess, while the American consumer and those who work in the telecommunications sector will suffer the consequences of this decision.

The decision last week did have one silver lining in that the broadband portion appears to mirror much of what the Committee sought to achieve last year in passing the Tauzin-Dingell bill. I have read in recent days, however, that certain Bell CEOs have announced that they will not invest in advanced networks because they did not receive all the relief that they were seeking. I hope that this is not true.

I expect the Bells to use this newfound regulatory freedom to do what they have promised -- which is invest rapidly and on a significant scale in local broadband networks. Such action, if taken, will lead over time to the creation of thousands of jobs and a more competitive broadband marketplace.

Let me briefly address another very important topic. The Commission will soon conclude a proceeding that appears to be aimed at weakening or eliminating its present media ownership rules. The premise underlying this proceeding is that the emergence of new media platforms -- in particular, cable and the Internet -- has created so many voices that we needn’t worry about the tremendous consolidation that continues to occur in the industry.

Mr. Powell, I challenge that premise.

While there has been an expansion of delivery systems, the most watched national news broadcasts, the most popular cable news channels, and the most visited websites for news and information are all owned and controlled by only a handful of companies.

While concerns over concentration in most industries are appropriately addressed through the antitrust laws, federal policy has long recognized that -- in a vibrant democracy -- the consolidation of those entities who distribute information poses far more serious concerns than, for example, concentration of those who distribute toothpaste or mouthwash.

The Commission, in its review of media ownership limits, is required by law to promote competition and the public interest. The public interest analysis has long consisted of two components -- localism and diversity. The Supreme Court recently upheld the Commission’s authority in Turner Broadcasting System, Inc. v FCC, stating that protecting diversity is a "governmental purpose of the highest order" ensuring the public’s access to a "multiplicity of information sources."

I support the Supreme Court’s rationale in Turner, and I expect the Commission to use it as a guidepost as it concludes this proceeding.