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Remarks by
Michael K. Powell
Chairman
Federal Communications Commission
at the
National Cable Television Association
June 12, 2001

They dared me backstage to do that --- Iím not one to shrink from a challenge and I had to do it.

Anyway, we are going to talk about something out here today. Itís a pleasure to be here with you today. Itís really a great opportunity to walk the floor and really see first hand the story of cable.

You know that story. Itís a fairy tale. The one about how the frog becomes a prince. Once upon a time, cable was widely perceived as a toad in the communications sector. Yeah, it was a nice little business, but it was hardly charmed. Regulatory policy was hostile. The FCC and Congress largely saw cable as a dangerous upstart that threatened and undermined a viable broadcast industry. The Commission asserted jurisdiction based on its ancillary authority in the broadcasting industry, concerned that quality programming would be siphoned off to cable. Undermining other medium was a paramount concern, as was pricing and quality of service. Wall Street wasnít particularly enamoured either. Cable was moribund in the markets, a highly leveraged business not investing significantly in plans or programming and consumers were less than satisfied. Rising prices and declining quality were often cited as justifying rate regulation of cable in Washington. Hating oneís cable companies became a national pastime throughout the country.

Now there has been a digital kiss placed on this toad and technology has transformed that toad into a prince. Digitalization and IP networks have suddenly moved the cable industry to center stage. Coaxial cable has indeed been spun into golden thread. That network offers great promise for new dynamic and innovative services. Network system innovations are taking video to new levels with the prospect of greatly expanding programming channels that can increase the range of diverse choices for consumers. Those same innovations hold promise for services, like video on demand and interactive television, that might actually transform the television watching experience from the passive couch potato one to a more dynamic activity. And the subject of the day, broadband services, which many believe will be as significant to the economy and to consumers as were electricity and the telephone systems, is growing in importance.

While many platforms and technologies are chasing the broadband rainbow, cable is unquestionably well positioned, and the hopes of millions are riding on ubiquitous and affordable roll out. As a converged platform, cable is well suited to be a viable competitive alternative outside its traditional video space, not only in the broadband space as a competitor with technology such as DSL, but also in traditional telephony services. These developments have yet to meet expectations but continue to move forward and will be greatly enhanced as voice becomes another application that rides on data centric networks.

The promise and the hope for the medium is reflected well in the numbers. Spending on infrastructure has gone from $2.2 billion in 1992 to $12.4 billion in 2000. The number of national cable networks has gone from 87 in 1992 to 281 in the year 2000. And the stock market reflects this transformation. But one must ask in this industry, will you snatch defeat out of the jaws of victory. This industry has all the tools it needs to succeed in the great digital revolution. It has the technology. It has the infrastructure. It has the financing. And I would submit, it has the most positive regulatory environment to operate in that its had in decades.

But will it last? Sadly with the history of this industry at times, you have to ask yourself that question. But I submit it is largely in the hands of this industry to maintain those favorable conditions. Much will depend on your ability to manage change and address the natural anxieties that are raised when an industry or a company begins to have a clear competitive edge. How you exercise these advantages and how well you can serve consumers will be vital.

Let me give you some sense of what to watch for and to be careful with.

The digital television transition -- This industry should find ways to be perceived as a productive partner in that transition, rather than its obstacle. Consumers will value these new services and they will provide opportunities for this industry as well. And they will demand access to them through their cable systems. Help make this a reality in a commercially valid way.

Program access and vertical market power -- Cable will be one of the great digital gateways to the consumer. There is nothing wrong with that. It earned it, in and of itself. But you must be cognizant of not misusing that position in a manner that denies programmers a fair opportunity to reach consumers. For that will raise the ire of consumers and the government and could result in the erosion of the healthy regulatory environment that currently exists.

B

roadband, interactive television -- As you can imagine the hopes and fears that accompany the introduction of broadband are acute. As an industry at the forefront of the revolution, you will contribute to the shape of the environment to which it exists. Preserving variety and choice, and preserving innovation on commercially reasonable terms, will be essential.

And finally, consumer value must always remain high. The products and services you deliver --- prices, choices, and quality --- if thwarted, will amplify calls for government intervention, as it has so often. Cable has come a long way and now a grateful nation will place many hopes on what you intend to deliver. The country needs you. The country needs the deployment of broadband to all Americans at affordable rates. And that is critical if we are going to meet the grand expectations for economic productivity, education, and commerce. If they are all to be realized, this industry will be integral to that vision.

The country needs the industry to engage and offer consumers a choice in telephone service in order to advance our confidence in competition over regulation. The country needs this industry, through its products, to continue to offer and expand the diversity of information, news and entertainment that formed the fabric of this nationís rich mosaic of viewpoints and interests.

Now I know itís a tall order, but let me just conclude by saying, it is a challenge worthy of a prince.

Thank you very much, itís good to be with you.