Commissioner Gloria Tristani
Federal Communications Commission
New Mexico Communications Network Symposium
Albuquerque, New Mexico
November 10, 1999
as prepared for delivery
Thank you. It’s a pleasure to be back home in Albuquerque and to be with you this morning. I’d like to thank Ed Spivak and the other organizers of the Symposium for bringing all of us together. This Symposium reflects the importance of telecommunications to the state’s future, and I am very pleased to take part in a dialogue with state and local leaders, consumers and business users, and industry. Increasingly, broadband deployment is becoming a top priority in Washington as we seek to ensure that the benefits of the communications and information revolution extend to all parts of America.
Just last week, I celebrated my two-year anniversary as an FCC Commissioner. This gave me an opportunity to reflect on our work as we oversee an industry as dynamic and exciting as any that has come before. During this period, we’ve had to implement the landmark Telecommunications Act of 1996, fulfilling the two goals of promoting competition and advancing universal service. We’ve witnessed the exponential growth of the Internet and the explosion of e-commerce. Throughout, I’ve been guided by a single, overarching principle: creating incentives and adopting policies to ensure that all Americans benefit from the communications revolution.
With this in mind, I’m proud of the decisions we’ve made: funding the E-rate program to provide America’s neediest schools and libraries with access to the Internet; moving ahead with a universal service program that works in a competitive environment; adopting policies so that Americans with disabilities can access the latest technology; and initiating proceedings to remove regulatory barriers to the deployment of telecom services in unserved and underserved areas of the country, including tribal lands.
I’d like to discuss an issue that is critical to New Mexico and the country: developing a communications policy that will foster deployment of broadband technology beyond major urban centers and into America’s smaller cities and rural areas. We all know that there is no generic formula to introduce broadband into every county and every town. There is one necessary ingredient, however. Federal, state and local government, rural citizens and businesses, and industry can identify policies and incentives to ensure the deployment of broadband. Together, we can overcome the obstacles to deploying broadband throughout America.
In today’s telecommunications market, we stand at a crossroads. While technology promises the Death of Distance, too many Americans remain on the losing side of the Digital Divide.
The communications and information revolution is driving dynamic change in all aspects of our lives, from the way we do business to how our children learn.
In 1994, there were 3 million Internet users; today there are over 171 million worldwide. Internet traffic is doubling every hundred days. Between 1995 and 1998, information technology companies, while accounting for only about 8 percent of the US Gross Domestic Product, contributed on average 35 percent of the nation’s real economic growth. And by 2006, almost half of the US workforce will be employed by industries that are either major producers or intensive users of information technology products and services.
And the phenomenon of e-commerce is nothing short of outstanding. As Peter Drucker wrote in an article in the Atlantic Monthly, e-commerce "is creating a new and distinct boom, rapidly changing the economy, society, and politics." And e-commerce is changing the way all businesses, small and large, think. To survive, businesses must think and act globally, in terms of one economy and one market.
To make this point, I’d like to borrow from an example Drucker provided, and I quote:
"A mid-sized company in America’s industrial Midwest founded in the 1920s and now run by the grandchildren of the founder, used to have some 60 percent of the market in inexpensive dinnerware for fast-food eateries, school and office cafeterias, and hospitals within a hundred-mile radius of its factory. China is heavy and breaks easily, so cheap china is traditionally sold within a small area. Almost overnight this company lost more than half of its market. One of its customers, a hospital cafeteria where someone went ‘surfing’ on the Internet, discovered a European manufacturer that offered china of apparently better quality at a lower price and shipped cheaply by air. Within a few months the main customers in the area shifted to the European supplier. Few of them, it seems, realize – let alone care – that the stuff comes from Europe."
For every opportunity lost in the global e-commerce marketplace, there is an opportunity gained.
For rural communities, e-commerce and broadband capability can provide an unprecedented opportunity to overcome traditional geographic disadvantages. Small businesses in rural areas can use e-commerce to market and sell their products around the globe, while rural residents can shop the global marketplace from their own homes. With advanced telecommunications capabilities, rural communities can compete with larger cities for information technology businesses. Distance learning allows students in smaller communities to access teachers and a wealth of information that otherwise would not be available. And telemedicine offers rural citizens the chance to obtain remote diagnosis and even remote surgery that require high resolution, real-time video and data services without having to travel thousands of miles. Broadband technology – through telco, cable, wireless or satellite services – makes all of this possible.
Yet at the same time, we are faced with the reality that many Americans are being left behind. For many people who live in rural areas or in inner cities, or who are minority or poor, there are too few on-ramps to the Information Superhighway.
Regardless of income level, Americans living in rural areas are lagging behind in Internet access, let alone high-speed Internet connections. Households with incomes of $75,000 and higher are more than twenty times more likely to have access to the Internet than those at the lowest income levels, and more than nine times as likely to have a computer at home. White Americans are more likely to have access to the Internet at home than African Americans or Hispanics have from any location.
We cannot afford to become a society of information "haves" and "have-nots" in a world in which the ability to access and manipulate information is the currency of the day. The sooner that all the stakeholders come together and discuss broadband deployment, the more likely it will be that all Americans will be part of the communications and information revolution.
Congress wisely understood the need for widespread deployment when it adopted the Telecommunications Act of 1996. In Section 706, Congress directed the Commission to monitor the roll-out of advanced telecommunications capability, and, if necessary, to take steps to ensure that all Americans have access to such capability on a reasonable and timely basis.
Last February, we issued our first report on broadband deployment, which examined investment and build-out of two-way broadband via high speed cable modems, DSL technology, and wireless and satellite-based services. The report was guardedly optimistic about the state of broadband deployment.
With respect to rural, smaller cities, and other hard-to-serve areas, however, I was more guarded than optimistic. While broadband deployment is occurring in some small cities and rural areas, I am concerned that it may not be happening as quickly or ubiquitously as it should.
I believe we must take a harder look at the state of deployment for all our citizens. To that end, I am working to ensure that the Commission collects sufficient information to make an informed evaluation regarding the state of broadband deployment in the next report to Congress.
In the meantime, we need to examine broadband deployment in smaller cities and rural areas in a variety of settings. With this in mind, we recently voted to establish a Federal-State Joint Conference to promote deployment of advanced broadband services. The Conference will provide an ongoing dialogue among the Commission, the states, and local and regional entities regarding broadband deployment. It will examine how best to accelerate the deployment of affordable advanced services to underserved users. It will identify a set of "Best Practices" from across the nation so that a community in Vermont, for example, could learn how a county in Nevada collected and quantified aggregate demand sufficient to make the case for a local provider to invest in broadband technology. In addition, FCC Chairman William Kennard recently announced a series of field hearings which should further improve our assessment of the availability of advanced services in rural areas and how we can spur development.
I am pleased to relate that the Congress is also focusing on broadband deployment in rural America. In September, I participated in a Senate Summit on Rural Telecommunications. I spent a morning with leaders of telecom companies talking about strategies for deployment of advanced services. What impressed me most was the conviction, expressed by many of the smaller operators, that smaller markets can be profitable for broadband deployment.
Yet, it is equally clear that there is no magic bullet to ensure that rural Americans benefit from the wonders of the World Wide Web. It’s not just digital subscriber lines, or just cable modem service, or just fixed wireless or satellite services. One rural telecom expert recently wrote that, "No single top-down solution is going to work in all rural locations. The solutions need to emerge from local communities themselves with supporting help from state and Federal governments." He observes that each community must first raise awareness of the potential demand for broadband from all sectors of the community and then explore the possible technologies and institutions that could be part of the solution.
I couldn’t agree more. Small cities and rural communities represent unique local environments that require unique solutions. Our challenge is to develop partnerships among elected officials, regulatory agencies, service providers, investors, manufacturers and, of course, the user community to identify solutions for broadband deployment.
During my tenure at the FCC, we’ve sought to create incentives to spur competition and the deployment of the infrastructure necessary for the communications revolution to benefit all Americans. In some instances, our decisions have involved new rules to ensure a level playing field among incumbents and new entrants. At other times, we have adopted policies of non-regulation intended to allow market forces to expand services and offerings to consumers and businesses. Our decisions and policies on universal service, on broadband cable, and on wireless service have set us on the path toward a connected country.
Our universal service policies have made a significant impact on deployment of advanced services throughout the nation. As many of you are aware, the Commission has implemented an e-rate program under which primary and secondary schools and libraries can receive telecommunications services at discounts ranging from 20% to 90% off commercially available rates. The most disadvantaged schools and libraries, as well as those in rural areas, receive the highest discounts. Since November 1998, New Mexico schools have benefited from over $45 million in e-rate funding. The e-rate program is one way we can ensure that children – particularly low-income and minority children – can gain the skills to compete in a digital economy. I am proud that this year we funded the e-rate program at the cap of $2.25 billion. I believe that these resources will change the nature of learning and indeed the lives of thousands of children.
The Commission’s universal service policies can also help level the playing field for consumers in unserved areas – those areas with low telephone penetration such as Indian tribal lands and certain portions of Alaska. This past January, Chairman Kennard and I held a field hearing at the Indian Pueblo Cultural Center here in Albuquerque to explore what actions the Commission can take to improve access to telephone service on Indian reservations. This summer, we initiated two proceedings to examine what regulatory barriers there may be to serving these areas. Getting these consumers connected will facilitate the provision of advanced services to them. Based on the record in those proceedings, I hope we will be able to identify any regulatory barriers that may exist and modify our rules accordingly to create the proper economic incentives to promote service in currently unserved areas.
Even as the Commission seeks to enable investment and build-out, the expectations of broadband are grounded in the promise of technology. As of June, there were nearly 160,000 customers of digital subscriber line service, which adds technology to the local telco’s copper loop to provide high-speed Internet access. Analysts predict that over 30 million telephone lines will be qualified to support DSL services by the end of 1999. Technical limitations, however, restrict DSL deployment to local loops near central office switches. The adoption of modified technology known as DSL-lite increases the coverage area, allowing more rural customers to receive DSL service over existing lines. To address the ability of new entrants to deploy this service, the Commission is scheduled to vote next week on a proposal to require incumbent local carriers to allow line sharing with competing carriers. Today, if a competing carrier wants to offer high-speed data services to a customer, it must purchase a separate line, which can be prohibitively expensive. The proposal could prove to spur competition in DSL deployment.
To date, two-way high-speed broadband via cable modems has been the broadband technology most deployed across the country. Nationwide, there are more than 1 million subscribers. These systems have been deployed by cable providers in urban and rural settings. For example, Cablevision Communications offers a high-speed Internet cable modem system to just over 1,200 subscribers in Cloudcroft, New Mexico.
I’d like to say a word or two about the open access debate, or as others call it, "equal access" or "forced access." "Open access" is generally understood to be a requirement that cable operators offer broadband Internet access services unbundled from content, so that subscribers may purchase one without the other, or a requirement to permit Internet Service Providers to purchase "transmission service" from the cable operator.
I support the Commission’s hands-off policy with regard to open access. To date, our review of the broadband marketplace has indicated that multiple sources are vying for customers. Cable broadband is a nascent industry, and I do not want to do anything that could jeopardize investment at this early stage. If cable’s broadband pipe proves to be a bottleneck, we can deal with the problem at that time. At this point, however, we don’t know how this market is going to develop. Let’s not regulate unless we know what we’re regulating and why we’re doing it.
In addition to wireline solutions, many observers believe that wireless technologies offer great promise as a broadband solution in smaller cities and rural areas. They note that while new wireline infrastructure in rural areas is very expensive, a wireless solution can offer a cost effective entry strategy that can be used for rapid market entry.
A multitude of fixed wireless broadband services are currently being deployed or are in the planning stages. While some are more targeted to an urban environment, others provide the necessary range and technical capability for deployment in rural areas. One example is the multichannel multipoint distribution service, otherwise known as MMDS or wireless cable. It offers the potential to provide broadband access to underserved markets.
MMDS licenses were originally granted for the provision of analog wireless cable service. In the fall of 1998, however, we changed our rules to allow these systems to offer two-way services. Since then, several companies have initiated two-way broadband services, including high-speed Internet access, and many more have announced their intention to do so. Several companies are targeting small- and medium-sized businesses and residential customers, and not only in major urban markets. MMDS technology can transmit data up to 35 miles from each transmitting station.
In addition, a significant amount of currently licensed spectrum is underutilized in rural areas. The Commission is also making available new spectrum that potentially could be conducive to broadband deployment.
Finally, since 1993, over $20 billion has been invested in the space industry, with much of it dedicated to the broadband satellite telecommunications sector. Satellites can offer instant infrastructure that provides the same broadband services, at the same cost, in rural and urban settings alike. In Grants, New Mexico, Louis Uttaro’s Cibola Internet Services provides access to the Internet via a satellite link to his ISP office, which then connects to customers through the local telco. It’s a more cost-effective approach than landline links to the Internet backbone. Cibola is now providing this satellite-based Internet service to 14 communities. In addition, several companies have plans underway for satellite services that will provide a two-way link directly to customers’ homes and businesses.
As you can see, broadband technology is available today and more is developing for deployment across America’s smaller cities and rural areas. At the federal and state level, our work is to ensure that public policy is conducive for investment and deployment. And in rural communities, leaders are finding solutions to gain broadband access. Through these efforts, together we will ensure that the communications revolution does extend to all parts of America.