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Federal Communications Commission
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This is an unofficial announcement of Commission action. Release of the full text of a Commission order constitutes official action. See MCI v. FCC. 515 F 2d 385 (D.C. Circ 1974).

August 26, 1997


FCC Chairman Reed Hundt praised the Internet today as the key to "competition, deregulation, economic growth, social change, high productivity, new record sales of hardware and software: in short, a better America," but said the slow pace of competition in local telephone markets is limiting the Internet's growth. "We're not getting it fast enough or spread far enough through our country's different geographic regions and demographic groups, "said Hundt in an address today to the Institute of Electrical and Electronics Engineers' Symposium on Hot Chips in Palo Alto, California. In the speech, titled "The Internet: From Here to Ubiquity," Hundt called for legislation to free the Internet from unwise government regulation and monopoly bottlenecks. He said the law should include a prohibition on regulation of Internet content; authorize the FCC to direct the states not to regulate digital packet-switched network services, and assure that data networks remain subsidy free.

Noting that a year-and-a-half after the Telecommunications Act "only about one percent of consumers are taking phone service from anyone but the traditional monopolist," Hundt predicted the Internet will "provide a key answer to the problem of competition in the local telephone markets," but described major threats to the rapid and successful development of the Internet as an alternative to today's circuit-switched telephone network. Among them are what Hundt described as "key congestion points of the Internet that aren't effectively open to competition," including the local loop, the local switch, T1 circuits, the Internet addressing system, and inside wiring. He noted that "unless efficient and competitive markets drive the growth of the Internet, its evolution is threatened."

Hundt said: "It turns out that the battle between the long distance companies and the local telco monopolies isn't just about those two sets of players. It's very much about companies trying to build the Internet and about others -- like our glorious software industry -- that will benefit from competition. And it turns out that the FCC's fight for meaningful local competition isn't just about whether consumers will have a meaningful choice for telephone service. It's also about whether the great mass of American consumers will have a meaningful and affordable and enjoyable opportunity to use the Internet and its services.

Hundt also contended that "continued efforts to write new rules of law to 'help' the Internet . . . aren't being written right." He cited the Internet Protection Act recently introduced in Congress as an example of a "grievous misstep" that, despite its worthy goals, "would fail to cure any of the market failures that cause Internet congestion today." Hundt also reiterated his criticism of incumbents who rely on multi-court lawsuits "to bolster monopolies and stifle interstate commerce and create years of litigation-induced delay," adding that "only vigorous competition and not vigorous courtroom advocacy will alleviate bottlenecks in response to real demand." Adding that "the pushback against pro-bandwidth policies has already begun," Hundt warned that incumbent circuit-switched network providers who view packet-switched technology as a threat to the status-quo "will mount an army of lobbyists and public relations firms and economists to take on the packetswitched threat," as they did in last year's unsuccessful attempt to impose new access charges on the Internet. Hundt cited the FCC's refusal to mandate high- definition TV as an example of permitting a new technology to become "an opportunity for big bandwidth -- not big government pushing its bad ideas on business." He criticized recent congressional pressure on broadcasters to air high-definitional television, saying that it would stifle the development of a new broadband digital medium.

Observing that "Washington can't make the Internet succeed. But it can be an obstacle to its success through unwise action and unwise inaction," Hundt called for an Internet Freedom Act that would be "blessedly short" and have as its key components a prohibition on regulation of Internet content, the authority for the FCC to order states not to regulate digital packet network services, an assurance that data networks will remain free from subsidy, clear FCC authority to open all communications bottlenecks to competition, and a single court of appeals for judicial review of essential FCC decisions promoting telecommunications competition.

--FCC --