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August 3, 2000


Re: Inquiry Concerning the Deployment of Advanced Telecommunications Capability to All Americans in a Reasonable and Timely Fashion, and Possible Steps to Accelerate Such Deployment Pursuant to Section 706 of the Telecommunications Act of 1996, Second Report, CC Docket No. 98-146.

The report that we issue today, consistent with section 706's directive that the Commission regularly determine whether "advanced telecommunications capability is being deployed to all Americans on a reasonable and timely basis," 47 U.S.C.  706(b), contains much encouraging information regarding the technologies that are being deployed to deliver advanced services in the United States, as well as where those services are currently being provided. Among other things, the data show that various forms of advanced services, including cable, digital subscriber line, wireless, and satellite technologies, are being deployed across the country and that companies are investing heavily in the facilities used to deliver these services. More than 90 percent of the country's population live in zip codes where advanced services have been deployed. Broadband services are available in all fifty states, the District of Columbia, and Puerto Rico. Residential and small business customers have been signing up for advanced services at a fast clip: the number of subscribers to such services has more than doubled in the past year. By all measures, the market for advanced services is thriving, and I therefore agree with our conclusion that the deployment of advanced telecommunications capability to all Americans is "reasonable and timely" within the meaning of section 706. I also believe that many of the deregulatory steps that the Commission is taking in separate dockets will have the beneficial effect of furthering competition in the market for advanced services throughout the United States.

I write separately to comment on our conclusions regarding the availability of advanced services to different areas and population groups throughout our country. The data show that the pace of deployment of advanced services varies throughout the United States. For example, urban residents may be able to obtain access to a number of different types of advanced services, whereas residents of sparsely populated parts of our country may have access to only one type of advanced service, or none at all. In time, we may determine that the current system of telecommunications regulation alone will not guarantee that certain segments of our population will receive "reasonable and timely" access to advanced services. Should we draw such a conclusion, section 706 directs us to "take immediate action to accelerate deployment of such capability by removing barriers to infrastructure investment and by promoting competition in the telecommunications market."

But the data before us do not permit us to reach that conclusion now. We must not lose sight of the fact that the market today is in a very early stage of development. As a threshold matter, the data do not demonstrate that, in the near term, large percentages of residential and small business customers will actually demand advanced services. The data plainly show that the vast majority of small business and residential customers today - regardless of their income level or where they live - choose not to subscribe to advanced services. The nationwide penetration rate for small business and residential customers currently stands at 1.7 percent. We could speculate about why this is the case. Perhaps, for instance, residential customers, facing the price of advanced services, have decided that the access they have to advanced services at their workplace or in their community's library is enough for them. Perhaps they are not sure that they want advanced services at all and are waiting to decide if subscribing is worthwhile. In any event, the bottom line is that today virtually all residences and small businesses have chosen not to subscribe to advanced services, even though, as this order concludes, such technology "is available now and continues to be deployed to a significant number of residential customers in communities of all types - affluent and low income, inner city, suburb, small town and thinly populated countryside," and even though advanced services are typically available at a price that compares to the cost of premium cable service. Consequently, in my view, it is difficult to draw a meaningful conclusion regarding the difference among the subscribership rates for different categories of residential customers, since these rates are uniformly quite low.

I conclude, therefore, the data we have gathered are most fairly understood as demonstrating that small business and residential customers are in the early stages of exploring a flourishing new market and that the market and current regulatory structures are working well to provide consumers with the services they want. I agree that we must continue closely to monitor the deployment of advanced services to ensure that such services are being made available to all Americans in a reasonable and timely fashion. But before we might legitimately begin changing or removing regulations that single out certain population groups for different treatment with respect to the provision of advanced services, we must have a far better understanding of this market.