FCC Bandwidth Forum
Thursday, January 23, 1997
Opening Remarks by Chairman Reed Hundt
I am very pleased to see you. I am especially impressed by the very distinguished
panelists that we are going to have over the course of the day. This is the first bandwidth forum
ever at the FCC.
You never know when you say that something is "a first" whether that is a tremendous
criticism of the fact that you didn't do whatever it was a lot earlier, or just a self-compliment
about the fact that you had some kind of an epiphany and you finally recognize that the thing that
is "a first" is very important.
I don't know whether this is an epiphanic moment or an appropriate moment for self-doubt and criticism for the FCC. Maybe it's a little bit of both. Although we have never had a
forum just like this, we have been for the last couple of years increasingly concerned at the FCC
about what we call the problem of access and bandwidth. We are not 100 percent sure exactly
how to state the problem, and we are not sure what the dimensions of the issues are here.
We have some grasp that public policy is becoming increasingly important to the
emerging industry of bandwidth delivery, if I can call it that. But part of the purpose of this
forum is to define what the interactions are between conventional telecommunications public
policy and the bandwidth issues that increasingly are preoccupying so many of the industries of
the world. Bandwidth delivery for data, now as never before, is an important part of the
functions of our traditional telecommunications industry. So I think what you are helping us do
today is to define the questions.
Of course, you can already look the answers up in George Gilder's articles. In many ways
we're just trying to take George's answers and find the questions they match up with. Those of
you who, like me, have enjoyed reading George's answers for many years will understand that the
problem with George's answers is being very sure that you have the questions matched up
correctly with those answers.
George has pointed out, for example, that we should not have auctions of the spectrum
because the spectrum has a bandwidth possibility that is now infinite, and that spread spectrum
technology means that we have no bandwidth issue with respect to spectrum. Twenty-four
billion dollars has been paid by people who don't seem to agree with George and who desire to
have exclusive licenses.
Possibly today you all will tell us that those people are wrong. If you do say that, try to be
just a little low-key about it, will you please, because we have other auction legislation coming
up in Congress. In fact, the balanced budget depends on George being wrong, at least for the
next couple of years.
I have also read in The Economist answers to the questions that I hope you all will frame
today. The Economist not long ago announced that time and distance have no meaning in
telecommunications. This came as a very welcome relief to those of us working on interstate
access reform. We suggested last night to a number of people in the industry that time and
distance have no meaning and that interstate and intrastate therefore is a concept that is of no
relevance. But no one agreed.
In fact, $23 billion dollars in charges to the telecom industry are based on the definition
of state lines --something that is actually a part of our Constitution. The Economist, being
published in never-never land, was somewhat indifferent to the access taxation system that in fact
is built on the notion that time and distance have, if not literal meaning, a presumption of
So what are we supposed to do, in short, about the telecom world as we know it? It may
be true that in many technological ways time and distance have less significance than they ever
had before in terms of communications. But it is not at all the case that they have no meaning in
terms of the reform of the systems that currently exist or that they have no meaning as we try to
provide a climate in which we can create the maximum incentives for the proliferation of
bandwidth and for the proliferation of access.
I also read in Fortune magazine -- I believe it was last July -- that Bill Gates and Andy
Grove had a fascinating dialogue in which Andy said, if I remember correctly, the following (and
I am remembering this by reading the quote): "As exciting as the Internet is, though, there is one
big problem: telecommunications bandwidth." And Gates responded, "Bandwidth bottlenecks.
No question. That's the biggest obstacle to where we would like to take the PC." I found this
particular colloquy to be immensely interesting because I believe it is the same as the colloquy
that we are having here in a variety of proceedings.
In our colloquy we talk about the essential facility or bottleneck problem in
communications. We talk about whether or not the last mile of the local loop, the length of wire
from the consumer to some centralized aggregation point, is a bottleneck. We talk about it in
antitrust terms. We talk about it in competition terms. We talk about whether the current local
exchange market is a bottleneck.
Now, that is a key issue in access reform. When we are having that conversation, what
we would like to find out today is, are we also having the conversation on the same topic that
Andy and Bill were talking about? Did they mean the same thing that we mean? If we don't
mean the same thing, let's find out the difference. But if we do mean the same thing, then it
should be the case that this obstacle to where we would like to take the PC, in fact, is the topic
that we are spending hundreds and thousands of hours on right here at the FCC.
And so now we have discovered that maybe our traditional public policy pursuits are
directly related to the future of our information economy in an even bigger way than we
previously had thought was the case.
The FCC for many years has worked with a group called the Network Reliability Council.
It's been primarily run by the incumbent telephone companies although it's been open to
participation from all the other industries that have ever wanted to be involved, and many have
wanted to be involved.
The Network Reliability Council concerns itself with, among other things, failure rates
for our communications system. The Network Reliability Council is the principal way in which
the telcom industry creates the protocols that allow it to use redundancy in the network, so as to
make communications continue to work in the event of earthquakes in California, hurricanes in
South Carolina, numerous other calamities. We don't like to spend a lot of time dwelling on this,
but the fact is that there are dozens of incidents of this kind, of various levels and magnitude,
every year. And when we say that we have the greatest communications system in the world,
what we mean in this country, among other things, is that our system does not fail in the event of
With all of this, one thing that I am very curious about is: Why does my eleven-year-old
get a busy signal when he tries to get on American On-Line?
And is that part of what ought to be the mission of the Network Reliability Council? Or in
fact should it be the case that it isn't as important that the Internet be reliable in the same way as
the circuit-switched network?
Is that really what you all want to tell us -- that service quality and reliability isn't
important? Remember that the Network Reliability Council is not guided by regulations. It is an
intra-industry group we blessed and work with. But fundamentally, it is a means for cooperation
that allows everyone to take advantage of the redundancy that is built into the circuit-switched
network. So one of the things we'd like to find out is whether or not reliability is in fact an
appropriate policy issue with respect to the packet- switched network. Or would you say to us,
no, that is not of any particular importance, and if I happen to rely on packet-switched technology
to get my sports, news, or make stock market trades, well it's not terribly important if that doesn't
work for several hours or days.
Don't misunderstand us; we do not in any way intend in this forum to be empowering
government to do that which it does not need to do. Please understand the opposite to be the
case, because the opposite is true. What we would like is to have help from all of the relevant
industries, users, consumer groups, and other participants in our information economy.
We'd like their help in figuring out the traditional telecommunications policy problems to
the degree that they have any bearing on what I read in all of these articles is the fundamental
issue of building an information highway: providing more bandwidth, cheaper access, and greater
So I am terribly excited about this forum, because I think that it will in fact lead to that
kind of help and it will permit us to get to work on what we're ultimately looking forward to: a
profoundly deregulatory era in the communications system.
Right now in this country there are probably 10,000 people employed in regulating the
telecommunications industry. There are about 200 here, and as many as 9,800 in the states and
municipalities. There are approximately 25,000 pages of orders and decisions that regulate the
communications industry; about 4 dozen pages here, and all the rest are issued at the state level.
None of us, not our friends at the state level and none of us here at the FCC, desire to have this
level of micro-management be a necessity or even be desirable as the communications era
unfolds. But none of us should fool ourselves. All of that requires a lot of change, to do away
with, or to alter, or to modify many, many rules.
So when I say we need help in effecting this change, it is your help that we are counting on getting today. Thank you all very much.