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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 meaning.

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 these crises.

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 availability.

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.