FOR IMMEDIATE RELEASE NEWS MEDIA CONTACT: September 9, 2001 Michelle Russo at (202) 418-2358 FCC CABLE CHIEF FERREE SAYS REGULATORS SHOULD CHANGE TONE AND EMBRACE NEW WAYS OF THINKING IN THE BROADBAND WORLD W. Kenneth Ferree, chief of the Cable Services Bureau of the Federal Communications Commission (FCC), today said that unrealistic expectations in the telecommunications arena have created a pessimistic tone. But local, state and federal regulators have an opportunity to counter the negativity, reject dogmas of the past and open themselves to new ways of thinking and acting. In a speech to the 21st Annual Conference of the National Association of Telecommunications Officers and Advisors (NATOA), Ferree said, "I would suggest that the pace of competitive development in the communications industries is about what one should have expected." Ferree said that because telecommunications markets are built upon technology, they follow "infrastructure" adoption models rather than "commodity" models. In a commodity market, two or more virtually identical products can survive side by side. However, under an infrastructure model, one dominant technology usually prevails to the exclusion of other look-alike technologies, such as VHS versus Beta. Ferree noted, "The dominant position garnered by the winner in a competition between two infrastructure products does not last forever. At some point, a new, technologically differentiated product or service will come along to claim the field." For instance, satellite service is gaining market share from cable, but the potential for another technology to displace both of these services exists. "The process is evolutionary," Ferree said. "Thus, in order to deflect the negativity directed at regulators, we should resist the temptation to be defensive when we talk about the state of the market. Competition is developing through a process that is very much characteristic of infrastructure products and services." Ferree noted that until everyday broadband applications are more prevalent, consumers will not flock to broadband connectivity: "Consumers should not be expected to be the risk takers in this evolution - that is the job of those who would market new products and services." Ferree cautioned that regulators must be prepared to think anew and act anew in the evolving broadband world. "As broadband applications are developed, and users begin to subscribe to broadband platforms, the government agencies whose statutory charge is implicated by the provision of broadband service must and will respond accordingly. And we will do so mindful of our charge to protect the public interest. We will be careful not to reduce consumer surplus through imposition of anachronistic regulatory requirements and we will be vigilant against any market failures that may require affirmative government remedies." - FCC - 1 2 News media Information 202 / 418-0500 Fax-On-Demand 202 / 418-2830 TTY 202/418-2555 Internet: http://www.fcc.gov ftp.fcc.gov Federal Communications Commission 445 12th Street, S.W. Washington, D. C. 20554 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).