REGULATORY OBSTACLES TO THE DEPLOYMENT OF BROADBAND FACILITIES
(Extensions of Remarks - January 21, 2004)

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[Extensions of Remarks]
[Page E30]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


     REGULATORY OBSTACLES TO THE DEPLOYMENT OF BROADBAND FACILITIES

                                 ______
                                 

                           HON. RICK BOUCHER

                              of virginia

                    in the house of representatives

                      Wednesday, January 21, 2004

  Mr. BOUCHER. Mr. Speaker, I rise today to discuss the positive 
economic benefits of eliminating the regulatory obstacles to the 
deployment of broadband facilities by telecommunications carriers. A 
recent report by economists Robert W. Crandall and Charles L. Jackson 
supplies strong evidence that further deregulation will jumpstart the 
sluggish technology sector and increase investment in broadband, which 
will in turn encourage greater Internet use, and expand the market for 
a broad range of technologies from computers and servers to digital 
appliances for the home that connect over the Internet.
  Despite recent efforts by the Federal Communications Commission (FCC) 
in its Triennial Review Order (TRO) to promote broadband investment, 
several restrictions on broadband deployment remain that threaten to 
undercut the economic benefits the FCC was seeking to foster in its 
deregulatory order. The FCC has before it a reconsideration proceeding 
in which it has the opportunity to eliminate remaining barriers to 
investment and nourish broadband deployment, innovation, and economic 
growth. I urge the Commission to take full advantage of that 
opportunity. The following counterproductive regulations should be 
repealed:
  First, although the FCC has eliminated unbundling requirements for 
new mass market broadband deployments, it mistakenly ruled that 
multiple dwelling units (MDUs) are subject to the greater unbundling 
obligations applied to the enterprise market. Apartment complexes and 
other primarily residential buildings should be treated the same as 
single family houses and small businesses that fall within the mass 
market. The unbundling requirements that apply to the enterprise market 
should not apply to these multi-family dwellings.

  Second, the TRO muddies the distinction between the mass market and 
the enterprise market in other unfortunate ways. The FCC recognized 
that telephone companies face tremendous competition from cable 
operators when telephone companies seek to deploy new broadband 
networks to the mass market. It accordingly provided maximum unbundling 
relief to telephone companies for mass market deployments. But the FCC 
failed to say what the mass market includes. In particular, providers 
are uncertain whether fiber loops deployed to small businesses will be 
subject to unbundling at below-cost rates. The FCC should clear up this 
uncertainty by providing a clear definition of the mass market.
  Third, although the TRO properly eliminates unbundling obligations 
for broadband under section 251 of the Communications Act, the FCC 
appears to have required the Bell companies to provide unbundled access 
to their broadband facilities under a different section--section 271. 
The FCC should make clear that no provision of the Act requires 
carriers to physically unbundle broadband facilities at cost-based 
rates.
  The FCC needs to act swiftly to eliminate these lingering impediments 
to broadband deployment. By doing so, the Commission will unleash the 
full potential of broadband communications, which will serve as an 
immediate stimulus for the economy.
  According to the Crandall-Jackson report, if the FCC acts as I have 
recommended to deregulate broadband, as many as 1.2 million new jobs 
could emerge over the next decade from the resulting widespread 
adoption of existing and advanced broadband technologies. In as little 
as 5 years, the more than 250,000 jobs lost between 2000-2003 in the 
telecommunications service and equipment sector could be restored. 
Capital investment could increase to such an extent that by 2021, 
capital expenditure on broadband technologies will reach $63.6 billion 
and create a cumulative increase in gross domestic product of $179.7 
billion.

  Finally, in addition to creating the proper framework for investment 
in broadband facilities, I urge the FCC to promote regulatory parity 
for the broadband services provided by cable operators and telephone 
companies. Under current rules, telephone companies are required to 
provide nondiscriminatory access to all Internet service providers, but 
cable operators are not. For example, Verizon can offer its customers 
an Internet access service, but the user can instead select AOL, 
Earthlink, or any other ISP while receiving local telephone service 
from Verizon. If the subscriber has cable modem service, in most cases 
he is stuck with the cable company's affiliated ISP, and he would have 
to pay extra to reach a different ISP. This disparity makes no sense, 
especially given that cable operators have a 2-1 market share lead over 
telephone companies in the broadband marketplace.
  The FCC should require cable operators to provide open access, just 
as telephone companies do. Americans deserve to choose their own ISP, 
rather than having the network owner choose for them. The FCC also 
should prohibit cable operators from using their bottleneck control of 
the network to discriminate against unaffiliated content providers or 
equipment suppliers. Such requirements would not involve the below-cost 
pricing associated with the objectionable unbundling regime, and 
accordingly would not chill investment in new networks. In fact, 
requiring all broadband network owners to provide a choice of ISPs will 
accelerate the deployment of broadband services at a more reasonable 
price.

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