Good Morning. I want to commend Chairman Upton for calling this hearing on legislation which addresses various subjects. I believe this bill has serious defects – flaws that will harm consumers and that risk condoning conduct by broadband companies that will destroy the Internet as we know it. Although there are a multitude of issues in the bill -- including several provisions I wholeheartedly support, such as the ability of municipalities to provide community broadband services – I will focus my remarks this morning on just two items.
In my view, rules ensuring network neutrality are indispensable.
I understand that there are those who argue that we should rely on mere network neutrality “principles,” or an imprecisely-worded FCC policy statement, rather than legally enforceable rules. Others will advise us to take a “wait-and-see” approach.
Yet we know from public statements from several industry executives that the owners of the broadband wires into our homes would like to start charging fees to Internet content providers. In other words, they want to artificially constrain the supply of Internet-based content and services to high-bandwidth consumers. This represents nothing more than the imposition of a broadband bottleneck tax on electronic commerce. Such a bottleneck tax for accessing consumers will undoubtedly have a chilling effect on investment and innovation.
There are some out there who will inevitably ask the question, “But why shouldn’t Google pay?” Google certainly has a very large market cap and presumably could afford to pay. But that is precisely the wrong question to ask. The question to ask is whether Larry Page and Sergey Brin could have afforded to pay circa 1998, whether Chief Yahoo Jerry Yang could have afforded to pay a broadband behemoth circa 1995, whether Marc Andreesen, the founder of Netscape, could have afforded to pay anyone, anything, circa 1994.
If there is an entrepreneur in some proverbial garage somewhere today, whose idea is new, whose product is still in “beta,” their dreams are just as real and valid as Larry’s, Sergey’s, Jerry’s, and Marc’s were an Internet-generation ago. We should be doing everything we can in public policy to ensure that this successful Internet model continues to drive innovation, economic growth, and job creation.
Instead, the proposed bill before us effectively condones online discrimination and then ties the hands of the agency from promulgating any guidelines to address it. The Barton bill actually says the FCC that it can never adopt rules to protect the Internet experience for the millions of entrepreneurs and consumers who rely on it.
Think about that: if there’s a problem, even if it is widespread, or affects a whole class of users or a whole class of violators, if consumers are being aggrieved on a daily basis, or even if industry itself feels that certain rules are useful or necessary, the Barton bill prohibits any rulemaking authority for the FCC on network neutrality whatsoever. Rather, it prefers a case-by-case investigation and adjudication of violations.
Does anyone here remember how long it takes the FCC to deal with individual complaints? It often takes years! And this bill is supposed to prepare us for a 21st Century broadband future? This is efficient government?
No, that’s neither futuristic nor efficient, that’s chaos. In short, the bill imperils the future of electronic commerce and innovation to the “world wide whims” of broadband barons and ties the hands of the agency in a way that will legally prevent it from saving something very special.
Service Area Parity
Second, I want to briefly address the proposed bill’s lack of a cable service area requirement. By failing to include a build-out provision to ensure service area parity between a Bell company entering a franchise area and the incumbent cable operator, the bill allows a national franchisee to use public rights-of-way in a community but serve only select neighborhoods within the community.
One does not need a business degree to have a hunch they will focus deployment on the 30% of town that has 70% of the revenue potential.
The bill, however, compounds the consumer risk when the omission of a service area requirement is considered in the context of an incumbent cable operator qualifying for a national franchise. Under the proposal, an incumbent cable operator may similarly seek a national franchise after the phone company arrives in a franchise area, even if the phone company is serving just one household in the franchise area. The lack of a service area requirement at the national level then means that the incumbent cable operator no longer has to serve the entire franchise either.
This means that the incumbent cable operator will now be free to skimp on service upgrades or withdraw service from any part of their historic service area. The incumbent cable operator may also immediately raise rates in areas of the community the phone company is not serving in order to cross-subsidize its offering in the part of town the phone company has chosen to serve.
In other words, although the proponents of the bill will trumpet the notion that consumers will receive lower prices, the reality for many consumers is that the bill will unwittingly result in the opposite – higher prices, shoddier service, lack of technology upgrades, or outright withdrawal.
This represents a truly historic abandonment of decades of policy and progress to get technology and competition out to all Americans regardless of where they live. It is clearly a grave consumer protection flaw in the bill that needs to be addressed.
Thank you and I look forward to hearing from our witnesses.