I'm guessing the dynamics will change. Instead of PCs driving the market, perhaps it'll be telecommunications devices that allow the Internet to thrive, and, if so, the power base will shift to companies like TXN, with its dominant position in the DSP sector, and LU (with ASND?), ALA, Siemens/NN, Nortel, and perhaps one or two others, who will dominate the networking/telecom side. Yes, Cisco will be a major player but I think they need to partner with a telecommunications company and I don't know who that'll be.
At any rate, the FCC speech is certainly clear in what it will take to get bandwidth to the home:
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At the FCC, our job is to fire the starting gun and let the race begin. We should not micromanage the race. We simply need to make sure that the race is fair and open to all who want to compete. Because competition always beats regulation as the way to bring consumers more services, better quality, and the lowest prices.
So our job is to ensure that these bandwidth technologies that can improve the lives of American consumers are deployed in a pro-competitive manner. I believe that this is what Congress intended the FCC to do.
So what does this mean? For openers, it means no price regulation for residential high speed data services. All companies are new entrants when it comes to these services, and I see no need for price regulation.
But we should go even further. To provide the advanced services, telephone companies will have to invest in advanced electronics. But the telephone companies have rightly asked, why should we make this new investment if we simply have to turn around and sell this new service -- or the capabilities of these advanced electronics -- to our competitors? If the telephone company has opened up its underlying networks to competition, the competitors can invest in the same advanced services.
Where networks are open, I see no reason to require discount resale or unbundling of these new services and advanced technologies that are available to all.
But let me be clear that when I talk of deregulation, I am talking about deregulation of advanced technologies. To return to my metaphor, these are the technologies that turn the garden hose into a fire hose so that you fill that swimming pool a lot quicker.
Today's announcement by AT&T and TIC could move us even more quickly to the day when we have another all-star competitor in the race to provide broadband to each home. I want to see if AT&T is committed to investing in advanced facilities and competing head-to-head with local phone companies to provide high-speed voice and data to the home -- if they plan to offer a second, bigger hose. That's what makes this deal thinkable. But the proposed deal does highlight the conflict in the way the Telecom Act treats common carriers and cable operators, especially on how open and accessible their networks are to users and competitors.
But for now, in most areas there is still only one hose -- the copper phone line that runs into the home, what we call the local loop. We may have expanded its capacity, but the question is: who gets to use it to reach the end user, the American consumer at home? The local loop is a bottleneck. How can we promote competition if one competitor owns a piece of the network that others must use if they are to compete?
This leads me to three principles that I believe we must follow if we are to have a competitive, deregulated market for high-bandwidth uses of the local telephone network.
First, we must identify the facilities that are truly critical to the deployment of high bandwidth technology to the home. These are facilities that in most instances, at least until cable television rolls out these services, will be controlled by only one provider -- the local phone company. These critical facilities must be made available to competitors. This includes the local loop and the space in the local phone company's central offices where both the phone company and its competitors can install the new technology. Competitors also must have access to the incumbent phone companies' operations systems -- the hardware and software used to order, maintain and control the critical facilities.
Second, we need to make sure all participants in the market, including the incumbent local phone company, have access to these facilities under the same terms and conditions, with the same information about network technology and interfaces. Open and fair competition means all competitors must be able to buy and take delivery of the facilities in the same way through the same systems. This allows them to compete on the basis of quality, service, and value. The obligation of nondiscrimination rests with the local phone companies. It is an obligation that they must take seriously, or else we will enforce it as strictly and as swiftly as any rule on our books.
Third, competing providers must interconnect their networks so that customers of one provider can interact with the customers of another. This is the concept, as I said before, of a network of networks. Providers that have the lion's share of the total network must permit interconnection by smaller providers. Interconnection of data networks is absolutely crucial if competition is to emerge. We will be watching to make sure it happens.
If these conditions are met, competition and consumer demand will take care of the rest.
Three simple conditions: identify the essential facilities; give competitors access to them; and make sure competing networks can interconnect with one another.
If we do this, there is no need for additional FCC regulation of advanced services, whether offered by the incumbent phone companies or by their competitors. No tariffs to file, no retail price regulation, and no unbundling of the new technologies that must be deployed to make expanded bandwidth to the home a reality. Because that new technology is really a new frontier, one that should not be burdened by regulation.We have before us a great opportunity and a great challenge. At the FCC, our challenge is to lay the groundwork for fair and open competition, to make sure that everyone has an equal shot at winning the race, and then getting out of the way. To those of you in these industries, your challenge is to race hard and to race fair.
We are at a crucial juncture in the deployment of advanced communications services to the home. The promise and the thrill of the Information Age should not be the exclusive domain of big businesses or of the affluent or those who happen to live in urban areas. I want to create conditions so that all competitors are free to make the very best our technology has to offer available to every community across the country, to every home, to every school, to every library, to all Americans.
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