Secretary's Speech

U.S. Secretary of Commerce Carlos M. Gutierrez
Remarks to the National Cable & Telecommunications Association 2008 Cable Show
New Orleans, Louisiana

Thank you. I’m pleased to be in New Orleans with one of our nation’s most innovative and successful industries. You’ve transformed from a one-way entertainment industry to an integral source of data and voice communications.

Cable is a $100 billion industry that supports 1.5 million Americans in good, high-paying jobs. At a time when our economy is being stretched and challenged—your contributions cannot be underestimated.

We know the economy is topic number one with most Americans, and people are concerned. So is this Administration. As predicted, first quarter growth was slow at 0.6 percent. And, while our unemployment rate fell to 5.0 percent in April, 20,000 American jobs were lost.

Any monthly decline in jobs is disappointing, but we expected a challenging first half of this year and the losses were better than forecast. Our economy has faced challenges in the past and we are confident we’ll come through again—but we must act decisively to help.

In the short-term the Administration, working with Congress, developed a stimulus package that gives money back to Americans and gives companies incentives to invest.
By the time the stimulus is fully in place we estimate it will pump more than $150 billion dollars into the economy, creating a half-million jobs.

While we must continue to address the challenges in the short-term, in the long term we must implement policies to ensure sound economic fundamentals.

Today I’d like to talk to you about innovation, which is an important economic driver, as well as the Bush Administration’s broadband policies.

Innovation keeps our nation on the leading edge, creating economic growth, high-paying jobs and an ever expanding array of new products and services. The transition to digital television is one of the latest in a long line of innovative steps that have brought vitality to our economy.

When full power TV stations stop broadcasting in analog at midnight, February 17, 2009, and switch to digital broadcasting—a new era of American innovation will begin.

The cable industry has been a leader in educating and communicating with the American people about the transition. So, thank you. The government could not accomplish all that is being done without your partnership.

While DTV will bring sharper pictures and better sound, it will also free up spectrum for new advanced wireless services. This is important for consumers—and it is important for fueling future innovations.

We believe it is government’s job to create a pro-growth environment that encourages innovation, job creation and entrepreneurship. This has been the driving philosophy behind the Administration’s broadband policy.

In 2004, President Bush announced a series of measures to ensure our economy remains the most flexible, advanced, and productive in the world.

A cornerstone of that effort was the call for universal, affordable access to broadband technology for all Americans by 2007. This goal would only be achieved by private sector efforts—not government mandates.

The policies put forth were designed to lower barriers, and provide incentives for the investment and deployment of broadband technologies. Some of these policies, such as preserving the Internet tax moratorium, were enacted by working with Congress.

Others came about through the leadership of this Administration, especially FCC Chairmen Michael Powell and Kevin Martin. For example: deregulating broadband by classifying it as an information service.

On the subject of the FCC, let me say how disappointed I am with the Senate’s vote last week to overturn the FCC rule allowing cross ownership of newspapers and broadcast stations in the nation’s top 20 media markets.

We believe this discourages a diversity of media voices and hinders efforts to enhance local content, and I’ll recommend that the President veto this bill if it reaches his desk.

We have also developed and implemented spectrum reform policies that have helped ensure the most efficient and effective use of this vital national resource.

In January, we released a report showing that these policies have made a significant impact on the availability and affordability of broadband in the United States.

In 2000, there were 6.8 million broadband lines. As of June 2007, there were 100.9 million—that’s an increase of thirteen hundred percent. Nearly 96 percent of U.S. zip codes have three or more competing service providers.

This tremendous growth has brought amazing technologies and services to the American people. Think about some of the breakthroughs enabled by broadband:

• Telemedicine allows doctors to diagnose and care for patients in rural areas, or those who can’t get to a hospital.
• Virtual classrooms allow a single parent to take college courses at night, furthering their education and their ability to provide for their families.
• E-business has created more Americans entrepreneurs who can sell goods and services in the online marketplace.
• And not to mention the amazing video capabilities that bring movies and television programs to our laptops.

Broadband has changed the way we do business, the way we educate and the way we interact.

And because of the increased capacity and competition, consumers not only have more options, they have lower costs as well—either through lower monthly bills or more Internet for their money.

And this broadband goal was not achieved by government mandates or bureaucratic regulations. Instead the Administration worked to create an environment that expanded competition and encouraged investment, letting the market work.

And that brings me to the issue of network management. As Internet use skyrockets, more bandwidth-intensive content becomes available, and methods of accessing the Internet multiply, managing this “information superhighway” has become a traffic nightmare.

Think about this, according to one estimate, YouTube consumes more broadband capacity than the entire Internet did in 2000.

While that’s great for consumers—it’s also increasing the focus on network management—an issue gaining more attention from Congress, with increasing calls for legislation.

That’s why today, I would like to outline the core principals of this Administration’s network management policy.

The freedom of expression and the ability to innovate are fundamentals of our democracy, our economy and of our society. These same fundamentals have made the Internet an amazing success.

As we said in 2006, the Administration supports the FCC’s broadband policy statement, and the Administration believes the FCC currently has sufficient authority to address potential abuses in the marketplace.

We believe that preserving the ability of the Internet to support the free flow of information, support the advancement of democracy and spur innovation should be key Internet policy goals now—and for the future.

First, government should avoid overly prescriptive regulations that can’t keep pace with technological change.

The rapid pace of change makes it difficult to even define what constitutes “reasonable network management.

Network providers need flexibility to manage congestion quickly and effectively. A transparent, competitive market provides the best mechanism to ensure networks are managed reasonably, while meeting consumer demands.

Second, competitive pressures—not new regulation—provide the most effective discipline on broadband providers. Providers know that consumers who can’t get the service they need will go elsewhere.

Third, we believe providers should disclose management practices to consumers. An educated consumer is an empowered consumer.

Service and application providers are already working together to enhance disclosure of network management practices. We believe transparency promotes competition.

Finally, we must ensure that incentives remain in place to build new Internet capacity. Since 1996, your industry has invested more than $130 billion to upgrade your networks and to deploy broadband services to your customers.

To put this in perspective, the cost of building the interstate highway system in today’s dollars would be about $20 billion annually over 25 years.

But in 2007 alone, private companies invested more than $70 billion in communications infrastructure in North America.

While that investment is impressive—the continuing need for broadband growth will demand even more. Some estimate that broadband traffic will increase as much as 50 fold in the next seven years.

To keep pace, providers must develop new capacity and maintain the flexibility to manage their networks effectively and transparently.

Broad regulations that limit the ability of operators to price or manage their networks could actually deter and delay investment and innovation. The result would be fewer choices and higher prices for consumers.

In closing, these are tough questions we face—but imposing regulations, throwing up barriers and creating more hurdles for industry and consumers is not the right approach.

We believe that openness is central to our way of life, our economic strength, and our future. As we grapple with these questions broadly across our society, I believe it is critically important that we preserve the vibrant and competitive free market that exists for the Internet, unfettered by regulation. Thank you.