News

Telecom Needs Regulatory Parity

7/25/2008 8:00 PM Eastern

The following is an edited excerpt from a statement by Jonathan Banks, senior vice president, law and policy, United States Telecom Association to the Committee on House Energy and Commerce Subcommittee on Telecommunications and the Internet. July 22, 2008.

Consumers are clearly benefiting from the accelerating convergence of technologies that allows for vibrant, cross-platform competition in voice, video and broadband. This progress also creates the urgent need for regulatory parity to ensure that consumer choices, rather than uneven policies, shape the future of this vibrant and innovative marketplace.

The United States Telecom Association represents broadband service providers in urban and rural areas, as well as manufacturers and suppliers. Our member companies provide broadband on a fixed and mobile basis, and offer an array of voice, data, and video services.

The last several years have brought the once-separate worlds of telecom, media, and technology together, where the health of each segment — its ability to innovate and invest — has a ripple effect on the health of the others and their capacity to deliver new choices to consumers and to our economy.

Telecom, media, and technology — the TMT sector — is a linchpin of our economy. TMT is the fourth-largest contributor to our GDP, and it is the leading driver of growth and productivity in our economy. About one-half of our economy’s productivity growth comes from this sector. In addition, the TMT sector generates over 10 million jobs, providing 8% or more of non-farm employment. Many of these jobs are high-wage jobs in high-growth areas.

The key to the vitality of this sector, and the jobs, economic growth, and innovation it creates, is ongoing and robust investment. Over the last five years, investment in this sector has returned to the levels reached during the heights of the Internet boom. Today, the TMT industry is investing about $400 billion in software and equipment on an annual basis accounting for about 40% of total U.S. non-structural investment. That is, leaving out investment in things like buildings and bridges, the technology, media, and telecom industries are responsible for 40 cents of every dollar invested in our economy.

Investment in communications equipment also has returned to levels not seen since the heyday of the 1990s Internet boom. Key investors include AT&T, Verizon, T-Mobile and Sprint, XO and Century Tel, Sprint and Clearwire, and cable companies. The Yankee Group is now forecasting $60 billion worth of U.S. communications infrastructure investment this year and more than $70 billion next year.

When we examine policy issues, we look to see that this healthy trend in investment and competition will, at a minimum, not be harmed. The efforts both here in Congress and at the FCC to achieve regulatory parity among competing providers have been extremely important to creating the climate that has supported today’s levels of investment.

The FCC’s 2005 order removing regulatory handicaps on telecom-provided broadband in order to level the playing field with cable-provided broadband is a case study on the public benefits of parity. Following that order, consumers began choosing telecom broadband at increasing rates, service offerings increased, and prices fell.

There are number of telecom competition issues, and I would like to offer some comments on each.

H.R. 3914, Protecting Consumers through Proper Forbearance Procedures Act: Our members support the goal of this proposed legislation to improve the forbearance process at the FCC. Congress created the forbearance process in the 1996 Act in recognition of the fact that the communications industry was entering a period of rapid change in which FCC rules and regulations could quickly become obsolete.

Pole Attachments: The current methodology for regulating pole attachments is in dire need of reform. Today, companies can pay wildly different rates for attaching to poles to provide directly competing broadband services. A broad survey of our members covering millions of poles corroborates the general consensus that incumbent local exchange carriers companies generally pay the highest rates.

Retention Marketing: Retention marketing benefits the consumer and spurs competition by allowing a customer’s current service provider to reach out to its customer and make its best offer to keep that customer. The customer is in the driver’s seat to make the best deal. It is the essence of free-market competition and consumer choice. A recent FCC order has tilted the playing field away from the consumer and towards cable companies.

Number Porting: US Telecom and its member companies have been instrumental in bringing number portability to American consumers and have made significant contributions toward making portability more efficient. However, the introduction of new communications platforms has made the process more complex. Our members have a strong interest in improving the efficiency of the number-porting process.

September