Remarks of

Michael K. Powell

Chairman, Federal Communications Commission

On Voice Over IP

At the Meeting of the Technology Advisory Council

FCC, Washington, DC

(as delivered)

October 20, 2003

Avoiding Regulating by Accident

Communication policy is about to be \-\-- if it isn't already \-\-- at a
crossroads. I think there is going to be a very, very important set of
decisions to be made as to how we embrace Internet-premised,
Internet-based IP type communications and whether we will tailor a set
of regulatory clothing uniquely for it, or whether we will make it wear
Ma bell's hand-me-downs.

And I think a public debate about it not being just a telephone or just
an incremental change off of the way we have looked at the telephone
system for 100 years is a very, very important part of the crossroads.
The micro judgments about what regulatory policies apply then seem to me
to be easier, or start to fall in place, if you at least create national
consensus that this thing is different, it's different from a historical
prospective, its different from a technological perspective and it's
deserving of a sort of singularly unique policy examination, as opposed
to what I see at risk right now, which is regulating it by accident.

What is happening now is it's slowly being regulated by accident. As we
stumble through these new innovations, the market moves faster, the
entrepreneurs are moving faster and the innovations are moving faster
then any regulator in this country is moving to keep up with it. And I
know what regulators do. I am one of them. We are conservative, and we
will fall back to what we know when fearing being run over by something
we don't understand.

And I think the first thing is to truly commit ourselves to
understanding the technology and the market and the nature and the way
in which it's unfolding so that we're not fearful \-\-- we don't
approach this with fear, but we approach it with excitement and optimism
that this is inherently a good thing for the world, a good thing for the
country, a major breakthrough in telecommunications and communications,
and a great new opportunity and promise. We shouldn't be afraid of that.

I personally think we should be embracing it. And so I think that that's
an important part of the debate. And so we're very excited about it.

I have decided that the Commission is now going to start exerting itself
in this area much more directly. And that is not to say regulating it
either, only to put a marker down that it's time to start having these
policy questions in forums that matter. I really don't. And I think that
we run the risk that if we don't move quickly to at least show that
we're focused on it, then if you don't have a state jurisdiction do it,
you will have a court do it.

Again I can honestly debate what the answers are, but I do think there
is a danger if you don't have the right institutional player in the
right place. And if you're not going to have an institution that's going
to be capable of dynamism and flexibility as it goes through trying to
learn this, I think we're going to have a problem.

The role of regulation seems to me to depend on the time, the nature of
the problems, and the nature of the consequences, Because it "depends"
is why I think the worse thing we could do is, again, regulate it like a
telephone, regulate it by an accident for no other reason than that's
what we know and that's what we understand. And I think there are a lot
of quarters right now throughout the federal government and state
governments that are poised to do just that.

Or you have the almost equally ideological absurd libertarian "who
cares" \-\-- we do care because we care about law enforcement
capability, we do care because we care about the disabled, we do care
because we care about anticompetitive behavior. I think the greatest
error going on is the misunderstanding that if you believe in the
Internet being free and minimally regulated and unregulated that means
you don't care one wit about these other policy things.

Build Up from a Blank Slate

I think that's wrong. I think what I care about is I want to build from
a blank slate up as opposed to from the myriad of telecommunications
regulations down. We might agree we want to be in the same place, but it
is a nasty, entangled litigious exercise to start from a phone company
world of regulation and work your way down this way, rather then to try
to say, no, this is something new.

Let's make each regulatory judgment as the consequence of forethought
and judgment and understanding about this specific technology. The
statue makes that cumbersome, because it's sort of like we want a set of
new clothes but we've got to work with the old sewing machines, the old
thread that we can find in the aging 1996 telecom closet. And that's not
easy. I would submit 80% of the questions that face me today are gray.
There is no clear answer in the statute, the statute is in its little
buckets, and the buckets don't make sense.

And why is the FCC in the midst of controversy all of the time? Because
it is always forced to try to negotiate a course through an ambiguous
statute premised on yesterday's technology and apply it to something
that's emerging and changing the new rule. We will keep doing that, but
that's going to crumble. The Act is going to crumble under relevance,
even under its own weight, from the pressures of technology. And one
day, whether we like it or not, Congress will have to come back to this
lest it sort of sanction a set of odd and observed contradictions that I
think start to unfold in the law.

So our goal should be \-\-- the TAC and the Commission \-\-- to shape an
intelligent debate. Make sure that long before congress starts getting
involved, we help win in the public mind what the understanding of what
that issue is, and we make these things more thoughtful and minimal. I
believe in minimal regulation here only because I believe there is a
futility principal. I think that our institution, and state regulatory
institutions, are not built particularly well for fast changing dynamic
technology-driven innovations.

We're really good with matured industries that have generally stabilized
to a point of fixed points, of regulatory choke points, and things. But
I think we're really on dangerous turf when we're regulating change. You
don't get a rule making out of the FCC in less than a year or 6 months
and in Internet time that can be forever.

And so making sure that we focus on those handful of core regulatory
values, and having the courage to shed the rest, seems to me to be the
billion dollar question, I think there will be core regulatory values to
protect but we ought to go through the judging of where those are,
commit to them, focus on them and be confident and courageous enough to
say "and the heck with the rest of this stuff."

And if time goes by and it turns out some of that rest of that stuff is
needed we'll bring it back. I'm always amazed at this sort of suggestion
that somehow there's one window for things and you will never be able to
fix it again. I don't know what world that comes from. I have watched
100 years of telecom regulation constantly change, evolve, and flow back
and forth, push and shove.

So what's the role of regulation? One, I think you should justify what
it is beyond general antitrust principles and I think there are things.
But on this revolution, I think the burden is on the government. I think
for this revolution, when the Internet is already prospered so nicely
without a lot of government handholding, where IP and voice over IP and
power line infrastructure and other things that are interesting begin to
prosper without our help, we should own the burden of presumption of why
we're needed here. And when we can satisfy it, we should act and act
clearly and swiftly. But when we can't, we should stay the daylights
away from it lest we interfere with a healthy robust, innovative market.