"BROADBAND CABLE: NEXT STEPS"

Address of

William E. Kennard

Chairman, Federal Communications Commission

before the

WESTERN SHOW

California Cable Television Association

Los Angeles

December 16, 1999

(As Prepared for Delivery)

Thank you, Spencer, for that gracious introduction.

And good morning to all of you, and to the distinguished members of this
morning's panel.

As you may know, through the Walter Kaitz Foundation, Spencer is working
to fulfill the dream of his late father that this industry provide
opportunity for Americans of all colors. That is a dream that I share
and am working hard to achieve. I thank you, Spencer, you are a friend
and an ally, and I congratulate you on the good works that you do in
that area.

Did you know that today is an important anniversary in our Nation's
history? Two hundred and twenty-six years ago, December 16, 1773, a band
of colonists threw chests of tea into Boston Harbor to protest the
British tax on tea.

The Boston Tea Party was not really a party and it was not just about
taxes. It was about the people wanting to control their own destiny.

That incident in history, and what it stands for is, of course, a part
of our heritage. We are proud of it. And 226 years later, the American
people still have a penchant for throwing things over when they feel
they can't control their own destiny.

And that is what I want to talk about today: Listening to what the
people want. Giving your customers a choice. And doing it before they
throw the modern day version of the Boston Tea Party.

Today I want to talk about the debate over access to the cable broadband
network. It has been a very hot issue this year. So hot that people
can't even agree on what to call it.

Some call it open access. Some call it forced access. Sometimes it's
just a pain in the access.

The interesting, and encouraging, thing about this debate is that it is
fundamentally a debate about means, not ends. Everyone I talk to about
this issue -- leaders in your industry, the ISP industry, franchising
authorities -- all embrace the concept of openness.

Everyone seems to agree that openness and choice are what consumers want
and will demand. This debate is really about how to get there.

There are two choices: we can rely on the market to facilitate openness;
or we can try to regulate our way there.

For now, I'm putting my faith in the marketplace.

Unless a compelling case can be made for government action -- a failure
of the market to maximize consumer welfare -- then we should give the
marketplace a chance to work.

That's particularly true with the deployment of new technologies.

In the mid-1980's, when the telephone companies started to roll out
"information services" -- the regulatory forerunner of the Internet --
the FCC had the good judgment to allow the phone companies to deploy
information services in an unregulated environment.

Without that decision to exercise restraint and let the market develop,
the Internet as we know it would not exist.

Imagine if in 1994, just five years ago, when there were only three
million on-line users in America, government had decided to design a
whole new regulatory regime for that emerging service.

Had we done that, we would not have almost 200 million Internet users in
the world today. I am convinced of that.

Well, today we have less than two million broadband subscribers in
America, and the most important thing that we in government can do is to
create an environment to get these pipes built. Get them deployed to
every business, every home, every school, every library and every
hospital in America. Get them deployed fast.

Broadband over cable, over DSL, over satellite and over terrestrial
wireless.

Once we have a network of networks, multiple broadband pipes accessible
to every American, this debate about access to your pipe will be
remembered as a transitional issue.

But only if we do not make the mistake today of dismissing this debate
and this issue.

The burning debate about access is how to make sure those cable pipes --
your pipes -- get deployed in a way that serves the public interest.

I have spent many hours discussing this issue with my counterparts in
municipal government, some of whom believe that now is the time for a
regulatory approach. They are people of good faith who believe sincerely
that the best way to advance broadband for consumers is to mandate
access to your pipes.

I respectfully disagree. I believe that this market is very dynamic and
that the incentives are aligned so that we have a good chance that the
market will develop an open platform.

I say give the market a chance.

But I also say to you, that if you do not listen to their concerns and
seek to demonstrate that you are working toward marketplace solutions,
you will be giving credence to those who are calling for a modern day
version of the Boston Tea Party.

So if you say to me and others in government, be patient, let us do this
on our own, then you need to step up to the plate.

Make the tough decisions now on protocols, access, programming and
pricing.

Then go negotiate it, go design it, and go build it.

I do not make this challenge lightly. I fully appreciate the challenges
you face.

Many of you are in the midst of massive re-builds and upgrades, rolling
the dice in the faith that a platform of bundled offerings of voice,
video, and data is what 21^st^ century consumers will demand.

And as you embark on these re-builds and upgrades, your core video
product faces the growing competitiveness of the direct broadcast
satellite industry and other video providers.

So in light of all these challenges, I salute you for your initiative
and your entrepreneurial spirit. It's the same spirit that has marked
this industry since the days when today's cable CEOs were climbing poles
and stringing wire, to give consumers a whole new universe of video
programming choices.

And it is with that same spirit that I hope you will accept my challenge
that you give consumers the openness they demand when it comes to the
new broadband universe.

Last summer, I encouraged some of the stakeholders in this debate to
come together and really engage on the issue of how unaffiliated ISPs
will get access to cable's broadband pipe.

As a result, two weeks ago, these stakeholders, including AT&T and
MindSpring\\Earthlink, announced an agreement-in-principle that will
allow AT&T's cable customers access to the Internet through unaffiliated
ISPs.

This is a positive first step. It is just a blueprint, a
plan-in-progress, but it is a start.

I encouraged these discussions because all the stakeholders were telling
[me]{.underline} that they believed in openness, but the stakeholders
weren't talking to each other. I wanted to facilitate a dialogue, a
dialogue that could lead to marketplace solutions rather than government
mandates.

AT&T and MindSpring [stepped up]{.underline} to the starting blocks.

Now I urge them and I urge you today to be the first [out
of]{.underline} the starting blocks.

I urge you to do this because this is what consumers want.

Like most important policy issues today, this debate is raging on
multiple fronts -- in Congress, in the courts, at the FCC, and in
municipalities around the country.

The Commission intervened recently in the first case to reach the
federal appellate courts -- the *Portland* case in the Ninth Circuit
Court of Appeals. I believe that policies concerning broadband access
should be decided at the national level, because these issues, like the
broadband networks themselves, are national in scope. This is what we
told the court.

If our point of view wins the day in the *Portland* case, that is not
the end of the story, just another chapter. And if that happens, I want
to be able to point to lots of activity in the marketplace driving
toward a marketplace solution.

A starting point for that to happen is for everyone to better understand
what openness means for the consumer. And how the marketplace must
develop to deliver it.

It seems to me that if we are to talk about openness, we need to talk
about open protocols, open boundaries, and open pricing.

By open protocols, I mean that the interface standards that applications
developers and equipment designers use are arrived at in an open,
transparent process, and then made accessible to everyone -- just like
the IP protocol.

By open boundaries, I mean that interconnection is encouraged, and
bottlenecks and content control are eliminated. The borders are porous,
not closed or walled-off, and outside programming and services are
allowed to enter the network and interact freely with consumers.

By open prices, I mean that prices for access to the network are
determined by a competitive market, not unilaterally by a rate-setter,
whether public or private. And the customer can reach the service
provider of their choice without having to pay twice.

And when we talk about openness and access, please remember that this
includes access by the millions of Americans with disabilities who are a
large part of your customer base.

And approach every home, whatever the income of its occupants, as an
opportunity to bring the richness and affordability of an open network
into that home.

Now, I know that Wall Street is pressuring you to execute on your
broadband promises. And that upgrading your systems is a massive and
complex undertaking. But if you ignore this access issue for now, or
worse, if you stonewall it, I fear that you will regret it.

Don't underestimate the power of this issue to capture the attention,
and the ire, of American consumers.

Engage this issue. Pay attention to it. Demonstrate that the marketplace
can work.

And be alert to the lessons of history. Remember the lessons of the
Cable Act of 1992, when your industry went into denial and paid a heavy
price.

And remember the lessons of the Boston Tea Party.

I suspect that some of you out there are thinking that you have put this
access issue behind you. That there is not a groundswell of public
concern about this issue. That you are winning on all fronts: at the
FCC, in Congress, and in most of the municipalities.

All I can say is, be careful. Two hundred and twenty-six years ago to
this day, King George felt the same way.

Thank you.