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Remarks of Kevin J. Martin

Commissioner

Federal Communications Commission

At the National Summit on Broadband Deployment

October 26, 2001

"Framework for Broadband Deployment"

Encouraging broadband deployment should be a fundamental priority of the
Commission and government in general. The availability of advanced
telecommunications is essential to the economy in the 21^st^ century,
dramatically reducing the costs of exchanging information and allowing
previously local businesses to serve the world. Telecommunications has
been responsible for much of this nation's economic growth in recent
years. I am confident that broadband deployment will lead to a new
period of growth, and I believe we need to make broadband deployment a
national priority.

I am not speaking of making industrial policy. Rather, I think the
government should be focusing on eliminating disincentives to broadband
deployment that already exist. Many have said that we need to be
cautious so that we, as regulators, do not stymie the deployment of
broadband services and technologies. But I do fear that, in many
unintended ways, we already are. Specifically, I believe the government
needs to change the way it taxes and regulates the provision and
consumption of broadband services.

# Remove Financial Disincentives to Deployment

There are several different legislative proposals for providing direct
and indirect financial incentives for broadband deployment. I share
Chairman Powell's skepticism and concern for using such tools of
industrial policy. I also agree that more targeted relief, such as
much-needed reform and modernization of our depreciation schedules for
investment in technology, could help spur deployment. More importantly,
however, I believe the government should first commit itself to
exercising self-restraint in placing additional financial burdens on
broadband.

Currently, at every level, government too often sees broadband
deployment and telecommunications more generally as a potential revenue
stream. From federal and state excise taxes -- the kind of taxes
traditionally reserved for decreasing demand for certain products, such
as alcohol and tobacco -- to local franchise fees, which are sometimes
designed to recoup more than the costs governments bear for such
services as repairing streets, governments impose taxes that actually
discourage demand and therefore deployment. To truly help spur broadband
deployment, every level of government should be committed to minimizing
and eliminating these excess financial burdens.

# Focus on Facilities-Based Competition

Similarly, I believe the government -- particularly the Commission --
should place a higher priority on facilities-based deployment and
competition. In the past, the Commission adopted a framework that may
have discouraged facilities-based competition, allowing competitors to
use every piece of the incumbents' network at super-efficient prices.
This regime creates significant disincentives for the deployment of new
facilities that could be used to provide broadband. Under such a regime,
new entrants have little incentive to build their own facilities, since
they can use the incumbents' cheaper and more quickly. And incumbents
have some disincentive to build new facilities, since they must share
them with all their competitors.

The goal of the Telecommunications Act was to establish a competitive
and deregulated environment. But to get to true deregulation, we need
facilities-based competition. Without it, you will always need a
regulatory body to set wholesale and retail prices. Thus, I believe we
need to evaluate the broadband deployment issues with an eye toward what
decisions, within the framework of the Act, will help spur facilities
investment. Moreover, as we saw on September 11, there are network
reliability and security advantages to having multiple facilities-based
competitors.

Contrary to what some may argue, I believe such a framework would not
favor any particular industry. For example, to facilitate CLEC
deployment, more detailed and strict enforcement of collocation rules
would be required. Such rules are necessary for CLECs to gain access to
incumbent offices in order to deploy their own facilities, and I was
pleased to support the Commission's collocation order at my first open
meeting. In the same vein, I believe the Commission needs to establish
additional guidelines and performance measures for provisioning elements
of the incumbent's network that are essential for competitors, such as
the local loop. On the other hand, the Commission might reconsider how
it should apply the necessary and impair standard used to determine
which elements must be unbundled. This will be particularly important
when considering how this standard should apply to elements that are
readily available from CLECs and to new facilities and infrastructure
being built by the ILECs.

# Establish Stable, Reliable, and Fast Regulatory Environment

Finally, I believe more needs to be done to establish a stable,
reliable, and speedy regulatory environment. At every level of
government, we ought to work to remove regulatory underbrush --
burdensome regulations that may be impeding deployment. For competitive
carriers, many of these hurdles occur at the state and local levels.
These include local rights of way, permits for zoning and tower siting,
and franchise fees that I have already discussed. Many of these local
restrictions are the most cumbersome and difficult for broadband
providers to navigate through. Some state and local governments -- and
the federal government with respect to federal lands -- could be more
proactive in facilitating deployment by streamlining these permitting
processes. I have recently learned that there are several state PUCs who
are evaluating and publishing a list of their own local communities that
are more open to broadband deployment and those that are not. I hope
that this kind of effort to spotlight local communities that may be
impeding deployment and those that are facilitating it will spur all
officials to take a more critical look at their existing regulations.

And at the FCC, we, too, need to critically reevaluate our rules to
determine whether they are necessary in today's regulatory environment.
For example, our accounting and auditing rules serve little purpose in a
price-cap regulatory framework. And why should the FCC separately
regulate depreciation rates for common carriers? I supported our recent
efforts to streamline these regulations and believe the Commission must
continue to identify anachronistic regulations that may be stifling
competition generally.

Moreover, we need to focus not only on changing our regulations, but
also on changing the regulatory environment. Regulatory uncertainty and
delay function as entry barriers, limiting investment and impeding
deployment of new services. We should work to be faster and more
reliable in our decisionmaking. Prolonged proceedings, with shifting
rules -- for example our recent proceedings on reciprocal compensation
-- ultimately serve no one's interest, regardless of the substantive
outcome.

Thus, we ought to complete the cable open access proceeding. Personally,
I would be very cautious about applying that type of legacy regulatory
regime to a new and innovative service. I believe that we should be
striving to achieve regulatory parity by providing deregulatory relief.
But regardless of the outcome, I believe it is incumbent on the
Commission to provide regulatory certainty and finish that proceeding in
the near future.

We should also consider changing our enforcement procedures to make an
effective and reliable rocket docket -- that all parties can use to
resolve disputes quickly.

By doing all of these things, we can begin to remove financial
disincentives and regulations that discourage broadband deployment. I
recognize that the steps I have outlined are no "silver bullet"
solution. But by following all of them, and working together and with
industry, I believe we can make an important difference.