Remarks by

Michael K. Powell

Chairman

Federal Communications Communication

at the

National Cable Television Association

June 12, 2001

They dared me backstage to do that \-\-- I'm not one to shrink from a
challenge and I had to do it.

Anyway, we are going to talk about something out here today. It's a
pleasure to be here with you today. It's really a great opportunity to
walk the floor and really see first hand the story of cable.

You know that story. It's a fairy tale. The one about how the frog
becomes a prince. Once upon a time, cable was widely perceived as a toad
in the communications sector. Yeah, it was a nice little business, but
it was hardly charmed. Regulatory policy was hostile. The FCC and
Congress largely saw cable as a dangerous upstart that threatened and
undermined a viable broadcast industry. The Commission asserted
jurisdiction based on its ancillary authority in the broadcasting
industry, concerned that quality programming would be siphoned off to
cable. Undermining other medium was a paramount concern, as was pricing
and quality of service. Wall Street wasn't particularly enamoured
either. Cable was moribund in the markets, a highly leveraged business
not investing significantly in plans or programming and consumers were
less than satisfied. Rising prices and declining quality were often
cited as justifying rate regulation of cable in Washington. Hating one's
cable companies became a national pastime throughout the country.

Now there has been a digital kiss placed on this toad and technology has
transformed that toad into a prince. Digitalization and IP networks have
suddenly moved the cable industry to center stage. Coaxial cable has
indeed been spun into golden thread. That network offers great promise
for new dynamic and innovative services. Network system innovations are
taking video to new levels with the prospect of greatly expanding
programming channels that can increase the range of diverse choices for
consumers. Those same innovations hold promise for services, like video
on demand and interactive television, that might actually transform the
television watching experience from the passive couch potato one to a
more dynamic activity. And the subject of the day, broadband services,
which many believe will be as significant to the economy and to
consumers as were electricity and the telephone systems, is growing in
importance.

While many platforms and technologies are chasing the broadband rainbow,
cable is unquestionably well positioned, and the hopes of millions are
riding on ubiquitous and affordable roll out. As a converged platform,
cable is well suited to be a viable competitive alternative outside its
traditional video space, not only in the broadband space as a competitor
with technology such as DSL, but also in traditional telephony services.
These developments have yet to meet expectations but continue to move
forward and will be greatly enhanced as voice becomes another
application that rides on data centric networks.

The promise and the hope for the medium is reflected well in the
numbers. Spending on infrastructure has gone from \$2.2 billion in 1992
to \$12.4 billion in 2000. The number of national cable networks has
gone from 87 in 1992 to 281 in the year 2000. And the stock market
reflects this transformation. But one must ask in this industry, will
you snatch defeat out of the jaws of victory. This industry has all the
tools it needs to succeed in the great digital revolution. It has the
technology. It has the infrastructure.

It has the financing. And I would submit, it has the most positive
regulatory environment to operate in that its had in decades.

But will it last? Sadly with the history of this industry at times, you
have to ask yourself that question. But I submit it is largely in the
hands of this industry to maintain those favorable conditions. Much will
depend on your ability to manage change and address the natural
anxieties that are raised when an industry or a company begins to have a
clear competitive edge. How you exercise these advantages and how well
you can serve consumers will be vital.

Let me give you some sense of what to watch for and to be careful with.

The digital television transition \-- This industry should find ways to
be perceived as a productive partner in that transition, rather than its
obstacle. Consumers will value these new services and they will provide
opportunities for this industry as well. And they will demand access to
them through their cable systems. Help make this a reality in a
commercially valid way.

Program access and vertical market power \-- Cable will be one of the
great digital gateways to the consumer. There is nothing wrong with
that. It earned it, in and of itself. But you must be cognizant of not
misusing that position in a manner that denies programmers a fair
opportunity to reach consumers. For that will raise the ire of consumers
and the government and could result in the erosion of the healthy
regulatory environment that currently exists.

Broadband, interactive television \-- As you can imagine the hopes and
fears that accompany the introduction of broadband are acute. As an
industry at the forefront of the revolution, you will contribute to the
shape of the environment to which it exists. Preserving variety and
choice, and preserving innovation on commercially reasonable terms, will
be essential.

And finally, consumer value must always remain high. The products and
services you deliver \-\-- prices, choices, and quality \-\-- if
thwarted, will amplify calls for government intervention, as it has so
often. Cable has come a long way and now a grateful nation will place
many hopes on what you intend to deliver. The country needs you. The
country needs the deployment of broadband to all Americans at affordable
rates. And that is critical if we are going to meet the grand
expectations for economic productivity, education, and commerce. If they
are all to be realized, this industry will be integral to that vision.

The country needs the industry to engage and offer consumers a choice in
telephone service in order to advance our confidence in competition over
regulation. The country needs this industry, through its products, to
continue to offer and expand the diversity of information, news and
entertainment that formed the fabric of this nation's rich mosaic of
viewpoints and interests.

Now I know it's a tall order, but let me just conclude by saying, it is
a challenge worthy of a prince.

Thank you very much, it's good to be with you.