**Remarks by Commissioner Kevin J. Martin**

**Federal Communications Commission**

**To the North Carolina Electronics and Information Technologies
Association's**

**Top Tech 2003: NC Innovation/Global Opportunities**

**Charlotte, North Carolina**

**May 14, 2003**

*As Prepared for Delivery*

Thank you for that kind introduction and for inviting me to be here with
you this morning. I always love to get back to North Carolina, and
especially to my hometown of Charlotte.

Thank you also to Bruce Melhman for his remarks. He is an old friend but
a hard act to follow. It is always a chore to follow Bruce and still say
something interesting, but I will do my best.

You have asked me to speak about the FCC's role in the future growth of
technology, which I am happy to try to do. But first, let me preface
that by saying that unfortunately like most of us \-- including many
other "experts out there" \-- I can't predict the future.

I read recently in the Wall Street Journal that "Technology companies
are often described as 'inventing the future'... but \[that\] they
aren't very good at predicting it" \[Lee Gomes, Wall Street Journal,
April 14, 2003\]. The article described WiFi as a way to bypass the
"last mile problem" and says that "there was a time when people thought
broadband access to every home would take billions of dollars worth of
fiber-optic cable laid everywhere. In the end we might get it free." I'm
not so sure about that prediction either \-- at least no one is offering
it free to my house yet.

But while the author may not be entirely correct either about the
predictive power of the technology industry or about the effectiveness
of WiFi, he still makes a good point. There have been some fairly off
key predictions made by the technology industry in the past.

Indeed, at almost every turn, even the most forward-looking individuals
have failed to accurately predict the development of technology.
Consider a few:

Ken Olson, President and founder of Digital Equipment Corporation,
concluded that "there is no reason for any individual to have a computer
in their home."

Or how about the statement by Thomas Watson, then Chairman of IBM, that
"there is a world market for maybe five computers."

Or even Bill Gates' conclusion in 1982 that "640 K ought to be enough
\[memory\] for anybody."

And just as these visionaries were wrong about the development of
technology in general, people have been consistently wrong about the
development of communications technologies that the FCC regulates.

For instance, Alexander Graham Bell patented his telephone in 1876 and
subsequently tried to sell it to Western Union. Western Union declined
saying "this 'telephone' has too many shortcomings to be seriously
considered as a means of communication. The device is inherently of no
value to us." The Boston Post editorialized in a similar vein, saying
that "well-informed people know it is impossible to transmit the voice
over wires, and that were it possible to do so, the thing would be of no
practical value." Believe me, my job would be a whole lot easier if this
had been true.

But if the visionaries were wrong about the development of technology,
the government has often done worse, at times acting as an impediment to
innovation.

In 1913 the US Attorney actually prosecuted inventor and radio pioneer
Lee DeForest for fraud. They concluded that "DeForest has said in many
newspapers and over his signature that it would be possible to transmit
the human voice across the Atlantic before many years. Based on these
absurd and deliberately misleading statements, the misguided public ...
has been persuaded to purchase stock in his company."

Sadly the FCC has too often been guilty of impeding technological
innovation, as well.

-   In the 1930's, the FCC suppressed the development of FM radio
    because of concerns about the impact on AM.

-   In the 1970's, the FCC delayed the development of wireless
    telephones by giving tentative approval to a [car-based]{.underline}
    wireless system instead of the portable cell phones we use today.

In the end, neither the technology experts nor government agencies can
predict the future direction of technological developments. But where
does that leave us and someone like me who is responsible for regulating
industry? I believe that is why we should avoid top down regulatory
approaches \-- ones that attempt to pick the right
[technology]{.underline} or [service]{.underline} to be deployed.

Government does not create wealth. But government can create an
environment in which innovation, entrepreneurs, and investment can
flourish.

As policymakers, we at the Commission have a responsibility to help
create such an environment \-- to promote and not stifle innovation. But
often times, that actually requires the government to get out of the
way. I believe that market-driven forces are the best method of
delivering the benefits of choice, innovation, and affordability to our
nation.

The Commission can foster innovation through policies designed to reduce
government's role \-- and allow American consumers to benefit from the
fruits of technological advancement. I believe the Commission can take
several steps to spur innovation and the benefits it provides:

1.) The Commission should facilitate technological advancements by
advancing a clear and sound regulatory environment. One that sets clear
rules and then removes impediments to innovation, encouraging investment
in the development and deployment of [new]{.underline} technologies.

2.) We should be hesitant to apply old regulations to new technologies
and services. There are significant advances constantly being made, and
we at the FCC must resist temptation to regulate up \-- or apply our old
rules to new competitors.

3.) Lastly, we as regulators must remain aware of how quickly markets in
this sector can change. When necessary, we must be ready to evaluate
both the marketplace and their existing regulations on a regular basis
to ensure that existing rules and policies continue to achieve their
intended objective in the most effective and efficient manner possible.
If and when existing rules or policies fail this test, regulators should
act quickly to determine whether those rules should be altered or
repealed.

With these principles in mind, let me take a few minutes to talk about
some of the technologies we at the Commission are seeing and how we are
attempting to remove regulatory burdens to facilitate their growth and
development.

I.  Broadband

None of us here underestimate the importance of broadband to our
nation's future. Telecommunications has been responsible for much of
this nation's economic growth during the past decade, and the
availability of advanced telecommunications is essential to the economy
in the 21^st^ century. I am hopeful that continued broadband deployment
will lead to a new period of growth in the sector.

Being from what was a rural area of North Carolina, advancing broadband
deployment in rural America is an area of great personal interest. We in
government must continue to promote initiatives which ensure that all
Americans are given the opportunity to participate in the global economy
and the information age. To do so, we must continue to encourage
deployment to underserved and rural areas.

Broadband deployment in rural areas can considerably improve the quality
of life for those consumers who live far away from many big city
services, including medical and educational services. For example, high
speed connections allow for the use of telemedicine; doctors in one part
of the state or another part of the world can diagnose and treat
patients located somewhere else in real time. Last year I saw first hand
such life-saving technology at the impressive telemedicine facilities at
East Carolina University.

In that vein, I must also applaud the work of the Rural Internet Access
Authority for their efforts to connect North Carolinians to the Internet
with their "e-NC" initiative. The Rural Internet Access Authority
recognizes that despite the tech sector presence here, North Carolina
remains a very rural state. And as such, North Carolina faces unique
challenges in increasing the number of households with computers and
Internet access. The e-NC initiative is an important step towards
getting more North Carolinians on-line.

Back in Washington, the Commission has been working on several things to
further promote broadband deployment. As you probably know, the most
talked about Commission action lately has been the Commission's decision
regarding the future of local telephone competition and broadband
investment. In February, the Commission provided sweeping regulatory
relief for broadband and new investments by incumbent telephone
companies.

In the decision, the FCC deregulated broadband and encouraged new
investment by removing many of the unbundling requirements on newly
deployed fiber and new packet technology.

Companies desiring to push fiber further to the home will now be able to
make a fair return on their investment. And more consumers will be able
to enjoy the fast speeds and exciting applications that a true broadband
connection offers. I hope this relief will jump start investment in
next-generation networks and facilitate the deployment of advanced
services to all consumers.

For example, Verizon just announced several weeks ago that it plans to
invest billions of dollars to upgrade their network to make DSL
available to 10 million [more]{.underline} homes by then end of this
year. And according to Verizon, incumbents may ultimately need to spend
more than \$100 billion on network upgrades. Such investment will
benefit equipment providers such as Corning and Alcatel right here in
North Carolina.

In fact, Alcatel recently announced that it will sell equipment to Bell
South in order to make 100 percent of South Carolina homes DSL capable
by the end of the year. Corning's optical fiber and fiber optic cable
manufacturing operations are centered in North Carolina, and as a
result, North Carolina has more manufacturers of fiber optics than any
other state in the Union. I hope continued efforts to upgrade the
networks will only strengthen these manufacturers.

Also in the broadband space, the Commission recently opened a proceeding
regarding broadband delivered over powerlines. This exciting alternative
to cable modem and DSL could provide another potential last mile
connection. Indeed, the existing national powerline grid already
connects nearly every home in the US. The widespread deployment of this
technology would be a great advancement for rural consumers. Not only
could broadband reach more customers, but the introduction of another
competitor should lower prices everywhere.

This technology has been just within reach for years, but potential
providers have faced what seemed to be giant technological and economic
hurdles. But lately, a few companies have seemingly solved these
problems and are running trials of their systems in various cities
throughout the county.

I know that a company called Amperion Connect is piloting such a system
in Raleigh. Amperion has incorporated wireless technology into its
system as their solution to many of the technical barriers to powerline
broadband.

Mass introduction of this technology would revolutionize the broadband
space as we know it. We at the Commission should do all we can to remove
or ease any barriers to its deployment. I was pleased that the
Commission recently took steps towards finding ways to ease some of
these regulatory barriers.

II. Wireless

We are also working to facilitate innovation in wireless services and
devices. In November, for example, we worked with the Department of
Commerce to allocate two 45 MHz blocks of contiguous spectrum, which we
propose to use for advanced wireless services. This would allow for
exciting new "third generation" or "3G" applications such as truly
high-speed Internet access on mobile phones and the ability to send
video images to other phones or computers at the touch of a button.

At the same time, we are working to get more out of existing spectrum
allocations. For example, last year, we also issued an order allowing
commercial use of a new wireless technology -- ultrawideband.
Ultrawideband devices operate by employing very narrow or short duration
pulses that result in very large transmission bandwidths. With
appropriate technical standards, ultrawideband devices can operate using
spectrum occupied by existing radio services without causing
interference. Such devices thus can co-exist with spectrum users in any
frequency, challenging the notion that use of particular frequencies or
bands is necessarily mutually exclusive. In defiance of our traditional
allocation paradigm that often forces us to pick "winners and losers" in
the face of competing demands, this technology seems to allow more
winners all around.

Ultrawideband technology promises a host of exciting military, public
safety, medical and consumer uses. For example, firefighters, police
officers, and emergency personnel can use of this technology to view
objects that are behind walls, buried underground, or even inside the
human body. Automakers have developed collision avoidance and improved
airbag mechanisms based on ultrawideband.

In a similar vein, tomorrow the Commission will consider a notice of
proposed rulemaking to make available an additional 255 MHz for
unlicensed devices. Like ultrawideband technology, unlicensed devices
share spectrum, with no company having rights to exclusive use. The
notice we will consider tomorrow would be a step in implementing an
agreement made by industry and the Defense Department to allow for a
significant increase in unlicensed spectrum.

Unlicensed devices have been a huge success story, from cordless phones
to wireless broadband connections, such as 802.11b and Bluetooth. I am
hopeful that unlicensed operations will, as some have suggested,
eventually provide a last-mile application to connect people's homes to
the Internet, offering a real alternative to telephone wires, cable, and
satellite connections. And I know that a number of companies are
developing a host of innovative new applications.

Finally, we are working on a critical proceeding to facilitate a
secondary market in spectrum, so that spectrum license holders can more
easily lease their spectrum to others. This week we will vote on an
order that allows some spectrum leases without prior commission approval
and provides a streamlined approval process for other leases. The idea
is to minimize transaction costs to promote a vibrant secondary market.

Enabling current licensees to lease or sell their spectrum more easily
provides an incentive to give spectrum to someone who values it more
highly and would use it more efficiently. This is perhaps one of the
clearest examples of where the government could set clear rules \--
establish interference limits \-- and then get out of the way. Trusting
the market to make sure spectrum is being put to its highest use rather
than us trying to anticipate what that use will be.

For these reasons, facilitating secondary markets in spectrum has been
one of my biggest priorities at the Commission, and I am pleased that we
are moving forward. The item we will vote on tomorrow covers only
leasing of spectrum, but I hope that we will go further in the near
future. I would like to make it easier not only to lease, but also to
assign and transfer spectrum licenses. For several years, economists
have been urging the Commission to take such a dramatic step. We are
going to consider these issues in a further proceeding, but I hope we
can act on them soon.

III. Media

Lastly, we have seen some exciting developments on the media side, as
well. After interviewing 1,000 people, the [Consumer Electronics
Association](http://www.ce.org/) found that 58 percent of women would
rather own a high-definition, digital television set than a 1-carat
diamond ring. And 64 percent of women would rather have a digital camera
than a pair of half-carat diamond stud earrings. I don't know where CEA
found these women -- they certainly didn't ask my wife. But, when one
considers all of the benefits that these new devices have to offer, you
can understand why some women would choose the digital way.

Digital radio provides crystal clear sound, comparable in quality to CDs
or to the acoustics of a fine concert hall. Unlike AM and FM, digital
radio reception is virtually immune to interference. Thus, there are
less static growls or multipath echoes that could be caused by signal
reflections off of buildings or other variations. In addition to
offering superior audio quality, the technology allows radio
broadcasters to send both audio and data content on the existing AM/FM
bands using digital signals. By employing existing bandwidth more
efficiently, digital radio transmissions can now include data such as
station, song and artist identification, stock and news information,
local traffic and weather.

On the video front, digital television is improving the viewing
experience exponentially. It will allow consumers unprecedented choices
-- not only in what they are watching, but in when, where, and how they
are watching.

Because DTV communicates in the digital language of computers,
television stations can now transmit far more information than
traditional technology allowed. They can send additional information
along with the picture, such as stock quotes, closed captioning, or the
price of products shown on the screen.

The possibilities for digital television are great, and will only
increase as technology improves. With a digital TV set, consumers can
view a picture as bright and sharp as it would appear on a movie screen,
with CD-quality sound. We can choose among hundreds of channels that
offer a wide variety of entertainment programming -- including scores of
broadcast TV shows, cable shows, movies, children's programming, and
sporting events. Throughout the regular season, a viewer can now watch
college basketball games that are taking place around the country --
games which were previously available only in the viewer's local market.
With the ACC's potential expansion further north and south, this could
be the most critical development for folks in North Carolina.

IV. Conclusion

And this brings us back to my predictions about the future and its
impact on North Carolina. Keeping in mind of course the fact that I,
like so many before me, have a great potential to get any predictions
wrong.

While I am likely to be a bad predictor of the specific future, I am
excited about and confident in the potential of the innovative services
we have talked about this morning. Like digital television's potential
for greatness, many of these emerging technologies present a real
opportunity for the sector to energize the customer experience. And in
doing so, they present an opportunity to help energize the economy, as
well.

And one area in which I am comfortable making predictions, and am even
more confident, is about North Carolina and its ability to continue to
develop its technology sector.

The technology sector's success has been a lynch pin to North Carolina's
renaissance and its future economic wellbeing. Tech companies are making
vital contributions to employment and to the economy in North Carolina.
And I will predict that further innovation and investment in the sector
will also lead to further investment to this state.

To highlight just a few of the activities in North Carolina today:

Cisco's "east coast headquarters" has been located in the Research
Triangle since 1993, where Cisco employs 2,500 people. Cisco has also
made a home at my alma mater, Chapel Hill, where the company has
centrally wired many of the campus's buildings for high speed data
transmission and for wireless access points.

Nortel has been in North Carolina since 1974 and is one of the Research
Triangle's largest employers, still employing 3,000 people. In a sign
that the worst may be over, Nortel has recently sent three of its top
executives to the Research Triangle campus, reaffirming the company's
commitment to North Carolina.

Similarly, IBM, who employs 17,000 people statewide, recently announced
the creation of a new Wireless Enterprise Lab in Raleigh where IBM will
conduct research and create software to help customers integrate their
wireless technologies.

In addition to employing North Carolinians and contributing to the
economic health of this state, I was also pleased to learn that many of
these companies are working to improve the quality of life here, as
well. For example, Nortel, Alcatel, and IBM have programs aimed to
improve many of our state's schools.

Nortel employees have spent significant volunteer time training over
6,000 North Carolina teachers to use computers and the Internet.

IBM has several educational programs. IBM is spending \$70 million on
its Reinventing Education initiative, and more grants have been allotted
to North Carolina than in any other state, including a new grant awarded
here in Charlotte. They also have a \$36 million global university award
program, and North Carolina State University has received a portion of
those moneys to study the impact of e-education and mobile computing in
teaching.

Alcatel is also conducting collaborative research with North Carolina
State University. North Carolina's schools are better because of these
and other similar programs, and as a society, we all benefit from such
commitments.

Because of the efforts of these companies and many others, my crystal
ball looks bright for further technology innovation and deployment in
this state. And we will do our best at the federal level to stay out of
your way.

Thank you again for having me this morning.