**Remarks of Commissioner Deborah Taylor Tate**

**before the**

**3G Americas Wireless Broadband Technology Briefing**

**September 18^th^, 2008**

> Thank you, Kris, and the entire 3G Americas board, for the invitation
> to speak with you today. I appreciate this opportunity to share my
> thoughts with you on our respective roles in this new, exciting
> "Broadband Age."
>
> Broadband deployment is a top policy goal of the White House,
> Congress, the FCC, and this Commissioner. Making broadband deployment
> a reality for all Americans requires the best efforts of government
> and industry. First, those of us who are policy makers have a
> responsibility to get the rules right, then get out of the way.
> Additionally, industry has the challenge of deploying the technology,
> service, speed, and quality -- not that government mandates, but that
> the market and consumers demand.
>
> 3G Americas and the GSM service providers -- both in the U.S. and
> abroad -- have played a critical role in advancing wireless
> communications for many years, and you now play an equally important
> role in advancing broadband. Indeed, wireless services made up 35
> percent of the 100 million high-speed connections in the U.S. last
> year, and were the fastest-growing means of broadband access, having
> increased 50 percent from a year earlier.
>
> What is particularly noteworthy in these numbers is the fact that,
> while wireless is increasingly important as a means of broadband
> access, most wireless connections have yet to include broadband
> access. With approximately 260 million wireless subscribers in the
> U.S., if only a third of these subscribers have broadband on their
> mobile phones, there is a huge market yet to be tapped, with the
> potential for explosive growth. And in these uncertain economic times,
> this is even better news.
>
> Then there's the global market. There are over 3.3 billion wireless
> subscribers across the world, with about 300 million subscribers in
> India and 600 million in China. The device manufacturers and providers
> that use GSM technology, such as 3G America's members, have the lion's
> share of those subscribers, with 3 billion users, while growing at the
> rate of 1,000 subscribers per minute.
>
> To many of these subscribers, the mobile phone is a critical -- often
> the only -- source of communications. Only a couple of years ago it
> was common to cite a study by Professor Robert Jensen of Harvard
> University, who showed how fishermen in India were using their cell
> phones to call into ports after a catch. The information conveyed by a
> simple phone call does more than help markets work much more
> efficiently. More important to these fishermen, it helps them find
> which markets have the highest demand for their fish and thus
> significantly raise their incomes. More recently, villagers in poor
> regions of Africa use cell phones to send text messages and engage in
> mobile banking -- not Wall Street-level banking but simple
> transactions like paying for food or a taxi ride, much like we use
> debit cards today. With all of these transactions happening without a
> broadband connection, just think of the possibilities when even more
> capability is placed -- literally -- in the hands of consumers!
>
> **Why Broadband Matters**
>
> Why does broadband deployment matter? As the examples from fishermen
> to farmers, financial institutions to healthcare show, the potential
> economic effects from this connectivity are exponential in impact. And
> broadband takes communications to the next level, raising productivity
> of workers at the office, on the road, and telecommuting from home.
> Even if we looked only at the economic effects, the phenomenal gains
> from further broadband deployment would be enough to get our
> attention. A recent study by Connected Nation estimated that increased
> availability of broadband across the U.S. would have a positive
> economic impact of \$134 billion.
>
> But of course, this is about more than just numbers and revenue. A
> broadband connection to the World Wide Web literally is a lifeline to
> our very wide world. With the click of a mouse, our children can go on
> an educational adventure -- to the Louvre or the Library of Congress,
> on an exploration of the Great Barrier Reef or the Great Wall of
> China, or take AP courses never before offered. Adults can attend
> class at a university across the nation while holding a job across
> town. They can also participate in local civic affairs or even get
> involved in politics at the national level. Even polling has gone
> "txt". In just one presidential cycle, Internet advertising has gone
> from essentially zero to estimates that it will exceed \$100 million
> in 2008. In addition, families can get better access to healthcare,
> such as teledentistry, telepsychiatry and even telesurgery.
> Telecommuting for doctors makes the physical distance between provider
> and patient immaterial, and this ability to shrink distances that
> isolate our most remote communities makes broadband particularly
> critical in rural areas. I have had the opportunity to see first hand
> -- from Alaska to Appalachia to Africa -- how broadband communications
> enables this kind of empowerment for those who are most physically
> isolated. And in many cases, wireless services will be the means to
> provide these broadband connections. In short, broadband
> revolutionizes how we communicate, how, where and when we work, how we
> educate our children, the delivery of healthcare and public safety, as
> well as how we entertain ourselves.
>
> **My Regulatory Philosophy**
>
> What, then, is the role of government in promoting broadband? I
> approach this issue, as I do all policy issues, with an overall
> philosophy. I look in amazement at the new technologies forward every
> day, as well as the innovations we make use of existing technologies,
> and I am humbled by the awesome power of the human spirit to innovate,
> create, and improve our lives. And I recognize that nowhere is this
> creative power more evident than in telecommunications and in this
> nation.
>
> As I consider the proper role of regulatory policy in such an
> innovative world, I am reminded of a simple fact. We will not know --
> and cannot know -- where the market will take us next. And when they
> try to predict the future, the experts often get it wrong. A
> generation ago, who would have expected that a device the size of a
> pack of playing cards could hold more processing capability than the
> Apollo spacecraft, that this device could be taken almost anywhere,
> and that it could provide mobile telephony, Internet access, and even
> television?
>
> We should welcome these advances in technology and changes in the
> market. They are reminders that, in today's world, change is the only
> constant. This often means that old technologies get left behind. The
> Polaroid camera is seldom used, and the silent movie has already faded
> into history, along with the buggy whip. This is all part of what the
> economist Joseph Schumpeter called "creative destruction" --
> destroying entrenched business models and technologies through
> innovative vehicles to create value, whether in goods or services, for
> consumers.
>
> This process is commonplace in your industry. The analog cell phone is
> ceding to digital technology: speaking of digital---I hope everyone is
> prepared for the DTV transfer on February 17, 2009! If not, go to
> [www.dtv2009.gov](http://www.dtv2009.gov/) for information on coupons
> and converter boxes. CDMA and GSM are evolving to LTE. And while GSM
> and LTE currently dominate the worldwide mobile industry -- for which
> congratulations is in order -- I do not believe the Federal
> Communications Commission or any other policymaking body should place
> its thumb on the scale to influence or dictate the next technology
> that will be adopted in the marketplace. Other technologies, like
> WiMax, will also compete vigorously. And as you all try to be the
> technology and providers of choice by offering the best products and
> service in the marketplace, it is the consumer who will benefit.
>
> It is in the face of such an ever-changing and always-innovating world
> that I have developed my regulatory philosophy, which calls for, first
> and foremost, regulatory humility. This is something I have tried to
> practice, both as a state regulator and now a federal one. I look to
> and especially encourage the industry to put forward market-based
> solutions whenever possible. I recognize that most of the consumer
> benefits we see in the communications sector of the U.S. economy are
> directly related to the significant levels of competition, and to our
> de-regulatory policies that have encouraged investment and thus
> fostered that competition.
>
> Of course, I also understand the need for regulation, if and when
> there is a clear market failure. Such market failure is probably less
> common in communications markets as compared to other sectors, but we
> should not assume that it does not exist, and we should acknowledge
> that market failure may at times occur as new competitors appear.
>
> I suppose it may not be a popular position to take here in Washington,
> DC, but policymakers, like businesspeople in the market, make
> mistakes, too. At the same time, we should not assume there will not
> be "government failure," such as when we adopt rules and regulations
> that we intend and expect will benefit consumers but, in the long run,
> do not in fact do so. This is partly because we have imperfect
> information, which is another reason why we need your input. This also
> underscores why it is so important that the Commission adhere to the
> APA, maintaining an open and transparent process that allows plenty of
> time for public participation.
>
> **Broadband Investment and Results**
>
> The role of industry in promoting broadband -- the developers of
> technology, the designers of hardware and software, the service
> providers -- cannot be understated. The demand is seemingly
> insatiable. The Discovery Institute, in a report by Bret Swanson and
> George Gilder, estimates that by 2015 IP traffic in the U.S. will
> reach 1,000 exabytes per year, or one million million billion bytes.
> This is an amount of information equal to 50 million Libraries of
> Congress. The report further estimates that, to sustain such usage,
> there will need to be \$100 billion in investment in infrastructure.
>
> Fortunately, the market is responding and providers are investing.
> AT&T and Verizon had capital investment of over \$17 billion each in
> 2007, counting both wireless and wireline investments. Sprint had
> CAPEX of \$6.5 billion last year, while T-Mobile invested \$3 billion.
> The Telecommunications Industry Association estimates investment
> focused specifically on broadband was \$15 billion in 2007 and that
> this figure will rise dramatically over the next couple of years, to
> \$23 billion by 2010. As a result, more than 99 percent of the U.S.
> population lives in zip codes where a provider serves at least one
> customer.  Workplace broadband connections are more and more common.
> And virtually all of our schools have high-speed Internet connections,
> and have had them for a number of years, thanks in large part to the
> E-rate program. The United States is also number 1 in wireless
> hotspots, school connectivity, and in (broadband market). Although
> none of this data is reflected in the OECD reports, I know that you
> have helped make this possible, and I want to thank you for that.
>
> As providers invest and compete to offer better services, consumers
> respond. In just the wireless market, data services for the first half
> of 2008 are up 40 percent from the same period a year earlier, to
> \$14.8 billion for this six-month period. And data services account
> for 20 cents of every dollar of revenue in the commercial wireless
> market. In addition, consumers send more multi-media messages -- like
> pictures and short videos -- than ever before. The 5.6 billion
> multi-media messages sent in the first half of 2008 were approximately
> equal to the number sent in all of 2007. Along the same lines, mobile
> advertising was estimated to be almost \$3 billion in 2007 and that
> this will explode to more than \$12 billion in 2011. Talk about a
> growth market!
>
> Perhaps all these exciting statistics about new services explain why
> the wireless industry added about 20 million subscribers in the past
> year, and 20 million in the year before that -- while landlines
> decreased by about 10 million in the 2006-2007 period. Providers know
> that, for wireless to continue to be a growth market, you must
> continue to offer the services consumers want -- often,
> bandwidth-hungry applications and services. And of course,
> eye-catching ads require the latest in technology -- graphics, video,
> etc. -- which brings us back to investment.
>
> At the same time, we should ensure that broadband access is a fact of
> life for all our citizens, including those in isolated and rural
> areas. Much has been made of the recent OECD report that the U.S.
> ranks 15th among 30 OECD nations in broadband penetration. But in
> order for such a statistic to be useful, we need to understand what it
> really means. For example, as the Phoenix Center points out, the OECD
> report does not consider differences in the size of households across
> nations, not does it count Internet access that is available via the
> thousands of hotspots and libraries in the U.S. Moreover, broadband
> usage depends on a variety of factors, including demographics,
> educational levels, and of course, the price of broadband.
>
> When considering broadband penetration in the U.S. -- and what
> policymakers might do to promote more of it -- we should be mindful of
> the unique characteristics of the U.S. market. And when we compare the
> U.S. market to that of other nations, we should be mindful of how
> nations differ. For example, failure to properly consider differences
> in household size or population density across nations can confuse the
> analysis. To illustrate with an example that is a bit more personal
> for me, consider South Korea, which has an impressive level of
> broadband penetration. While South Korea is about the same size as my
> home state of Tennessee in terms of geography, it is much larger in
> terms of population. In fact, in order to equal the population of
> South Korea, Tennessee would need to add a few people to its current
> population, roughly everyone in the nearby states of Mississippi,
> Alabama, Georgia, South Carolina, North Carolina, Virginia, and
> Kentucky. High population density enables the achievement of a higher
> penetration rate. These are basic economics of the industry that you,
> the providers of service across the U.S., understand better than
> anyone. It's easier to achieve a high penetration in Manhattan than
> Mississippi.
>
> This is not to say that there is no role for policy. We all want
> broadband to do as much to promote jobs in Mississippi as it does in
> Manhattan. To accomplish this, our policies much create the right
> incentives for providers, with, for example, technology-neutral rules,
> and with enough spectrum available for the bandwidth-hungry
> applications consumers demand.
>
> **Challenges Ahead**
>
> As we carefully choose the best rules to promote broadband deployment,
> we must be mindful of a few other policy challenges that are
> intimately related. I am particularly concerned about three Ps --
> piracy, privacy, and protection of children. And, just today, I can
> add another "P" -- pandemic, as our first summit on pandemic
> preparedness is occurring right now, which will result in even more
> burdens on our bandwidth, as possibly half of the workforce may work
> remotely in the event of such a tragedy.
>
> **Piracy:** In the midst of the incredible consumer benefits of the
> digital age, many of you know all too well that piracy is a very real
> and present danger. Piracy steals the fruits of some of our most
> creative minds. Because I'm from Music City, and have witnessed
> first-hand the toll this is taking on my personal friends, the music
> industry, and all those associated jobs and service industries, I am
> declaring a "War on Piracy."
>
> The cost of piracy to our musicians and other creators of content is
> huge. For the nation as a whole, the U.S. Chamber of Commerce
> estimates the cost to the economy is \$12.5 billion. In this as with
> so many issues, the solution truly must be global. This is especially
> true given the prevalence of piracy abroad. In 2007, Brazil was
> estimated to have had 3.8 billion illegal downloads! Yet there is
> probably a viable -- even a highly profitable -- business model out
> there, one that provides creative content to consumers who value it
> and that, at the same time, provides compensation to those who develop
> this content. I encourage everyone -- from developers of applications
> to service providers -- to think creatively about this problem, to
> develop tools and curriculum for the next generation, and to help
> enforce our existing laws against piracy.
>
> **Privacy:** As this Digital Age offers more personalized information
> to better meet individual needs of consumers, the information that
> provides this personalization also has risks of being breached. We
> therefore must ensure the safety and security of users. But the
> challenges are immense. Consumers in Southeast Asia receive 10 to 12
> spam messages per day. One professor estimates that in a few years we
> will need anti-virus protection on cell phones, and that day may be
> approaching faster than we think. The incredible uses for GPS,
> including child tracking, also illicit privacy concerns. Industry must
> address the risks and rewards.
>
> **Protection of Children:** Our children are indeed our nation's most
> valuable natural resource, and we should treat them as such. In order
> to ensure they reach their greatest potential, we must ensure that
> they have access to a wealth of educational information in an
> environment that protects their physical safety, their healthy mental
> development and emotional well-being. While we hold the parents
> accountable, everyone involved has the responsibility of insuring that
> parents have the tools to do the job.
>
> Protection of children becomes even more critical as they find more
> ways to get online -- usually for very productive reasons like
> completing their schoolwork, or simply to stay in touch with friends
> and family. Research by the Pew Internet and American Life Project
> estimates that 94 percent of teens go online. While the majority of
> these online experiences are positive, it is possible for our children
> to get lost in the back alleys of the Internet. For example, the same
> Pew study estimates that 32 percent of teens who go online have been
> contacted by a stranger online. Moreover, we used to monitor our kids'
> online activities by keeping the computer next to the kitchen or in a
> common area, but now their favorite computer may be in the palm of
> their hand.
>
> This mobility is a tremendous asset -- one that many of you are
> helping make possible -- but you also must be mindful of the
> responsibility to provide parents with the tools to make their
> children's Internet experience a safe one. For this reason, last week
> I suggested and challenged the wireless industry to become more
> involved in this issue as they become a gateway to the Internet. With
> 5.3 million "tweens" having cell phones, and the fact that they are
> now marketed to preschoolers, providers of wireless service have a
> responsibility to come to the table and discuss this growing concern.
>
> **International Focus**
>
> All of these issues -- from promoting broadband deployment to
> protecting a user's experience on the Internet -- are truly
> international issues. No nation wants its citizens to be left off the
> Information Superhighway. All nations want their citizens connected.
>
> In my nearly three years with the Commission, I have been honored to
> participate in international dialogues with delegations from across
> the world, and I continually find that policymakers share this
> concern, no matter what nation they represent. I have met with my
> international colleagues at the West Africa ICT Conference in Ghana,
> at APEC-Tel, the Asian Pacific Telecom Ministers in Bangkok, and at
> the Global Forum in Italy. I have held discussions with Secretary
> General Hammadoun Tourré of the ITU, with Vice Minister Xi of the
> Chinese Ministry of Information Industry, with Chairman Shehadi of the
> Lebanon Telecommunications Authority, with the First Lady of Egypt,
> and with Ministers of Australia, Brazil, Japan and Viet Nam regarding
> the various initiatives they are undertaking. In our conversations,
> both official and personal, we shared themes of developing our
> economies in an increasingly competitive and globally interconnected
> environment, and adopting policies that incentivize and encourage the
> development of new technologies.
>
> As I mentioned earlier, policymakers have a responsibility to get the
> rules right, and in my discussions with colleagues from across the
> world. I am trying to do my part to represent American companies well
> -- to open more markets to U.S. companies and encourage pro-market
> policies in other nations -- with transparent and technology-neutral
> rules -- and to increase competition and choice for global consumers
> as we have done here. So let me add to your list of responsibilities.
> Not only do you, as industry, have the task of deploying the valuable
> services consumers demand. You also need to educate, both policymakers
> and the public as a whole. Today's technology briefing is an important
> step in this regard.
>
> Thanks again for the opportunity to speak with you. Never has there
> been a more exciting time to be in the communications industry. I look
> forward to learning from you about the latest technologies and
> services that you have to offer, and working with you to ensure that
> our policies in the U.S. foster the investment and competition that
> ultimately will benefit all Americans.