**[SPEECH OF FCC COMMISSIONER ROBERT M. McDOWELL]{.underline}**

**CREDIT SUISSE MEDIA AND TELECOM WEEK CONFERENCE**

**NEW YORK, NY**

**December 5, 2006**

Good morning. Thank you for inviting me to speak here today. It's good
to be back in New York. I like to get out of Washington as much as
possible so I can learn what's going on in the real world. In fact, just
last week, I was in one of the epicenters for positive and constructive
economic disruption: Silicon Valley. I met with investors and
entrepreneurs of all stripes to learn what new opportunities they saw
coming over the horizon. I also asked them a lot of questions, such as:
what can the FCC do, or perhaps NOT do, to help speed the creation of
new services and delivery platforms to meet new waves of consumer
demand? And my visit here today to New York, the citadel of capitalism,
strengthens my firm belief that the core mission of the FCC is to
promote freedom. It's a simple as that.

I want consumers to have the freedom to have their demands satisfied.
And I want entrepreneurs to have the freedom to innovate and bring their
products and services to market so they can satisfy those consumers'
demands. I trust free people acting within free markets to make better
decisions for themselves than those of us in government. Free markets
and free ideas are the twin cornerstones upon which we have built our
free nation. Government should not adversely interfere with the
relationships between consumers and entrepreneurs. Rather, government
should try to remove barriers to entry and allow competition to
flourish.

However, there are times when the government should address market
failure so new entrepreneurial ideas have a chance to compete in the
market place, and succeed or fail on their own merits \-- and their own
merits alone. Any remedies applied to market failure should be
narrowly-tailored, and sunsetted, to maximize freedom for all market
players.

As you already know, an immensely powerful new wave of consumer demand
is dictating business decisions across all media platforms. Consumers
want to be able to "pull" the content of their choice through the pipe
of their choice anytime and anywhere. Consumers also want to be able to
manipulate that content at their discretion and, all the more
frequently, create their own content and send it back up the pipe for
the world to see. Never have consumers been as empowered as they are
today, thanks to brave and brilliant entrepreneurs who dared to smash
the paradigms of old. And consumers have responded more brilliantly than
anyone could have imagined -- to the point where this new wave of demand
has become a new wave of democracy. Anyone who tries to frustrate this
demand will do so at their own peril.

At the FCC, under Chairman Martin's leadership, we are working hard on
creating even more opportunity for consumers, entrepreneurs, and
democracy alike. We are trying to make it easier for entrepreneurs to
construct new delivery platforms more quickly. Our policies will also
make it easier for the owners of existing platforms to upgrade their
facilities. This new surge in capital investment will give American
consumers new tools to strengthen their freedom, and all of us will
benefit as a result.

Many of you here today come from broadcasting, cable, telephony and
other traditional media industries. Changes, such as the migration to
digital TV technology and the necessary upgrades to existing systems,
already have begun to provide exciting innovations and make capacity
limitations a thing of the past. Pipes are getting fatter and faster.
However, competition increasingly will come from new technologies, as
both the birth of mobile TV and the promise of the 700 MHz band can
attest. In fact, one legendary Silicon Valley investor told me last week
that such wireless technologies may end up being more disruptive than
the Internet itself.

So, your companies have a choice: they can feel threatened by these new
competitive platforms; or they can adapt to this new wave of change and
prosper as a result. I realize that this challenge is daunting, but I am
confident that the dynamism of the private sector will lead to dazzling
displays of adaptation and innovation. You, the marketplace, rather than
the Commission, should pick the winners. Currently, we have a full plate
of issues before us that may affect the delivery of these new and
improved platforms. So, before I take your questions, I'd like to rush
through some brief thoughts on a few of the issues we have been working
on, such as: the digital TV transition; white spaces; digital audio
broadcasting; media ownership; video franchising; and the cable set-top
box/integration ban -- all before 11 o'clock!

**Digital Transition (television)**

The Digital Television Transition and Public Safety Act of 2005 (the DTV
Act) establishes a hard deadline of February 17, 2009, for the cessation
of analog broadcasting. The DTV Act also requires the Commission to
begin the auction for the licenses associated with the recovered analog
spectrum no later than January 28, 2008, and to deposit the auction
proceeds no later than June 30, 2008. In October, the Commission
released the Seventh Further Notice of Proposed Rulemaking to begin the
final stage of the transition of broadcasters to digital television. The
Notice proposed a new DTV Table of Allotments, taking the seventh and
final step to complete the DTV channel election process. We are working
hard at the Commission to make the 2009 transition deadline a reality
for broadcasters and, through consumer education efforts, for the
American public. I look forward to the innovative new programming and
services that digital broadcasting will enable local broadcasters to
provide for free, over-the-air to their communities.

Also, as a result of the Congressional directives in the DTV Act, the
Commission is actively engaged in proceedings that are each examining
ways to maximize the efficiency of the 700 MHz band and to increase
access to broadband services by American consumers, businesses and
emergency response providers. Certainly the auction for spectrum in the
700 MHz band, which must begin by January 2008, is on the horizon, and
the Commission is working hard to finalize the service rules for these
licensees. The 700 MHz band, the "Park Avenue" of spectrum real estate,
holds great promise and roll-out there will inaugurate a new era of
opportunity for media entrepreneurs of all stripes. The best part is,
the government will not be micromanaging the use of this spectrum. Such
important decisions will be left to the true experts and ultimate
shareholders in this enterprise: American consumers.

In the meantime, the Commission recently completed an auction for
advanced wireless spectrum in the 1710-1755 and 2110-2155 MHz bands.
These bands are ideal for the delivery of bandwidth-intensive
applications. Auction No. 66 closed on September 18, after 161 rounds of
bidding, raising total gross bids of nearly \$13.9 billion. Over one
hundred companies placed winning bids, and over one half of those were
small businesses. It is important to America's continued economic
competitiveness that the Commission be in a position to grant
applications, and release this spectrum to the winning bidders, as
quickly as possible. And we are. In fact, just last week, we issued an
Order granting 550 of the 1,087 licenses won in the AWS auctions. This
represents \$12.2B of the total net high-bids from Auction No. 66.

# White Spaces

At our October meeting, the Commission adopted an Order and Further
Notice of Proposed Rulemaking regarding unlicensed operation in the
white spaces of the TV broadcast bands. This proceeding starts a chain
of events that will lead to an explosion of entrepreneurial brilliance
for further unlicensed use of these slices of the spectrum.

I like deadlines, and I am delighted that the Commission has laid down a
timetable that will help ensure that consumer products will be available
for sale at the conclusion of the DTV transition. In the interim, we are
proceeding mindful of the need to protect from harmful interference not
only broadcasters, but all authorized commercial and public safety
entities that operate in the TV bands as well.

**Digital Audio Broadcasting**

While we have a solid start on the DTV transition, I hope that the
digital transition for the radio industry will be just as rewarding. I
applaud the "early adopters" of in-band on-channel (IBOC) technology for
taking the initiative and embracing the capabilities of digital radio,
particularly multicasting, to provide their listeners with better
quality sound and expanded programming options, particularly for
underserved and niche audiences. I expect that the service rules and
other licensing and operational requirements we are developing will
provide both the regulatory certainty and the flexibility that the
industry needs to expedite the transition to digital radio and to
provide higher quality audio, diverse programming and innovative data
services to the public. However, I am particularly frustrated that it
has taken the Commission so long to finalize these rules. I am working
hard to spur resolution of issues that some of my fellow commissioners
may have regarding IBOC so that the Commission can release a Report and
Order outlining service rules as soon as possible.

**Media Ownership**

As an inventory of any average American household will show, the media
marketplace has changed drastically since the inception of the
Commission's ownership rules. I, for one, have a hunch that we are no
longer in 1975. Clearly, the broadcast industry faces enormous
competitive challenges from cable TV, satellite MVPDs, satellite radio,
iPods and podcasting, the Internet and blogging \-- and perhaps most
importantly, the rapidly changing viewing and listening habits of young
people \-- with more on the horizon. Competition in this space has never
been so fierce and chaotic.

At my first meeting as a commissioner, we commenced our latest
comprehensive review of the media ownership rules on June 21. As our
review proceeds, I look forward to continuing to learn more about
competition, diversity and localism in markets around the country from
the perspective of people "on the ground" there \-- consumers,
broadcasters, programmers, artists, economists, academics and so forth.
People with first-hand knowledge of the realities of the market are
providing us with valuable information on how to go forward with the
proceeding.

Our broadcast ownership rules must strike a difficult balance. They must
take into account the dramatic changes that have occurred in the media
landscape in recent years. At the same time, we must ensure that the
rules continue to promote our long-standing values of competition,
diversity and localism. We must also carefully thread the legal needle
handed to us by the Third Circuit in the Prometheus decision. Being an
incurable optimist, I am confident that we can develop a reasoned
approach that resolves the regulatory uncertainty that followed the
appeal of the previous order.

**Video Franchising**

The regulatory issues that arise from a traditional industry's entry
into a new business are illustrated by the video franchising proceeding.
The proceeding pending at the Commission focuses on how to ensure that
local franchising authorities do not unreasonably refuse to award cable
franchises to competitive entrants. Legislation proposed on Capitol Hill
earlier this year likely will not be passed. In the absence of
additional guidance from Congress, we will review the issue carefully
and attempt to ensure that competing MVPDs, whether they be traditional
phone companies, cable companies, or overbuilders, each has the same
opportunity to succeed or fail without the government -- any government
-- putting its thumb on the scale. Any unnecessary regulatory underbrush
that can be cleared away will be. And, hopefully, our actions will take
place sooner rather than later.

**Set Top Boxes/Integration Ban**

This year, several cable companies have requested waivers of the
Commission's integration ban. My staff and I have been following this
issue closely. As all of you know, it presents several extremely
complicated technological and policy issues. I understand that the cable
industry and the consumer electronics industry are continuing to talk
with each other to reach a solution. Also, a group of consumer
electronics and IT companies have recently filed with the Commission a
proposal for a two-way plug-and-play solution. I hope that innovation
and private sector negotiation will provide answers that are workable
for the cable and CE industries. Of course, the best solution for
consumers and industry alike would have downloadable security at its
core. I strongly encourage a private sector resolution to this
challenge.

**Conclusion**

In closing, I'd like for you to consider an important footnote to all of
this: as consumer demand becomes more sophisticated, and as more
delivery platforms come online, hopefully, those who create content will
face increasing pressure to resolve the challenge of intellectual
property protection in the wake of the Digital Revolution. The sooner
that Gordion Knot is untied, the sooner we will witness an acceleration
of broadband take-rates and a new surge of technological innovation.
While intellectual property issues are not at the heart of the FCC's
mission or jurisdiction, they silently shadow many of our initiatives
like an unhappy apparition. But I firmly believe that competition and
technological innovation are the universal solvents for these and other
challenges. They help to create and preserve our freedom and,
ultimately, help to improve the human condition -- and that should be
our highest calling. I hope that you, the private sector, will resolve
these crucial challenges before the government feels compelled to take a
stab at them. Rarely can we do as good a job as you.

Thank you for having me today and I look forward to your questions.