Remarks of

Michael K. Powell

Chairman, Federal Communications Commission

Voice on the Net Conference

Boston, Massachusetts

October 19, 2004

(as prepared for delivery)

I. INTRODUCTION

It is election season---that important moment in American life when we
choose our President. Despite the closeness and toughness of this
election, one must still be proud of the enduring tradition of our
democracy. As I stand here before you in Boston, a city that figured so
prominently in the founding of the republic, I have a sense of how our
first President, General George Washington, would have felt standing
before the Minutemen that would form the Continental Army, for like him
I am looking out over a crowd of revolutionaries, bent on ending the
old-line regime and giving birth to something profoundly new---you are
bringing about a revolution, like the American Revolution, intent on
bringing power to the people.

Clearly, you are a revolutionary army on the march:

The fact that this conference has doubled its attendance from last year
-- to 5000 attendees -- is proof positive that something is happening.
Seven years ago, voice over the Internet protocol (VoIP) had not emerged
from the labs in any meaningful way, desktop computers struggled to turn
256 cycles per second, and a gigabit of storage required a second
mortgage on your home.

Today, citizens operate on machines more powerful than those on the
spacecraft that landed on the moon. WiFi networks are dotting the
American landscape, and VoIP has ignited a fire under a stalled and
depressed industry. In fact, the Yankee Group estimates that there will
be 1 million VoIP subscribers by the end of 2004, up from just 131,000
last year. That's a 650% increase. Something is taking hold. So, it is
with great pleasure that I come before you today at the 2004 VON
Conference to talk about the new revolution and how important it is for
government to nurture the Internet as a platform for innovation and
entrepreneurial activity and not crush it with the heavy burdens of a
sovereign out of touch with the people.

II\. THE FORCE OF CHANGE

Forces have been building for some time that have allowed VoIP to erupt
onto the scene. The central drivers of today's revolution are
technological; silicon, storage and speedy connections have combined to
form a powerful storm that is reshaping the communications landscape.

Micro processing power continues to place enormous computing capability
into the laps and palms of our citizens. Cheaper and greater storage
places enormous volumes of information into our living rooms and even
our pockets. And, the growing availability of high speed Internet,
nearly 48 million subscribers by our latest count, is connecting up
these forces in a way that ensures that the world will never be the
same.

Like the great American Revolution, the IP technology revolution will
usher in a new form of democracy. It will place more and more control
into the hands of individual citizens and away from central
institutions. In short, technology is democratizing communications like
never before.

Just consider the rash of devices we all can buy today. MP3 players,
like Ipod, let consumers be their own record producers. PVRs, like Tivo,
let consumers be network programming executives. Cell phones are highly
personalized and customized, with a personal number people take with
them wherever they go. PDAs have WiFi chips in them and let Americans
access the world's information from almost anywhere. These are powerful
and important developments.

In addition to individual empowerment, local communities are revived as
well. Last week, I was in New York City and visited a wonderful studio
called the Manhattan Neighborhood Networks. It provided facilities to
allow average citizens to produce their own programs for airing on
public access channels. It allowed members of the community to check out
top quality video cameras, once only available to the most sophisticated
news operations. It taught citizens to produce and edit programs on
desktop computers, using off-the-shelf software. In all, MNN says it has
over 1200 "producers" from the community who cover issues unique to
their locality. I was interviewed by some kids who were running their
own Youth Channel and talked with some of them over publicly available
WiFi hotspots. They had used these hot spots to collect footage remotely
and transmit from all over the city. This is technology for the masses.

VoIP will do the same thing for voice service that technology is doing
in other walks of life---bring greater value to individuals and
communities.

VoIP offers consumers unprecedented flexibility, unheard of in
traditional telephone services. I recently returned from an
extraordinary trip to Cypress and Jordan where Khalid Hudhud, a senior
official with the Jordanian Ministry of Telecommunications, uses a VoIP
phone with a 617 area code to make calls to family and friends living in
the U.S.

Just like many other applications provided over the Internet, VoIP is
nomadic, it doesn't matter where the provider is located -- a server
providing a VoIP application could be down the street, or in the next
state, or in Britain, Ukraine, India, or, as is currently the case with
Skype, which has been downloaded over 15 million times by users around
the world, in Estonia. This is not your father's telephone.

The IP revolution also unleashes the strength of innovation and
entrepreneurial spirit that has been the hallmark of American economic
life. The Commission has squarely recognized how dramatic a change it is
to move from a circuit based network, in which applications are tightly
woven into the architecture and controlled centrally, to an IP network
that is capable of running applications over top of it. It means great
innovation is possible. Through creative software development,
competitors can create new applications that can ride on any IP
platform, at substantially lower cost.

This holds great promise for the communications sector. It means lower
prices, greater value, more competition, and more innovative services.
VoIP is barely a few years old as a retail offering and providers have
already cut prices several times to compete for consumers. These are the
benefits indicative of a true revolution.

To realize the innovation dream that IP communications promises,
however, we must ensure that a willing provider can reach a willing
consumer over the broadband connection. Ensuring that consumers can
obtain and use the content, applications, and devices they choose is
critical to unlocking the vast potential of the Internet.

Today, broadband consumers generally enjoy such freedom. Numerous
benefits will follow if the industry continues to preserve choices,
value, and personalization that broadband users continue to expect and
demand. Internet Freedom will promote comparison shopping among the
growing number of providers by making it easier for individuals to
obtain access to meaningful information about the services and technical
capabilities they rely on to access and use the Internet.

Moreover, Internet Freedom promotes innovation by giving developers and
service providers' confidence to develop applications that will reach
consumers and run as designed, and also serving as an insurance policy
against the potential rise of abusive market power by vertically
integrated providers.

Some in the industry are beginning to recognize the importance of
consumer empowerment and the Internet Consumer Freedoms that I have
outlined:

\(1\) *Freedom to Access Content*: Consumers should have access to their
choice of legal content;

\(2\) *Freedom to Use Applications*: Consumers should be able to run
applications of their choice;

\(3\) *Freedom to Attach Personal Devices*: Consumers should be
permitted to attach any devices they choose to the connection in their
homes; and

\(4\) *Freedom to Obtain Service Plan Information*: Consumers should
receive meaningful information regarding their service plans.

There are positive developments in this space: providers are beginning
to offer "naked DSL" access to their broadband pipe without the
requirement that customers also subscribe to their voice offering.
Similarly, AOL and MSN recently announced an agreement to integrate
their instant messaging services.

The *entire* broadband industry should nevertheless take heed of how
critical unfettered access to the Internet has been, and will continue
to be, to the success of the Internet. Consumers have a high expectation
that such access will continue, and the benefits to them and the nation
are significant.

III\. REGULATORY CHANGE---A NEW CONSTITUTION

George Washington presided over the Constitutional Convention in 1787.
He and the founding fathers had come to realize that the old form of
governance would not suit the young republic. It needed a different form
of government and a new Constitution, one befitting the ideals of the
revolution: a Constitution that recognized the centrality of the
individual, saw the need for federal supremacy of the law, and promoted
the importance of interstate commerce to the economic well-being of the
nation.

We, too, need a new Constitution for the regulation of services, one
befitting that revolution.

Many regulators have protested change, saying that VoIP is just a
different way to make a phone call. But isn't that the point! It is a
different way, and it deserves a different regulatory structure that
reflects its unique qualities. I guess one could say that the
Constitution and the democratic form of government are just another way
to run a nation.

But it was not just another way, it was a better way---one that produced
the greatest nation in the world. A nation where someone with a good
idea has an opportunity to succeed with minimal interference from the
government. A different way that favored the individual over
institutions. A different way that has led to great prosperity. I
support a different way for voice over the Internet, and if we have the
courage of our forefathers to pursue it we will be equally rewarded.

It's wrong, just plain wrong to not recognize the potential of VoIP, or
to see it through the lens of the old telephone network regulatory
model. VoIP is a data application and as such has all the hallmarks of
the Internet itself.

Like the Internet, the change is cosmic; it obliterates the importance
of time and distance. There is no need to organize the regulatory regime
around per minute prices and costs as we have done with common carriers.
VoIP service is offered in flat bundles, recognizing the efficiency and
small incremental costs of information services. We have seen the great
advantages of cell phone buckets of minutes and what that did to
increasingly erase the idea of long distance as a distinct service. VoIP
will complete the circle and collapse any such geographic distinctions
in all voice service.

Like the Internet, IP data communications knows no borders. In the
height of the dot com boom you often heard commentators speak of the
death of distance. It was an accurate understanding of the Internet and
IP communications. If it were true of the Internet generally, it is
unquestionably true of VoIP. This has profound implications for the
traditional common carrier regulatory model. And bold action is needed.

It is very likely that treatment of VoIP will have some of the farthest
reaching consequences of anything the Commission will consider in the
near future. The Commission is not simply considering minor adjustments
to specific regulations -- the Commission is considering the future of
electronic and optic communications for many years to come. And we have
to get this right.

The first step in getting policy pointed in the right direction is for
the Commission to step forward and affirmatively establish jurisdiction
over these services. That is why I will present to my colleagues for a
decision the question of whether VoIP services -- like Vonage - should
be subject to exclusive federal jurisdiction. We cannot avoid this
question any longer. To hold that packets flying across national and
indeed international digital networks should be subject to state
commission economic regulatory authority is to dumb down the Internet to
match the limited vision of government officials. That would be a
tragedy. I look forward to working with my state and federal colleagues
-- indeed my international colleagues -- to ensure that a minimal,
well-harmonized regulatory environment is applied to VoIP services.

IV\. CONCLUSION

So, here we are on the precipice of something big. And, like our
founding fathers, we will have to decide where we stand. Will we have
the courage to stand for change, going boldly forward toward the promise
of a better world? Or, will we stand timidly with the familiar?

As for me, to paraphrase another great American Patrick Henry, as for
VoIP I say: "Give it liberty, I say give it revolution!"

\- FCC -