**Remarks of FCC Chairman Kevin J. Martin**

**National Cable & Telecommunications Association**

**Las Vegas, NV**

**May 7, 2007**

**(As Prepared For Delivery)**

# Thank you for inviting me to speak today. It is a pleasure to be here. Actually it is more than that - - it\'s a surprise! Over the past few months, I wondered whether or not I would even be invited to attend, never mind invited to speak. For example, let\'s look at some recent headlines. Just last Monday, one headline read "NCTA Heaps Scorn on FCC\'s Plans." Another article contained a quote from an NCTA spokesman saying that my policies were "simplistic and misguided." According to another article he said the industry didn\'t agree with me on a \"single issue.\" Finally, only yesterday I saw a headline that simply read, \"Chairman vs. Cable\". And those were just last week!

# Seriously though, I appreciate the opportunity to visit with you today. And I would like to set the record straight. I do not dislike Cable. Quite the contrary - - I am an avid cable customer. I subscribe to digital cable, have three set-top boxes, two DVRs, high-speed access, and wi-fi all provided by cable.

# It is true, however, that I have some strong beliefs when it comes to matters of importance to your industry.

# Let me start with the fact that the cable industry has done some remarkable things in the past few years. As an industry you have spent billions of dollars to upgrade your networks. Since 1996, you have spent more than 100 billion dollars on infrastructure investment. These upgrades have enabled you to deploy broadband services to millions of customers and resulted in you being a serious competitor to the incumbent telephone companies.

# Specifically, at the end of 2006, nearly 29 million customers relied on cable\'s high-speed Internet services and more than 9 million customers received telephone service from a cable operator.

From my first days at the Commission, I have supported efforts to
refrain from regulating your broadband service. I agreed with the cable
industry that you should not be required to open your broadband network
to competitors at wholesale rates. I agree that the government should
also refrain from imposing taxes on broadband service and I support
exempting them from franchise fees. I agree with the cable industry that
your broadband services should not be subject to universal service fees
that would be used to subsidize your telephone company competitors.

Your lead in deploying broadband forced the telephone companies to
follow. You continue to lead the broadband industry in terms of offering
fast speeds that enable consumers to take advantage of the most
bandwidth-intensive applications on the Internet.

According to your recent report, cable's high-speed Internet access
services are being offered at peak download speeds as high as 30 Mbps to
50 Mbps. This broadband deployment has been instrumental in allowing
consumers to experience all that the Internet has to offer.

With such incredible speeds, consumers can do a wide range of exciting
things such as downloading their favorite videos in minutes, use
life-enhancing telemedicine applications, or share hundreds of family
photos with distant relatives. I commend you on your success in this
area and the market you have helped create.

## Your significant infrastructure investments have also enabled most cable operators to offer consumers telephone service. You have succeeded where others have failed, providing the most successful and sustainable competition in the voice market. You offer consumers a facilities-based competitive alternative to the incumbent phone company, and they have responded by the millions.

## Comcast alone added 587,000 voice customers during the first quarter of this year. Your success has contributed significantly to the downward pressure on prices for phone service, benefiting all consumers. It is this type of competition that the Telecommunications Act of 1996 envisioned. And, as a regulator, it is this type of competition we are trying to facilitate.

## Competition

Competitive forces spur innovation and push prices down. When a
regulatory issue comes before me, my first instinct is to pick the
action that will help facilitate and promote competition, innovation,
and consumer choice. Sometimes that is de-regulation. Sometimes that is
enforcing existing regulations designed to level the playing field or
promote new entry. I have tried to apply such competitively and
technologically neutral policies consistently across all platforms.

As a result, this means that sometimes my policies favor the cable
industry - as they typically do when it is a matter of entry into new
markets like the voice market. And, sometimes they do not - when it is
an issue of someone else\'s entry into the video market.

As you know, your entry into the voice market dominated by an incumbent
has not been easy. You have relied significantly on the Commission's
market-opening policies, and I have supported you. Recently, I supported
Time Warner Cable's petition for a declaratory ruling regarding
interconnection rights that were affecting its ability to offer
competing telephone service. We made clear that new telephone entrants,
such as cable and other VoIP providers, must be given access to local
telephone numbers and be able to interconnect with incumbents to deliver
local calls to them. I have also circulated an order addressing a
petition by Cox regarding its ability to reach customers in multi-tenant
buildings to provide competitive phone service.

Fundamentally, your entry into the phone market benefits consumers, and
I will support regulatory action to promote that entry and the
competition it enables.

But cable operators are not always the new entrants. So consistent with
my commitment to fostering a competitive marketplace and consumer
choice, I have and will continue to side with the new entrants trying to
break into the market where *you* are the traditional incumbent. My push
to streamline the franchise reform process for new entrants was not
intended as an attack on cable. Rather, it was promoting new entry in
the video market in the same manner as I supported your entry into the
phone market. Indeed, cable operators are able to take full advantage
where they are willing to overbuild outside their incumbent region.

And yes, there are other proceedings on the horizon that we will likely
debate -- such as our pending program access and MDU access proceedings.

As we participate in what I am sure will be a vigorous exchange, you
should understand that I am approaching these issues with the same
regulatory philosophy that has guided me thus far. That is, I will
examine the current competitive landscape and ask what Commission action
is necessary to ensure that a level playing field exists to foster
market entry.

There are some other high-profile issues where your industry and I are
in strong agreement. One of these is in the area of net neutrality. Lots
of people would like the Commission to impose regulation in this area. I
have consistently resisted. As I have been saying for the past couple of
years, I believe that any regulation in this area would be premature.
There is no evidence of a market failure that warrants regulation in
this area at this time. I also believe that network providers need to be
able to recoup the costs for upgrading their infrastructure. Regulation
in this area could have the detrimental effect of slowing down the
deployment of broadband networks and thus the adoption of broadband
services.

## Consumer Choice

Another belief I hold firm is that consumers should be able to purchase
the products and services they want without being forced to buy
something they do not want. Once again, sometimes that means I agree
with the cable industry, and sometimes it does not.

For example, I agreed with Cable that consumers should not have to buy
DirecTV service in order to see Major League Baseball games. I supported
your efforts to allow cable subscribers to continue to purchase "Extra
Innings" if they so desired. But similarly, I don't believe subscribers
should have to buy Spike TV in order to get Discovery. Fundamentally, I
support consumers' ability to pick and choose the products they want.

As most of you are aware, I have been strongly -- not to mention
frequently - encouraging your industry to adopt an approach that gives
consumers greater choice in how they purchase their programming. Some
consumers, and I am one of them, enjoy a large number of channels. But
not everyone does. In short, an a la carte regime would enable viewers
to buy their television channels individually, in smaller bundles, or in
the large bundles currently offered. This issue has become even more
important as the number of channels included in expanded basic, and the
corresponding price to consumers, has continued to skyrocket. Expanded
basic rates have almost doubled since 1996.

I realize that most of you are already quite - perhaps even painfully -
familiar with my views on this topic so I will not spend too much time
explaining them in detail. After all, I do not want to incite a riot
here this afternoon. Nevertheless, I do want to point out that a la
carte approaches have worked well in other countries, such as in Hong
Kong and Canada.

For example, Rogers Cable, a Canadian cable operator, offers consumers
substantially greater choice and appears to be benefiting financially
from this decision. Its net income for every quarter in 2006 appears to
have outpaced its net income for those same quarters in 2005.

Before I stop singing the praises of a la carte, I would also like to
briefly respond to those who argue that an a la carte regime would be an
unconstitutional means of protecting children against violence on
television. I do not believe that requiring cable and satellite
television providers to offer programming in a more a la carte manner
raises any substantial difficulty under the First Amendment. In the
first place, it is far from clear that any level of First Amendment
scrutiny would be applied to a requirement to unbundle, for payment
purposes, disparate video signals that comprise a programming package.
While the Constitution protects the right to speak, it certainly doesn't
protect a right to get *paid* for that speech.** **

** **Even if, however, the First Amendment were thought to apply to an a
la carte regime, such a regime does not on its face favor or disfavor
particular types of speech or impose a burden on speech based on a
program's ideas or views. All of the versions of

a la carte would keep government out of regulating content directly
while enabling consumers, including parents, to receive the programming
they want and believe to be appropriate for their families.

## Consistency

Finally, I have long been a strong advocate of promoting the digital
transition in a manner that minimizes the burden on consumers while
offering them the benefits of digital broadcasting.

I thought the FCC should encourage broadcasters to multicast because it
would offer consumers -- and over-the-air viewers in particular -- a way
to benefit from the transition. Thus, they would have the incentive to
get a converter box or a digital set, because they would get more free
channels. This incentive is what made consumers in Berlin and the UK
*want* to get new equipment.

By contrast, without multicasting, the United States is saying to
consumers, "get a converter box or else your TV will go dark,\" rather
than, "get a converter box so you can get more free channels.\" The
message in this country is not as appealing.

Broadcasters said they could not sustain a business based on
advertiser-supported multicasted channels unless they knew the channels
would be carried on the cable and satellite systems. Your industry
opposed mandatory carriage, saying consumers should be able to pick and
choose the channels they want, not have programming forced upon them.
But if that is really your belief, then it should hold true whether we
are talking about broadcast channels or your own cable programming
channels. You can't have it both ways. Fundamentally, I agree that
consumer choice should be paramount. And if you advocate subjecting
broadcast channels to consumer choice then why shouldn\'t cable channels
be similarly subject to free market choices as well.

Finally, I would be remiss were I not to mention an issue which is at
the forefront of many of your minds. That is the looming July 1^st^
deadline of the set top box integration ban. As you have seen, we are in
the process of ruling on the multitude of waiver petitions that have
recently been filed with us. Fundamentally, I am for innovation. It
leads to new and improved services, and ultimately lower prices. When
someone is innovating with voice competition, I am on their side. When
someone is trying to slow set-top box innovation, I am not.

Now there are certain instances where a waiver may be appropriate. For
instance, when a cable operator is deploying an all digital system. In
addition, it is important to remember that this rule does not apply to
the legacy boxes already deployed. And the Commission has recognized
that small cable operators may need more time to have their orders
filled as they are frequently at the back of the line for new equipment.

*Conclusion*

So where does this leave us? There are some issues where we are in
perfect agreement. Those areas of agreement, unfortunately, rarely get
much attention. And, yes, there are some issues on which we do not see
eye to eye. I believe that my regulatory philosophy is simple one. I
hope that it has come across in my remarks today. I believe in leveling
the regulatory playing field for the purpose of fostering a competitive
marketplace -- whether the market be voice, broadband, or video. I also
believe in doing everything possible to promote consumer choice and
innovation. During my tenure as Chairman, I have tried to apply these
principles on a competitively and technically neutral basis -- across
all the industries that the Commission oversees.

I recognize that the Commission is currently working on a number of
proceedings of great importance to your industry.

I urge you, in the coming months, to have an open dialogue with us.
Although I cannot promise that we will ultimately see things your way on
every issue and in each proceeding - - I can promise you a fair hearing,
serious consideration of your viewpoints, and, above all, a lively
debate.

Thank you for your time today. I truly appreciate the invitation to be
here.