[Top][All Lists]
[Date Prev][Date Next][Thread Prev][Thread Next][Date Index][Thread Index]
[DMCA-Activists] Reed Hundt on VOIP
From: |
Seth Johnson |
Subject: |
[DMCA-Activists] Reed Hundt on VOIP |
Date: |
Mon, 12 Jan 2004 09:57:33 -0500 |
> http://www.danielberninger.com/documents/reedhundt.html
NOVEMBER 11, 2003, pulver.com Wireless Internet Summit, Santa Clara
Marriott
"The Revolution Revolves Again"
The United States is still the land where dreams can and do come true.
America is still the place where people can pursue happiness each in
their own way and yet still believe that we are all in this together.
Our society is still the wisest, largest and most diverse group of
people to live peacefully together that the world has ever seen.
These are all truths. They are hard to find in Washington. In
Washington the problem is theres not much of a market for truth: the
problem is that honesty just cant get distribution.
But out here, way outside the Beltway, the people know more than their
leaders do. The people know that its important that for 39 straight
months, the number of manufacturing jobs in the United States has
declined. The people know, as both Andy Grove of Intel and Sam
Palmisano of IBM have warned, it is important and distressing that we
are in the early stages of exporting not our software, but our
leadership in the software industry. The people know that while the
current stock market boom is nice, it is important and distressing
that consumer spending exceeds income; that while tax rebates are
nice, it is important and distressing that our deficit makes the
federal budget look like a candidate for chapter 11; that while
ignoring the future costs of an aging population is easy on the mind,
in only a few years our society will rupture along the seams dividing
the haves and the have-nots. The people know all these things.
How do the people know more than their leaders do?
Where does their knowledge come from?
Not from the matrix of the mass media. The surest way to be misled is
to give credence to whats on TV. TV news is as much about accuracy as
reality TV is about reality.
But somehow the people know whats up and whats going down.
Where does our knowledge come from?
Each other on the Internet.
The Net is the peoples medium. It still is not run from a command and
control headquarters. It is not spun. It is not filtered. Its size and
openness so far has defeated all attempts at hegemonizing its look,
feel, or meaning. More than 90% of children get on it some time every
week because somehow the revolutionaries snuck access into every
classroom and every library. Almost 70% of homes log on every week.
Soon hundreds of millions of handheld devices will provide Internet
connections from virtually all places on the planet.
This ever-new medium of the Internet shapes the worlds understanding
the way tectonic forces create mountains and valleys. You see its
outcroppings, its effects, but not what drives it. It is a kind of
subconsciousness of society.
We are here today to discuss a new stage in the metamorphosis of the
Net, the addition of another of the five senses that may be
incorporated in this new medium, which as McLuhan predicted two
generations ago may subsume and extend all previous media.
We are here to talk about talking on the Internet. We are here to talk
about voice on the Net.
The Internets messaging is still a matter of fingertips. How much
more effective will it be how much quicker can the people share
knowledge when we are talking and listening to each other on the Net
even more easily than we can do in this very room.
A fully developed Internet is a Net that will unite voice, ears, eyes,
and link not just a person to a page, but people to people.
So this is what Voice over the Internet is really about: a step to a
different form of society and a different kind of politics.
If VOIP develops as its science suggests, then carriers will have much
greater incentive to build fiber to homes. They will charge for such
connectivity, and abandon the soon to be defunct pricing per minute of
voice calls. Imagine a household today paying $30 a month for DSL and
$20 a month for local voice. Suppose that a household could instead
pay the aggregate of $50 a month but buy for that not copper access
but fiber to the premises providing broadband at 100 megabits per
second, with voice as an application that is carried essentially for
free in the huge bit stream surging up and down this very high speed
connection. Being able to count on $50 a month from 80 million
households with PCs, and perhaps some government subsidy for the 20
million low income and rural households left out of this deal, the
telcos then would be looking at revenue streams that could make them
much more eager to build out fiber to every home. They could become
Connection Companies as well as service providers
The main risk to a walk on this sunny side of the street is the
possibility of regulatory storm clouds brewing over Washington.
In Washington many think that entrepreneurs are barbarians at the
gate, and change is by definition a threat to the livelihood of
everyone who has a stake in the status quo.
It is true that entrepreneurs carry the disruptive idea that we are
each endowed by our creator with the inalienable right to try to
change the world. This is the central idea of democracy and of
technology.
VOIP is disruptive by definition because it changes the business model
for the biggest market in communications: fixed line voice. But as as
indicated by Qwests recent announcement of its VOIP plans, telcos see
that this new service at last brings the promise of retail price
deregulation for voice service.
Nearly 10 years ago your FCC declared wireless voice to be totally
deregulated at the retail price level. This was called the section 332
order.So states like California that wanted to set prices for this new
service were told they could not do so. As a result of this decision,
coupled with fairly easy entry by numerous companies into the market,
cellular became the biggest and most competitive new communications
market in the last decade.
In the last 10 years cellular prices are down 74% and subscribers are
up 780%; jobs are up 383%; capital investment is up 800%; minutes of
use are up 200%. Not bad! VOIP could travel the same road, if a true
deregulatory way is followed.
For many years, the bane of all policy in wireline telephone markets
has been state regulation of retail prices. This policy has protected
some consumers at the expense of many who would have had lower prices
and better offers under more efficient schemes.
VOIP can disrupt this state regulation. It can force states to adopt
only such universal service policies as are applicable to all
technologies, funded from general revenue instead of arbitrageable
levies on specific services, and used to address real needs such as
fiber to poor and remote locations instead of merely helping certain
middle or upper income classes at the expense of most consumers. These
changes will force business model changes as well as regulatory
changes, but all can benefit in the end.
Lets be specific to illustrate the point: if a consumer in, say,
Bethesda, Maryland, can choose from three broadband suppliers; Vonage,
Skype, and a few other VOIP services; a half-dozen cellular service
providers; and three UNEP sellers, then why does that consumer need
retail price regulation of basic voice service? That actually does
describe much of Bethesda today. And thats not all that different
from neighborhoods containing millions of consumers across the
country. Zip code by zip code, state by state, region by region, the
FCC should be preparing Operation Deregulation. If not now, when?
But what will the FCC do with VOIP? Theres no promise that it will
follow this deregulatory prescription. I havent heard that the FCC
wants to deregulate voice pricing. I wonder if the FCCs DNA instead
will cause it to generate another era of regulation, just when
innovation gives us a chance to break into the clear, sunny upland of
free market competition in voice.
Should we fear the encroachment of the FCC into new areas of
regulation? Look at the record of the last couple of years. This
agency ordered that every American must pay for a digital tuner in
every TV set, even though almost 90 percent of households already do
not tune in to over the air reception. This is a $20 billion annual
tax on the American consumers, with the money going principally to
foreign manufacturers.
Should we worry that we might have a hard time figuring out what this
agency intends to do? Lets be post-modernists and study the texts.On
November 5, 2003, the FCC chair told Senator Ron Wyden that he will
hold a hearing on Voice over Internet Protocol on December 1. He said
he will invite "industry and government." Who is the industry that has
been invited? What government is attending? Who will represent the
people?
In the same letter, the chair said "shortly after the forum, the FCC
will initiate a Notice of Public Rule Making on VOIP services." Not to
be picky but there is no such procedure under the law. Does the FCC
mean a NOI, or Notice of Inquiry? If that is the intended notice, we
can breathe a little easier, because a NOI often means there is no pre-
existing decision to regulate. But what if the FCC really meant a
Notice of Proposed Rulemaking? Then we should worry, because such a
notice typically portends an intent to put on the books new
regulation. A rulemaking is the name of the process that produces new
regulations. And how can we believe the December 1 hearing is part of
a neutral, non-biased inquiry if the FCC already intends to propose
new regulations "regulations "shortly" afterwards?
Moreover, in this letter the FCC says it will issue a report and order
within a year. A report and order typically is the name of the
document that contains regulations. If the FCC doesnt intend to
regulate VOIP then it wouldnt need to issue any Report and Order.
This isnt just fog that shrouds the FCC, but thunderheads brewing
trouble for VOIP.
Normally on the eve of a Presidential election even the FCC knows it
should abide the will of the people and wait for their judgment on who
will set policy. But theres no sign in this letter that the FCC
intends to wait on the 2004 elections; perhaps the agency, as it
should be, highly confident that the President will be re-elected. Yet
for those in either party or no party at all who do not favor
regulating VOIP, the urge to move before the election should not be
taken as a positive signal. Positive would be a statement by the FCC
that it doesnt intend to do anything about VOIP for at least a year
or two, or certainly until the service becamebecome more well-
established in the marketplace. My thesis: If the regulatory system
aint broke, dont fix it; and by the way when and if it is broke,
consider just throwing it out.
When the Internet was in its salad days, your FCC decided that ISPs
should be able to use the telephone network without paying extra
charges. The result was 5,000 ISPs promoting narrowband Internet, and
selling it at prices that were one tenth of what was charged in Europe
and one hundredth of what was charged in Asia. Thats a primary reason
why the Internet flourished principally in the United States, a main
reason why the Net became an American medium. To follow this reasoning
with respect to VOIP, the FCC need only say that VOIP is just like e-
mail and needs no regulation. That, like the treatment of internet
access, would be a decision not to pour new wine into old bottles.
That approach worked out well for narrowband. Why not copy it for
VOIP, even if its authors are now old and gray (or Democrats). But in
its letter to Senator Wyden, the FCC mentioned a desire to place
uppermost in its proposal "E911, universal service, and securing our
homeland."
When the FCC talks about the shibboleth of security, the people should
be on guard. To address homeland security, the FCC should create a
single national swath of spectrum for all public safety to use. It
should encourage municipalities and federal agencies to coordinate
their communications, to adopt the most advanced security measures. It
should take virtually wasted spectrum held by broadcasters and find
ways to use its economic value and its propagation characteristics to
give us the worlds leading homeland defense. These are homeland
security imperatives, not regulating VOIP.
As to E911, FCC delayed for years the imposition of that requirement
on wireless carriers. That was a critical issue. E911 for VOIP doesnt
come close to the importance of that issue. After all, consumers are
certainly likely to be able to use either or both wireless or wire
service providers for 911 for years to come, even if VOIP is
unregulated from its inception in the marketplace.
Then theres the universal service bugaboo. There could be nothing
more potentially universal than the new cost reductions that VOIP can
offer not just for one-to-one voice calls but for a range of services
such as conference calls, distance learning, and health care delivery.
Why isnt the right goal the delivery of VOIP universally, instead of
the universal regulation of VOIP?
And indeed why isnt the highest universal service goal the universal
build out of fiber and wireless broadband? Universal broadband was
ridiculed by the current FCC as equivalent to trying to give everyone
a Mercedes Benz.
Im tempted to point out that this FCC cant think of the name of an
American car, much less a pro-American policy. But that would be
snide, as well as earning me 15 yards for unsportsmanlike conduct.
Yet I have to point out that Uuniversal broadband would probably add a
million jobs to the economy. And since the network would be here in
our homeland, the jobs to build and maintain it couldnt be exported
to foreign lands. Theres nothing wrong with homeland job security.
Some believe the FCC should burden or tax VOIP with charges that are
then given to circuit-switched voice providers. This is what is
euphemistically called a transition. But should we add a charge on
airline tickets in order to raise revenue for railroads? Add a charge
to e-mail in order to raise money for the United States Postal
Service? Add a charge to PCs in order to subsidize mainframes? Why
should VOIP require a transition that starts with regulation? At some
point, new goods and services should not subsidize old; new networks
should not be taxed to support old; new market competition can
eradicate the case for price regulation of old, static, non-
competitive markets. The goal in all events is a competition policy
that obliges competitors to seek advantage by obtaining and generating
productivity gains.
The only right national economic policy is to create a high and rising
standard of living for the nations citizens. I copy this
from "Competitive Advantage of Nations" by Michael Porter of the
Harvard Business School. To do that a country must seek full
employment and productivity gains in all sectors. Communications is
both a sector and an input to other sectors. Therefore, countries are
doubly advised to focus on policies to generate highly productive
communications sectors.
Following this rule, countries like Korea and Japan know they need the
most efficient communications networks. They are structuring their
markets, and their government pump-priming subsidies, to get this
result. They seek "a high-speed, congestion-free, always reliable,
friction-free, packet switched, big bandwidth, data friendly network
that is universally available, competitively priced, and capable of
driving our economy to new heights."
They know that what they need and I quote again "a data network
that can easily carry voice, instead of what we have today, a voice
network struggling to carry data."
These are quotes from the FCC of 1997, long ago and far away in time,
yet now heard echoing in Asia. But every FCC has the same job in a
sense: the job of helping the new drive out the old, helping new
efficiencies overcome bottlenecks and first mover advantages in order
to get to the market. The help should be in the nature of assuring
competitive market structure and rational universal service schemes if
any such are necessary. It should not be help in the form of
technology bias or preference for individual firms. It should be help
in the sense of a desire to see efficiencies translated through a
competitive process to marketplace rivalry. This philosophy, if it
animated the FCC today, would not lead to regulating VOIP but to
opening the door to entrepreneurs at both new companies and old who
would create new business models that emphasized connectivity and
creativity and consumer benefits and productivity gains. These are all
worthy ways for the United States to continue to fight the competitive
battle of nations.
Of course we in the United States are fighting not only for economic
success, but also for democracy around the world. This is also not a
new goal for the United States. To this end we must renew democracy
here at home. At the FCC, democracy means showing a willingness to
take decisions that are considered in the plain view of the people,
done for the people, and ultimately taken by the people, and not by a
privileged elite.
Will the FCCs treatment of the new and exciting technology of voice
over the Internet meet this test? Will the FCC listen to the people
and do what serves the best interest of the people? Theres a chance
for this to happen. But that will require VOP the Voice of the
People to be heard. Now the choice is yours.
[Prev in Thread] |
Current Thread |
[Next in Thread] |
- [DMCA-Activists] Reed Hundt on VOIP,
Seth Johnson <=