Keynote Address, Alliance for Public Technology Policy Forum
March 5, 2004, Alliance for Public Technology Policy Forum, Wasington D.C.
Thank you. I am pleased to be here with the Alliance for Public Technology, the leading advocate for affordable, quality high-speed Internet services for all Americans. APT has highlighted the benefits we will see in education, lifelong learning, health care and broader participation in our society by people with disabilities when we are all connected to each other with truly high-speed Internet services.
In addition, it's estimated that a universal broadband network will create 1.2 million jobs making it the best jobs program for our faltering economy. CWA shares that goal with APT, and we're proud of our long association with the organization.
CWA is part of a global network of telecommunications unions called Union Networks International. Union Networks International includes telecom unions from more than 100 countries representing more than 2 million telecommunications workers. Last year, we published our vision called "Telecommunications for the Long Run."
In that document, we laid out three goals for national – and global – telecommunications: first, universal affordable telecommunications services, including high-speed Internet for all; second, quality services and quality jobs; and third, financial equity and transparency.
My discussion this morning will focus on the first goal – high speed Internet for all -- the issue that brings us together today. Let me first talk for just a few moments, though, about the other two goals -- quality services and corporate integrity – which are essential elements of a quality telecommunications system, but that too often are overlooked.
What do I mean by quality services and quality jobs? If you speak English, press one, if you speak Spanish, press two, if you don't understand the question, press 3, and if you really want an answer, press 0 to talk to a live person who can listen to you and solve your problem. Need I say more?
Quality service requires quick connections to a trained, career employee –a service representative or operator or skilled technician who can solve problems, not just read from scripts or try to sell you things you don't want. Quality service means you know who you are talking to -- that when the service representative answers the phone, "Hi, I'm Mary from AT&T, how can I help you?" you know that she is really Mary and she really works for AT&T.
We have a service crisis in this country, driven largely by a race to the bottom to get the cheapest labor possible. And now we're losing our high-skilled service and white-collar jobs to cheap labor overseas.
I don't have all the answers to this problem. I know customers and telecom workers in this country and around the globe must join together to demand better service, to raise living standards abroad, and to block the race to the bottom. As part of our commitment to quality service, CWA has been supporting right-to-know legislation in the states and in Congress which guarantees that customers know who they are talking to-service provider or contractor, and where that person is located when they call a service provider. We're also supporting legislation that blocks companies that send good jobs overseas from the use of public subsidies and taxpayer dollars. These are only first steps in addressing a fundamental problem – the fact that competition is driving a race to the bottom, both in service and jobs. We want to join with customers to demand the kind of quality service that makes the members of my union proud to go to work each day.
Let me talk for a moment about the second goal – public policies that protect against the accounting scandals that ravaged the telecom industry just a few years ago. To cite the worst example, MCI WorldCom's massive fraud and subsequent bankruptcy destroyed more than $70 billion in shareholder value, and also cost the jobs and careers of tens of thousands of employees. Congress has taken some steps to ensure greater financial disclosure, but we must do more. Certainly, companies – not just the CEOs -- that commit fraud must be punished. We must also require expensing of stock options, to take away the incentive to push stock prices higher and higher through fraudulent accounting schemes.
And now let me return to the first goal: universal affordable service, including high-speed Internet for all.
Decades ago, the United States made universal, affordable voice telephone service a national policy goal. The free market did not deliver on that goal. For example, almost half of American households still did not have telephone service at the end of World War II . So we established public policy mechanisms to subsidize networks in high-cost rural areas and to provide subsidies for poor people to make sure that every American was connected. In the Telecom Act of 1996, we added subsidies to schools, libraries, and rural health centers to provide Internet connections to these vital public institutions. The E-rate has been a huge success, although the job is far from complete. While today most schools and libraries are wired, most classrooms are not, and many connections are still limited to narrowband -- insufficient bandwidth for many educational and health care purposes.
Today, we need to update our universal service policies to make sure that all Americans have access to and can afford high speed, high-quality Internet service at home. We cannot have a democratic society if some Americans have access to advanced communications and information, but others do not. We cannot continue to grow our economy and provide jobs in all parts of this country without a first-class digital network to every home and business.
But we won't get from here to there with today's policies.
Look where we are today. According to a recent report of the International Telecommunications Union, the United States – the largest economy in the world -- ranks 11th among nations in the number of households with high-speed Internet service. We lag behind South Korea, Taiwan, Canada, Denmark, Japan, Sweden, Belgium, Hong Kong, Iceland and the Netherlands.
In South Korea, more than 70 percent of households have broadband at 1 to 2 mega-bits per second. The South Korean government is working with industry to increase that to 50 to 100 megabits per second. The South Korean government has provided direct subsidies for the construction of a national broadband backbone.
Japan has 14 million broadband subscribers. Japan has a national policy to have fiber to every home by the year 2010. Japan provides low-interest loans and subsidies to encourage broadband investment. Japan's Yahoo broadband package offers 12 mega-bits per second downstream and 1 megabit per second upstream at $19 a month. And 3-G wireless is everywhere in Japan.
And yet the United States, with more than twice the population of Japan, has just 16 million "advanced services" subscribers" – defined by the FCC as those with 200 kilo-bits per second upstream and downstream. Fewer than 7 out of 100 U.S. households have a broadband connection, and the bandwidth is not truly broadband: 500 kilobits per second is now standard for DSL, and 1 to 3 megabits per second for cable modems.
Not only are we behind the rest of the world, but also there is a wide digital divide. According to the Commerce Department's 2002 report, only one-third of Americans earning less than $25,000 a year had Internet access at home, compared to 80 percent of those with incomes over $75,000. Only one-third of Hispanic and Black households had Internet access at home, compared to 55 percent of white households. And this is narrowband, not broadband. 20% of the country can't even get broadband service, because there is no deployment.
This is unacceptable. What can we do?
The first step is to establish a national goal with timetables to deploy affordable truly high-speed Internet access to all Americans. The high-tech community calls for services of 10 to 100 mega-bits per second to 100 million homes by the year 2010. CWA supports a policy to get 10 to 100 mega-bits per second to every home and business by the year 2010.
They've set this policy in Korea and Japan – we must do the same in this country.
A second step is to create a framework to ensure build-out of high-speed digital networks to all Americans, and delivery of high-speed Internet services at affordable rates. How? Let me offer one proposal. Certainly there are others worthy of consideration.
Incumbent local telephone companies are the only carriers with the obligation to serve all customers. Cable and wireless companies can pick and choose – and they do. They put their investment where it will make the most money – the high end of the market and urban areas with population density. Absent public policy, telephone companies will do the same with their broadband investments. As a result, we'll be a nation in which maybe half the population will have two or more broadband options, and the other half will have none. And because investment dollars are dispersed, even the affluent, urban consumer may not get the bandwidth to support 10 to 100 megabits per second.
So here's my proposal. Let's establish timetables for deployment for the local telephone companies – the only carriers with universal service obligations. Let's say, if you commit to these timetables for deployment, then we'll offer carrots – we'll take off unbundling obligations, provide tax incentives and public subsidies. But the deal is that the increased revenues must go to finance the social good of a universal high-speed network at 10 to 100 megabits per second, and not to higher CEO pay or inflated profits. And let's cap prices and target subsidies to low-income and high-cost areas, so all Americans can afford the service.
If the cable or wireless companies commit to a universal network and affordable regulated prices, they can tap into public subsidies to build and then support affordable high-speed Internet service on their platforms. But the bottom line for public support is a commitment to universal, affordable deployment, one that would foreclose cherry picking the high-end customer.
And its very important that as we move toward Voice over the Internet, we cannot abandon universal service and other social obligations just because a voice telephone call is delivered with Internet protocol. We must ensure that all carriers-regardless of the technology-contribute to universal service obligations, provide access for persons with disabilities, meet public safety obligations, service quality standards, and provide other consumer protections.
We can either extend current telecom regulation to other technologies, or we can reduce unnecessary regulation. However, we can't have two different regulatory schemes for the same service, like we have today with deregulated monopoly cable modems, and regulated DSL.
One final point. Let's be clear. The problem today is not lack of local competition. Competition is alive and well in many segments of the local telecom market. There are almost 150 million wireless subscribers, fast approaching the number of wireline customers, which has dropped for the second year in a row to 180 million customers. There are 27 million Americans who subscribe to competitive local exchange carriers.
E-mail and instant messaging are real alternatives to phone calls. According to a Forrester Research report, the average American spends twice as many minutes per day e-mailing, instant messaging, and talking on their wireless phones as he or she does on a wireline phone -- 85 minutes compared to 45 minutes per day.
We must establish a meaningful competition policy, one that does not discourage investment. Look at what the FCC's unbundling policies did to investment. Over the past two years, the local Bell companies cut $30 billion in capital expenditures. And CWA employers cut almost 70,000 jobs. We need policies that encourage job-creating investment. That means investment in alternative technologies, networks, and services – not resale competition.
In sum, we all need to join together – workers in the industry, consumers, and advocates – in support of a vision and policies that lead to high-speed Internet for all, in this country, and around the globe.
Let's work together to make a reality the promise of Section 706 of the Telecommunications Act, a section that APT worked so hard to insert in that landmark piece of legislation. Section 706 states that it is the law of this land "to encourage the deployment on a reasonable and timely basis of advanced telecommunications capability to all Americans." We cannot afford to wait.
