Remarks of Federal Communications Commissioner Robert M. McDowell 
Tech Policy Summit 
Thursday, March 27, 2008 
8:15 – 8:45 a.m. 
Hollywood Ballroom – 2
nd
 Level 
Renaissance Hollywood Hotel 
Hollywood, California 
 
 
 Introduction.  Thank you, Carolyn, for your kind introduction.  I am delighted to be here, 
and I thank you and all of the folks at the Tech Policy Summit for asking me to join you.  The 
depth and breadth of the issues presented today is extremely impressive, and I am pleased to be 
part of your program.   
 What your program reflects is the wonderful reality that we are privileged to live in the 
most exciting time ever in the history of communications.  That may sound a bit trite, but it 
happens to be true.  We are in the midst of a tremendous explosion of entrepreneurial brilliance 
that is producing more disruptive and positive technological change than the world has ever seen 
before.  But maybe I’m wrong. 
 So, let’s look at some fresh facts.  In just 26 years since its invention, half of the world’s 
population now has a cellphone.  3.3 billion cellphones inhabit our planet of 6.6 billion people.  
No technology has ever penetrated this deeply this fast.  On top of that, many of those phones 
possess more computing power than did the entire Apollo program.  As processing power climbs 
ever-higher under Moore’s Law, our use of the spectrum has become exponentially more 
efficient as well.  In fact, our spectral efficiency doubles every two-and-half years.  Since 
Marconi’s first radio transmission in the 1890s, we are one trillion times more efficient in our 
use of the spectrum.  These wonderful trends should continue forever. 
 Internet usage is also increasing at an astounding rate.  In fact, today just one website, 
YouTube, consumes more bandwidth than the entire Internet did in 2000.  And rapid advances in 
wireless technology mean that we have the freedom to access the Internet anytime and anywhere.  
That means we’ll be able to watch March Madness virtually anywhere.  But apparently we 
already are.  CBS tells me that their NCAA website spewed an astonishing 2.9 million hours of 
live streaming video of the tournament, viewed by 3.7 million daily unique users, in just the first 
two days.  That’s 102% growth over last year.  So the real question is: is anyone in America 
getting any work done Thursdays through Sundays in March?   Perhaps we should just be honest 
about it all and declare a national basketball holiday.   
But to get back on topic, as our PC becomes our TV and cell phone, all at the same time, 
what does this mean for policy makers in Washington who like to squeeze technologies, and 
their regulations, into neat little silos?  I operate from the presumption that no one can keep track 
of this fabulously constructive chaos in the market place, let alone five unelected bureaucrats in 
Washington.  Only unfettered markets are qualified to make the billions of decisions each hour 
that determine the success or failure of ideas.  Regulation should be reserved only for market 
failure, especially when all technologies, and consumer habits, are constantly evolving.  
 For instance, our “new media economy” has grown past its infancy and is now squarely 
within its adolescence.  And just like our own gangly and awkward teenage years, the new media 
economy is working through growing pains.  Case in point:  The Writer’s Guild of America 
effectively shuttered Hollywood when it went on strike to garner a greater share of new media 
revenue.  New media is where the world’s eyeballs are looking and, as a result, where the ad 
dollars are flowing.  In fact, comScore reported that Americans viewed an eye-popping 10 billion 
online videos in December 2007 alone, a record number.  comScore attributed December’s spike 
in online viewing specifically to the Hollywood writers’ strike which caused a dearth of fresh 
content in the traditional media sector. 
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What this means is that viewers are increasingly seeking alternatives to traditional media.  
Nimble entrepreneurs are stepping in to satisfy that demand.  Earlier this month, the New York 
Times ran a story about how disruptive this metamorphosis is.  According to the Times, a study 
last October revealed that 25 percent of Internet users had streamed full-length television 
episodes online in the previous three months.  And these weren’t just the young: 23 percent of 35 
to 54 year-olds did this.  “Grey’s Anatomy” has been streamed more than 26 million times on 
ABC.com in the last six months, adding the equivalent of two full ratings points to each episode.  
Such numbers have the potential to put more eyeballs in front of ads, and more money into 
writers’, producers’ and actors’ pockets.  But it is consumers who are becoming the ultimate 
winners. 
The Times article closed with the story of Peer Gopfrich, a screenwriter here in L.A.  
When he realized that the networks were offering his favorite shows in high-definition online, he 
hooked up his new HDTV to his computer and broadband connection.  The Times reporter wrote, 
“Mr. Gopfrich’s computer became a free and seemingly endless source of on-demand television.  
‘All of a sudden, we could watch pretty much every popular show we wanted, when we wanted, 
in high-definition in our living room,’ he said.”  Mr. Gopfrich typifies the changing viewing 
habits of millions of Americans. 
Furthermore, this new on-demand phenomenon is going wireless and, therefore, mobile.  
Here in Southern California, The William Morris Agency, Accel Partners, Venrock, AT&T, and 
others, are investing in technologies that will make it easier to run content on cellphones, as well 
as to nurture social networking sites like Facebook and MySpace that have migrated to hand-held 
devices. 
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But the story here is: it appears that the market is delivering its own a la carte video 
offerings, without the “help” of the government.   The video market place is more competitive 
than ever, and it is evolving.  Hundreds of millions of viewers are flocking to sites like:  Hulu, 
Joost, Veoh, MeeVee, Dailymotion, Gofish, and Imeem.  Additionally, as a result of these 
wonderful new developments, parents also have more powerful technologies at their fingertips 
than ever before to help protect their children from indecent content. 
Would these developments exist today if the government had tried to engineer them 
through mandates?  Probably not.  So shouldn’t the government be wary of artificially disrupting 
this natural evolution?  If the government starts imposing mandates regarding à la carte, credible 
studies from both the public and private sectors tell us that consumers will pay more and get less.  
Channels that rely on the eyeballs of browsers for ad revenue will likely disappear, leaving 
consumers with fewer choices, not more.  The subscription rates of surviving channels may very 
well go up, and their programming quality may go down, as they lose ad dollars and are forced to 
divert dollars away from production in favor of marketing.  In fact, one Wall Street analyst has 
suggested that ESPN alone could cost over $25 a month.  So why would the government want to 
impose this mandate when the market is already delivering it, business plans are adjusting 
accordingly and the unintended consequences would be higher prices and less choice during this 
market transition? 
We must also not forget about the First Amendment.  First Amendment rights preclude 
the government from dictating to operators and programmers how their programming must be 
packaged and sold.  A prescriptive à la carte mandate would probably be shot down in court on 
First Amendment grounds alone.  
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But consumers must have at their disposal reliable and affordable broadband pipes if 
market-driven on-demand video is to achieve ubiquity.  Our thirst for online video content is 
posing an engineering challenge to network providers.  Several analyses estimate that only 5 
percent of broadband users consume as much as 90 percent of network capacity.  Most of that 
traffic involves peer-to-peer applications.  Contrary to conventional wisdom, this challenge is not 
unique to the United States.  Japan, which offers fatter and faster pipes on average, is also 
experiencing vexing congestion problems when it comes to P2P applications.  According to its 
Embassy, one percent of Japanese users consume more than half of the broadband capacity in 
that nation.  And, while I’m here in Hollywood, I would be remiss if I did not observe that 
pirated content is a significant part of all P2P traffic. 
Last night’s announcement regarding the BitTorrent/Comcast agreement underscores the 
point that everyone has a responsibility when it comes to network congestion.  I am optimistic 
that the parties recognize this fact.  Just like it did with the creation and governance of the 
Internet itself, the private sector has already formed a working group, called P4P, comprised of 
cable and telephone companies, application providers and other technology companies, to work 
these wrinkles out on their own.  I’m not convinced that the BitTorrent/Comcast matter warrants 
any further government action at this point. 
But going forward, I would warn those urging government regulation in this space to be 
careful what they wish for.  America’s Internet economy is the strongest in the world.  It got that 
way not by government fiat, but by all interested parties working together toward a common 
goal.  By definition, the Internet, a network of networks, is a “Wiki” environment which we all 
share and ultimately pay for.  Is now the time to discard that model which has served us so well 
for so many years of tremendous success?   
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Also, keep in mind that it was not a regulation that pushed broadband adoption to the 50 
percent level in ten years (as measured by the Pew Internet Project).  That success was achieved 
through market forces.  And to put that figure in perspective, keep in mind that it took 18 years 
for color TVs and personal computers to reach similar penetration levels.  Perhaps if the 
government had mandated specific standards and technologies for broadband in the 1990s, today 
we would still be using ISDN, which quickly became known to stand for “it still does nothing.” 
Would those who favor even seemingly innocuous consumer disclosure requirements on 
network owners regarding how they manage P2P traffic mind if a similar requirement were 
imposed on applications providers to reveal to consumers that their computers must be “seeded” 
and work 24 hours a day to allow the P2P system to work?  Such disclosure might be beneficial 
to the public interest, but isn’t the private sector the best forum to resolve these conflicts?  
Government should be the forum of last resort in the event of market failure, not a first line of 
defense for conflicts among businesses. 
Of course, the best way to obviate the need for regulation is to help create the opportunity 
for new competition.  Our country could be especially helped by increased competition among 
new platforms for the delivery of broadband services.  Our recently concluded 700 MHz 
spectrum auction was all about trying to bring “new blood” into the broadband game.  This slice 
of the spectrum is extremely attractive because signals there can travel long distances and 
penetrate buildings.  Last July, I cast my first partial dissent against part of the requirements 
imposed upon the plan for this spectrum precisely because I didn’t think that the plan, as 
adopted, would achieve the goal of bringing in new broadband competition.  And it appears that 
many of my fears proved to be correct.  But I wish I had been wrong. 
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The majority of the Commission imposed an open access requirement on the large, 22-
megahertz portion we call the “C Block,” and public safety requirements in the neighboring 10 
megahertz “D Block.”  “Open access” sounds good if you say it fast, but when it comes in the 
form of a government mandate, what does it really mean?  It was sold to mean that a carrier had 
to allow any device and application on its network, also known as “device and application 
portability.”  But did the open access mandate actually undercut the chances of small and mid-
sized players to emerge as winners from the auction?  By encumbering the larger spectrum 
blocks that better fit larger companies, did the Commission drive these bigger players into the 
smaller spectrum blocks that were better designed for smaller players?  In other words, it is 
apparent from the auction results that larger companies outbid smaller companies in the smaller 
blocks in order to avoid the open access mandate.  In the name of openness, did the auction 
design push rural players and smaller entrepreneurs out of the wireless marketplace?   
Well, here is what we know so far: the price per pop for the “open access” C Block was 
only 77 cents.  On the other hand, the price per pop of the unencumbered B Block was an 
astronomical $2.67 per pop.  There was no way smaller companies could afford to bid those 
prices.  And, let me quickly explain the term “price per pop.”  In calculating spectrum prices, 
whether at auction or in the secondary market, we multiply “megahertz” (the spectrum 
bandwidth) by “population” (the number of people located in the market area).  Formally, 
spectrum price is described as “megahertz per pop.”   But the bottom line is that larger and 
deeper pocketed carriers outbid smaller players by bidding almost three times more for the 
smaller unencumbered blocks than the larger more regulated blocks. 
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Early on, I noted my concern that the proposed open access requirements traded the 
benefits of rural deployment by small and regional licensees, and the entry of new players, for – 
at best – speculative gains of an open access network.      
Make no mistake, I am not, and never have been, opposed to a winning bidder rolling out 
an open network if it wants to.  Nothing under our previous auction rules has prevented this 
development.  In fact, the biggest unwritten story is that device and application portability were 
already coming to market long before the FCC got involved.  Take for example the efforts of two 
carriers who, in 2006, launched dual-mode cellular-Wi-Fi handsets designed to make voice calls 
on cellular GSM networks and at Wi-Fi hot spots - both at home and in public - using voice-
over-Wi-Fi technology, with seamless handoff between the two types of networks.  This offering 
enabled consumers to break through walled gardens into the free and open Internet.  Or what 
about the November 2007 introduction of Android, a Linux-based software stack that consists of 
an operating system, middleware, a user interface and applications, which had been in 
development since 2006?  Or most recently, and after almost a year in the making, even the two 
largest wireless carriers each announced initiatives to allow customers to use any wireless device 
and to employ elective applications on their respective networks.     
In short, the market was heading toward the open waters of open access long before the 
government mandated it.  So for the government to take credit for sparking a drive toward open 
access is a bit like a rooster taking credit for the sunrise.  But what did prevail was the law of 
unintended consequences.  The open access mandate was advertised as the only avenue to attract 
a new player into the broadband market – the coveted Holy Grail of broadband: the “third pipe.”  
But that third pipe player never materialized, and smaller players paid the price.  
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However, with our spectral efficiency doubling every two and a half years, I remain 
optimistic a future FCC will have another opportunity to give entrepreneurs a chance to enter this 
market.  Technological innovation always seems to offer a surprising new solution every few 
years.  In this spirit, I am confident that innovation will resolve the conflicts over use of the TV 
“white spaces.”  These are the unused spaces in between TV channels.  Starting in late 2006, the 
Commission kicked off an equipment testing program to see if either fixed or portable devices 
could be used in these frequencies without causing harmful interference to broadcasters, wireless 
microphone users and others who already use slices of this valuable spectrum.  While the first 
round of tests did not go well for the prototypes, we are undergoing a new round of testing with 
new devices.  If we let science, and science alone work to resolve this issue, I am confident we 
will witness a positive outcome for all.  It may not be this week, this year or next year, but 
eventually increased use of white spaces will spark even more positive and constructive 
disruption which will change the lives of every American.   
    Conclusion.  At the end of the day, we must keep in mind that we are living in an 
exciting, market-driven, on-demand world.  As technologies evolve and consumer tastes and 
habits change, it is better to proceed with a healthy skepticism of regulation.  Given that overly-
engineered mandates often turn out to be counterproductive, we should resist the temptation to 
think that government can outsmart an unfettered and competitive market.  Instead, we should 
remain mindful of the law of unintended consequences.  Although sometimes politically 
difficult, the wiser choice is to equip the private sector with the freedom and flexibility necessary 
to resolve challenges and satisfy consumer demand on its own, while remaining vigilant - and 
ready - to jump in to resolve genuine harms that cannot be addressed any other way. 
 Thank you again for hosting me this morning.  I’m pleased to take a few questions.  
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