STATEMENT of COMMISSIONER ROBERT M. McDOWELL FEDERAL COMMUNICATIONS COMMISSION Before the COMMITTEE ON ENERGY AND COMMERCE SUBCOMMITTEE ON COMMUNICATIONS, TECHNOLOGY AND THE INTERNET UNITED STATES HOUSE OF REPRESENTATIVES September 17, 2009 Mr. Chairman, Ranking Member Stearns and Members of the Subcommittee, it is a privilege to appear before you today. The FCC is an agency with new energy and new blood, and I am honored to be serving there for another term. I look forward to working with my new colleagues, Julius Genachowski, Mignon Clyburn and Meredith Attwell Baker, as well as my friend Mike Copps. With these new commissioners and new leadership, we have a perfect opportunity to rebuild the FCC as we address the myriad communications and economic policy challenges facing America. For some time now, I have been calling for reform of the Commission’s structures and processes. To help spark discussion and progress, I wrote open letters outlining reform ideas to both Acting Chairman Copps in January and Chairman Genachowski in July. Additionally, we have shared ideas with each other from the outset. First and foremost, the FCC should be a more open and collaborative place where all Commissioners are included in the idea formulation process early on, rather than just 21 days before a voting deadline. Towards this goal, immediately upon becoming Acting Chairman, Mike Copps worked to make the Commission more transparent, collegial and efficient, and I commend him for his efforts. Similarly, Chairman Genachowski has started a new process of enhancing information flow and improving employee morale. A tremendous amount of FCC reform work remains to be done, however. I look forward to working with all stakeholders on this important endeavor, especially Members of this Committee. For the sake of brevity, I have attached a copy of my open letter to Chairman Genachowski as part of my testimony and I respectfully request that it be made part of today’s record. The FCC’s largest initiative of the year thus far, of course, has been the digital television transition – which continues to this day. Prior to the June 12 analog cut-off date, almost three million households were estimated to be unprepared. As of August 30, however, 1.8 million of those households were ready – leaving only about 710,000 households without access to digital signals. In other words, 99.4 percent of U.S. households are getting DTV signals in some way – over the air or through subscription services like cable or satellite TV. Nevertheless, the Commission continues to work with the private sector to help the remaining consumers connect to the digital age of television. Similarly, we are working with broadcasters to resolve a few reception issues, mostly involving the higher VHF channels. Overall, while I’m reluctant to declare victory yet, the DTV transition went better than many had feared, thanks to the hard work of an uncountable number of people, including our dedicated public servants, Mike Copps and his team. As we move forward, I cannot think of a more important time to be at the FCC. Even though the American economy has been shrinking overall, our communications 2 marketplace is vibrant, evolving and growing. Consumers have more choices among more communications technologies, services and providers than ever before. For instance, 157 million Americans watched more than 21 billion online videos during the month of July alone -- a figure that is growing at a double-digit rate each month. Consumers are watching those videos on an increasing number of platforms as well. For example, nearly 15 million Americans watch video on their mobile devices, and that number is growing at 50 percent per year. Three years ago, the discussion of a wireless-only marketplace was just beginning. Today, nearly one in five American households is wireless-only while the majority of American consumers has a choice of five wireless carriers. At the same time, 23 percent of all businesses are expected to be wireless-only by 2012. America’s wireless broadband market is leading the world by growing more than 400 percent during the past three years. Additionally, America has the fastest growing fiber-to-the-home market in the world – with an annual growth rate of over 120 percent. Five years ago, less than one percent of American homes had access to fiber. Today, that figure stands at 13 percent. Since 2000, the number of high-speed lines in America has increased more than 1900 percent, from approximately 6.8 million connections at the end of 2000 to almost 133 million lines nearly nine years later. To grow that number further, American businesses will spend up to $80 billion on new broadband infrastructure this year alone. Few, if any, business sectors can make such a claim in this economy. Certainly, our communications marketplace is far from perfect, and more must be done to help make new technologies and services available to more Americans at 3 affordable prices. As we prepare our congressionally mandated national broadband plan, however, we should not just examine our shortcomings, but we should learn from what we have done right as well. The information and communications technology (“ICT”) sector is poised to lead our country out of the recession and into an era of sustained economic prosperity, higher paying jobs and untold consumer benefits if the government does not adopt policies that inhibit economic freedom and investment. America’s year- over-year private sector investments in broadband dwarf any government-funded broadband efforts throughout the globe. In recent years, the Commission has promised that new broadband technologies would come to fruition as a result of our actions to put into the hands of consumers the power of previously unavailable spectrum, such as the 700 MHz band. Market players, both large and small, will need even more capital to build out the infrastructure needed to make that promise a reality. With this fact in mind, whatever policies we adopt should help attract more private sector capital, not deter it. Encouraging the flow of capital is the spark needed to restart America’s economic engine. As the broadband plan takes shape, it is my hope that the plan not take a heavy- handed, top-down, command-and-control industrial policy approach in an attempt to promote more broadband access and usage. Instead, I hope that it will be imaginative, pragmatic, flexible and the next step in an open and iterative process that will make helping unserved America its top priority. Our policies should encourage abundance and competition to give consumers more choices, life-changing innovations and lower prices, all while obviating the need for regulation and rationing. If we are truly committed to 4 5 being data driven, and avoid cherry picking data to justify a predetermined outcome, we can produce a useful template to produce constructive public policy. In addition to reform and the broadband plan, the Commission faces a number of other challenges. We are confronted with a skyrocketing Universal Service cost structure that is unsustainable. We preside over an inefficient and outdated intercarrier compensation regime. We should quickly gather more granular data to better analyze the special access market. More than 1.3 million broadcast indecency complaints, some of which are older than my children, lie ossifying in our headquarters. The Communications Act requires us to review our rules governing media ownership again next year. And during that review, as with all of our endeavors, we must be faithful to the First Amendment and defend the freedom of speech. We still have work to do to ensure technologies that operate in the unused television “white spaces” can come to market and into the hands of consumers as quickly as possible. Likewise, we must work with Congress to devise a solution for resolving the communications challenges faced by our nation’s emergency response providers. And the list goes on. In conclusion, America’s ICT sector is at a critical juncture. Our technological and economic future could be brilliant if we, as policy makers, have the courage to make the right choices. I look forward to working with Congress, Chairman Genachowski and my Commission colleagues on important new policies that will encourage job-creating investment, empower consumers and make America stronger and more competitive. Mr. Chairman, Ranking Member Stearns and Members of the Subcommittee, thank you again for the opportunity to appear before you today. This concludes my statement, and I look forward to answering your questions.