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Remarks by Assistant Secretary Rohde at the Dialogue on Diversity

Examining The Telecommunications Act
May 19, 2000

Remarks of Gregory L. Rohde
Assistant Secretary of Commerce Communications and Information
Dialogue on Diversity
National Press Club, Washington, D.C.
May 19, 2000
(Text as prepared for delivery)

Examining The Telecommunications Act

Good afternoon and thank you for inviting me to address the "Dialogue on Diversity." I am delighted to be here.

Allow me to share with you a recent experience I had which highlights diversity and commonality. I recently traveled to Brooklyn, New York where more than 2.3 million people live in an 88 square mile area and where over ninety different languages are spoken in one of the most ethnicity diverse communities anywhere. It is also home to a very large immigrant population and one of the largest public housing projects in the nation.

Now Brooklyn and North Dakota, where I grew up, could not be more different in many respects. There are only 620,000 people in about 70,000 square miles in my home state. However, the children growing up in Brooklyn and my two young nieces who currently live in Grand Forks, North Dakota, have one very important fact in common - they are all at risk of becoming bystanders in the new economy. The fact is that residents of rural and inner-city areas, minorities, and low-income families tend to have less access to the tools of the information age - computers, the Internet, and advanced telecommunications infrastructure.

If we can overcome the common challenge of closing the digital divide, our Nation, as a whole, will be able to benefit by our diversity. Abraham Lincoln used to practice his home work with charcoal on the back of a shovel. He overcame his humble beginnings. But how many more Americans are not fulfilling their full potential because they face the barriers of geography, discrimination, and financial status? Think of the talent that has gone unrealized because of the accidents of geography, economic status, gender, or race.

Fortunately, we have an unprecedented opportunity to change that. The new economy and the telecommunications revolution which has helped make the new economy possible can eliminate the barriers of the past. The telecommunications revolution and the Internet has completely transformed the center of our economic universe. No longer is it the case that one's economic opportunity is dependent upon geographic proximity to markets; the prosperity of one's community, or ones race or gender. In the new economy, access to the tools of the information age will determine opportunity.

Here is an example. There is a group of ladies in Fargo, North Dakota who practice the ancient Norwegian craft of hard anger - an embroidery technique. For years, these women had been making hard anger products and selling them in a small shop in Fargo called Nordic Needle. A few years ago, they decided to create a web site and sell their goods on line. Today, Nordic Needle is an international business and has to struggle with keeping up with orders.

E-commerce makes it possible for small main street businesses to become international marketplaces. It creates new opportunities for inner-city and rural communities to rejuvenate and it opens doors for female and minority owned businesses.

It is hard to pick up a newspaper or magazine today without reading some incredible new statistic about how the Internet is changing our lives:

  • Two-thirds of U.S. companies now advertise online.
  • 140 of the 150 largest newspapers are online.
  • In the next 5 years, Internet ad sales could surpass TV ad sales.
  • Nearly 40% of home buyers use the Internet.

But how can we ensure that this revolution reaches all Americans and all regions of the Nation? The recent explosion of new services that are bringing Internet access to more Americans and its corresponding opportunity is not happening by accident. It is happening because of technology and the ingenuity to apply new information technologies.

It is also happening because our nation has worked to establish a competitive environment that is driving investment. The same technology exists in Europe, Asia, and Latin America. But there is an explosion of growth in the U.S. that has other nations striving to replicate our success.

There is a growing recognition in the world that open, competitive markets foster growth in telecommunications and information services. The U.S. has shown leadership in breaking open markets to competition. The breakup of AT&T and the Telecommunications Act of 1996 have generated very positive results for consumers. The AT&T divestiture led to the creation of hundreds of long distance competitors who built multiple nation wide fiber optic networks within a decade and long distance rates dropped by more than half.

In 1996 the Congress and the Administration sought to replicate a competitive environment in all areas of telecommunications and information services. When I worked on that legislation in the U.S. Senate, there were fewer than a dozen competitive local exchange carriers (CLECs). Today, there are literally hundreds of new competitors offering telephony and advanced services whose existence was made possible by the pro-competitive provisions in the Telecommunications Act of 1996. In fact, the competition has become so intense in some areas, such as Washington, D.C. that the city had to impose a moratorium on carriers tearing up the streets to lay facilities which provide high speed Internet access and other services. The pro-competitive environment has led to more than $50 billion in investment and created nearly a quarter million new jobs.

Wireless and land line CLECs are making progress into RBOC territory because the Act not only imposes interconnection and unbundling on the incumbent carriers but also because the Act requires that the RBOC network be effectively open to competition before they can enter long distance services. The Act's pro-competitive provisions are indeed working to open up markets. In my judgement, we are seeing significant progress in several states with RBOCs opening up their markets. As a result, opportunities for entrepreneurs and competitors are growing.

Despite the progress being made under the pro-competitive approach of the Telecommunications Act of 1996, some in Congress are talking about changing directions. Under the veil of "de-regulation for data services" some are talking about stopping the progress of competition.

The Administration believes that competition, as structured under the 1996 Act, is the model that will best deliver advanced telecommunications and information services, such as high speed Internet access. Walking away from the Act's pro-competitive provisions at this point would be a serious mistake.

Socrates was once asked his opinion as to whether or not it was best for man to marry or stay single. His response was: "let him do as he will, for he will repent of it anyway." The recent activity on Capitol Hill to gut the Telecommunications Act of 1996 by excluding data and other advanced services from competition seems to be a change of mind for many legislators. The Administration does not believe that we need to change course at this time. In fact, we believe that the results are evident that competition is working and now is the time to stay the course and continue to promote competition.

Many appear to be mistaken about a fundamental principle of the Telecommunications Act that sequence matters. The Act is indeed about de-regulation, ultimately. However, consumers will not benefit through deregulation of monopoly service. That is why the Act is structured as it is: the first step is to establish a pro-competitive environment. Only after effective competition has been established can de-regulation follow. Those who speak about the need to de-regulate and cite the Act as the defense fail to appreciate that competition is a necessary requirement.

Only a pro-competitive environment is going to create opportunities for new entrants - including women and minority businesses. There is no more dynamic aspect of our economy than the area of telecommunications and information services. Keep in mind that this industry has leaders such as Meg Whitman, President of e-bay, and Candice Carpenter, founder of i-Village and others have benefitted from the pro-competitive model that we should not jeopardize.

Thank you.