Statement of Senator Patrick Leahy, Ranking Member, Senate Juidicary Committee Hearong on Broadband: Competition and Consumer Choice in High-Speed Internet Services and Technologies

July 14, 1999

When I was first elected to the Senate in 1974, in the post-Watergate election, we knew it was a time of political change in America. Little did I realize at the time that this was also the year that the Internet as we know it today was being launched. This was the year that Vint Cerf and Bob Kahn published the design for the Transmission Control Protocol, or TCP, which is one of the core technologies that makes the Internet run. In fact, they first used the word "Internet" in 1974 to describe how this new technology worked.

Look how far we have come since then. Entire industries have grown up in the last 25 years that owe their existence to the Internet, and we are continuing to see new applications, new businesses, and new user demands evolve exponentially. The Internet truly has been the engine of this so-called Information Age and it holds the promise for even greater growth and opportunities.

I commend the Chairman of the Committee and the Chairman and Ranking Member of the Antitrust Subcommittee for convening this hearing, because the issues before us are of critical importance to the future of the Internet. At this hearing, we have a distinguished panel and a panoply of issues that we are confronting in this exciting time of major innovations in technology and telecommunications.

I have asked over the past three years whether 1996 Telecommunications Act has fulfilled its promise of more competition or simply promoted more consolidation. I appreciate that the Bell Companies, including Bell Atlantic, which provides my local telephone service both at my farm in Vermont as well as at my home in Virginia, are anxious to compete in the long-distance telephone market and to offer data transmission services outside their regions. I, too, want them to be there competing, but only when they satisfy the requirements under the law for unbundling their local loops and allowing interconnection to competitors.

I have also raised questions about the elimination of all cable rate regulation called for under the Telecommunications Act. Many consumers have seen their cable rates increase over the last few years and are concerned that the consolidation in the cable industry, which will be accelerated further by AT&T's purchases of TCI and proposed purchase of MediaOne, will result in even higher cable rates.

These are all important issues, and the Committee may have to hold further hearings to explore them fully. The issue I want to focus on today is the Internet, which has had a profound effect on our society. It has simultaneously been a high-powered engine for our economy, and a vehicle for citizens to interact with Congress, our governments, businesses large and small, and other people across the country and around the world.

What has made the Internet so successful in the narrowband (or dial-up) world is that virtually anyone can have an ISP, start a business or simply put up a Web site with important information at low cost, with few barriers to entry. This open network has been healthy for the businesses using the Internet and healthy for consumers.

As we move from a world of primarily dial-up access to the Internet to a high-speed broadband world, the same open environment should exist and thrive. We all have an interest in making sure that the economic and democratic vitality of the Internet continues to flourish, and that the broadband Internet itself be available to all parts of our society, rich and poor, urban and rural.

Significant concerns have been raised about whether proprietary cable-modem broadband service threatens the open architecture of the Internet and, in turn, threatens to stifle innovation in Internet services and applications. To be specific, cable operators are deploying their broadband services through @Home under exclusive contracts. Customers get their high-speed service bundled with the @Home ISP and content service and are not given the choice of paying a reduced fee for the high-speed pipe alone. Generally, if these customers want to get their Internet access through some other ISP or to view proprietary content from another online service providers, they must pay a second subscription fee on top of the full @Home fee. Just as Bell companies with monopoly holds on the local telephone loop are required under the Telecommunications Act to unbundle their services and allow interconnection, some local municipalities have or are considering requiring cable operators to unbundle the high-speed pipeline and allow customers to use other ISPs and online service providers.

What are the threats and risks that consolidation in the telecommunications and cable industry may pose for open access to broadband networks? Would we have the next generation of high-speed broadband networks without the investment that this consolidation reflects? How could concentrated market power over high-speed broadband networks be used as leverage to affect the price and therefore the accessability of online content? Do we need regulation to ensure open access to broadband networks or will the marketplace over time simply demand it? These are important questions, and I look forward to hearing from the witnesses about the answers to these and other questions today.