POWELL CALLS ‘DIGITAL MIGRATION’ CRITICAL TO U.S. COMPETITIVENESS

MANCHESTER, N.H. -- The digital migration isn’t just about technology, it’s about “the infrastructure for U.S. competitiveness, period,” FCC Chmn. Powell told a town meeting here Tues. sponsored by the N.H. High Technology Council. Broadband networks will affect the future competitiveness of the U.S. economy, he said. With the overseas outsourcing of jobs an issue in the Presidential campaign, “I've wondered why we don’t outsource jobs to Appalachia or the Mississippi Delta -- with broadband networks in place, we could,” Powell said.

This digital migration “isn’t just a problem for a single regulatory agency, [and] there needs to be a recognition of that fact,” Powell said. The U.S. faces a massive capital expenditure project and a complete conversion away from analog communications is inevitable, Powell said. Two years ago, telco executives had argued that the digital migration would affect only small parts of the telephone network with niche applications such as VoIP, he said: “In the last 6 months, everyone has stopped making that argument.” The challenge for the FCC is “to look at every rulemaking and decide, will this help the transition or impede it,” Powell said.

Powell traveled with Sen. Sununu (R-N.H.). Speaking informally while touring VoIP firm Cedar Point in Derry, N.H., Sununu said he fully expected his VoIP bill (S-2281) would advance this year at least as far Commerce Committee markup. He said the bill had been received favorably by Committee Chmn. McCain (R-Ariz.). Prospects beyond that were less clear: The bill has no co-sponsors and no companion bill in the House, he said, although House Commerce Committee Vice Chmn. Pickering (R-Miss.) introduced similar legislation. Pickering had said his bill was a good “starting point” and the goal would be to have legislation passed in the first session next year. Sununu said later at the event that his bill “tries to provide clarity and guidance to the FCC” on not just VoIP “but other IP services.” S-2281 would exempt VoIP from the current access charge regime or successor charges. Sununu said it also would preempt state or local jurisdiction over VoIP and make clear that VoIP applications would fall under federal jurisdiction. The bill’s preemption of potential state oversight proved popular among an audience composed largely of N.H.-based VoIP equipment makers and competitive telephone operators.

Powell and Sununu answered audience questions on a wide range of topics in a town meeting format. On the subject of media ownership and the “impact that media consolidation might have on democracy,” Sununu contested the “mythology” of increasing consolidation. Growing up in N.H. in the 1960s, he said viewers had a choice of 3 networks, and these “networks owned 70-80% of the audience. Today, there’s 40 or 50 other channels on cable and that’s just TV.” Beyond TV, there’s the Internet, radio -- “thousands of media outlets that aren’t affiliated in any way.” Powell warned “public policy can’t be made by rhetorical accolades about ’the death of democracy.'” Democracy depends on diversity of opinions and “no one in govt. is arguing against diversity,” he said. And at some level of media consolidation free flow of information could be compromised, Powell said. “But there should be an honest debate: Where do you draw that line?” Rules should reflect the composition of the market, Powell said, noting that media consolidation rules affect only broadcasters.

An audience member praised Powell’s vision of a “one world” digital network but wondered aloud whether his vision would be scuttled and if the obstacle would more likely be technology or policy. “Technology doesn’t wait for your consideration,” Powell said. In dealing with problems at the FCC, he said he asks his staff to immediately identify what is “futile.” He didn’t want to spend time on a solution that won’t work because technology already had passed it by: “Technology is almost Darwinistic in its march forward… Let policy act like a mirror reflecting technology truths, rather than try to shape technology.” The FCC must try to be forward-looking on policy, Powell said: “The ground is littered with false predictions.”

Digital networks are taking the transition cost of sharing information to zero, Sununu said. “We've already seen this in the recording industry,” he said. Large companies were formed by “the huge transition costs to share music.” With the Internet, the cost to share music, legally or illegally, is close to zero, a fact that has caused turmoil in the industry. Now we see the same thing in the long-distance market, Sununu said. “The marginal cost for moving a byte for long-distance telephony is going to zero. The industry must come to grips with these economic facts of life,” he said: “But the free exchange of information will be fantastic for freedom.” Ideas can easily be sent across borders, he said: “Repressive regimes have held onto power by controlling the flow of information and the economy.” The emergence of a worldwide digital network will make this impossible, Sununu said.