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Chairman: Statement to House Subcommittee on Ensuring Internet Competition

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Released: May 5, 2011

Statement of

Chairman Julius Genachowski

Federal Communications Commission


Hearing on "Ensuring Competition on the Internet: Network

Neutrality and Antitrust Law"


Before the Subcommittee on Intellectual Property, Competition, and the

Internet

Committee on the Judiciary

U.S. House of Representatives

May 5, 2011

Chairman Goodlatte, Ranking Member Watt and members of the
subcommittee. Thank you for the opportunity to be here.
This is my first time testifying before this subcommittee since becoming
Federal Communications Commission Chairman in 2009.
Prior to my appointment, I spent more than a decade in the private sector,
working as an executive at Fortune 100 company, and also as an investor.
I saw in the private sector the importance of high-speed Internet of wired
and wireless broadband to our country's economic success, and to
addressing so many challenges our nation faces, from education to public
safety.
The importance of communications to our economy and to all Americans is
why the Communications Act has long given the FCC authority in this area.
So we are working hard at the FCC on universal service for broadband, on
reducing barriers to private sector broadband buildout, and on unleashing
spectrum so that we can lead the world in mobile and address the looming
spectrum crunch.
I also saw in the private sector the importance of the Internet's freedom and
openness to its powerful success as a platform for innovation and economic
growth, as well as for free expression.

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I learned that no central authority, public or private, should have the power
to pick which companies or which ideas win or lose on the Internet.

I also learned in the private sector that certainty and predictability are critical
to encouraging private investment and innovation, as is flexibility for
companies in sectors characterized by fast-moving technologies and
markets.
When I arrived at the FCC, the agency had on a bipartisan basis adopted
measures to ensure Internet freedom and openness, and enforced those
measures.
But unfortunately, the ad hoc process by which the prior FCC sought to
protect Internet openness generated uncertainty among Internet stakeholders.

This uncertainty and other issues created a real schism within the broadband
economy between Internet content and application entrepreneurs on one
hand, and broadband providers on the other, a battle that was
counterproductive for our economy and global competitiveness.
Meanwhile, there were incidents in which Internet service providers blocked
or degraded lawful online content, and FCC action was required to bring
these practices to a stop.
This occurs in a market where more than 70 percent of Americans live in
areas with only one or two fixed broadband providers.
That's why, in 2009, we launched a fair and open Administrative Procedures
Act process, with the goal of establishing a framework that would be good
for all parts of the broadband economy for consumers of Internet services,
for innovators and entrepreneurs building new products and services on the
Internet, and for Internet service providers. A framework that would
increase certainty and predictability in this important but historically
contentious area.
That was our goal, and I believe we achieved it. Our sensible, high-level
framework to preserve Internet freedom has generated broad support from
stakeholders who, in the past, couldn't find common ground.
The rules of the road are strong and balanced, built on the Commission's
prior steps in this area, and rooted in the Communications Act.
The rules fit on one page, and boil down to four things.

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First, transparency, so that consumers and innovators can have basic
information to make smart choices about broadband networks and how to
develop and launch the next killer apps. Empowering them with information
will reduce the need for government involvement.
Second, no blocking of lawful Internet content or services, so that consumers
can be free to access lawful content or services, and so startup and other
Internet companies can be free to reach Internet consumers. Our framework
makes clear that it does not protect unlawful content that violates, for
example, intellectual property or child pornography laws.
Third, a level playing field a fair non-discrimination principle, so that
consumers and markets are picking winners and losers online.
And fourth, flexibility for Internet service providers --flexibility to manage
broadband networks, recognizing legitimate differences between wired and
wireless technologies; flexibility to deal with congestion or harmful traffic,
to pursue innovation in business models, and, of course, to earn a
meaningful return on investment.
Some people think the framework we adopted doesn't go far enough, and
others think it goes too far. I believe it gets it right.
One of the nation's leading venture capitalists described our framework in
terms used by many other investors and companies in the broadband
economy: "This effort is a pragmatic balance of innovation, economic
growth, and crucial investment in the Internet."

It's not regulation of the Internet; it's a light-touch framework to preserve
the dynamic, free and open nature of the Internet.
Virtually all major investment analysts agreed that our framework was good
news for the broadband economy. Since our action, investment has
accelerated in both early-stage companies and in broadband networks.

And that's what we want to see massive private investment throughout the
broadband economy in startups creating online products and applications,
and in the companies building broadband network infrastructure.

And we want to see the open Internet grow and strengthen as a platform for
small businesses to seize the opportunities of cloud computing, lowering
their costs and expanding to new markets. That's what our framework

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achieves.

We completed the Internet freedom order in December, and to undo our
framework would increase uncertainty, decrease investment, and hurt job
creation.

Some argue that, rather than acting, the FCC should have allowed antitrust
laws to be the sole remedy for violations of Internet freedom.

In my view, while critically important, antitrust laws alone would not
adequately preserve the freedom and openness of the Internet or provide
enough certainty and confidence to drive investment in our innovation
future.

As we heard during our FCC proceeding, antitrust enforcement is expensive
to pursue, takes a long time, and kicks in only after damage is done.
Especially for start-ups in a fast-moving area like the Internet, that's not a
practical solution.
Some have suggested that Congress adopt new antitrust laws addressing
Internet openness. But that too would be a problematic approach, ill-suited
to the fast-changing nature of Internet technology. As the Supreme Court has
pointed out, while statutes are hard to change in light of new developments
in network technology or markets, expert administrative agencies have
flexible processes for dealing with the unexpected and are, accordingly,
better suited for handling this particular issue.
The Supreme Court decision in Trinko raises additional uncertainty about
relying solely on antitrust laws as a remedy in the context of
communications services. Indeed, writing for the Court, Justice Scalia
observed that antitrust laws can be particularly difficult to apply to technical
communications issues and emphasized the comparative advantages of the
FCC as an expert agency on communications issues.

To conclude, while the FCC was divided on the particular issue of open
Internet rules, the fact is that we resolve more than 95 percent of our votes
on a bipartisan basis.
We are now focused on promoting universal access to broadband and
unleashing spectrum initiatives of critical importance to our 21st century
economy and our global competitiveness, to expanding opportunity broadly,

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and to addressing major issues from education to public safety.
I look forward to working with my Commission colleagues and with
Congress to harness the opportunities of communications technologies for
our economy and all Americans.
Thank you, and I look forward to your questions.


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