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Commissioner Pai Remarks at the U.S. Chamber of Commerce

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Released: September 14, 2012

OPENING REMARKS OF COMMISSIONER AJIT PAI

AT THE TELECOMMUNICATIONS & E-COMMERCE COMMITTEE ROUNDTABLE

OF THE U.S. CHAMBER OF COMMERCE

WASHINGTON, DC

SEPTEMBER 14, 2012

I want to thank the U.S. Chamber of Commerce for organizing this roundtable discussion
on job creation and economic growth in the communications industry. As you celebrate your
100th anniversary, the Chamber’s voice has never been more vital than it is today, speaking out
on behalf of policies to promote entrepreneurship and American competitiveness. I also want to
thank the Chamber’s members for participating in today’s event.
You don’t need me to tell you that our nation’s economy is struggling. Your companies
deal with that reality every day. Our growth rate has been anemic, and in the last two months
alone, over half-a-million Americans have exited the labor force. The information and
communications technology (ICT) sector has the potential to lead the way to a strong recovery.
But that sector is not doing as well as it should be. Right now, according to the Labor
Department, there are fewer Americans working in the ICT sector than there were in June 1989,
a time before the advent of the Internet and the ubiquity of smartphones and other mobile
devices. Over the past three-and-a-half years, the United States has lost 165,000
telecommunications jobs, over fifteen percent of the industry’s workforce.
In order to figure out what is responsible for these trends, I have been meeting with those
in the private sector who decide whether to invest their capital and to create jobs. When I’ve
asked what’s holding them back, why they aren’t investing the billions of dollars sitting on their
balance sheets, I have heard a similar answer over and over again in one form or another:
regulatory uncertainty. This afternoon, I want to hear your views on what the FCC can do to
create a favorable regulatory environment that will encourage investment and unleash innovation
in the ICT sector. But let me start by sharing a few thoughts.
First, in order to promote job creation and economic growth, I believe that the FCC needs
to remove barriers to infrastructure investment. The communications industry is in the midst of
revolutionary change, and we need to be preparing for what I would call an Internet
transformation in America. We can no longer afford to cling to outdated regulatory approaches.
Many of our rules were developed for copper-wire networks that were operated by monopoly
providers. Today, we have to embrace a modern framework that facilitates investment in next-
generation networks and recognizes that we are quickly headed to a competitive, all-IP world.
This is why I strongly disagreed with the Commission’s recent decision to suspend our
longstanding, bipartisan pricing flexibility framework governing special access services.
Marching back down the road of re-regulation sends precisely the wrong message to the private
sector. Companies are understandably worried that the Commission’s ultimate target will be
fiber. Their concerns will only discourage infrastructure investment and delay the IP transition
that will improve our global competitiveness. The Commission’s action is all the more
unfortunate because we badly need additional investment in this area. Studies estimate that
every billion dollars the private sector spends on fiber deployment creates between 15,000 and
20,000 new jobs.

Aside from removing barriers to infrastructure investment at the federal level, we should
also do the same at the state and local level. I just returned from Kansas City, where I visited the
new Google Fiber project. Over 1,100 towns and cities competed to be Google’s test site.
Kansas City won only after it streamlined its rights-of-way management policies and made up-
front commitments to expedite and simplify its permitting processes. But it shouldn’t take a
nationwide competition to cut through the endless maze of regulation that delays and deters
companies from upgrading broadband networks or deploying new infrastructure. To cite just one
egregious example, it shouldn’t take years for AT&T to bring U-verse to the City of San
Francisco. Instead, government should encourage the private sector’s efforts through broadband-
friendly infrastructure deployment policies.
Second, I believe the FCC needs to accelerate its efforts to make additional spectrum
available for mobile broadband. The Commission has fallen behind schedule in meeting the
goals set forth in the National Broadband Plan. The Plan called for freeing up 300 MHz of
additional spectrum for wireless broadband use by 2015, and 500 MHz by 2020. But so far, in
the two-and-a-half years since the Plan was released, we haven’t made any additional spectrum
available for wireless broadband use.
This omission has serious consequences for the broader economy because of the link
between spectrum policy and job creation. According to a recent study, a more rapid rollout of
4G wireless technology in the United States could yield $28 billion in additional capital
investment and create up to 400,000 American jobs by 2016.
I would like to thank the Chamber for speaking out on this issue. Earlier this year, the
Chamber urged the Commission to adopt service, technical, and licensing rules by the end of
September so that 40 MHz of AWS-4 spectrum can be used for terrestrial mobile broadband. I
made the same request. Unfortunately, I see no realistic prospect that the Commission will act
this month. But it is important for the Chamber to remain engaged. I know that the diligent
Commission staff is working hard on the AWS-4 proceeding, and I am optimistic that we can
adopt final rules in October if we make it a priority.
Another important avenue for addressing the spectrum crunch is through the use of
incentive auctions. I therefore applaud Chairman Genachowski for scheduling a vote later this
month on a proposal to kick off the implementation of the incentive auction legislation. I am
carefully studying the proposal and look forward to working with my colleagues to reach a result
that is fair to all stakeholders. In my view, one thing that the proposal must include is a schedule
detailing when the Commission intends to take the steps necessary to complete the rulemaking
process and to hold the incentive auctions. Most importantly, I believe that we should set a
target date of June 30, 2014 for completing the auctions.
Third, I believe that the FCC must be as nimble as the industry we oversee so that we do
not stand in the way of innovation, investment, and job creation. To overcome bureaucratic
inertia, entrepreneurs need an ally and an advocate at the FCC. That’s why I have proposed that
the Commission create an Office of Entrepreneurial Innovation (OEI). This can be done without
enlarging the federal bureaucracy by repurposing the Office of Strategic Planning and Policy
Analysis. OEI would assess agency proposals to ensure that new regulations don’t slow down
innovation. In addition, OEI would focus on breathing life into Section 7 of the
Communications Act, which directs the Commission to act on any proposal for a new technology
or service within one year.

But it is not only new technologies and services that need FCC approval. Being nimble
means taking deadlines seriously, starting with reviewing major transactions within 180 days.
We should codify that deadline in our rules. Furthermore, license renewal requests should not
languish for years; they must be handled in a prompt manner to provide certainty to businesses.
In order to reduce uncertainty, we also should act quickly to clarify ambiguous statutes or
regulations. Businesses deserve to know the rules of the road. They shouldn’t be left to guess
where their legal obligations start and stop. Take, for example, ambiguities in the Telephone
Consumer Protection Act. Because our regulations aren’t clear about what’s prohibited and
what’s allowed, companies are facing class-action lawsuits for innocuous conduct such as
making group-texting easier or confirming that a consumer has opted out of receiving future
messages. And the threat of litigation has deterred companies from engaging in common-sense
communications with customers, like confirming that a package is scheduled for delivery. These
ambiguities serve the interests of trial lawyers, not consumers, and certainly not companies
trying to meet their customers’ needs. I want companies to spend their time innovating, not
litigating, and the Commission should aim to reduce lawsuit abuse.
These three principles—removing barriers to infrastructure investment, bringing more
spectrum into the mobile marketplace, and acting with dispatch—encompass some of my ideas
on what the FCC should be doing to spur job creation and economic growth in the ICT sector. If
we implement the right policies here in Washington, I am confident that a dynamic
communications industry can be at the forefront of a robust economic recovery that will create
millions of jobs and raise the American people’s standard of living. I look forward to hearing
your suggestions this afternoon on how we can make this happen.

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