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Chairman Genachowski U.S. China Internet Industry Forum

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Released: December 7, 2011

REMARKS OF FCC CHAIRMAN JULIUS GENACHOWSKI

U.S.-CHINA INTERNET INDUSTRY FORUM

WASHINGTON, DC
DECEMBER 7, 2011

Good morning. I’m Chairman Julius Genachowski of the U.S. Federal Communications
Commission.
Thank you to Microsoft and the Internet Society of China for inviting me to spend some time
with all of you today. In particular, I’d like to thank Vice Minister Qian Xiaoqian of the State
Internet Information Office, Vice Chairman Wu of the Internet Society, and Craig Mundie of
Microsoft.
I will talk today about opportunities and challenges in the U.S.-China relationship on information
and communications technology issues.
Let me be clear: while there are significant opportunities, the FCC and other U.S. government
entities have significant concerns regarding China’s conduct on important issues, including
restrictions on Internet freedom and openness, inadequate protections for intellectual property,
cybersecurity, international standards, and market access.
The Federal Communications Commission is the U.S. government’s expert agency for
communications. We develop and implement policies for wired and wireless communications—
including broadband Internet, telephone service, broadcast TV and radio, satellite, and cable.
A fundamental principle of the FCC is this: Free markets for commerce, communications, and
ideas will result in greater innovation and investment, increased job growth, and benefits to our
citizens.
I’m pleased that during my two-plus years at the FCC, we’ve focused the agency on unleashing
the tremendous opportunities of broadband – wired and wireless. Broadband is an information
and communications technology that can do so much to promote job creation; economic growth;
and advances in health care, education, energy, public safety, and cloud computing.
Broadband can help new businesses start, small businesses grow, and large businesses compete
and succeed. And not just technology businesses. Broadband is helping an enormous number of
“offline” businesses, from farms to bakeries to delivery companies.
To harness the opportunities of broadband, we at the FCC crafted America’s first-ever National
Broadband Plan, released in the spring of last year. It identified key initiatives related to
broadband deployment, in areas of the country where broadband networks haven’t been built out;
broadband adoption, for the tens of millions of Americans who do not have broadband service;
and wireless spectrum, since demand for spectrum is fast outstripping supply as we see
tremendous innovation in and on mobile platforms. It also identified key initiatives in the use of
broadband in important sectors of our economy, such as education, health care, and energy.
Since adopting the Broadband Plan, we’ve been hard at work ensuring we have the right policies
in place to execute on the initiatives.
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For example, to address broadband deployment, just six weeks ago, the Commission
comprehensively reformed our Universal Service Fund, which helps the private sector provide
communications services in rural areas. We took an outdated, broken system designed for the
telephone era and modernized it for broadband, our 21st century essential infrastructure. This will
help connect millions more rural Americans over the next several years, and put our country on
the path to universal broadband by the end of the decade.
To address broadband adoption, we challenged the private sector – including leading Internet
service providers, technology companies and nonprofit organizations – to help overcome barriers
to broadband adoption. Earlier this fall I was pleased to announce that a coalition of
organizations had launched the “Connect to Compete” initiative, which will enable low-income
families to purchase a computer and basic broadband service at deeply discounted prices, and as
part of which partner organizations will step up their efforts to improve Americans’ digital
literacy skills. We’re also working to modernize existing FCC rules and policies in this area.
To address the growing spectrum shortfall, our National Broadband Plan set a goal of unleashing
500 megahertz of spectrum for mobile broadband, both licensed and unlicensed, by the year
2020 – a goal endorsed by the President last June.
To help meet that goal, we’ve proposed a number of policy initiatives, including a new type of
two-sided spectrum auction called voluntary incentive auctions, and have been taking additional
steps to remove barriers to the use of spectrum for broadband.
We’ve also been focused on other policies to promote innovation and investment throughout the
broadband economy.
Last year we adopted a strong framework to preserve Internet freedom and openness. This
framework does not – and we should not – regulate the Internet. Rather, it ensures that no central
authority, public or private, can act as a gatekeeper to the Internet. This framework ensures that
entrepreneurs and others can launch online businesses and reach customers and markets through
the Internet, without fear of blocking or interference.
We said these widely supported rules of the road to preserve Internet freedom would increase
certainty and predictability in the marketplace, unleashing new innovation and investment across
the broadband economy. And they have. At both applications and infrastructure companies in
the U.S., innovation is increasing. Investment is up.
We’re focused on ensuring we have the right broadband policies in place because broadband is
so important to our economy and our country. And we understand that broadband is driving
tremendous benefits and opportunities - and can drive even more - not just in the United States,
but also abroad.
By working together to address common challenges, we can increase global economic growth,
innovation, and prosperity, benefitting all countries. That’s why, continuing the work of my
predecessors, I’ve met regularly with my counterparts overseas.
And that’s why I recently traveled to China, where I met with many key government officials and
business leaders, including Vice Minister Qian and Director-General Liu Zhengrong of the State
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Council Information Office - who I know are with us today. I also met with Vice Minister Shang
Bing of the Ministry of Industry and Information Technology, and other Chinese government
leaders.
We went to China primarily to discuss several important issues: spectrum and broadband policy,
the need for free flow of data across borders to advance cloud computing, and the important role
of intellectual property protection and open networks in spurring innovation.
In addition, we emphasized the importance of enhanced market access, and greater Internet
freedom. We have real concerns about China’s position on these issues. We also believe there are
significant opportunities to work together to promote economic growth and innovation in both
our countries – a win-win.
One immediate area for possible coooperation and coordination is spectrum policy.
In the U.S., multiple experts expect that by 2014, demand for mobile broadband and the
spectrum to fuel it will be 35 times greater than last year. And China alone added 30 million
mobile subscriptions in just the last quarter.
We believe cooperation and coordination on issues like spectrum harmonization will increase
economic growth, innovation, and lead to a range of societal benefits for both of our nations,
including in health care, education, energy, public safety, and cloud computing.
The same is true on the issue of ICT standards, where we have real concerns that Chinese
domestic standards are creating unnecessarily burdensome technical barriers.
As Undersecretary of State Hormats said this morning, wireless broadband standards based on
global norms will increase Chinese innovation and help Chinese consumers. They will increase
the size of the wireless broadband pie, benefitting everyone.
In addition to unleashing spectrum, my counterparts in China and I discussed the promise of
cloud computing. As both of our nations seek to unlock the enormous promise of the cloud, I
believe that there is a common interest in ensuring data is able to move more freely across
national borders.
In that regard, restrictions by governments on where data centers must be located undercut the
cost structures that make cloud computing a viable business proposition. Neither of our nations
gains if these restrictions take root globally.

Last month, President Obama, along with the other leaders of the Asia-Pacific Economic
Cooperation (APEC) group, approved a new framework to harmonize cross-border data privacy
rules across the APEC region. This is an important step to promote growing economies.
By removing restrictions that hamper the free flow of data across borders, we would allow cloud
computing to truly flourish. The result would be the rapid expansion of cloud benefits to the
greatest number of Chinese and American citizens, including our innovators and entrepreneurs.
We also discussed the importance of stronger intellectual property protection. The future of both
of our economies depends on innovation, but innovation cannot flourish without robust IP
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protection to provide the right incentives. As China further develops an information-based
economy in line with its most recent Five Year Plan, we hope and expect to see all innovators
and content creators benefit from stronger IP protection and enforcement.
Likewise, we believe preserving a free and open Internet stimulates innovation and economic
growth. As we have observed in our domestic market, it is the open, decentralized nature of the
Internet that has made it an engine of innovation and economic growth. We believe the U.S. and
China share an interest in ensuring our entrepreneurs and innovators are free to launch new
products, reach new markets, and continue driving the innovation economy.
Similarly, we believe innovation flourishes in an environment where our citizens enjoy the
freedom to go where they want, use the services they want, and read and say what they want
online. As Secretary of State Clinton has observed, “principles like information freedom aren’t
just good policy . . . they’re also good for business. . . . [T]he freedom to connect . . . allows
individuals to get online, come together, and hopefully cooperate.”
Widespread and open connectivity fuels innovation and broad consumer benefits.

I was encouraged by our meetings in Beijing, and I am pleased to report that the FCC and
Ministry of Industry and Information Technology (MIIT) have agreed to initiate a new
Broadband & Innovation Dialogue. I am hopeful this new, ongoing dialogue will provide a
vehicle for the U.S. and China to address some key opportunities and challenges in the
information and communications technology sector.
As both of our nations experience rapid growth in mobile data traffic and seek to benefit from
Next Generation IT, I look forward to working together at the upcoming ITU conference in
January, and beyond, to free up additional harmonized spectrum globally for mobile broadband –
both licensed and unlicensed.
I look forward to exploring the possibilities of our new Broadband & Innovation Dialogue, and
to working with many of you to seize the opportunities we have to stimulate economic growth,
innovation, and investment, improving the lives of people in the U.S. and China, and billions
around the globe.
- FCC -
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