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Comm. Rosenworcel's Remarks at the Practising Law Institute's Event

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Released: December 13, 2012






DECEMBER 13, 2012

Thank you, Laura Phillips, for your kind introduction. Thank you also to the Federal
Communications Bar Association for the good work you do every day and for your efforts today
to help coordinate this Practising Law Institute event.
It is wonderful to be here this morning at the start of what will surely be a long day’s
journey into night. As you know, ten hours from now many of us will gather here again for the
storied Chairman’s dinner—and a very different kind of speech from my colleague, Chairman
I am thrilled to kick-off the 30th Annual Telecommunications Policy and Regulation
Institute. All anniversaries beg us to take a look back. It is safe to say that thirty years ago we
were communicating a little differently than we do today.
In 1982, we had local and long distance. Calling across the country for an extended chat
could easily cost as much as a tank of gas. Calls were often scheduled, conversations quick, and
they took place over black rotary phones with the grace and heft of a brick.
Thirty years ago, we watched video only on the television screen. And whether we were
sitting down to Dallas or moving on up with The Jeffersons, we were doing it at the time the
show was on. Time shifting, place shifting, pull television—these were not in our vocabulary.
In 1982, if you combined the words data and traffic you were probably waiting for
information about beltway back-ups on the radio. If you had a state of the art wireless system, it
was probably something like what those motorcycle police officers used on CHiPs. After all, it
was not until the following year, 1983, when the first mobile phone was sold.
Today, of course, we’re breaking down the barriers between local and long; voice, video,
and data; and wired and wireless. The scope of convergence is immense. The digitization of our
networks, our content, our commerce, and our lives is well underway. The ways we connect,
create, educate, entertain, and govern ourselves will never be the same.
There is no question that this is exciting. But it also brings its challenges.
With technology changing so rapidly, our laws and regulations struggle to keep up. So
the Commission needs to approach the tasks before us with a healthy dose of humility. We also
need to respect the power of innovation to, without warning, alter what we think we know.
So in these transitional times, what should guide us as we carry out the laws developed
by Congress?

To begin to answer this question, I’ve spent my first six months on the job listening to a
lot of folks—and getting out of Washington as much as possible.
In Silicon Valley, the tip of the spear of innovation, I caught a glimpse of the future that
is fast approaching. I saw what the intoxicating mix of mobility, cloud computing, and social
networking can mean. It can change the way we pay our bills, monitor our health, and consume
all manner of content.
In Alaska, I saw how communications technology can transform the lives of those in the
most remote communities in the country. At a rural school in a village 30 miles north of the
Arctic Circle, I watched our E-rate program at work. Students isolated by uncompromising
geography can still connect to learning opportunities world-wide.
In Minnesota, Vermont, and a number of other places along the way, I’ve had the
opportunity to visit with the men and women that operate our emergency communications
centers. They spoke to me about the challenges they face making sure that as our commercial
systems for communicating advance, our systems for emergencies keep pace—and keep us safe.
Up in New York and down on Wall Street, I heard from investors enthusiastic about the
Commission’s first-in-the-world upcoming incentive auctions.
And of course, small businesses from all over rural America have spoken to me about
recent universal services reforms.
So I have talked to a lot of people about a lot of different issues. Here’s my take away.
Our policies in these transitional times must do two simple things.
They must promote confidence for private investment in digital age infrastructure—and
they must promote confidence for consumers to realize the full potential and opportunity that our
digital world provides.
Let me spend some time talking about both of these concepts in a little more detail.

Confidence for Investment

By some measures, communications technologies account for one-sixth of the economy
in the United States. No wonder. These are the networks that support our commerce, connect
our communities, and enhance our security.
However, when it comes to network infrastructure, we are living in a transitional time.
We have the public switched telephone network and an emerging IP ecosystem. Today they
coexist. The new and the next interconnect. They are jointly responsible for carrying our

Consider the numbers. In 2001, there were 192 million circuit-switched telephone lines.
A decade later, this number declined by more than 40 percent to 112 million. VoIP subscriptions
have risen more than 50 percent since 2008, and now number 34 million. And over one-third of
households have cut the cord entirely, with their wireless phone their only phone.
Let me submit to you that this is a trend. The ways consumers choose to connect are
growing more diverse, and so are the networks over which our conversations and content travel.
So in a transitional time, how do we apply the law? How do we approach regulation?
These questions are squarely before the agency right now. We have a Technology
Transitions Task Force that will look broadly at these issues. We have a Technological Advisory
Committee assessing the state of the public switched telephone network. We have two petitions
before us that urge the agency to consider the TDM to IP transition. And we have similar
interest from our state counterparts, who through the National Association of Regulatory Utility
Commissioners last month assembled a group to consider federalism, telecommunications, and
the role of the states. We are all wrestling with applying the laws of the present to the networks
of the future, and we must make choices that inspire confidence and private investment in our
nation’s infrastructure.
To this end, companies need to understand what policies guide the Commission’s actions,
both from a regulatory and enforcement perspective. We will undermine investment if we are
not clear. So as we develop a framework for the IP transition, let me be clear. I believe four
fundamental criteria—grounded in the law—should guide us.
First, public safety is paramount. In the very first sentence of the Communications Act,
Congress instructed the Commission to make available, “to all the people of the United States
. . . a rapid, efficient, Nation-wide, and world-wide radio and communication service” in order
to promote the “safety of life and property.” In light of this directive, any technological or
network transition must, first, and foremost, be judged by its ultimate impact on public safety
and network resiliency.
As the numbers I just shared with you demonstrate, we are migrating to wireless and IP
networks. That means that we are choosing to go without the independent electrical source that
traditionally powered copper plant. Our new wireless and IP technologies are dependent on
commercial power. When that goes out, so do connections. But as consumers switch to new
networks, I do not believe we have to sacrifice safety in the process.
So as I have said before, it is time for an honest conversation about network reliability in
the wireless and digital age. It is time to ask hard questions about back-up power, and how to
make sure our networks are more dependable when we need them most. We also need to make
sure that consumers understand the benefits—and limitations—of new technologies when they
reach out for emergency assistance. Hurricane Sandy demonstrated this need with painful
clarity. I think that the transitional state of our networks represents another opportunity to have
this discussion.

Second, universal service is still essential. No matter who you are or where you live,
prosperity in the 21st century will require access to broadband services. The Commission’s
ongoing efforts to promote broadband deployment and adoption are built on this simple truth.
But as we transition to new technologies, we must ensure that no American is left behind.
At least ten states have enacted legislation to relieve carrier of last resort obligations. We must
understand what this means. We need to understand how it impacts rural consumers. Because as
a matter of public policy, we must make sure that modern communications are available in urban
America, rural America, and everything in between.
Third, competitive markets are fundamental. Competition inspires private sector
investment. The competitive markets that have spurred so much technological innovation in the
past will be the most effective means of making sure that consumers reap the benefits of this
network transition in the future.
But we cannot forget a key element of the Telecommunications Act of 1996 that has
made our patchwork of competitive telecommunications networks work seamlessly:
interconnection. So we must monitor IP to IP interconnection and stand ready to act to ensure
that network providers negotiate in good faith.
Fourth, consumer protection is always in the public interest. In a transitional world,
consumers rely on both old and new technologies. We need to help consumers understand what
different technologies offer and help them make good choices. We must vigorously enforce
principled consumer protection policies across technologies.
Over the long haul, as we assess changes in the public switched telephone network, I
think these principles are good guideposts. I think that we can work within this framework and
promote confidence in network investment.
Over the near term, however, I think there are also clear opportunities to promote
confidence in network investment.
For instance, with our upcoming wireless auctions, we should put them all on a timeline.
Nothing inspires capital formation like a pending opportunity with a date certain.
In addition, I see opportunities with our recent universal service reforms. The
Commission’s effort last year to update its high-cost universal service and intercarrier
compensation system was nothing short of historic. I commend my colleagues for their efforts.
They refocused the fund from last century’s technology. They put it on a budget. And they
increased accountability throughout.
But the Commission’s reforms to the high-cost universal service system are extremely
complex. I fear that this complexity can deny rural carriers dependent on them the certainty they
need to confidently invest in their network infrastructure. So when opportunities arise to
simplify our rules in a manner that is fiscally sound, good for rural consumers and bound to
inspire investment—we should go for it.

To this end, I believe we should combine the two separate capital and operating expense
benchmarks into one benchmark to simplify the regression analysis and provide carriers with
flexibility to meet our new limits. In addition, we should take a hard look at keeping our
benchmarks in place for a longer period of time, instead of resetting them annually. I think this
would help ensure a more “predictable” and “sufficient” system that provides carriers with more
confidence to invest in broadband infrastructure.

Confidence for Consumers

So far I’ve talked about increasing confidence for infrastructure investment, but the other
part of the equation is increasing confidence for consumers—so that they can reap the benefits of
this investment.
Communications and media services are becoming a more substantial part of household
budgets. In 2011, consumer expenses on communications bills were more than 4 percent of
disposable income. That, on average, can be thousands of dollars a year. To be clear, we are
getting a lot more value from these services. We have more channels than ever before. We have
faster broadband. We have mobility, and with it the expectation that wherever we go, the ability
to connect will follow. And we have a revolutionary world of connectivity in the smartphones in
our pockets and the tablets in our laps.
But consumer wallets are not without limit. Pocketbooks have their bottom. In a world
where consumer choices have become both vast and complex, information is power. It is vitally
important to get consumers the information they need to make choices with confidence in a
marketplace that can be bewildering to navigate.
Consider, for example, the dizzying array of wireless plans available: shared and
individual plans, limited and unlimited voice, data, and text. To stay within a plan can require
keeping track of voice, data, and text usage across multiple devices. So, quick show of hands,
who here actually knows how many megabits each of their devices has consumed so far this
At the end of the day, nobody should need to hire a lawyer to understand their wireless
contract—and nobody should need to hire an accountant to explain their bill. That is why the
FCC’s bill shock initiative, working with carriers, is a terrific development. Going forward,
consumers will get alerts when they reach their voice, data, text, and international roaming
The concept is simple: give consumers more information. But the impact is large: with
information, consumers will no longer unknowingly rack up charges and wind up with
unexpectedly big bills. With information, consumers will have the confidence to adopt new
technologies and services—and benefit from their functionality.
This is good. But we can do more.

After all, getting information to consumers is not the sole province of industry. In these
transitional times, the FCC—as the agency tasked with the protection of consumers of
communications services—must be the resource that consumers need. I think there are two ways
we can improve upon our efforts.
First, our consumer complaint process needs an upgrade. In my time at the agency, it has
become apparent that while the digital age advances, our consumer complaint process is stuck in
the analog era.
Consider that last year the Commission received nearly 380,000 complaints and inquiries.
We have hard working folks processing all of these complaints and inquiries. They do a heroic
job of moving all manner of consumer interests through a complicated process. But our
interfaces are dated and the information we provide has too much of the special charm of
regulatory legalese. We can do better. In the Internet age, the consumer interface matters.
Design impacts experience. So I think we can do more to make our efforts to interface with
consumers appealing. That means an improved complaint and inquiry interface. It means more
consistency in the complaint and inquiry process.
Second, the agency should make the consumer data we collect more open to the public.
In our consumer complaint process and elsewhere in the agency, we collect a lot of numbers.
But we publish them in snapshot form. We need to consider making our data more open, in
machine-readable formats, and if possible, with APIs and common metadata tagging schemes.
We should use this data to inform the Commission’s policy activities. And we can turn to others
to slice and dice these numbers and identify meaningful trends that deserve our attention, our
concern—or even our praise.
Taken together, these improvements will mean that consumers will get more and better
information. And with this information, consumers will have more confidence to make good
choices, explore new technologies and services, and experience the full opportunity of the digital
It is, as I said at the start, the beginning of a long day for many of you. So let me sum up
my thoughts.
The communications landscape is changing. It is strikingly different from what it looked
like when the Practising Law Institute began this event thirty years ago. We have seen a range of
technological innovation and industry convergence beyond what any one of us might have
predicted. The rate of change is only increasing, and applying the laws of the present to the
networks of the future is undeniably challenging.
So I think that in these transitional times two fundamentals should guide us—promoting
confidence in private network investment and promoting confidence for consumers.
If we do both and we do them well, we can help grow the economy, spur job creation,
foster digital age opportunity, and enhance civic life. That is good stuff—so I think it merits our
attention and is worth our effort. Thank you.

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