National Association of Regulatory Utility Commissioners Winter Meeting

Thomas J. Tauke
Washington, DC
February 16, 2009

Prepared Remarks

 Happy President’s Day, and thank you, Commissioner Harris, for the invitation to join this discussion. Your leadership on communications issues for the citizens of New York State is greatly appreciated.  

Tomorrow, President Obama will sign the 2009 American Recovery and Reinvestment Act.  Verizon congratulates the Administration, Congress and other policymakers who had input in shaping this economic plan. 

This stimulus package provides grant money for broadband deployment and funding for mapping, and underscores the efforts our industry has played in making broadband a key driver for economic growth and innovation.  There is also robust funding to leverage broadband technology: computer labs for schools, health care IT and virtual medical records, and smart power grids, for example.  These are all good things … for consumers, communities, as well as those who innovate around broadband technology.

We join the President, Congress and others in the hope that these funds achieve their intended purpose – jumpstarting economic growth, creating and saving jobs, connecting everyone to broadband and strengthening our nation’s infrastructure for the next generation.   

As you know, many of us have been working toward these goals for quite some time. But not too long ago, there was no consensus on a plan for rural broadband deployment … and no funding.  We were focused on getting a mapping bill approved, and blue-skying the prospect of someday getting a rural-broadband capital fund. 

Now look where we are:  more than seven billion dollars for investment and deployment of broadband … hundreds of millions for mapping … and billions for the kinds of programs that will stimulate consumer demand on the networks in place and to be deployed. 

There were many views on the best way to stimulate broadband deployment and to produce the quickest stimulus.  But now we have a plan and a great opportunity for broadband.  We have national leadership that put broadband deployment, adoption and innovation on its priority list.  We have resources and a bit of a tailwind to achieve some very good things with broadband for our fellow citizens if we work together and have the right policies in place.  

So how do we achieve this goal?  Verizon doesn’t have all the answers, but I think it’s fair to say that we’ve learned a thing or two over the past few years about the challenges and opportunities for investment in broadband deployment, so I’d like to offer several points to “stimulate” the discussion.

First, the stimulus package will go a long way to close the gaps in broadband. But investment in broadband will have to continue long after the stimulus grants are spent. It’s important that we continue to encourage private investment for the expansion and evolution of broadband networks. Here’s why: 

Last year, America’s wireless, telecom and cable companies invested about $70 billion in wireline and wireless broadband networks.  This was more than federal spending on interstate highways, railroads, airports, and rivals the core infrastructure spending in this stimulus bill. 

Verizon is proud to be doing its part to grow the economy. We’ve invested more than $50 billion in technology infrastructure over the last three years.  Our high-speed, fiber-to-the-home FiOS network has passed more than 12 million homes, and deployment continues. On the wireless side, we are moving ahead with plans for our fourth-generation LTE network, which we believe will be particularly helpful in serving as a broadband network for some underserved parts of the country.  All of this underscores Verizon’s long-term commitment to offer our customers the best broadband networks available, and to spur innovation around and across the Internet.

This level of investment is important, especially today, because when shovels are in the ground deploying broadband, jobs are created. One recent study estimates that for every percentage point increase in broadband penetration in a state, employment will increase 2- to 3-tenths of a percent per year.  That’s an increase of about 300,000 jobs if we continue investing in the networks.

Second, to complete a national, broadband infrastructure requires the kinds of policies that enabled the remarkable broadband world we are seeing develop, and which makes broadband a critical part of our nation’s economy.

It’s important to remember that the investment and innovation we’ve seen in broadband did not take place in a vacuum. It occurred because policymakers had the foresight to put in place a predictable regulatory framework for wireline broadband and a national policy framework for wireless, neither of which favored one technology over another.  These policies encouraged companies to invest large amounts of capital and to innovate around consumer demands and expectations. 

The result is a highly competitive, consumer-focused marketplace for broadband, and an industry that is an engine for U.S. economic growth.  We think this is the best approach to encourage broadband investment and innovation, and that we should not weigh down stimulus efforts with added regulations that could limit future private broadband investment and deployment.

That said, there are rural communities and parts of some states that are either underserved or unserved by broadband networks.  In most cases lack of broadband connectivity is not the result of a lack of competition or high operational costs, but prohibitive capital investment to deploy.  This stimulus package gives us an opportunity to change that.  But money alone isn’t going to make it happen.

This brings me to my third point, which is that all of you have an important role to play in this stimulus plan. A national policy framework for broadband is preferable, and, to ensure broadband’s continued growth, we should continue to pursue such a framework.  Within that context, however, implementation of this stimulus package should include a strong state role to ensure that funds are wisely spent and targeted to needs, whether for mapping or rural connectivity, smart electricity grids or computer labs in public facilities.  This is a lot of money for broadband deployment, and we must ensure that these billions in stimulus funds are put to their intended and best use.

The stimulus funds for broadband deployment will be dispersed largely by the National Telecommunications and Information Administration and the Rural Utilities Service in Washington, but doing so will be a challenging job for these agencies.  With expertise from leaders like John Norris at the Agriculture Department, we know rural needs will have strong advocates. NTIA has experience in managing grants for broadband, but on a smaller scale.  As policymakers in Washington establish the rules of the road for stimulus grant-making, states should look to assert a role. 

Partnerships between federal, state or local authorities and the private sector are important and can create the best outcomes – with local knowledge of what needs to be done, private-sector expertise in network construction and management and, of course, financial support and leadership from the federal government.  From experiences such as Connect Kentucky, which was a public-private partnership for mapping broadband deployment and filling the gaps, we know that state-based efforts can work well.

We also should not lose sight of both the short-term goals – connectivity – and long-term goals – ensuring that the broadband networks deployed meet the needs of our society, spur economic development, and facilitate the services and benefits broadband can deliver.

The stimulus package takes important steps in these areas by funding the computerization of health records over the next five years, and funding “smart grid” technologies that will allow greater use of networks for home energy monitoring and management. Promoting demand in this fashion can both address critical societal problems while stimulating investment in more broadband. 

I would add that these are not applications that need to wait two or three years.  We have networks right now – Verizon’s wireline and wireless networks included – that can be utilized.  Wherever possible, we stand ready to work with you to leverage these networks to meet consumers’ needs.

It’s important to remember that these tools and applications won’t reach their full potential if broadband networks are not fully deployed or do not continue to evolve.  As noted in John Markoff's story in today’s New York Times, entitled “Do We Need a New Internet?”, we have serious security issues in today’s broadband world that threaten to undermine each consumer’s online experience.  We need to work together and focus attention on Internet safety to protect each consumer and to support a new generation of Internet applications that will deliver the improvements in health care, the environment, energy usage, and education that we all envision.

We are also seeing the emergence of new, fiber-fueled ultra-high-speed landline broadband networks and 4G mobile will soon be another platform providing major advances in speed and capacity. A national framework that encourages the development of both will ensure that our citizens benefit fully from the Internet, from IP services, and from all that they deliver. 

All of us who are invested in broadband networks, and feel an obligation to see that all of our citizens are connected and served, are gratified that our policymakers are committed to encouraging investment in a national broadband infrastructure.

Beyond setting that goal, it is important that we put this large task in the context of policies that will ensure this goal is met and work together to get the job done, and done right. 

Thank you.