WASHINGTON -- Government action that clears a path to investment in fiber-based broadband networks is essential to unleashing the economic stimulus that can be provided by the nation's telecom sector, Tom Tauke, senior vice president for public policy & external affairs at Verizon, told a congressional subcommittee today.
"But at the rate we're going, MTV's "The Real World" will take place in a geriatric unit before we see action by the Federal Communications Commission," he said.
Testifying before the Telecommunications and Internet Subcommittee of the House Energy and Commerce Committee, Tauke said the industry's economic importance looms larger than ever in these challenging times, when the U.S. economy is still shedding jobs even though the recession was recently declared to have ended nearly two years ago. About 700 jobs are created for every $100 million of capital spent by telecommunications companies, and spending these capital dollars on broadband means even more job growth.
More than four jobs in manufacturing and services are created for every one job that's directly involved in building a broadband fiber network. In addition, investments in networks have historically had big economic multiplier effects because communications inherently aids economic activity of all sorts.
Stepped up capital investment is well within the means of the country's telecom companies, Tauke said. The market demand that entices such an increase is well documented. What stands in the way are outdated and unwarranted regulations that put a chokehold on spending.
Wall Street believes today's rules make it nearly impossible to realize any return on new telecommunications technologies and services, and so it rewards cutbacks in capital expenditures, instead of increases. Current regulations are unwarranted, Tauke said, because they are aimed at a presumed telecom company monopoly that clearly does not exist when a cable company today serves two of every three broadband customers.
"What's needed is a new approach that takes account of competitive broadband deployment," said Tauke. Cable companies, free of regulation, have invested $70 billion in the last seven years, upgrading their networks so they can offer hundreds of digital TV channels and broadband communications. That $70 billion helped spur the economy in the late 1990s.
Verizon and many others in the telecom sector are eager to compete head-on with the other technologies and networks that are vying for the customer's attention, and in the process they will spur the economy in the 21st century.
But policy makers need to clear a path through the jungle of regulations that currently post "Do Not Enter" signs at every turn toward broadband.
Tauke called for the following -- without further delay:
- A strong Triennial Review order that cannot be gamed and that makes it clear broadband technologies will not be subject to rules devised for traditional voice networks;
- A "hands-off broadband" national policy that sends a clear signal to Wall Street, saying government will permit all builders and providers of broadband services to compete on an equal basis and will let the market declare who wins and loses;
- An end to destructive price rules that siphon money from incumbent phone companies and direct it toward arbitrageurs who use it only to line their own pockets, when it could be used instead to support new investment.
"The key to reinvigorating the telecommunications industry is to send strong, consistent signals that uncertainty in policy is about to end, and national policies will be adopted forthwith that support -- not impede -- investment," said Tauke. "Verizon is ready to do its part, and it already is making plans in anticipation the government will soon make the right policy changes. But we need action, and we need it now."
A Fortune 10 company, Verizon Communications (NYSE:VZ) is one of the world's leading providers of communications services. Verizon companies are the largest providers of wireline and wireless communications in the United States, with 136.6 million access line equivalents and
33.3 million Verizon Wireless customers. Verizon is the third-largest long-distance carrier for U.S. consumers, with 13.2 million long-distance lines, and the company is also the largest directory publisher in the world, as measured by directory titles and circulation. With approximately $67 billion in annual revenues and 227,000 employees, Verizon's global presence extends to the Americas, Europe, Asia and the Pacific. For more information on Verizon, visit www.verizon.com.