In the heated rhetoric surrounding H.R. 1542, the so-called Tauzin-Dingell bill, Congress has opened a national dialogue on what government should do to further encourage the growth of broadband services. There is no question that broadband is vital for the nation. There is, however, some disagreement about what government should be doing to promote it.
Consumers are now benefiting from an explosion in broadband availability. The Federal Communications Commission recently reported a several hundred percent year-over-year rise in broadband deployment, concluding that broadband services were being deployed to Americans in a "reasonable and timely" manner. At the same time, four companies -- Verizon, BellSouth, Qwest, and SBC -- are seeking to undo the act of Congress that is responsible for that deployment. These four companies Bell Operating Companies want to dismantle the Telecommunications Act of 1996 and return to the days when they enjoyed an unfettered local phone monopoly.
Even though they lobbied for passage of the 1996 Act, the Bells are now engaged in a multi-million dollar political campaign to rewrite the law to provide them with all of the benefits of the Act, without any of the obligations upon which Congress conditioned those benefits. Looking beyond the rhetoric to the facts, it's clear that the Act, together with vigorous enforcement of the laws designed to ensure free and fair competition, is essential to the health of our economy. The Act is a success and calls to undo competition that is dangerous to the US economy.
After the 1996 Act was passed, three visionaries from Intel joined together to found Covad Communications to fill a void left by the Bell Companies. Covad's goal is to make affordable, technically superior, high-speed data connectivity widely available. We became the first company in the United States to commercially deploy broadband DSL services, which provide high-speed connectivity at a fraction of the cost charged for traditional Bell monopoly services such as ISDN and T-1 lines.
Indeed, Covad offers small- and medium-sized businesses the Telextend product -- a technically superior alternative to legacy Bell T-1 services -- at a fraction of the price. At the time Covad was founded, no Bell Company had deployed DSL commercially despite the fact that the technology had been developed years earlier. Instead, the Bells were subjecting DSL technology to endless trials clearly intended to go nowhere so they could continue to milk their more expensive offerings.
In city after city, Covad beat the Bell Companies to market. Our services now pass over 45 million homes and businesses nationwide -- nearly half of the US population can order Covad service today. Our growth, in turn, spurred the Bell Companies.
As the Counsel of Economic Advisors has noted, the Bell Companies did not offer their own DSL services until after the "emergence of competitive pressure" from companies like Covad. The giant phone companies have now deployed nearly 5 million DSL lines; Covad alone has more than 350,000 lines in service. Indeed, the FCC concluded in its recent annual report to Congress that broadband services are being deployed in a "reasonable and timely manner," even absent the regulatory and legislative relief the Bells claim is needed. These facts clearly demonstrate that the Act has speeded broadband deployment -- by both incumbents and competitors -- and not, as the Bells and their apologists argue, discouraged it.
Bell Company rhetoric preaches that the obligation to open bottleneck facilities to competitors is a disincentive to network investment that is keeping broadband from reaching more Americans. The Bells suggest to lawmakers that the monopolists will increase their network investment only if competition is eliminated. This demonstrably false rhetoric is belied by one simple fact: In 1996, before the Act was passed, exactly 0 percent of the nation had access to broadband services. Today, according to the Commerce Department, nearly 10 percent of the US population subscribes to broadband services, and nearly three-quarters of the country has access to such services. To what should we attribute this explosion in broadband deployment, with expansion so rapid that it eclipses the take rates of prior technological innovations like color television and cellular phones? Simply put, the answer is competition.
The Bells suggest that a return to the pre-1996 world of one network, one provider will inspire them to depart from a hundred year tradition of stifling innovation, inflating costs to consumers, and refusing to meet pent-up public demand for new technologies. We know better -- we remember what 0 percent broadband deployment looked like just six short years ago.
If the Bell Companies are allowed to succeed with their anticompetitive agenda, the result will be higher prices, less innovation, fewer affordable services for students and small businesses, and slower economic growth for years to come. How do we know this? Because this is exactly where we were before 1996 -- the world without competition that the Bell Companies so desperately want to relive. This nation cannot afford to yield to the Bell Companies' addiction to their monopolies. The nation's technology leaders are calling on the government to take the steps necessary to ensure ubiquitous broadband deployment to all Americans. Competition, not monopoly, is the way to get there. The Telecommunications Act of 1996 is working, consumers are benefiting, and calls to change the 1996 Act are mere transparent efforts to return the nation to the dark days before the broadband revolution.
