International Broadband Communications Conference

International Broadband Communications Conference

Ned O'Brien, Economic Bureau

Bucharest, Romania

October 5, 2004

The Economic Bureaus Ned OBrien addressing the International Broadband Communications Conference in Bucharest, Romania on October 5, focusing on U.S. foreign policy and the role of the internet. Thank you for your invitation to join you today at this important conference. I am delighted to be among such distinguished company here today in Romania, a country that I last visited as a tourist and which, I have found, goes out of its way to make visitors feel welcome. In addition to what we in America might describe as the Old World charm of Romania's rich historical and cultural heritage, I find it has an impressive and forward-looking view of the role of technology in modern society. Bucharest is thus a particularly appropriate venue for this conference. This event, which the Committee for Information Technologies and Communications of the Chamber of Deputies of Romania has been kind enough to organize -- with the crucial support of the National Regulatory Authority for Communications -- will bring together stakeholders from across Europe and the United States.

The Romanian experience is an excellent example of how an enlightened telecommunications policy can contribute to national well-being. After Romania liberalized telecommunications at the beginning of 2003, the sector experienced growth at a much faster rate than the economy as a whole, as witnessed by the number of telecom service providers -- quite a bonus to the Romanian consumer.

I understand that the Romanian Government has forecast that the country's Information Technology sector, a key source of foreign trade and investment, will account for ten percent of gross national product in 2004. In 1998, just two percent of Romanians had Internet access, a figure that grew to 23 percent by the end of 2003. In addition, E-government and e-procurement have introduced new elements of transparency, with details on bidding available to the public. Romania also has one of the fastest growing mobile phone markets in the region, as multiple operators using competing technologies -- both GSM and CDMA -- compete in the same market. Rather than the government mandating a particular standard, the government has let consumers decide for themselves. Against this backdrop, it is fitting that we gather to discuss the future of broadband, as the availability of high-speed internet will change people's lives in ways we can hardly predict.

It is an honor to be addressing such prominent and authoritative experts in the telecoms field. As for myself, I am a career diplomat by profession, with a specialty in economic affairs.

My current responsibility includes managing the Central and Eastern Europe regional portfolio in the State Department's Office of International Communications and Information Policy, which is the U.S. Government's lead agency on international telecommunications issues. I report to Ambassador David Gross, who is the U.S. Coordinator for International Communications and Information Policy. And by the way, Ambassador Gross would have loved to attend this conference as well, but he is currently heading the U.S. delegation to the World Telecommunication Standardization Assembly in Brazil.

In addition to my European regional responsibilities, I also manage a modest yet highly-targeted assistance fund called the Telecommunications Leadership Program. This fund provides help to countries seeking to reform and liberalize their telecommunications policies. It has been used to help build institutional capacity in places as diverse as Moldova and the Palestinian Territories. For example, a group of Moldovan regulatory authority personnel just completed training across the United States last week.

A few months ago, we used the TLP to help the Palestinians strengthen legislation to safeguard fair, free and open competition, and to support the creation of a Palestinian telecommunications regulatory body based on existing models such as our own FCC. Having an independent telecom regulator is not only important as Palestine moves toward statehood, but it helps to create a regulatory environment that could facilitate further economic growth, stimulate investment, and create additional jobs in the information and communications sector, as well as to provide widespread mechanisms for people to share and consume information.

Whatever our line of work, we all believe that our policy area is different, unique, one of a kind, special. But telecoms really is different. We're not selling used cars or laundry detergent. What we do fundamentally transforms the way people work, play, buy things, and interact. You all know far better than I do the transformational effect a modern telecommunications infrastructure has had on a region where just a decade and a half ago, information was tightly controlled by undemocratic governments and freedom of expression and communication was limited.

Last December in Geneva, the global community came together at the World Summit on the Information Society and recognized for the first time that information and communication technologies are a key element of political progress, growth, and social development.

Clearly, the Internet and the increasing variety of applications that it supports provide tremendous opportunities for economic and social development around the world. In the United States, the advancement of Internet technologies and applications continues to flourish to the benefit of individual consumers and the broader economy. High speed Internet in particular is placing personal and economic power into the hands of individuals. The increased reliance of the health, education and business sectors on the Internet is shrinking geographic, economic and cultural boundaries.

Throughout the world, the telecommunications sector is looking increasingly healthy. After a significant downturn over the last few years, we are finally poised for a resumption of growth.

The Telecommunications Industry Association in the United States forecasts that the telecoms market outside the United States alone is expected to grow at 10.3 percent in 2004 to 1.5 trillion dollars. Overall spending on telecoms in Canada, Mexico, Europe, Latin America, and Asia/Pacific will expand at an estimated 10.5 percent compound annual growth rate rising to more than 2 trillion dollars by 2007. Growth in wireless services and support services will be an important factor.

While the rate of wireless market penetration may slow over the next few years, the introduction of third-generation (or "3G") wireless services will keep the wireless market growing at double-digit rates. 3G expansion is expected to drive growth and innovation in many of the same applications as broadband, as it will provide broadband-like speeds.

In this time of such great promise, it is important that all countries are able to reap the benefits of this new technology. The key is the creation of regulatory regimes that allow for the development of truly competitive markets that will foster the adoption of new technologies through market-driven solutions.

The theme of the discussion that will take place later this morning is "Broadband - the telecom growth engine." The title says it all. Broadband will increasingly serve as a venue for creative new applications, as present speed and content boundaries are expanded. New and innovative broadband applications will function as catalysts for growth and technological progress, in much the same way that bigger and better software programs have fueled demand for ever bigger memory in PCs and other computer systems. In the United States, subscribership to high-speed Internet increased by 18% during the first half of 2003, to a total of 23 and a half million lines in service. High-speed internet is now available in all 50 states and in 91% of all zip codes in the United States.

It is the policy of the United States Government to promote innovation and economic security through broadband technology. As part of this strategy announced in April, President Bush has called for universal, affordable access for broadband technology by the year 2007. While the choice of technology is key, as many Americans have the option to choose among cable or DSL competitors, that is a choice that our consumers rather than the government will make. Broadband technology will be harnessed to enhance American economic competitiveness. Broadband provides high-speed Internet access connections that improve economic productivity and offer life-enhancing applications, such as distance learning, remote medical diagnostics, and the ability to work from home more effectively.

As in most economic domains, the U.S. Government has a preference for allowing the private sector to take the initiative in further development of the internet and related industries. We have found, however, that there are three key areas in which government can foster broadband growth and development: creating economic incentives, removing regulatory barriers, and promoting technological innovation to help make broadband affordable. The economic incentives take the form of both accelerated depreciation for capital equipment used for broadband deployment and a two-year extension of the Internet Access Tax moratorium, a moratorium that the federal government has proposed to make permanent.

The removal of regulatory barriers includes deregulating new broadband infrastructure to private homes as well as rights-of-way reforms to streamline the process for broadband providers to get access to Federal lands to build the necessary high-speed infrastructure. Use of power lines is under consideration. Promoting innovation has in the American context meant releasing greater amounts of spectrum for innovative wireless broadband applications such as Wi-Fi and Wi-Max. Some of our localities, Philadelphia for example, are also encouraging investment and economic development by contributing to the cost of constructing Wi-Fi networks.

How can governments act as champions of progress? It is the policy of the

United States Government to support a free-market approach and permit

service suppliers the flexibility to choose their operating technology,

particularly for telecom services. We actively encourage open, market-driven approaches to standards setting and spectrum allocation, which will allow multiple standards to co-exist and compete in the marketplace, rather than give preference to one technology over another.

We believe that standards should not be used as obstacles to trade, that governments should be transparent and nondiscriminatory when making decisions regarding spectrum allocation, and that they should rely on market-driven solutions rather than attempt to pick what they think is the most appropriate technology standard.

Despite the increase in telecommunications competition worldwide over the past 20 years, recently we have seen resurgence in some countries in the use of standards to prevent the full participation of competitive companies in those markets. We see the use of non-market-driven standards in some situations as attempts by governments to control their national markets, and in other instances as attempts by some developed countries to ensure that closed markets exist for their companies' goods and services, to use the French expression, a sort of "chasse guardée," a private hunting ground.

In the end, both of these moves are self-defeating:

In the first instance, they will hinder the influx of needed investment capital and deny developing markets the benefits of market-driven standards. In the second instance, they will create national champions who will be unable to compete effectively on international markets.

As we speak, the question of standards is now under discussion at the International Telecommunication Union World Telecommunication Standardization Assembly (WTSA) in Florianópolis, Brazil. This meeting is addressing the development of those standards that will define the next generation of services, network and systems architecture. WTSA is expected to oversee the creation of a Next Generation Network Study Group, which will be asked to develop standards for the future convergence of existing telecommunication network architectures into a broadband, multimedia, packet-switched network. These standards will lay the very foundation for the next generation of telecommunications equipment.

But what about the internet itself? Debate continues regarding the appropriate role of governments and intergovernmental organizations in the Internet space with some favoring a much stronger role for the ITU or other international bodies.

These divergent views have been highlighted as we engage in preparations for the second session of the UN World Summit on the Information Society, which will take place in November 2005. The phrase commonly used in these discussions is "Internet Governance."

The U.S. view is that no single stakeholder can and should govern the Internet. All stakeholders governments, the private sector and civil society each have a role to play in the development of the Internet, and none should be excluded. The success of the Internet has been in part based on the fact that no one single entity controls it, allowing entrepreneurs, scientists and academics to continually innovate.

No discussion of broadband and related technologies would be complete without an earnest assessment of the impact that such high-tech progress can ultimately have on the lives of ordinary people in developing nations. Creating digital opportunity needs to be an integral component of any development strategy. The first session of the World Summit on the Information Society recognized in Geneva last December that information and communication technologies are a key element of political progress, growth, and social development. As we look to the concluding session in Tunis next year, we need to be thinking about how this important conference will help encourage the creation of a truly connected world. In our view, this conference should support:

* freedom of expression,

continued growth and stability of the Internet, scientific research and development, and the creation of digital opportunities through the promotion of democracy, transparency, accountability and good governance.

Ladies and Gentlemen, let me again thank you for your invitation to come to Bucharest. The theme of this conference, the expansion of broadband access, is of great significance to the promotion of economic growth and human freedom throughout the world. I am very glad to be here in Bucharest and look forward to some fascinating discussions in the coming days. Thank you very much. [End]

Released on October 25, 2004