The following are prepared remarks delivered by Jim Cicconi, former AT&T Senior Executive Vice President of External and Legislative Affairs, at the Brussels Internet & Telecom Seminar:
Thank you for having me here today. I am pleased to be in Brussels, and a part of this discussion about Regulatory Modernization.
This is an important topic for all of us, both in Europe and the US.
I’ll be the first person to recognize that the different facts in each country can require different policy tools, even when there are common goals. With that in mind, though, I hope it will be helpful to this panel discussion if I share my thoughts, based largely on US experience, on the topic of what needs to happen with regulation to inspire investment in the networks of the future.
Full disclosure: I’m a policy guy, and I’m not ashamed of it. I think it’s important to talk about the relationship between technology and regulation. Why? Because in this conversation among all of us in the private sector and government, we need to find a good balance, with the right policies to guide market forces. If we don’t get the regulatory framework right, we won’t tap the full potential of what new technology can do for our economy and society.
New technologies are transforming our societies and economies, and have revolutionized how we communicate and how we go about our lives. And here is a profoundly obvious point: technology changes much faster than regulation.
Nearly six years ago, AT&T was the first wireless carrier to offer the iPhone. This put us at the forefront of the mobile Internet revolution, not only in the U.S. but also in the world. We had a front row seat to the dramatic changes in our industry. Over the past 6 years, mobile data traffic on our network increased 30,000%.
There has been a transformation in how people communicate, huge changes in the revenue value chain, and a warp-speed technology transition as we moved from 2G to 3G to HSPA to 4G LTE, all in just about 5 years in the U.S.
The U.S.’s wireless success is due in no small measure to its longstanding recognition that a light touch approach to wireless regulation best promotes competition, innovation and investment. As a result, U.S. consumers have a vast array of choices of wireless products, services, devices and providers.
The past 5 years in our industry have largely been about human interaction with our devices. But today and in the years ahead, the services we provide will play an even more transformative role. The next wave of innovation will move our societies into the era of a truly intelligent and digital life —where advanced communications connect virtually everything, with or without human intervention, through a seamless broadband cloud architecture.
So, what do we need to do to foster and speed this next transition?
How can we best facilitate and accelerate the necessary investments to foster innovation and to drive economic growth, job creation, and global competitiveness? I would like to suggest three policy approaches that I believe are particularly important:
First, we need smart spectrum policy. Never take spectrum for granted. Spectrum is the lifeblood of this industry. More than ever before, spectrum allocations need to be bold; they need to be harmonized as globally as possible; and they should be evergreen, so that operators have every incentive to invest with confidence in networks that will best use that spectrum.
Second, we need to minimize fragmentation and barriers among the European Member States, as well as between the EU and other regions. I understand the Europe is tackling this issue head on. The Commission and BEREC ’s current work on enhancing the EU single market for telecommunications is fundamentally important. Consistency of regulation, economies of scale, and rational consolidation, will all favor investment.
Third, we need to craft modern regulatory frameworks that do not lock our customers into old technologies or extend monopoly-era regulations to next-generation technologies.
If these things happen, companies will be in a better position to look their shareholders and customers in the eye, and say that “its smart money to invest here and now.”
Companies such as ours have a responsibility, provided that it is rational and rewarding for our investors — to take the initiative and step up to long-term, strategic capital investment plans.
To this point, late last year, AT&T announced a plan to invest billions to significantly expand and enhance our wireless and wireline IP broadband networks in the U.S. The plan entails an investment of more than $60B over the next 3 years, on top of the nearly $100B we’ve invested in our networks during the last 5 years. AT&T’s transition to an all-IP network will make broadband more widely available, reliable, and faster. We’ll use new technologies and speed-enhancing techniques capable of bringing our wireline customers next-generation broadband speeds of up to 100Mbps. We also plan to expand our 4G LTE wireless network to cover 300 million people by the end of 2014.
Our level of investment in wireless broadband has been favorably recognized, including in a report by GSMA issued just last week.
I normally would not stand here in Brussels, and talk about investments we are making in the U.S., but I do so today to highlight a point that is important to us all, about regulation and the difficulty of modernizing regulatory frameworks. Frankly, we’ve made something of a bet in the US, trying to meet our customers’ needs today and anticipate how best to meet their needs in the future, even as essential reforms in the regulatory framework for traditional wireline telephone services seriously lags where our customers have gone and where our investments need to take us. In short, our customers have already voted with their feet, leaving behind old regulated PSTN network technology and services. Today, less than 1/3 of households passed by our telephone network even subscribe to traditional telephone services. The vast majority of people have opted to replace traditional telephone service with wireless and VoIP services, and the trend is, if anything, accelerating. This trend is not unique to the U.S.
In this environment, we have to ask ourselves what regulation makes sense for the 21st century communications landscape?
Regulations that meet consumer needs, assure consumer protection, reflect the modern marketplace, and are applied in a competitive, technically neutral fashion across the Internet ecosystem make sense and can spur economic growth and development.
Unfortunately, the regulations designed for the rotary telephone and the old monopoly telephone networks don’t line up very well with these goals.
It makes no sense to require AT&T and other historical telephone companies to maintain the old PSTN network and services, in parallel to building more capable fixed and wireless IP networks. It is not smart public policy, particularly during an era of scarce investment resources when we can least afford to siphon off investment to maintain the old lines and old technology that consumers no longer want or need.
The IP transition is already happening, and consumers are leading the way – they want more, they want it everywhere, and they want it all the time. The question is, how much longer do we keep the old rules that mandate capital be spent every year propping up the technologies of the past before we unleash that spending for investment in our future?
As a company that has been in the customer connections business for a very long time, we are fully aware of the crucial role our networks play in the lives of our customers and our economies. Because of our customer relationships, we have strong reasons to ensure that the IP transition happens in a way that enhances their lives with new technologies. We have strong reasons to not leave people stranded without a superior option for connectivity. Policymakers will of necessity play a critical role in the transition of all IP networks. We will all get to the goal of an all IP network more quickly if we work together to adapt the regulatory environment to the modern communications landscape. On both sides of the Atlantic, telecom companies and policy makers are looking to learn from each other, and to achieve common and interoperable policy goals.
There’s no industry that contributes to society and economic growth quite like this one. Given that importance, I’m optimistic we can get the critical components right for the years ahead.