Statement by Sen. John McCain (R-AZ) on the introduction of the Internet Regulatory Freedom Act. Re: making broadband Internet access widely available. Date: May 13, 1999. Source: Office of Sen. John McCain.

"I rise today to introduce the Internet Regulatory Freedom Act of 1999. This legislation will help assure that the enormous benefits of advanced telecommunications services are accessible to all Americans, no matter where they live, what they do, or how much they earn.

"Advanced telecommunications is a critical component of our economic and social well-being. Information technology now accounts for over one-third of our economic growth. The estimates are that advanced, high-speed Internet services, once fully deployed, will grow to a $150 billion a year market.

"What this means is simple: Americans with access to high-speed Internet service will get the best of what the Internet has to offer in the way of on-line commerce, advanced interactive educational services, telemedicine, telecommuting, and video-on-demand. But what it also means is that Americans who don't have access to high-speed Internet service won't enjoy these same advantages.

"Congress cannot stand idly by and allow that to happen.

"Advanced high-speed data service finally gives us the means to assure that all Americans really are given a fair shake in terms of economic, social, and educational opportunities. Information Age telecommunications can serve as a great equalizer, eliminating the disadvantages of geographic isolation and socioeconomic status that have carried over from the Industrial Age. But unless these services are available to all Americans on fair and affordable terms, Industrial Age disadvantages will be perpetuated, not eliminated, in the Information Age.

"As things now stand, however, the availability of advanced high-speed data service on fair and affordable terms is seriously threatened. Currently, only 2 percent of all American homes are served by networks capable of providing high-speed data service. Of this tiny number, most get high-speed Internet access through cable modems. This is a comparatively costly service --about $500 per year --and most cable modem subscribers are unable to use their own Internet service provider unless they also buy the same service from the cable system's own Internet service provider. This arrangement puts high-speed Internet service beyond the reach of Americans not served by cable service, and limits the choices available to those who are.

"If this situation is allowed to continue, many Americans who live in remote areas or who don't make a lot of money won't get high-speed Internet service anywhere near as fast as others will. And, given how critical high-speed data service is becoming to virtually every segment of our everyday lives, creating advanced Internet ‘haves' and ‘have nots' will perpetuate the very social inequalities that our laws otherwise seek to eliminate.

"This need not happen. Our nation's local telephone company lines go to almost every home in America, and local telephone companies are ready and willing to upgrade them to provide advanced high-speed data service.

"They are ready and willing, but they are not able --at least, not as fully able as the cable companies are. That's because the local telephone companies operate under unique legal and regulatory restrictions. These restrictions are designed to limit their power in the local voice telephone market, but they are mistakenly being applied to the entirely different advanced data market. And as a result, their ability to build out these networks and offer these services is significantly circumscribed.

"It's very expensive to build high-speed data networks. Unnecessary regulation increases this already-steep cost and thereby limits the deployment of services to people and places that might otherwise receive them --and many of them are people and places that won't otherwise be served. This legislation will get rid of this unnecessary regulation, thereby facilitating the buildout of the advanced data networks necessary to give more Americans access to high-speed Internet service at a cheaper price and with a greater array of service possibilities.

"That's called ‘competition,' and some people don't like it very much. AT&T, for example, owns cable TV giant TCI and its proprietary Internet service provider @Home. AT&T doesn't face the same regulatory restrictions as the telephone companies do, and AT&T will fight furiously to retain these restrictions so that it can continue to enjoy the ‘first-move' advantage it now has in the market for high-speed Internet service. So will other local telephone company competitors such as MCI/Worldcom, many of whom, like AT&T, prefer gaming the regulatory process to competing in the marketplace.

"They're right about one thing --competition sure isn't nice. It's tough. Some companies win, and some companies lose. But the important thing to me is this: with competition, consumers win.

"The 1996 Telecommunications Act effectively nationalized telephone industry competition. That's one of the many reasons I voted against it. As subsequent events have shown, the Act has been a complete and utter failure insofar as most Americans are concerned. All the average consumer has gotten are higher prices for many existing services, with little or no new competitive offerings. Most of the advantages have accrued to gigantic, constantly-merging telecommunications companies and the big business customers they serve.

"We must not let this misguided law produce the same misbegotten results when it comes to making high-speed data services available and affordable to all Americans. The service is too important, and the stakes are too high.

"Even the former Soviet Union managed to recognize that centralized planning was a flat failure, and abandoned it decades ago. It's time we started doing the same with centralized competition planning under the 1996 Act, and advanced data services are the best place to start. Unfettered competition, not federally-micromanaged regulation, is the best way of making sure that high-speed data services will be widely available and affordable. That's what I want, that's what consumers deserve, and that's what this legislation will do.

"The first is the fact that the high-speed cable modem service being rolled out by AT&T on many of the nation's cable television systems favors its own proprietary Internet service provider, which limits consumer choice. Although AT&T's cable customers can access AOL or other Internet service providers of their own choice, they must first pass through, and pay for, AT&T's own Internet service provider, @Home. The fact that it typically costs around $500 a year to subscribe to @Home is a big disincentive to paying even more to access another service provider.

"The second problem is every bit as troubling. Even though cable subscribers have only limited choice in accessing high-speed Internet service, 98 percent of Americans are even worse off, because they aren't served by any network that can carry high-speed Internet services.

"Obviously, telephone networks serve almost everybody, and the large telephone companies very much want to convert their networks and make these services available to subscribers who might not otherwise get them, especially in rural and low-income areas, and also provide competitive alternatives for AT&T's cable modem subscribers. But, although AT&T can roll out cable modem service in a virtually regulation-free environment, federal regulation significantly impedes the ability of telephone companies to do the same thing.

"This is blatantly unfair to the telephone companies --but that's not the worst of it. The benefits of business development, employment, and economic growth will go where the advanced data networks go. If these benefits go to urbanized, high-income areas first, the resulting disparities may well be difficult, if not impossible, to equalize."