Free State Foundation Fifth Annual Telecom Policy Conference Keynote Address

Remarks As Prepared For Delivery

Senator Marco Rubio

March 21, 2013

Thank you very much for this opportunity. Randy, thank you for that introduction and for inviting me to speak today. I've looked forward to this opportunity and I am pleased to be joining all of you today.

Let me start by acknowledging the Free State Foundation and the work that it does. It is great to have groups like the Free State Foundation promoting free markets and individual freedom. Thank you for upholding these principles, and providing a much needed voice in telecommunications policy.

I would like to spend a few minutes discussing some ways I think we can help the digital transition, and two issues that I think are critical to this effort and that I will hopefully work on with all of you moving forward.

As you all know, the theme of today's conference is "Completing the Transition to a Digital World: How to Finish the Job and Why It Matters."

Completing the transition to a digital world...it sounds great. I think everybody here is on board with that. So why does it matter - not just to you in this room, but why does it matter to entrepreneurs, consumers and people who want better job opportunities in the 21st century economy and a real chance to succeed in America's thriving middle class?

It matters because the future of telecommunications and the services that the middle class uses are going digital. The future is an Internet Protocol based world. And therefore we, as policymakers, must put the right policies in place for broadband networks, for wireless Internet, and for the global Internet ecosystem to ensure that legacy laws and regulations don't deprive the middle class of the opportunities that will come along with the digital world.

So how do we do it? Is it with more government and more regulation? Or through a light-touch regulatory structure based on sound analysis, competition, and economic growth? Do we break down regulatory barriers and reform rewrite laws based on the past? Or do we continue to subject 21st century industries to 19th and 20th century laws?

These are important questions to answer when we look at embracing the digital world. And if we get them wrong, the benefits of the digital world will not be fully realized - with negative consequences that will impact how we communicate with our loved ones and our colleagues, with prospective employers or customers, with other nations, and when advancing worthy causes.

Over the past few months, I have talked a lot about economic growth and prosperity, and policies that I think will help us achieve these goals for people trying to make it into the middle class or achieve greater opportunities in it. There is no question that telecommunications will be vital to our future economic growth, and to upward mobility for millions of Americans.

We are talking about industries and subsets of our economy that did not exist 20 years ago, or even five years ago. The perfect example is the application economy - five years ago there were no app's. This year the global app economy will reach $25 billion, and it is projected to grow at an average annual rate of over 40 percent - that is crazy.

That means the guy or girl you see at the coffee shop every day laboring on their computer - might just be an app developer working on the next big app. And when they break through, you stop seeing them at the coffee shop because they're growing, they've opened up an office and are hiring new people.  People who couldn't possibly have taken a college course on "app development" because apps didn't exist are now employed by this whole new sector. That right there is the essence of the American economy.

It goes without saying that our future upward growth depends on telecommunications as a driving force - not only as a thriving sector, but also as a way for individuals to improve their own economic well-being.

For those of us who serve in government and for everyone in this room, one of the fundamental challenges before us is to find an appropriate, sustainable and limited role for government in creating the right conditions for entrepreneurs in these industries - and industries yet to be created - and their customers to take advantage of the services and technologies provided.

So how do we do it? Well, I believe it has to start with a regulatory agency that works, and laws that are based on where the industry is headed, not where it used to be.

When I first got on the Commerce Committee and did background meetings on telecommunications issues, I was struck by how the laws and regulations governing the industry do not match the nature of the industry. We have a fast-paced, dynamic industry operating in a hypercompetitive environment.

But we have static laws and legacy regulations that were applied to analog networks in the twentieth century's more monopolistic environment. That are now applied to technologies operating in a converged marketplace.

I think about the way my family utilizes telecommunications - we can surf the Internet on our TV, we can watch TV and stream movies on the iPad, and we can use cell phones for all of the above...and occasionally make a call. And perhaps the most important technology development of all - the NFL Sunday Ticket.

Our house is just an example of how broadband has allowed for the integration of voice, video and data capabilities, all at high levels of service, and to the cross-platform competition we see among service providers. This is the reality of the converged world.

Yet the Telecommunications Act divides the marketplace into silos as if all these services operate independently of the other. It makes no sense, and it will only to lead to confusion as technologies and services continue to evolve.

We need laws with flexibility, that do not subject providers who offer the same service to different regulations based on what they used to offer or how that service is delivered to the home. 

Legacy regulations written in 1996 could not have contemplated the multi-faceted,  IP world we have today. Don't get me wrong, I liked Windows '96 on my giant desk top computer and the brick sized phones like Crockett and Tubbs used on Miami Vice. But we've moved well beyond that. And it is time that Congress looks at moving beyond the '96 Act. For telecommunications, a law based on the past is only going to hurt its future.

We also have to look at reforming the commission in order to have more of a predictable and transparent regulatory process. That should be the case for any agency, but especially the FCC.

There are a number of ways to improve the FCC and ensure that we have an agency that mirrors the industry it regulates...things that should have bipartisan support like:

�         demonstrating the necessity and benefits of regulations,

�         restricting conditions that can be put on acquisitions and spectrum auctions,

�         requiring the agency to set and follow timelines and deadlines for its proceedings, or

�         reforming the forbearance authority so it is more difficult for the FCC to reject regulatory relief petitions when they are justified.

We've all heard stories of applications sitting at the commission for years, rulemaking proceedings remaining open with no deadline or decision in sight. How does that create certainty? How does not acting on an application or appeal give businesses the confidence to make decisions?

The best example is the Title II docket. A proceeding to regulate broadband services under common carrier regulations - a massive change to how the Internet would be regulated and how the industry would operate - remains open for over three years. Just sitting there like a threat, or path to Internet regulation if the current effort fails.

That is not certainty. It is not the type of regulatory framework that incentivizes investment or promotes innovation. And it is not how you further the digital transition or help grow the economy. Needless regulation and regulatory uncertainty are job killers throughout the entire economy, and this is especially the case in telecommunications.

And that brings me to the two issues that I plan to focus on, and that are at the crux of the debate, and future of, the digital transition. The first is the regulation and governance of the Internet.

It is almost an understatement to say that the Internet has changed the world. It has impacted everything we do and connected people and ideas in ways not previously imagined. And it has virtually unlimited power to help people achieve unprecedented freedom and rise above the circumstances of their birth.

You can look at Intel's study on Internet activity to see how much is being done online. The study found that, in one minute, more than 204 million emails are sent, 47,000 apps are downloaded, around 20 million photos and 6 million Facebook pages are viewed, and 1.3 million video clips are watched on YouTube.  All this happens in just one minute. Think about the amount of economic activity in that minute.

To ensure that the Internet's success continues and that society continues to benefit, we must keep it free from regulation, both at home and abroad.

Much of the debate surrounding net neutrality, and even the adoption of the FCC's order, happened before I came to the Senate. But it did not take long after I arrived in the Senate for me to realize that I did not agree with the FCC's action. It was clear that this was a regulation based on speculation. Implementing mandates that constitute public utility-style regulation onto broadband networks was a step in the wrong direction.

I hope that net neutrality mandates are overturned in court. And if that occurs, we must be prepared to oppose efforts by proponents of net neutrality to reclassify broadband and pass legislation doing so.  

We must also prepare for the growing international threat to the Internet. A year ago, some questioned whether there was really a threat to Internet freedom, or if the ITU was actually seeking to regulate the Internet. After Dubai, we don't have to question it anymore. We don't have to wonder about the intent of countries opposed to Internet freedom. 

We see stories all the time of countries censoring and controlling the Internet. Two weeks ago, Iran banned a majority of the country's "virtual private networks." In December, China passed a new law that ties every web site and Internet connection user account to the identity of an individual. These aren't just efforts to stifle online political discussion and restrict the flow of information. These are efforts to oppress people and deny them their fundamental human rights to express themselves, organize peaceful opposition efforts and use the Internet to let the world know about their reality.

If we've learned anything about the Internet over the years, it's the enormous power it has to give people economic opportunity.  When people are able to connect and use the Internet, they don't just use it to be pen pals with people.  They use it to explore business opportunities.  The more open and accessible the Internet is around the world, the more prosperous people will be - and that means greater opportunities for American small businesses and companies alike to sell their products and services abroad.

The Internet also has the enormous ability to empower people and make their voices heard. I was fortunate to meet with one such person yesterday - Yoani Sanchez, the author of Generaci�n Y blog in Cuba. Through her blog, Yoani has given the rest of the world valuable insights into daily life in Cuba and, more importantly, given us a glimpse of what democracy advocates like her can do, and what they can expose, with just a little bit of Internet access.

It is no surprise that these countries - Iran, China and Cuba - were among those supporting more international control over the Internet. But the issue is not just censorship. We also have to be concerned that countries want to justify economic regulation of the Internet, and that the ITU even wants to bring the Internet under its jurisdiction.

The United States must take these developments seriously and work to prevent intergovernmental control and influence over the Internet. We must engage our allies and work with countries in preparation for future meetings and conferences.

Now, I am not saying that the Internet should operate outside the law. Illegal activity, even if carried out through digital means, is illegal activity. What I am saying is that we must protect the Internet ecosystem - the content, the architecture, and networks - from government control and regulation by international tribunals.

That is why I worked with Senators on both sides of the aisle as well as members of the House last year to make Congress's position on this crystal clear. And why I am working again on bipartisan legislation that reinforces that the policy of the United States is to promote a global Internet free from government control and maintain the current multi-stakeholder governance.

We cannot stand idly by as countries try to justify censorship or economic regulation of the Internet. If we do, we will lose the very essence of what makes the Internet unique and great, and jeopardize the promise the Internet holds for the digital transition.

Another issue critical to the digital transition is spectrum. The way I have described the issue - and I made this point last week - we talk about how important roads are to the economy, to getting your products to market and conducting commerce. And that is the way I see spectrum...as the roads of the digital age. And we know right now that the roads are getting crowded, and traffic is only going to get worse.

Cisco's latest report on Internet traffic found that globally, mobile data traffic grew 70 percent last year, and it is expected to grow thirteen fold by 2017. This year, the number of mobile-connected devices will exceed the world's population. We already have more devices than people in the U.S.

But we don't need stats to tell the story. Everyone in here is using a wireless device ...hopefully tweeting about how great this speech is. We're banking and controlling our appliances from our devices; utility companies are deploying wireless meters. Even restaurants are using tablets to show you menus.

Simply put, the world is going wireless. And we don't fully know what that world will look like in five years, much less ten years. With the development of cloud computing, M2M communications, and open source platforms, the industry will continue changing at a rapid pace. Competition between traditional carriers and web based companies is only going to continue, while consumers will demand greater bandwidth and higher download speeds.

That is the great part about wireless telecommunications and the future of the industry: we don't know what's down the road in terms of new technologies and innovative devices. But we do know that in order for these new technologies and innovations to be realized, in order for more Americans to participate in the wireless economy, we will have to make more spectrum available.

And the reason we have to is not because carriers want more spectrum.

We have to for our economy. Estimates are for every 500 MHz of spectrum made available for commercial use, that's an additional 350,000 jobs created and $87 billion for our GDP.

We have to for economic mobility. Wireless is the preferred route to the Internet for our minority populations. Hispanics and African American wireless adoption outpace the general population. The path to economic prosperity for our minority populations is in large part wireless.

We have to because it will help empower our people with the education and skills to make it into the middle class.  One of the most revolutionary movements under way right now is in education, with innovative online courses that are in some cases free.  Not everyone can afford to go the traditional four year college route.  And as part of education reforms we need to take advantage of the creative new ways people can educate themselves with little more than a wireless Internet connection.

But making this reality will require making more spectrum available.  So you see, for people who don't think this spectrum issue matters to them, education is a perfect example of how important it really is to our goal of helping more people get the education they need for the jobs of the 21st century.

We also have to make more spectrum available for our kids and teenagers who will only know the wireless world throughout their lives. The latest survey from the Pew Internet and American Life Project found that one quarter of teens access the Internet mostly from their cell phone. My kids are going to look at wires the way that I look at the rotary phone.

The reasons for allocating more spectrum are clear. But as all of you know, the solutions are not. And that is why I want to get more involved in this issue. There is no silver bullet to solve our spectrum issues. But there are a number of steps we can take to help.

I believe we have to get more spectrum in the pipeline. We need to look beyond the auctions currently authorized and have a series of auctions over several years to provide spectrum in a clear and predictable manner. That is how we provide industries certainty so they can invest in and deploy infrastructure.

To ensure this happens will require getting the incentive auctions and those set for 2015 done on time. It will also require reallocating government spectrum.

We all know the challenges that go along with reallocation. There is no doubt that the federal government, including our military, need spectrum. Our warfighters, our satellite communications, our operations in space...all are examples of the importance of spectrum to the government.

But spectrum is a finite public asset. Therefore we must ensure that it is being put to the best, and most valuable, use for the taxpayers. And we must be certain that it is being used efficiently and for justifiable purposes.

Just because an agency utilizes a particular band of spectrum now does not mean that it always should, or that it cannot operate elsewhere on the spectrum frequency. We need to know how agencies are utilizing their spectrum.

I am pleased to see the government sitting down with industry stakeholders to share information, conduct tests, and learn about each other's spectrum needs. This is the type of collaboration that has to happen moving forward.

To ensure that we capitalize on these collaborations and reallocate spectrum in the future, I believe we need several things to occur:

�         we need a full accounting of how agencies are utilizing spectrum and accurate estimates of what will be required to clear spectrum;

�         we need the NTIA and OMB to hold agencies accountable to ensure that spectrum is being used efficiently;

�         we need the wireless industry to be willing partners when working with NTIA and the agencies;

�         we need leadership from the White House, from the FCC and NTIA, and from Congress to ensure that spectrum reallocation is a priority moving forward; and

�         we need to be forward thinking - and by that I mean pairing spectrum bands to maximize proceeds and the use of that spectrum, and making spectrum available that is internationally harmonized.

That is why I am pleased to see that the action taken by the FCC yesterday in notifying NTIA of its intent to auction 40 MHz of spectrum to preserve potential pairings. This is exactly what Commissioner Pai advocated for at last week's hearing.

And by forward thinking, I also mean sharing and utilizing unlicensed spectrum where it makes sense. That is why I am encouraged by what the FCC is doing with unlicensed spectrum above 5 gigahertz. Hopefully this will continue to promote the use of Wi-Fi, which will help offload wireless traffic and lead to more broadband hotspots like we are seeing deployed by the cable industry.

As I stated before, there is not one answer, so we have to explore all options. The situation is simple - the federal government has an asset, all of which is not being used efficiently. What a surprise.

The government also needs money to close our deficit and pay down our debt. And we have private entities willing to pay a lot for that asset, which will help agencies upgrade their equipment and use spectrum more efficiently, help pay down the deficit, and help grow our economy.

You can clearly see by our hearing last week that there is a lot of interest in this issue. And it makes sense why - we have a sector of the telecommunications industry that has been extremely successful, that has provided devices and technologies that have changed our lives, and that will be vital contributor to the future of our economy.

But the industry's lifeblood - spectrum - could be limited. And we must act to ensure that it is not. Otherwise we will endanger the industry's future and delay the digital transition.

Now, I have laid out a few of my priorities and ways that I think we can further the transition. We have to start with the agency and laws governing this space - the transition will be inhibited unless we have a commission and laws that work.

And more than anything, at least I believe, the future of the digital transition can be secured if we keep the Internet free from regulation and intergovernmental control, and if we get more spectrum into the commercial market.

I will close with this - the focus today is the digital transition and how we finish the job. I would caution against looking only at finishing the job. Sure, it is important that we do. We have to look at the steps to get there otherwise we may take the wrong ones.

But we should not limit ourselves to focusing on the finish line, only because we don't know where that line will be or what it will look like. Telecommunications is moving that fast. We have to be forward thinking, and we have to take the long term view.

I believe that is how we ensure that telecommunications is leading our economic growth and opportunity, and providing a path to the middle class for millions of Americans.

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