Internet Telephony: America Is Waiting

Remarks by FCC Chairman William E. Kennard at the Voice Over Net Conference, September 12, 2000, Atlanta, Georgia.

Key themes include the myth of the level playing field, the importance of the nascent VoIP industry, and a plea that the competitors behave better than the incumbents.

IP Pioneers: The Progeny of Paley
Thank you, Jeff, for that kind introduction.

I am grateful for the opportunity to speak to such an extraordinary assemblage of talent, and I congratulate you, Jeff, for bringing this group together.

The incumbent telephone companies may have started with Ma Bell, but it's pretty clear the IP telephone companies are starting with "Pa Pulver."

I feel like I am at a convention of Bill Paleys.

As you know, Bill Paley was the father of the modern business of broadcasting.

In 1928, Paley's father took $400,000 of the family cigar fortune and bought CBS Radio. He told his son to go run the company. No one thought that radio would amount to much. NBC was only two years old and was struggling. CBS was in worse shape. It had only 16 affiliates. It was losing money. CBS didn't even own a single radio station. And Paley was 27 years old in 1928 and had no broadcasting experience.

But Paley understood something very important about radio. He understood that the power of radio was in its reach. When Paley came to broadcasting, the networks sold programming to radio stations. The radio stations bought the programming, so they were the clients.

Paley developed a new business model. He just gave the programming away to the stations, to get the widest distribution, and made the advertisers his clients.

Paley shifted the paradigm in radio, and in the process, he jumpstarted an industry that became the most important cultural medium of his time.

You might say that Bill Paley was CBS's very first "Survivor."

He stood the conventional business model on its head. He thought outside the box.

You in this room are not only thinking outside the box, you've got a whole new box, and it's called the Internet. And I am confident that you will use it to shift the paradigm and forever change the way people use the telephone in this country.

So here we are, present at the creation — present at the creation of the IP telephony revolution.

You only have one percent of the voice traffic in this nation.

How do we know this? Because Jeff Pulver says so.

No one really knows. So we all just quote Jeff.

I was thinking about the top six reasons to encourage IP telephony. I had ten reasons, but we are streamlining at the Commission, so now I have only six.

• Number six: The string and two-paper cup phone system we have between the FCC and the White House has gotten notoriously unreliable lately.
• Number five: So telemarketers can find ever cheaper ways to harass people during the dinner hour.
• Number four: So we can actually get some equipment at these conferences, instead of just consultants.
• Number three: So net-savvy teens will finally free up the traditional phone for their tech-illiterate parents.
• Number two: Because when you're angry it's so much more satisfying to slam down the mouse.
• And the number one reason: So Jeff Pulver can keep having conferences.

You may have one percent of the voice traffic now, but estimates are that in five years you will have 15% of the traffic. IDC estimates that in just three years, 300 million people worldwide will be using voice over the net.

I am convinced that once Americans discover the cost and functionality of IP telephony, they will leave the circuit-switched world forever. And it will happen very fast.

The Internet is Born (and the Government is Midwife)
Of course, IP telephony would not have been possible without the birth of the Internet.

The role of the government in the New Economy is hotly debated these days, but I will tell you that much of the New Economy could not have happened without government.

This is an area where government has made the right decisions most of the time.

In the 1960s, the federal government funded a Defense Department computer network called ARPANET, and the National Science Foundation worked to extend this nascent net to universities and industry.

But the ARPANET was a long way from the network the Internet is today. To create that, you had to crisscross the country with a transport backbone, and get cheap modems and computers into America's homes and offices.

The FCC's initial instincts were right: allow entrepreneurs to innovate, and trust the American people to choose the technology they want. So when telephone-related equipment like computers and modems and their software surfaced in the 1970s, we did not regulate them. And we told the monopoly phone companies that you had to allow people to plug them into the network.

In the 1980s, government broke up AT&T and opened up competition in long distance services. Investment flowed into long distance, laying the foundation for the Internet backbone.

And when technologists began to use the telephone network for "enhanced services" in the 1980s, we declined to regulate those services, paving the way for the unregulated Internet. Like our equipment decisions in the 1970s, we said that old laws should not automatically be applied to new technologies.

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