Jonathan Spalter

The Future of Broadband

The following remarks were delivered by Jonathan Spalter, President and CEO, USTelecom before the Ohio Telecom Association on April 10, 2018

Thank you, Charlie, for the invitation to join you and the work you and this organization do every day connecting Ohio communities and families to broadband’s many opportunities. The $4 billion and 16,000 jobs the Ohio telecom industry contributes each year to the state’s economy is impressive, and your work demanding a level playing field for your companies and your investments are essential.

I also want to thank you for the opportunity to get outside the beltway. It’s been a year and a quarter since the family and I put our things in a moving van and left the Bay Area of California. It’s certainly been an interesting time to return to the nation’s capital.

There has been important progress:

Regulatory burdens are easing—from starting to peel back outdated, heavy-handed and lopsided regulations, work FCC Chairman Pai affectionately refers to as his regulatory ‘weed whacker.’  Although far more work remains to be done.

Common sense is prevailing—at least for now at the federal level—when it comes to the open internet.  The flip side: Maintaining this progress continues to entail hand-to-hand combat not only at the national level, but increasingly the state and local levels, too.

There’s also growing understanding—hard to avoid given the near daily headlines—that regulatory parity is not only in our companies’ best interests, but it represents essential protections for consumers, as well.  Finally, the nation is waking up to the fact that from privacy to issues of neutrality, it’s not OUR companies that are raising the real-world questions and concerns today.

In other words, it’s an important moment…to reintroduce and reinforce our industry, our companies and the deep roots you have in the communities you serve, and our value to this nation—from the jobs we create…to the economic opportunities we make possible at massive scale…to improvements in health care…education…the list goes on.

The Original Innovators

You know it well.  My goal is to be as forceful as we can in making sure the rest of the country not only knows and appreciates but supports and encourages your work.

I’ve spent a good part of my early time in this job on the road getting to know the companies and the people I now have the privilege and the honor to represent.

Probably the single most powerful common thread I’ve encountered is that when companies say they have roots in the nineties…as often as not, they mean the EIGHTEEN-nineties.

Cincinnati Bell is even older, founded in 1873…three years BEFORE the invention of the telephone.  They started out as a telegraph company.

These are extraordinary stories…companies often run by generations of the same family…who first started connecting the country via telephone lines…sometimes in those early days fashioned from cattle wire…and today they are connecting communities across the country to a whole world of opportunities in the digital age.

$1.6 trillion dollars in investment in the nation’s information infrastructure later, there’s still a real disconnect.  When I tell people I work for the companies that make the internet possible, their thoughts immediately go to the so-called FAANG corporations—Facebook, Amazon, Apple, Netflix, Google.

These companies have had quite a honeymoon from the regulatory perspective, and I say with utter sincerity and even awe that their contributions to American innovation are extraordinary—indeed transformative.  I’d simply add that they wouldn’t be possible without your networks, your leadership and your commitment to the communities you serve.

Parity in the Spotlight

The tide is turning a bit for these edge companies, and there’s certainly no need to pile on.

As I visit with all of you, Mark Zuckerberg is preparing to appear before a joint hearing of the Senate Judiciary and Commerce Committees.  This makes his first appearance to testify before Congress…answering questions about privacy and business practices and disclosure and elections.

And, with increased scrutiny across the FAANG cohort—not only here in the U.S. but also in the EU and elsewhere—the capital markets have been pretty brutal in reassessing the value and potential risk facing these ventures.

In other words—welcome to OUR world.

These new online heavyweights—now some of the biggest companies in the world—are finally beginning to stare down challenges America’s ILECs have dealt with for decades.

The answer, of course, is not dragging everyone down with heavy regulations.  We don’t want others to ‘feel our pain.’  We want consumers to feel protected and confident in their online experience.  And, we want rules of the road that achieve that while also encouraging innovation throughout the internet ecosystem.

And, that leads to an obvious conclusion: The answer is not—as proposed with the misguided Title II approach to net neutrality—bolting on to the entire internet regulations originally written not just for ROTARY phones, but RAILROADS.

The answer is for our policymakers to step up and do the hard work of coming up with a MODERN framework to help encourage the growth and evolution of the most powerful tool in our modern lives.  The internet must be freed from outdated and outmoded regulations that have no place in today’s world outside the Smithsonian.  In its place, fresh, modern and constructive principles must be applied in an even-handed way across the ENTIRE ecosystem.  On privacy…on openness…on all these important issues—consumers and innovators alike deserve one set of protections and rules of the road.

Threat Matrix

So how do we as an industry help get our nation there?  We stand together…with new allies…and a broader circle of interests to face down some very real threats.

Threat #1: Invisibility

The first threat, we already discussed: The work our companies do building out and constantly upgrading the central infrastructure of our nation’s information economy is not recognized or even widely understood.  Have you ever asked someone not in the industry what a broadband company is?  You’d be surprised by the answers—and how infrequently they tie back to our companies.

Your networks are the indispensable infrastructure that makes all digital innovation possible.  Yet for all the enthusiasm around the progress of the internet, you’d think we don’t even exist.  In this new digital economy, the reliance of jobs, healthcare, education, communication—name your necessity—on fast and reliable broadband cannot be understated. We need to do a much better job of telling our story—and working with agriculture, community hospitals and schools to make clear the direct translation between our investments and local jobs, opportunities and quality of life.

At the bottom of every email I write, it says “This digital message is brought to you by our nation’s innovative and open broadband providers.”

Threat #2: Disparity

The second threat: Is this profound disparity between the core and the edge—not only in regulatory treatment, but also public perception.  We see it in its most obvious pain relief in the net neutrality debate.  If you believe what the other side has to say about us—which I know is impossible for anyone in this room—it’s completely understandable why consumers are so worked up.  Fear is a powerful motivator.   But we have to separate out the rational from the irrational.  This whole Title II debate was predicated on the notion that broadband providers would somehow reverse course on 20 years of innovation and progress and topple the open and free internet we have championed and upheld since the early days of ‘honk and screech’ dial up service.

Finally, we are seeing more rational fears surfacing—and they have little if anything to do with our companies.

As I said, there is a growing sense that consumers deserve the same protections across the online world. This I believe is a core component of the success we have had to date pushing back on uneven open internet and privacy regulatory approaches.  It’s just no longer acceptable to write rules that omit the most powerful players of the digital age.

And, this isn’t just a U.S. issue.  The woman referenced in the Wall Street Journal headline is European Union antitrust chief Margrethe Vestager. Now the public face of Europe’s effort to rein in Big Tech, she has become the de facto global regulator for the U.S. tech giants, fining Google 2.4 billion Euro last June for abuses.

…which leads right into our third big threat.

Threat #3: Paralysis in Washington

We need policymakers in Washington to step up.  We need to get outmoded regulations off the books.  We need modern policy constructs.

And, here I’d say Ohio is very fortunate to have a strong advocate in Congressman Bob Latta, who is right in the thick of these issues…leading the Rural Broadband Caucus and also as a leader on rural tech issues on the House Energy and Commerce Committee.

Net neutrality is truly the poster child for why we need more in Congress to step up.  What the FCC has done has been grossly mischaracterized.  We need to be aggressive in pushing back and defending that progress.

We need to be clear about WHY having ALL of these protections under the same cop on the beat—the Federal Trade Commission, which is the nation’s top consumer protection agency—is a good thing for consumers, our economy and innovation alike.

And, we need to press our leaders in Congress to step up and help get our nation off this hamster wheel of empty, divisive soundbite wars and scare tactics.

This is the greatest democracy in the history of the world.  Free speech has always been central to who we are and what we stand for—in the real and virtual worlds.  That won’t change, and it’s far easier to uphold the right way than with 1930s era Title II rules.

And, the right way includes ensuring every American is protected.

There is now a metastasis of efforts around the country which are creating differing and disparate approaches to regulatory, business and technology standards, which will have implications on our global competitiveness that can’t be underestimated.

But just as we would not accept a huge 50-state variance on civil rights, so should we not accept a patchwork quilt of basic online protections.

It is said that the road to hell is paved with good intentions. Policymakers at all levels of government should be praised for wanting to do everything they can to protect their communities. But the global internet exists to transcend boundaries, and we will aggressively challenge any state or municipal attempts to fracture the federal regulatory structure.

Threat #4: Cybersecurity

It’s been seven years since the Department of Defense declared cyberspace an operational domain that U.S. forces will be trained to defend.  Headlines virtually every day remind us just how mission-critical this theater of warfare has become.

We are seeing an increasingly sophisticated enemy, in the form of both state-sponsored and criminal enterprises that use malware, botnets, DDoS attacks and other weapons to attack major corporations and municipalities, like what happened when the city of Atlanta was brought to its knees in a recent Ransomware attack.

Responding to these sophisticated, real-time threats with bureaucratic red tape is a non-starter…nor is it our companies’ responsibility alone to bear the burden of this vigilance.

Fortunately, the collaborative approach forged between the public and private sectors on this issue is a fairly strong model for how we can work together in a strong, nimble way to address extremely complex, fast-moving and high-stakes challenges.

I’m proud to say that USTelecom is helping lead these efforts from the industry side.  Robert Mayer, our Senior Vice President for Cybersecurity, serves as chairman of the Communications Sector Coordinating Council, a public private partnership with the Dept. of Homeland Security.

We are also expanding our partnerships to bring in a broader array of industry players.  With the Information Technology Industry Council, we recently launched the Council to Secure the Digital Economy—which Robert also co-chairs—and now have companies like IBM, Intel, Cisco, Akamai, Oracle and Samsung all a part of our cybersecurity work.  This is a public-private partnership that brings to the table some of the largest names in tech.  USTelecom also formed a special group to deal with the unique burdens and considerations of smaller companies trying to keep up –The Small Medium Business Cybersecurity Committee – with this global threat.

And, it’s important that we approach these issues from both sides of the equation.  The most recent issue we are dealing with relates to the presence of foreign products and services in U.S telecommunications networks.  The FCC is attempting to prevent universal service funds from being used to purchase equipment or services from companies that pose a threat to national security. It’s more complicated than it sounds on its face.  So it’s important that we are all at the table working through the details together.

Threat #5: Our Country Abandoning 16 Million Rural Americans

And, this leads to the final threat.  In my view this is an existential threat to what it MEANS to BE America: We are not the nation I grew up believing us to be if we walk away from our enduring commitment to connect ALL Americans to opportunity.

Our nation has a proud history of connecting everyone to opportunity and progress through infrastructure—from electricity, to safe, running water, to telephones and highways.

If we don’t collectively as a nation give walk to the talk of closing the digital divide to rural and unserved communities, then we all suffer.

This means we must INSIST that broadband not be an afterthought in any infrastructure bills, but a central consideration with dedicated funding.  And, loans don’t cut it.  If we want to get at these final unserved areas—where there is no economic business case for service—then the federal government needs to be our partner.

We need to tell the stories of rural communities in a bolder, louder and clearer way.  We need members of Congress to see these funds for that they are—investments in rural opportunity…allowing the Cleveland Clinic to be a leader in the use of technology to enhance patient care…empowering Columbus to show the WORLD what a truly smart city can achieve…all of this is made possible by broadband—and the government working as a partner to connect the final frontier.

Transforming Our Advocacy

Like you, USTelecom’s roots are more than a century strong.

We are going to keep evolving and innovating, just like the companies we represent.

We are reorienting our work to ensure it is meaningful and measurable on the bottom lines of our companies—large, small and everyone in between.

We appreciate that the core value of USTelecom is that we are all sitting at the table together.  I truly believe this unique alchemy of large and small companies, working together, is our secret sauce.  It makes us greater than the sum of our individual parts.

And, I’m also working to infuse a fresh sense of urgency, boldness and agility in our team around our members business needs.  The fundamental structural changes and pressures on your own businesses demand it.

I see USTelecom like a ninja warrior—protecting, defending and advancing your interests—loudly where we need to, subtly where it makes the most strategic sense.

For those of you who are with us at USTelecom helping do the national work−Doylestown, Fort Jennings, Kalida and Pattersonville − thank you. For those of you who aren’t yet or aren’t anymore, I encourage you to take another look, and I thank you for your state-level support and engagement with OTA.  And, to all of you in our broadband community here in Ohio, thank you for your work.  I am proud to be your champion in Washington.  I understand we have a few minutes for questions, and I’m happy to take any you may have.