Competition and Convergence Hearing

S. HRG. 109–689 COMPETITION AND CONVERGENCE HEARING BEFORE THE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION UNITED STATES SENATE ONE HUNDRED NINTH CONGRESS SECOND SESSION MARCH 30, 2006 Printed for the use of the Committee on Commerce, Science, and Transportation ( U.S. GOVERNMENT PRINTING OFFICE 30–101 PDF WASHINGTON : 2006 For sale by the Superintendent of Documents, U.S. Government Printing Office Internet: bookstore.gpo.gov Phone: toll free (866) 512–1800; DC area (202) 512–1800 Fax: (202) 512–2250 Mail: Stop SSOP, Washington, DC 20402–0001 VerDate 0ct 09 2002 11:27 Nov 29, 2006 Jkt 030101 PO 00000 Frm 00001 Fmt 5011 Sfmt 5011 S:\WPSHR\GPO\DOCS\30101.TXT JACKF PsN: JACKF SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION ONE HUNDRED NINTH CONGRESS SECOND SESSION TED STEVENS, Alaska, Chairman JOHN MCCAIN, Arizona DANIEL K. INOUYE, Hawaii, Co-Chairman CONRAD BURNS, Montana JOHN D. ROCKEFELLER IV, West Virginia TRENT LOTT, Mississippi JOHN F. KERRY, Massachusetts KAY BAILEY HUTCHISON, Texas BYRON L. DORGAN, North Dakota OLYMPIA J. SNOWE, Maine BARBARA BOXER, California GORDON H. SMITH, Oregon BILL NELSON, Florida JOHN ENSIGN, Nevada MARIA CANTWELL, Washington GEORGE ALLEN, Virginia FRANK R. LAUTENBERG, New Jersey JOHN E. SUNUNU, New Hampshire E. BENJAMIN NELSON, Nebraska JIM DEMINT, South Carolina MARK PRYOR, Arkansas DAVID VITTER, Louisiana LISA J. SUTHERLAND, Republican Staff Director CHRISTINE DRAGER KURTH, Republican Deputy Staff Director KENNETH R. NAHIGIAN, Republican Chief Counsel MARGARET L. CUMMISKY, Democratic Staff Director and Chief Counsel SAMUEL E. WHITEHORN, Democratic Deputy Staff Director and General Counsel LILA HARPER HELMS, Democratic Policy Director (II) VerDate 0ct 09 2002 11:27 Nov 29, 2006 Jkt 030101 PO 00000 Frm 00002 Fmt 5904 Sfmt 5904 S:\WPSHR\GPO\DOCS\30101.TXT JACKF PsN: JACKF C O N T E N T S Page Hearing held on March 30, 2006 ............................................................................ 1 Statement of Senator DeMint ................................................................................. 3 Statement of Senator Inouye .................................................................................. 2 Statement of Senator Stevens ................................................................................ 1 WITNESSES Comstock, Earl W., President/CEO, COMPTEL ................................................... 23 Prepared statement .......................................................................................... 24 Cooper, Dr. Mark, Director of Research, Consumer Federation of America; on behalf of the Consumer Federation of America, Free Press, and the Consumers Union ................................................................................................. 44 Prepared statement .......................................................................................... 46 Ellig, Jerry, Ph.D., Senior Research Fellow, Mercatus Center, George Mason University ............................................................................................................. 37 Prepared statement .......................................................................................... 39 Largent, Steve, President/Chief Executive Officer, CTIA—The Wireless Asso- ciation® ................................................................................................................. 31 Prepared statement .......................................................................................... 33 McCormick, Walter B., Jr., President/Chief Executive Officer, United States Telecom Association (USTelecom) ....................................................................... 28 Prepared statement .......................................................................................... 29 McSlarrow, Kyle, President/CEO, National Cable and Telecommunications Association ............................................................................................................ 4 Prepared statement .......................................................................................... 5 APPENDIX Response to written questions submitted by Hon. Trent Lott to: Earl W. Comstock, ............................................................................................ 64 Dr. Mark Cooper ............................................................................................... 74 Jerry Ellig, Ph.D. .............................................................................................. 72 Walter B. McCormick, Jr. ................................................................................ 66 Steve Largent .................................................................................................... 69 Kyle McSlarrow ................................................................................................ 61 Response to written questions submitted by Hon. Ted Stevens to: Earl W. Comstock, ............................................................................................ 62 Dr. Mark Cooper ............................................................................................... 74 Jerry Ellig, Ph.D. .............................................................................................. 70 Walter B. McCormick, Jr. ................................................................................ 65 Steve Largent .................................................................................................... 68 Kyle McSlarrow ................................................................................................ 59 (III) VerDate 0ct 09 2002 11:27 Nov 29, 2006 Jkt 030101 PO 00000 Frm 00003 Fmt 5904 Sfmt 5904 S:\WPSHR\GPO\DOCS\30101.TXT JACKF PsN: JACKF VerDate 0ct 09 2002 11:27 Nov 29, 2006 Jkt 030101 PO 00000 Frm 00004 Fmt 5904 Sfmt 5904 S:\WPSHR\GPO\DOCS\30101.TXT JACKF PsN: JACKF COMPETITION AND CONVERGENCE TUESDAY MARCH 30, 2006 , U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, DC. The Committee met, pursuant to notice, at 2:32 p.m. in room SH–216, Hart Senate Office Building, Hon. Ted Stevens, Chairman of the Committee, presiding. OPENING STATEMENT OF HON. TED STEVENS, U.S. SENATOR FROM ALASKA The CHAIRMAN. Over the course of our series of 14 hearings, our Committee has heard from the wireless, wireline, competitive, cable, Internet, satellite and content industries as well as consumer groups and academic groups on a wide range of communications issues. Today, we want to discuss the phenomenon of convergence and how it is changing the competitive landscape in today’s market. Cell phone companies, Bells, CLECs, cable companies and satellite providers are capable of providing the same or similar services. Our Committee wants to look at what that means for each of these industry segments and their consumers. Already, consumers are clamoring for a quadruple play of local, long distance, video, and data service on a single platform. Soon, consumers will be able to reach their video recording de- vices from their cell phones to either watch or record TV programs while on the move. These technological changes will impact how regulations are ap- plied. Certainly, we have all heard about the importance of setting a level playing field as phone providers move into the video marketplace. Currently, the same bundles are often regulated dif- ferently depending on the platform that delivers it. It is our hope that as we level the playing field, we will seek the most deregulatory approach possible consistent with the public in- terest. Going forward, it will be necessary to ensure that regulations are flexible to readily allow for the innovation that consumers demand. Convergence and other forces are also contributing to the mergers we have seen in the communications marketplace. Wireless, wireline, and cable have all seen significant transactions in the last couple of years with the combination of Sprint-Nextel, Verizon- MCI, SBC–AT&T, AT&T-BellSouth, and the Comcast-Time War- ner-Adelphia deal. (1) VerDate 0ct 09 2002 11:27 Nov 29, 2006 Jkt 030101 PO 00000 Frm 00005 Fmt 6633 Sfmt 6633 S:\WPSHR\GPO\DOCS\30101.TXT JACKF PsN: JACKF 2 With respect to the wireline mergers, one concern that has been raised is not just the impact for residential users but the impact on the business market. The special access lines that provide high capacity access to businesses are largely controlled by the Bells, but are crucial to competing in the business market. This is one area where intermodal competition may not be enough. We plan to schedule a hearing on mergers in the future, so we can examine all of them in some detail. This is the last communications hearing scheduled prior to that mark-up of our ‘‘Communications Package.’’ I have appreciated the participation of all you here at the table and I look forward to your testimony here. I don’t know when we’ll be able to look at the intermodal competition subject, but we will do our best to do so before we ask the Committee to report the bill. Our Co-Chairman, sir? STATEMENT OF HON. DANIEL K. INOUYE, U.S. SENATOR FROM HAWAII Senator INOUYE. I thank you very much. While transformation of the communications services in our country is encouraging and bringing new benefits to consumers, as the Chairman indicated I think it’s important that this Committee keep a close watch on the state of competition in the communications marketplace. As the Chairman noted, the proposed AT&T-BellSouth merger would certainly alter the communications landscape

Load more