Prepared Statement of The Honorable Joe Barton Competition in the Communications Marketplace: How Technology Is Changing the Structure of the Industry. Full Committee on Energy and Commerce March 2, 2005 Good Morning. Today’s hearing is entitled “Competition in the Communications Marketplace: How Technology Is Changing the Structure of the Industry.” We have before us today a very distinguished panel of six of the top communications executives in the world. We also have a second panel of representatives from consumer groups, the financial industry, and academia. Today’s hearing will examine will how advanced technologies have changed the dynamics of the communications industry by (1) enabling the same suite of voice, video, and data services to be offered over different network platforms and (2) permitting entry into these markets by "virtual" operators that use Internet Protocol (IP) to provide applications such as Voice over IP (VoIP) to consumers who subscribe to broadband services. These trends have resulted in a "hollowing out" of some traditional telephone market segments such as residential and enterprise long-distance telephone service as well as residential local exchange service. These industry trends have also led service providers with complementary IP and broadband assets to merge. The communications industry certainly looks very different than it did ten years ago when this committee debated the legislation that became the ’96 Telecommunications Act. Back then, there were 28 million wireless subscribers. Today, there are 170 million. Back then, wireless rates were much higher, and long-distance was not free. Today, wireless rates have plummeted, long-distance is almost entirely free, and consumers are beginning to “cut the cord” and replace their existing wireline phone service with wireless phone service. And, today, in addition to providing voice services, wireless carriers are now offering data services and beginning to roll out video. Back then, the Internet had not been fully commercialized. Today, there are more than 140 million Internet subscribers in the United States, including approximately 40 million broadband customers. These broadband customers all now have access to innovative new IP services such as VoIP that can be offered over broadband platforms at rates far below what consumers currently pay for their traditional local and long-distance packages. Furthermore, in 1995, cable companies offered cable services. Today, the cable industry leads broadband subscribership in the United States, and cable companies are aggressively deploying VoIP services. With an industry that has changed so much in ten years, it should come as little surprise that companies are looking at one another to determine whether partnerships will enable them to be stronger competitors in the new digital world. The combination of Sprint and Nextel will create a broadband giant in the wireless industry that has no affiliation with the Bells. We should not be wary of such a combined entity; we should welcome it. And the once “unthinkable” merger of AT&T and SBC is now very realistic. AT&T is a different company than it was ten years ago. AT&T and SBC have complementary assets that will create a company with strengths in the residential and enterprise sectors, local and long-distance, wireline and wireless, and with the ability to serve as a broadband network provider and an IP application service provider. The same logic applies to the Verizon-MCI deal. The United States needs to have a vibrant communications industry with strong national players. I believe that the companies before us today are creating such players and that U.S. economic growth and consumers will benefit as a result. I look forward to the testimony of our witnesses and I thank them for participating in today’s hearing. Related Documents