December 09, 1998

The following letter was written to William E. Kennard, Chairman of the Federal Communications Commission:
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We are writing to you regarding the Commission's important effort to encourage the deployment of broadband networks.

While we are involved in many different types of businesses, we all share a strong interest in making sure high speed broadband networks are built out as quickly and widely as possible. All our businesses will benefit from the deployment of these networks. Just as important, such deployment would catalyze numerous social benefits in education, health care and other public services.

We know the Commission is currently evaluating several different actions that will affect the speed and ubiquity of the deployment of broadband networks. In light of those proceedings we would like to offer two observations.

1. The Marketplace is Building Multiple Competitive Broadband Networks, but Needs to Move Faster.

Over the last several years a broad array of providers has invested billions of dollars to create new broadband networks. We are just beginning to see the fruits of that effort, as incumbent and competitive telephone companies, long distance carriers, cable companies, wireless providers, satellite companies, and utilities are now beginning to offer broadband services.

The Commission can rightly take pride in its limited but important role in these developments. For example, it was Commission action that led directly to the creation of new billion dollar companies such as WinStar and Teligent. Similarly, the Commission recently took action to enable wireless cable companies to provide high-speed data transmission.

Significantly, the government action in these instances was limited to making spectrum available to these parties. The Commission then wisely stepped back and let the companies figure out the best way to offer services to the public.

This hands-off approach is right and is beginning to work, but we need to move faster. The emergence of these broadband networks, and the plans for more, should give the Commission comfort that marketplace forces will bring the public the benefits of vibrant competition envisioned by the authors of the Telecommunications Act of 1996. The Commission should ensure that the new multiple broadband networks are not shackled by burdensome new regulations.

2. The Government Should Avoid Actions That Will Dampen the Willingness of Financial Markets to Finance the Construction of Broadband Facilities.

It is a simple but undeniable reality that new and unnecessary regulations will diminish the willingness of capital markets to finance the construction of new broadband networks.

This is true for a number of reasons. As a threshold matter, such investments are very risky and lack any guaranteed return. Government regulation would actually limit the return on investment, and cause investors to be less willing to risk the billions of dollars necessary to build out the networks. Government intervention is particularly misplaced in the case of new broadband networks deployed by entities that lack the market position of the traditional telephone companies. Not only is broadband investment in its infancy, there is plenty of competition from existing networks and there will be plenty of competition from emerging networks. Further, the uncertainty created by even potential government regulation increases the cost of capital for new networks.

We share the Commission's view that the public interest will be best served by the deployment of multiple broadband networks as widely as possible. But that goal will only be realized if the Commission maintains a ``hands off'' approach that trusts markets to determine how the emerging broadband networks will be built and utilized.

This letter was signed by:


Leslie L. Vadasz
Senior Vice President
Intel Corp.


John T. Chambers
President and CEO
Cisco Systems


Dr. Eric Schmidt
Chairman and CEO
Novell, Inc.


Eckhard Pfeiffer
President and CEO
Compaq Computer Corporation


Peter D. Fenner
President and CEO
COM21, Inc.


Christopher G. Caine
Vice President, Governmental Programs
IBM Corporation

C. Richard Kramlich
Partner
New Enterprise Associates

John Doerr
Partner
Kleiner Perkins Caufield & Byers

Roger McNamee
Partner
Integral Capital Partners

Jim Breyer
Partner
Accel Partners

Gary Griffiths
CEO
SegaSoft Networks, Inc.

Ric Fulop
President
Arepa Inc.

Kevin Bermeister
President
Brilliant Digital Entertainment

cc: Hon. Susan Ness
Hon. Harold Furchtgott-Roth
Hon. Michael Powell
Hon. Gloria Tristani


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