Speech: The Open Internet, Innovation and Economic Development

Prepared Remarks of Chairman Julius Genachowski
Joint Center for Political and Economic Studies: Media & Technology Policy Forum
National Press Club
Washington, D.C.
Wednesday, March 3, 2010 

Thank you Ralph for that kind introduction. And thank you Dr. Nicol Turner-Lee for putting this event together, and for your ongoing leadership on media and technology policy issues. I’d like to acknowledge the presence of my colleagues Commissioner Copps and Commissioner Clyburn, who have each worked very hard on these issues.

I’m very pleased to be here at this event: The Joint Center is an increasingly important force on media and telecom policy issues. It’s data-driven and forward-thinking, focused on facts and empirical research rather than partisanship and rhetoric. It works to address gaps in our understanding of key policy issues. Just last week, the Joint Center released the National Minority Broadband Adoption study, a comprehensive survey of acceptance and use of broadband, particularly among African Americans and Latinos. The study has some good news about affluent minorities—high rates of broadband adoption among African Americans and Hispanics with college degrees.  The study also showed that college-educated minority Americans who make over $50,000 are adopting broadband at the fastest rate of any group. At the same time, the study confirmed areas of real concern: lagging broadband adoption for lower-income, older and less educated blacks and Hispanics, with only about a third of them or less regularly using the Internet.

That begins to tell us why today’s discussion matters. Broadband is our generation’s infrastructure challenge. Like roads, canals, railroads, telephone service, and electricity for previous generations. It’s the foundation for our economy and democracy for the 21st century. A Plan to Connect America is what Congress asked the FCC to develop, connecting all cities and towns; all businesses, large and small; all schools; all libraries; all hospitals; all Americans.

But the U.S. is lagging behind globally. Only 65% of U.S. households have broadband.  In comparison, adoption in Singapore is at 88%, and in South Korea, 95%. We ranked 6th in a recent study looking at innovation and competitiveness across the globe, but we were 40th—out of 40 countries—in our rate of change in innovative capacity. That’s the canary in the coalmine.

And within the U.S., some communities are lagging behind others. African Americans, Latinos, seniors, and rural Americans all have adoption rates significantly lower than the national average.

Moreover, the costs of digital exclusion are growing. Today, with more and more job postings only available online, you simply can’t apply for many jobs without broadband. As schools increasingly use online resources as part of their curriculum, you can’t get a first-rate education without broadband. As health information and medical records move online, you can’t fully control your health care without broadband. As the most effective business applications and services increasingly move to the cloud, you can’t run a successful small business without broadband. On a trip to Erie, Pennsylvania last year, a farmer told me that for most of his career he never thought the Internet would matter to him. But today, he said, you can’t be a farmer without high speed access to the Internet, to check the weather, crop information, and other resources only available online. Today, without broadband, you can’t be a farmer, a teacher, or a small business owner; you’re at a serious disadvantage in our economy.

So the FCC has been developing a National Broadband Plan, which we’ll be releasing in two weeks. The plan will present a strategy—a series of recommendations and initiatives to fulfill the promise of a connected America. We’ll put forward policies to increase inclusion and accelerate broadband adoption and use, including among minority and low-income communities. The goals of these policies including ensuring that every young person in America is digitally literate when they leave high school, and that every American household—no matter where you live, what your income, or what community you’re part of—has meaningful access to broadband. We took a step forward on inclusion last month when the FCC gave schools that receive federal broadband funding more flexibility to allow community use of the schools’ broadband access.

Our broadband plan will also lay out policies to drive innovation and investment in and on the broadband platform. The benefits of broadband Internet for innovation and economic development are unparalleled. But we’ll lose those tremendous benefits if the Internet does not remain an open platform, where Americans can innovate without permission, with low barriers to launching small businesses and creating jobs. For that reason, we’ve been working on a complementary initiative—our open Internet proceeding

Internet openness is key to a healthy business ecosystem, particularly for startups and small businesses, which are America’s engine of growth and opportunity. Small businesses employ more than half of all private sector workers, and nearly all net job creation in the U.S. between 1980 and 2005 occurred in firms less than 5 years old. Small businesses are particularly important to minority economic development. The most recent data from the Small Business Administration show that minorities owned more than 4 million small businesses.

Startups and small businesses have great opportunity as a result of the Internet, but they are also the most sensitive to barriers to entry on the Internet. Let me quote from my colleague, Commissioner Clyburn, talking about the open Internet earlier this year: “We are faced with one of those rare moments in time where a sea change is actually possible for groups that have traditionally been marginalized by the structure of the communications marketplace. . . . Together we must ensure that people of color – and all Americans – can participate as owners, employees, and suppliers online.”

The open Internet also enables new and diverse voices to launch content ventures and attract and build an audience. Ruth Livier was an actress in Los Angeles who wanted to tell stories in Spanish and English about a modern Latina making her way in contemporary America. She tried traditional media outlets, with no success. Then, two years ago, she created the Web video series YLSE—which she writes, acts in, and produces—and which has now built an audience approaching half a million viewers with zero marketing dollars. In the process, Livier became the first person admitted to the Writer’s Guild of America for work in new media. As she explained at an FCC workshop in December, “For minority content creators, the low barriers to entry on the Internet have allowed us to take initiative, create, produce, and distribute our stories and develop financially viable businesses. But [this] . . . is dependent upon [the] ability to reach an audience unimpeded and unencumbered by gatekeepers and filters.”

And Livier is just one example. Take another: Jonathan Moore founded Rowdy Orbit, a growing online platform for professionally produced Web content for minority audiences. Moore’s total expenses for launching this venture?  Less than $1,000.  This is another business that could only have been launched on the open Internet.

So the question is: How best to ensure the Internet remains open so that businesses like these can continue to start and grow, and voices like these can continue to thrive? To answer that question, we started our open Internet proceeding late last fall, putting forward a draft proposal for 6 high-level rules of the road to protect the open Internet, and inviting public comment.

For the most part, I’ve been encouraged by the response we’ve gotten. We’ve seen growing common ground on key issues, including the value of openness, the need for the FCC to provide greater clarity for the marketplace around these issues, the benefits of transparency by broadband providers, and the importance of ensuring continued Internet openness to incentives to innovate and deploy capital. The record is also making clear that an open Internet can coexist with broadband providers managing their networks and earning a return on investment, and that commonsense rules of the road can promote predictability, certainty, and a healthy market for innovation and job creation.

Today’s forum provides an opportunity to move beyond false choices, and to discuss constructively how the open Internet can best be preserved. I believe this is a particularly important conversation for minority and low-income Americans, and for anyone presenting a diverse programming idea or point of view, all of whom benefit from an open Internet with low barriers to entry and participation.

I look forward to today’s discussion.