TESTIMONY OF MITCHELL KAPOR PRESIDENT ELECTRONIC FRONTIER FOUNDATION BEFORE THE SUBCOMMITTEE ON TELECOMMUNICATIONS AND FINANCE HOUSE ENERGY AND COMMERCE COMMITTEE REGARDING TELECOMMUNICATIONS INFRASTRUCTURE LEGISLATION AND PROPOSALS OCTOBER 24, 1991 MR. Chairman and Members of the Committee: I want to thank you for inviting me to testify today on the Telecommunications Act of 1991 (H.R. 3515) and the Telecommunications Competition and Services Act of 1991 (Committee Discussion Draft, August 1, 1991). For those who may not know me, I am the principal developer of the Lotus 1-2-3 spreadsheet program and served as the CEO of the Lotus Development Corporation between 1982 and 1986 during which time it grew into a $200 million dollar a year software company. The Electronic Frontier Foundation I am a founder and President of the Electronic Frontier Foundation, a public interest organization established one year ago by pioneer developers of computer software and hardware and members of the computer networking community. We founded the Electronic Frontier Foundation (EFF) based on a shared conviction that a new public interest advocacy organization was needed to educate the public about the democratic potential of new computer and communications technologies and to work to develop and seek to implement public policies to maximize freedom, competitiveness, and civil liberty in the electronic social environments being created by new computer and communications technologies. While one of EFF's objectives is to secure First and Fourth Amendment protections for computer users and electronic bulletin board operators, our primary mission is to insure that the new electronic highways emerging from the convergence of telephone, cable, broadcast and other communications technologies are truly free and open. By building our membership base, cosponsoring the Communications Policy Forum with the Consumer Federation of America and the ACLU Information Technology Project, and developing and advocating specific communications policies, we hope to play a significant ongoing role in resolving critical communications issues. In this context, Mr. Chairman and Members of the Subcommittee, we again welcome the opportunity to appear here today. The Infrastructure Challenge Mr Chairman, I view the lifting of the information services restrictions by Judge Green as a pivotal moment for our nation's communications future. If Congress is to address these issues effectively, it must first re-frame the current debate. While the entry of the seven Regional Bell Operating Companies into the information services market poses serious dangers of anti-competitive behavior -- because of their bottleneck control over the local phone loop -- erecting appropriate safeguards must not be the overarching goal of communications policy. Neither should "lifting the restrictions" on information services or manufacturing be the goal of public policy as the RBOCs advocate. Congress has the opportunity---in fact the obligation---to assert its jurisdiction and define a national communications policy to govern the future development of our nation's communications infrastructure. Only Congress can do so and it must if we are to end the long standing communications policy gridlock and move toward achieving our communications goals. Public policy must be guided by an overarching social vision of what I call the National Public Network, a vibrant web of information links to serve as the main channels for commerce learning, education, politics, and entertainment in the future. This network will include the voice telephone service that we are already so familiar with, along with video images, sound, and hybrid forms of communication. To build the National Public Network will require more than safeguards, entry level tests or new telephone company investment in information services and fiber optics. It will require Congress to establish in legislation basic standards, requirements, regulatory mechanisms and incentives that will -- establish an open platform for information services by speedy deployment of ``Personal ISDN'' nation-wide; -- ensure competition in local exchange services; -- promote First Amendment free expression by reaffirming the principles of common carriage; -- foster innovations that make networks and information services easy to use; -- protect personal privacy; and -- preserve and enhance equitable access to communications media. In essence, we need to meet the challenge posed by Chairman Markey: to make [information services] available swiftly to the largest number of Americans at costs which don't divide the society into information haves and have nots and in a manner which does not compromise our adherence to the long-cherished principles of diversity, competition and common carriage. The National Public Network Today, more and more information links are evolving from computer and telephone systems. By the end of the next decade, these links will connect nearly all homes and businesses in the U.S. They will serve as the main channels for commerce, learning, education, and entertainment in our society. The National Public Network will not be created in a single step: neither by a massive infusion of public funds, nor with the private capital of a few tycoons (today known as telecommunications companies) such as those who built the railroads. Rather the national, public broadband digital network will emerge from the "convergence" of the public telephone network, the cable television distribution system, and other networks such as the Internet. At its best, the National Public Network would be a source of immense social benefits. As a means of increasing social cohesiveness, while retaining the diversity that is an American strength, the network could help revitalize this country's business and culture. It will increase the amount of individual participation in common enterprise and politics. It could also galvanize a new set of relationships-- business and personal-- between Americans and the rest of the world. The names and particular visions of the emerging information infrastructure vary from one observer to another. Senator Gore calls it the "National Information Superhighway." Prof. Michael Dertouzos imagines a "National Information Infrastructure [that] would be a common resource of computer-communications services, as easy to use and as important as the telephone network, the electric power grid, and the interstate highways." We call it the National Public Network (NPN), in recognition of the vital role information technology has come to play in public life and all that it has to offer, if designed with the public good in mind. To what ends can we reasonably expect people to use a National Public Network? We don't know. Indeed, we probably can't know -- the users of the network will surprise us. That's exactly what happened in the early days of the personal computer industry, when the first spreadsheet program, VisiCalc, spurred sales of the Apple II computer. Apple founders Steve Jobs and Steve Wozniak did not design the spreadsheet; they did not even conceive of it. They created a platform which allowed someone else to bring the spreadsheet into being, and all the parties profited as a result, including the users. We know this much: Computer and communications technologies are transforming speech into electronic formats and shifting the locus of the marketplace of ideas from traditional public places to the new electronic public forums established over telephone, cable, and related electronic communications networks. To both local and long-distance communities, accessible digital communications will be increasingly important; by the end of this decade, the "body politic," the "body social," and the "body commercial" of this country will depend on a nervous system of fiber-optic lines and computer switches. Although we cannot anticipate the future uses of the telecommunications network, we can, and must, articulate goals that will shape the infrastructure as it develops. Just as it is necessary for an architect to know how to make a home suitable for human habitation, it is necessary to consider how human beings will actually use the network in order to design it. Policy Recommendations In that spirit, we offer a set of recommendations for the evolution of the National Public Network that need to be addressed in crafting the legislation before you. I first encountered many of the fundamental ideas underlying these proposals in the computer networking community. Some of these recommendations address immediate concerns; others are more long-term. The recommendations are organized here according to the main needs which they will serve: first, ensuring that the design and use of the telephone network remains open to diversity, second, safeguarding the freedom of users. The ultimate goal is to develop a habitable, usable, and sustainable system--a nation of electronic neighborhoods that people will feel comfortable living within. I. Create an Open Platform for Innovation in Information Services by Speedily Deploying a Nation-wide "Personal ISDN." By offering affordable, end-to-end digital capability capable of reaching into every home, business, and school in the U.S. Such a platform will unleash a new generation of information entrepreneurs to develop a wide range of valuable services. In the evolution of the NPN, information entrepreneurship can best be promoted by building with open standards and by making the network attractive to as many information service providers and developers as possible. The most valuable contribution of the computer industry in the past generation is not a machine, but an idea--the principle of open architecture. Typically, a hardware company (an Apple or IBM, for instance) neither designs its own applications software nor requires licenses of its application vendors. Both practices were the norm in the mainframe era of computing. Instead, in the personal computer market, the hardware company creates a "platform"--a common set of specifications, published openly so that other, often smaller, independent firms can develop their own products (like the spreadsheet program) to work with it. In this way, the host company takes advantage of the smaller companies' ingenuity and creativity. In the early stages of development of an industry, low barriers to entry stimulate competition. It should be as easy to provide an information service as to order a business telephone. Large and small information providers will probably coexist as they do in book publishing, where the players range from multi-billion-dollar international conglomerates to firms whose head office is a kitchen table. Large and small publishers can coexist because everyone has access to production and distribution facilities--printing presses, typography, and the U.S. mails and delivery services--on a non-discriminatory basis. To achieve the information diversity currently available in print in the new electronic forum, we must guarantee widespread accessibility to a platform of basic services necessary for creating information services of all kinds. The platform of services offered must: (1) have a critical mass of features and capabilities; (2) be ubiquitous; (3) be affordable. Some suggest that the technology necessary to offer such a platform is far off and would require billions of dollars of investment in fiber optics. Actually, we have a platform that meets these criteria within our reach right now. Personal ISDN (Integrated Services Digital Network) could make voice, data, video, high-speed fax, video, and multimedia services available TODAY to telephone subscribers all around the country. ISDN as a key information services technology is well-known in the communications industry, but its potential as a universal platform is not properly appreciated, nor has it been properly positioned by the RBOCs as a service for everyone. The personal computer transformed the image of the computer from that of hulking mainframes imprisoned in glass-walled temples to friendly desktop machines capable of performing a wide variety of useful tasks. Just as the desktop personal computer represented the revolutionary platform for innovation of the 1980's, it is my belief that ubiquitous digital communications media, such as are enabled by ISDN, represent the hope of the 1990's. Personal ISDN can enable the citizen's access into the Information Age. The key attributes of a Personal ISDN are that, as a platform, it possess a critical mass of enabling features and capabilities for individual use; and, as a service, that it be positioned, priced, marketed to be of interest to and within the reach of everyone. ISDN must be re-positioned as a basic service, available to consumers and small businesses. This service can be the test bed for a whole new generation of information services which could benefit the American public. +Critical Mass of Features Many of the capabilities once thought to be possible only on an all-fiber network, such as interactive full-motion video can be achieved to a significant degree over Personal ISDN. This is due to continuing revolutions in microelectronics and software which enable compression of video signals by a factor of 100 without significant loss of quality. Given this, it is possible to use copper wire-based ISDN to carry video signals to their destination, at which point they are uncompressed through use of increasingly inexpensive processors, which are built-in to computers, televisions, and other consumer electronic equipment. If uncompressed, carriage of these video signals would require hundreds of billions of dollars of replacement of existing wiring in the local loop. I am sure that the researchers at Apple Computer and other pioneering high-technology firms in Silicon Valley and elsewhere in the country would be happy to come to Washington to demonstrate these capabilities for committee members. The Electronic Frontier Foundation would be happy to arrange for this. Ultimately, there is a crucial role for an end-to-end fiber optic network. While we have not yet reached the limits of what can be done with video compression, in the end there will be some services, such as high-definition television, which will require the bandwidth of fiber optics. It would be a huge mistake, however, to commit the enormous funds required to build such a network and to wait until the next century for its deployment without accumulating a generation of experience based on lessons of the marketplace which can be achieved through a Personal ISDN-based platform. We have reached an effective limit to the usability of the current voice-grade telephone network for information services. Current bulletin boards and on-line services use existing voice-grade telephone lines for user access. These include 30,000 computer bulletin board systems (BBSes) with millions of users, in addition to the millions of Prodigy, Compuserve, and other commercial services. It's a healthy start, but expansion is hampered by inadequate infrastructure imposed by trying to overlay computer use on top of a network designed for voice telephony. Problems include lack of standardization; slow speeds; noisy, error-filled channels; and the difficulties of use and barriers created by these factors. As a result of these barriers, the vast benefits of new information technologies are denied to all but the computer-literate -- those who have the technical skills to navigate the complexities of today's information services. What is needed is to raise the floor by creating a new standard, minimum platform for information exchange. ISDN, repositioned as Personal ISDN, can provide a faster, cleaner digital platform for information users around the country. It will be easier to use, and allow information entrepreneurs to offer a vast array of services to a broader user base. +Ubiquity To create a market for information services, everyone must be able to reach the platform. We must build the new public network by making it easy for people to connect to it with a few simple decisions. Again, an analogy to the personal computer market is helpful. Minicomputers and mainframes were marketed to companies. Microcomputers (PC's) were marketed to individuals. We need to build a platform that can reach into individual households and small businesses in order to stimulate the development of information services that will meet the needs of those users. Personal ISDN -- which can be provided over the existing copper plant that comprises today's public switched network -- can reach into every home and every small business without laying a single mile of fiber optic cable. Telephone company data indicates that over the next three years majority of central office switches will be upgraded to requisite digital capability. +Affordability Platform services, even if they are ubiquitous, are useless unless they are also affordable to American consumers. Just as the voice telephone network would be of little value if only a small fraction of the country could afford to have a telephone in their home, a national information platform will only achieve its full potential when a large majority of Americans can buy access to it. We need an information platform that is priced as a basic service, on par with voice services, so that a choice to sign up is no more or less burdensome than subscribing to basic telephone service or cable television. All available information indicates that ISDN can be priced as a basic service. The cost of carrying a digital ISDN call from the customer to the local switch is just the same as an analog voice call in the digital switching regime that ISDN pre-supposes. There are some fixed investment costs still to be incurred to upgrade the nation's central office switches in order to handle ISDN traffic, but commitments to these investments are already largely made. For all of the reasons I have cited, ISDN would be an ideal platform for the creation of a variety of new information services. Yet it is not being made available to the American public. Today, even in Washington, DC -- a city that is one of the major information hubs of the country -- it is impossible to order standard ISDN service from the local phone company. Progress towards realizing the vision of the National Public Network will best be achieved through a series of incremental steps as our society learns how to use digital media. No one can guarantee when an application as useful as the spreadsheet will emerge for the NPN (as it did for personal computers), but open architecture based on a Personal ISDN is the best way for it to happen and let it spread when it does. The next incremental step should be the deployment of a medium-speed digital infrastructure based on ISDN which can be readily adapted for use by information entrepreneurs today. It will not require large capital investment, which could drive up basic rates. It can be leveraged by use of computer technology of desktops, laptops, and palmtops. In years to come every home and office may be attached to the National Public Network with a fiber optic link. But this is hundred of billions of dollars and years away. We have to crawl before we can run to the field of dreams. Much of the current debate about the future of the telephone network is defined by the opposition of two sets of large forces - the local Bell Operating Companies, on one side, and other carriers and publishers on the other. But often as not, the creation and emergence of new industries depends more on outsiders and new entrants who rely more on ingenuity than capital to develop the breakthrough concepts and systems which result in explosive growth. The personal computer industry was sparked by the contributions of industry outsiders like Steve Jobs, Bill Gates, and myself to grow from nothing to $100 billion in just over a decade. A personal ISDN platform would give a new generation of information entrepreneurs a chance to show what they can do. To the extent we can open up the process from one dominated exclusively by well-fortified corporate interests to one in which entrepreneurs have a chance, we improve the chances of another entrepreneurial revolution. If we build the right platform and we lower the barriers to entry to invite in all who want to play, I am convinced the entrepreneurs will find it, and, with the sure invisible hand of market feedback will help realize the vision of the information age. II. Ensure Competition in Local Exchange Services In the context of the post MFJ restrictions environment, Congress must act now to ensure competition in local exchange services. Competition will promote innovation in these services on which information providers rely, and help guarantee equal access to all local exchange facilities. Many consumer and industry groups are concerned that as the MFJ restrictions are lifted, the RBOCs will come to dominate the design of the emerging National Public Network, shaping it more to accommodate their business goals than the public interest. There is evidence that the RBOCs are resisting attempts to transform the public telephone system into a truly open public network notwithstanding the FCC's stated intention to implement Open Network Architecture. The Communications Policy Forum, a coalition of public interest and industry groups, is working hard to study whether some mix of safeguards drawn from Rep. Cooper's bill, H.R. 3515, and Chairman Markey's August 1, 1991 Discussion draft, could maintain a competitive information services market that allows RBOC participation. Some suggest that an entry level test is necessary to guarantee that alternative infrastructure is developed for information services delivery. But rather than relying on alternative pathways, we might first investigate ways to open up the existing public switched network. The post-divestiture phone system offers us a valuable lesson: a telecommunications network can be managed effectively by separate companies --even including bitter opponents like AT&T and MCI-- as long as they can connect equitably and seamlessly from the user's standpoint. The bottleneck that RBOCs have on local exchange services critical to information providers can be minimized by unbundling these services and allowing non-BOC providers to offer them in competition with BOC local exchange companies. The RBOC's response to the FCC inquiry on open architecture in the public switched network was not sufficient because it does not allow for full competition in services that have traditionally been identified as part of the local switch. Bellcore's proposal for an Advanced Intelligent Network (AIN) offers many useful services, but centralizes them in BOC-controlled facilities, leaving no room for competition from other providers. Unbundling and expanded competition is a key to ensuring equitable access to local exchange services needed for information service delivery. III. Promote First Amendment Free Expression by Affirming the Principles of Common Carriage In a society which relies more and more on electronic communications media as its primary conduit for expression, full support for First Amendment values requires extension of the common carrier principle to all of these new media. Common carriers are companies which provide conduit services for the general public. They include railroads, trucking companies, and airlines as well as telecommunications firms. A communications common carrier, such as a telephone company, is required to provide its services on a non-discriminatory basis. It has no liability for the content of any transmission. A telephone company does not concern itself with the content of a phone call. Neither can it arbitrarily deny service to anyone. The common carrier's duties have evolved over hundreds of years in the common law and later statutory provisions. The rules governing their conduct can be roughly distilled in a few basic principles. Common carriers have a duty to: +provide services in a non-discriminatory manner at a fair price +interconnect with other carriers +provide adequate services The common carriers who make up the critical elements of the public switched network -- local exchange companies and inter-exchange companies -- should be subject to comprehensive common carriage duties as described above. However, all communications carriers are not necessarily common carriers. As part of the larger telecommunications infrastructure there will be private networks which perform specialized functions or only serve certain groups of users. These private networks may be interconnected with the National Public Network, but not dedicated to carrying all traffic, as the local and long distance exchange carriers are now. However, on these private networks, it may be desirable to create public ``right of ways'' to facilitate the most efficient, free flow of information. Unlike arrangements found in many countries, our communications infrastructure is owned by private corporations instead of by the government. Therefore, a legislatively imposed expanded duty of common carriage on public switched telephone carriers is necessary to protect free expression effectively. As Prof. Eli Noam, a former New York State Public Utility Commissioner, explains: [C]ommon carriage is the practical analog to [the] First Amendment for electronic speech over privately-owned networks, where the First Amendment does not necessarily govern directly. A telecommunications provider under a common carrier obligation would have to carry any legal message regardless of its content whether it is voice, data, images, or sound. For example, if full common-carrier protections were in place for all of the conduit services offered by the phone company, the terminations of "controversial" 900 services such as political fundraising would not be allowed, just as the phone company is now prohibited by the Communications Act from discriminating in the provision of basic telephone services. In a letter to this committee from non-profit organizations who use 900 number services which was also signed by EFF, we noted that: Non-profit charitable and political organizations are at the forefront of innovative uses of audiotext services. The flexibility of this medium enables political advocacy groups to put up 900 number programs in response to changing political events....Since regulation of this medium is likely to set the pattern for other information services in the future, we believe that Congress should take careful steps and consider long-term goals. To guarantee that this medium continues to fulfill its potential as a forum for political debate and the free flow of ideas to the public, Congress could adopt legislation that would extend common carriage non-discrimination duties to all enhanced service providers. Neither BOCs nor IXCs would be allowed to terminate service because of anticipated harm to their "corporate image." Though providers of 900 information services did have their freedom of expression abridged by the BOC/IXC action, First Amendment protection is probably not legally available to them because there was no state action underlying the termination. If efforts to encourage the development of the National Public Network are successful, more and more expressive and communicative activity will rely on new information media. As the locus of communication shifts, fundamental principles which protect free expression and free press must be adapted so that the same level of protection applies to all communication, regardless of the medium. IV. Make the Network Simple to Use Today's public switched telephone network is easy to use and adaptable for use by people with special needs. Information services that become part of this network should reflect this same ease-of-use and accessibility. "Transparency" is the Holy Grail of software designers. When a program is perfectly transparent, people forget about the fact that they are using a computer. The mechanics of the program no longer intrude on their thoughts. The most successful computer programs are nearly always transparent: a spreadsheet, for instance, is as self-evident as a ledger page. Once users grasp a few concepts (like rows, cells, and formula relationships), they can say to themselves, "What's in cell A-6?" without feeling that they are using an alien language. One of the great virtues of the public switched telephone network, from a user's perspective, is that it operates according to patterns and principles that are now intuitively obvious to almost everyone. As this network grows beyond just voice services to digital information exchange, the same kind of ease and user comfort should be maintained. For example, information services will need standards for presenting textual information in formats that are pleasing to the eye and easily manipulable by users. Today, though, the only common standard for computer text is the American Standard Code for Information Interchange (ASCII). But ASCII is inadequate; it ignores fonts, type styles (like boldface and italics), footnotes, headers, and other formats which people regularly use. Each word processing program codes these formats differently, and there is still no intermediary language that can accommodate all of them. The National Public Network will need such a language to transcend the visual poverty and monotony of today's telecommunicated information. It will also need additional standards beyond what have been developed for message addresses and headers, a common set of directories (the equivalent of the familiar white pages and yellow pages directories), common specifications for coding and decoding images, and standards for other major services. Since current standards are inadequate to the demands of users: We ... need to endow the NII [National Information Infrastructure] with a set of widely understood common communication conventions. Moreover, these conventions should be based on concepts that make life easier for us humans, rather than for our computer servants. The development of standards is vital, not just because it helps makes the network easier to use, but also because it ensures an open platform for information providers. In shaping the standards development process, we can draw guidance from the voluntary, cooperative style of standards setting that has help the Internet to flourish. The technical and management standards that govern the Internet have evolved over more than twenty years to the mutual benefit of all members of the network. Furthermore, the TCP/IP standards at the heart of the Internet, have contributed much to our general understanding of network architecture principles and practice. Congress and government regulatory bodies may need to set out the ground rules for standards planning in order to ensure that all interested parties have an equal voice, and the resulting standards should be closely analyzed to make sure that they reflect public needs. But, direct government involvement in the process should be as limited as possible. V. Protect Personal Privacy The infrastructure of the NPN should include mechanisms that support the privacy of personal information and personal communication. As the NPN develops there are two main threats to privacy. First, electronic communications meant to be private can be intercepted with the consent or even knowledge of the communicating parties. The Electronic Communications Privacy Act addresses these concerns, but some modifications in its approach may be necessary. Second, as the public switched telephone network is used for an increasing variety of transactions, it will hold a more personal information about consumers. This includes not only financial data, but also buying patterns and preference that can reveal a great deal about a person's habits and lifestyle. The privacy of telephone conversations and electronic mail is already protected by the Electronic Communications Privacy Act. Without a valid court order, for example, wiretaps of phone conversations are illegal and private messages are inadmissible in court. Legal guarantees are not enough, however. Although it is technically illegal to listen in on cellular telephone conversations, as a practical matter the law is unenforceable against private parties. Imported scanners capable of receiving all 850 cellular channels are widely available through the gray market. Cellular telephone transmissions are carried on radio waves which travel through the open-air. The ECPA provision which makes it illegal to eavesdrop on a cellular call is an inadequate means to achieving the correct end. Privacy protection would be greatly enhanced if public-key encryption technology were built into the entire range of digital devices, from telephones to computers. The best way to secure the privacy and confidentiality Americans say they want is through a combination of legal and technical methods. With respect to privacy of personal information, we need to give citizens greater control over information collected, stored, and disseminated by telephone companies and information providers. As the public outcry over Caller ID demonstrates, citizens want and deserve to have adequate notice about what information is being collected and disseminated by communications firms and must be able to exercise informed consent before information collected for one purpose can be used for any other purpose. To accomplish this, we need to build on the provisions in the legislation before you. We can also incorporate and build upon the baseline privacy rules that were established for the cable industry in the Cable Deregulation Act of 1984. VI. Preserve and Enhance Equitable Access to Communications Media The principle of equitable access to basic services is an integral part of nation's public switched telephone network. We must ensure that all Americans have access to the growing information services market. Finally, Mr. Chairman, we need to ensure that all citizens have equitable access to enhanced information services that serve the public interest. As you know, telephone companies and others paint a vision of the future in which all citizens have access to education services such as distance learning or on-line health care services. Neither market competition nor lifting restrictions on telephone companies alone will deliver these services. It is time for those who propose serving the "information have nots" to admit that equity can not be achieved except by legislative mandate and public funding. The Electronic Frontier Foundation is prepared to work with the Congress and consumer groups to achieve these important goals. Conclusion The chance to influence the shape of a new medium usually arrives when it is too late: when the medium is frozen in place. Today, because of the gradual evolution of the National Public Network, and the unusual awareness people have of its possibilities, there is a rare opportunity to shape this new medium in the public interest, without sacrificing diversity or financial return. As with personal computers, the public interest is also the route to maximum profitability for nearly all participants in the long run. The major obstacle is obscurity: technical telecommunications issues are so complex that people don't realize their importance to human and political relationships. But be this as it may, these issues are of paramount importance to the future of this society. Decisions and plans for the NPN are too crucial to be left to special interests. If we act now to be inclusive rather than exclusive in the design of the NPN we can create an open and free electronic community in America. To fail to do so, and to lose this opportunity, would be tragic.