Executive Voices: An Op Ed Column
Can Broadband Rebound
Yes, it will, and until then our commitment to North Carolina
remains firm
By John W. Loose
Last
year, the future appeared clear and exciting; we were in a new
world of connectivity and opportunity, all connected by a global web
of telecommunications networks and technologies.
The present, we now know, has not developed quite as advertised. The
implosion of the dot coms and the decline of the telecoms raises some
questions. Is the promise of broadband connectivity real? Will
telecommunications emerge from the meltdown? What will the industry
look like when things turn around? What does it all mean to companies
like Corning? What does it mean to states like North Carolina, with
which we have forged such valuable partnerships? And most important,
what can we do about any of this?
Let’s start with the promise. The broadband promise is real and
demand continues to grow, fueled primarily by business. But a freeze
in capital investment has slowed the deployment of networks. The
result is an industry turned upside down. Did we at Corning see it
coming? Yes and no. While we never expected the white-hot growth rates
of the past to continue indefinitely, we did not expect anything like
the decline we’ve seen in the past 12 months. North Carolina, we
realize, has been caught in the down draft.
Our optical fiber and cable operations in Concord, Hickory, Wilmington
and Winston-Salem added hundreds of employees over the past five
years. We built the world’s largest optical fiber cabling business
here, as well as the world’s largest optical fiber manufacturing
factories. In 2000, we announced projects that amounted to more
economic development than any other single employer in the state.
Now the headlines are decidedly different and include news of layoffs,
extended shut-downs and postponed expansions. As the bad news
continues to mount, it understandably raises questions about our
ability to grow as we and North Carolina had expected we would.
First, I want to reaffirm our commitment to North Carolina. Our
commitment to this state is as firm as it was when our business was
growing 30 percent a year. Although we are certainly in the midst of a
mid-course correction, growth will return. And so will jobs.
The timing of the recovery is a more complex question. It involves two
powerful variables. One is the turnaround in the telecom industry,
which might not happen until well into 2002, perhaps later. The
horrific events of Sept. 11 and the crisis in the Middle East only add
to the overall uncertainty.
The second key factor is the impact of public policy to remove
barriers to the expansion of broadband access — the high-speed
Internet connections that can truly transform how we work and live.
Any projection for telecom’s rebound rests on the degree of
confidence in the demand for that high-speed access.
Some now say that the whole Internet phenomenon was massively
over-promoted, a commercial mass hysteria that will fall well short of
true transformation. The facts argue otherwise. But it’s not
Internet shoppers or instant-messaging teenagers that are leading the
way. It’s business . . . fueling business-to-business commerce on
the net, server-to-server networking, and more very powerful
applications. In all, according to Federal Reserve estimates, the
Internet and associated technologies accounted for nearly two-thirds
of the incredible productivity growth of the 1990s. E-mail alone has
changed the very nature of business communications.
Every important digital technology of the past 50 years has seen an
initial explosion of activity followed by a 90 percent shakeout, with
a process of economic selection allowing the strongest players to
emerge to lead the industries. That process is now under way for the
Internet; painful, but inevitable.
Right now, only about 10 percent of American homes have broadband
access, which means the other 90 percent have a choice between the
painfully slow copper wire of their telephone lines, or painfully
expensive — and uncertain — alternatives. Amazingly, all but a
statistical handful of small businesses — one of the country’s
engines of economic growth — are limping along on 56 kb connections.
Market forces will expand access, but not nearly fast enough. For
example, at the current rate, it’s going to take seven years or more
for broadband access to spread to even half of American homes.
If we are going to win the bandwidth race as we won the space race,
it’s going to take a similar commitment. We have to confront two
very serious issues: a lack of investment capital and incentives to
invest in broadband, coupled with regulations that discourage that
investment.
There are several pieces of legislation in Congress to address these
issues. But we need more than that. We need a comprehensive broadband
policy at the state and federal level, with the clear goal of ensuring
that all Americans have current generation broadband access by 2005
and next-generation access by 2010.
There are some very critical parts to such a policy. We need tax
credits to encourage broadband deployment to underserved and rural
areas. We need the immediate allocation of spectrum for the next
generation of wireless broadband. The FCC must ensure that their
regulatory requirements on the incumbent telephone companies are
reasonable. Conversely, we have to remove regulatory barriers to new
entrants.
To answer the questions I raised at the beginning of this column: Yes,
the broadband promise is real — more so than we can even imagine.
For Corning and our partnership with North Carolina, the payoff of the
promise is not diminished; although we are on a delayed timetable. And
while economic cycles won’t be rushed, there is much we can do to
accelerate the impact of broadband. It will take focus and will in
equal measure. But it can and must happen.
John W. Loose is president and CEO of Corning Inc., which has four
major installations in North Carolina.
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