Jonathan Spalter

Montana Telecommunications Association’s Annual Meeting

The following remarks were delivered by Jonathan Spalter, President and CEO, USTelecom before the Montana Telecommunications Association Annual Meetingon August 28, 2018.

Thank you, Geoff, for that introduction. Maybe not all of you know this, but in a former life Geoff ran congressional affairs at USTelecom. I’m sure he’s much happier out here these days.  Of course, I’m very biased in saying that after joining many of you yesterday for your fly-fishing expedition.

This is beautiful country…something I’ve appreciated since my high school days…when I was 16 my parents took a gigantic leap of faith and allowed me and my best friend to ride our bikes cross country. Their only rule: One of us had to call home every other day to say we were OK.

Our path took us right through Montana on Route 2.  I turned 17 in Glacier National Park.

And, it was certainly this state that put our pact with our parents to the test.  This was before cell phones—in the days of payphones. And, they were few and far between here. I suppose that was my first introduction to rural call completion rules.

So, it’s quite meaningful to me personally…all these years later…to be back in Montana…standing before the companies that make this life-changing connectivity possible…and who are now committed to bringing every corner of this state into the still relatively new broadband era…of global digital connectivity…and all it makes possible.

It also means a lot for me to be here for two other reasons.  The first is Jason Williams, CEO of Blackfoot, who is an essential voice on our USTelecom Board.  He has been indispensable in representing the voices of our more rural members and being a sounding board for me personally as we rebuild and grow… bringing in new members and old members… and begin to think how USTelecom can be even more impactful in bringing a new vision for how we advocate for this important economy. The second is Diane Smith, the founder of American Rural, who I’m sure many of you know and who worked with me for many years in my prior job with Mobile Future. I can say with total confidence: She is the proudest Montanan I’ll ever meet.

And, thank you all for the invitation to join you and for the work you do here in Montana.

You have an impressive line-up: Ken Johnson, RUS Administrator, and Paul Kjellander, Chair of NARUC’s Telecommunications Committee; to name a few.

I’m sure Ken will agree with me when I say it still feels odd to be grouped in with these folks as a ‘Washingtonian.’  It wasn’t that long ago the family and I packed up our moving van and left the Bay Area of California.

It’s certainly been an…interesting…time to return to the nation’s capital.

There has been important progress:

Regulatory burdens are easing—from starting the tedious but essential process of peeling back outdated, heavy-handed regulations, revving up what FCC Chairman Ajit Pai affectionately refers to as the regulatory ‘weed whacker.’ Well, we’ve been hard at work with a sledgehammer over the last few months to level the playing field for our members so they can compete without unfair advantages to rural electric cooperatives, cable, satellite and others.

So far—level heads are prevailing when it comes to modern open internet rules. Yet we’re headed to court to defend this progress.  And—as you know in Montana—state actions threaten to dismantle the national framework of our nation’s digital economy.

One upside:  Through this debate…and skirmishes around privacy…there’s growing understanding that regulatory parity is the ONLY path to ensuring fair treatment for our companies against a whole host of new and largely unregulated competitors—AND consistent protections for consumers across the ENTIRE internet.

All of that adds up to mean: It’s an important moment to reintroduce our industry, your companies and the deep roots you have in the communities you serve.

We need to be loud and proud about our value to this nation—from the jobs we create…to the economic opportunities we make possible…to advances in health care…education…and, yes, keeping in touch with our friends and loved ones.

The Original Innovators

USTelecom’s goal, working with allies like MTA, is to make sure the country not only understands and appreciates—but supports and encourages—your work.

As I said, I’ve been in this job since January of last year. And, I spent a good part of my early days on the road getting to know the companies and the people I now have the honor to represent. Among the many things I’ve learned: When companies say they have roots in the nineties…as often as not, they mean the EIGHTEEN-nineties.

Here in Montana, several of our members have been active for decades. Blackfoot, for example, began in 1954 as a co-op.  The residents of Arlee and Dixon felt they had been left behind in the race to rural electrification and, quite rightly, believed they could no longer collectively share a single phone line.

These are extraordinary stories…companies forged from the needs of their communities…who first started connecting the country via telephone lines—sometimes literally using cattle wire.  And today, they are connecting these same communities to the most important enabling technology of the modernworld.

Threat Matrix

How do we accelerate this momentum?  We reach toward the center…the bipartisan principles that have guided American innovation through the Clinton Administration…the George W. Bush administration…and the first six years of the Obama Administration, to such great heights from the earliest days of honk-and-screech dial-up service. These are truly non-partisan principles that fueled our nation’s rapid rise to become the undisputed leader of the global digital economy.

It’s a position we can’t afford to take for granted, and it requires us today to stand together and face down some significant threats.

Threat #1: Invisibility

The first threat: Invisibility.

…Despite $1.6 trillion in investment in the nation’s information infrastructure over the past two decades from U.S. broadband providers—when I tell people I work for the companies that make the internet possible, their thoughts immediately go to the so-called FAANG cohort—Facebook, Amazon, Apple, Netflix, Google.

These companies’ contributions to U.S. innovation ARE extraordinary. But they’d be impossible without your networks and your commitment to connecting communities.

The work your companies do building out and constantly upgrading the central infrastructure of our nation’s information economy is not properly valued or even widely understood.

USTelecom EXISTS to change that.  We exist to bring everyone together—large, mid, small…global, national, regional…urban, rural—to shout from the mountaintops that the American people and the U.S. economy deserve policies that reflect the clear and compelling interest in strong, state-of-the-art, agile and secure broadband networks.

We need to do a much better job of telling this story—and working with small businesses, community hospitals, schools and other stakeholders to make clear the direct translation between our investments and local jobs and quality-of-life.

Threat #2: Disparity

The second threat: a profound policy disparity between our companies and our modern-day competitors. Just watch the actual headlines on privacy or neutrality, the companies having actual mis-steps aren’t ISPs.  Just witness the back-and-forth between Google and Amazon blocking the sale of each other’s products on their respective platforms.

In a rationalized world, one might assume the net neutrality debate is between those who support this central principle of a connected and free society and those who don’t.  But the actual disagreement comes down to regulatory arbitrage:  Some of the most powerful NEW companies in our information economy…insist the only way to ensure REAL net neutrality is by reinstating rules first written in the 1930s…in other words—rules that do not apply to them.

Someone needs to stand up and state the obvious: It should no longer be acceptable to write rules either in Washington or in any state that omit the most powerful and valuable—at least in terms of market cap—players of the digital age.  And, that’s all of us standing together through USTelecom.

And, the issue of parity goes WELL beyond net neutrality. For example, just in the last few weeks, we’ve secured an order from the FCC to bring greater parity to pole attachments rates. This has been a long…weedy…but critical slog.  Once over the finish line, this will return millions of dollars to our members balance sheets, and through more balanced policies, put some much-needed wind in the sails for the business case for capex from our companies.

Modern, even-handed policies will allow us to organize our innovation economy in a way that better ensures the whole ecosystem can thrive, grow and be dynamic—by delivering uniform expectations for all companies and equally consistent protections for consumers.

But this requires action and leadership, which leads to our next threat.

Threat #3: Paralysis on Capitol Hill

On data privacy, on an open internet, on a framework for innovation, it’s all the same.  If we don’t lead on policy…we risk our leadership on innovation.

The regulatory ping pong in Washington for the past eight years…the Europeans stepping up…states now stepping in…all are evidence of what happens when Washington—particularly in this case, Congress—abdicates and equivocates.  It’s no way to run half the economy.

For most of the past two-plus decades, the operating system of U.S. innovation policy has been non-partisan and infused with American optimism.  Our policymakers believed in and sought to encourage all that was possible.  So, they exercised restraint…and gave this promethean innovation room to expand and evolve—rapidly transforming our economy and way of life.

When I lived in the Bay Area, I used to take my kids to the parks of the former Alameda naval air station.  It was originally the western terminal point of the transcontinental railroad.  That railroad transformed our economy in the 19th century. Broadband has done the same today—placing California (and our nation) at the global epicenter of so much tech dynamism.

If we regulated broadband networks—or the railroad system before it—on a 50-state basis.  We wouldn’t have either as we know it today.  Nothing could be more counter to the collective cause than everyone—no matter how well meaning—writing their own set of rules for how the global internet should operate in their neck of the woods.

So, we need policymakers in Washington to step up. We need to get outmoded regulations off the books. We need modern policy constructs.

Here I’d say you are very fortunate to have strong advocates in Senator Daines and Senator Tester. Senator Daines has shown great leadership in making sure the government allocates funding efficiently, effectively and appropriately, and has helped our efforts to prevent over building. I believe that Congressman Gianforte will address this group tomorrow, and I’m confident he will be just as strong an advocate as his colleagues in the Senate.

And, it’s past time we get our broader policy house in order because complex, new and very real threats will require a whole new way of working together.

Threat #4: Cybersecurity

Cybersecurity is the next and newest threat. It’s been seven years since the Department of Defense declared cyberspace an operational domain that U.S. forces will be trained to defend. Headlines virtually every day remind us just how mission-critical this theater of warfare has become.

We are seeing an increasingly sophisticated enemy, in the form of both state-sponsored and criminal enterprises that use malware, botnets, DDoS attacks and other weapons to attack major corporations and municipalities.

Responding to these sophisticated, real-time threats with red tape is a non-starter…nor should our companies alone bear the burden of vigilance.

Fortunately, the collaborative approach forged between the public and private sectors on this issue is a fairly strong model for how we can work together in a strong, nimble way to address extremely complex, fast-moving and high-stakes challenges.

We also are bringing in a broader array of industry players.  Working with the Information Technology Industry Council, we launched the Council to Secure the Digital Economy and now have companies like IBM, Intel, Cisco, Akamai, Oracle and Samsung working alongside us. This is a public-private partnership that brings to the table some of the largest names in tech.

Our work is highly operational…from developing a global guide to anti-botnet practices…to mobilizing more effective incident response mechanisms to safeguard the economy in the event of a major cyberattack.

We also are highly cognizant of the fact that it’s not just the big companies who must face down this threat.So, we’ve also scaled this work DOWN…setting up through USTelecom a working group that brings together small companies—who have far more limited resources and just as daunting a task keeping their networks secure. I invite all of you to participate in this work.

Threat #5: Pulling the Plug on a Connected Nation

The final threat I’d like to discuss, in my view, is an existential threat to what it MEANS to BE America: We simply are not the nation I grew up believing us to be if we walk away from our enduring commitment to connect ALL Americans to opportunity.

Our nation has a proud history of connecting everyone to opportunity and progress through infrastructure—from electricity, to safe running water, to highways.

Broadband is just as important, but there’s a key distinction.  The deployment, maintenance and continual upgrading of this infrastructure has been financed almost entirely by the private sector.

As you see here, from a recent report USTelecom released with NCTA, this private-led investment model works well in reasonably populous areas.  But significant barriers arise as economies of scale dissipate.

By the way, the report also warns about the serious risks of relying on ventures that utilize internal cross-subsidies—chiefly electric co-ops or government-run entities.  This is an issue that is very important to achieving sustainable economics of broadband deployment in rural areas, and one that hasn’t yet received adequate attention.

It comes down to supply and demand, right? As you see here, when the substantial costs of laying fiber must be spread across a vast geography and a dwindling number of customers, the private sector can’t go it alone.

Numerous federal programs exist and can be enhanced to accelerate rural connectivity, chief among them the Connect America Fund. I believe we missed an opportunity in the recent infrastructure conversations on Capitol Hill. Everyone said the right thing, but we didn’t see enough concrete funding for digital infrastructure.

It is certainly within our capabilities to achieve a truly connected nation.  What’s left is a question of collective will.  We must INSIST in our advocacy that rural broadband consumers not be an afterthought, but a central consideration.  And, loans don’t cut it.  If we want to get at these final unserved areas—where there is no economic business case for service—then the federal government needs to be a full partner.

We need to tell the stories of rural communities in a bolder, louder and more clear way. We need members of Congress to see these funds for what they are—investments in rural opportunity…allowing rural healthcare providers to enhance patient care… empowering schoolchildren to connect with global information…enabling local businesses to survive and grow…all of this is made possible by broadband—and the government working as a partner to connect the final frontier.

Transforming Our Advocacy

We are going to keep evolving and innovating, just like the companies we represent.

We are reorienting our work to ensure it is meaningful and measurable on the bottom lines of our companies—large, small and everyone in between.

We appreciate that the core value of USTelecom is that we are all sitting at the table together. I truly believe this unique alchemy of large and small companies, working together, is our secret sauce. It makes us greater than the sum of our individual parts.  And, I’m also working to infuse a fresh sense of urgency, boldness and agility in our team around our member’s business needs. The fundamental structural changes and pressures on your own businesses demand it.

I see USTelecom like a special operations unit deployed for you in Washington, DC—protecting, defending and advancing your interests—loudly where we need to, subtly where it makes the most strategic sense…and, with the active participation and leadership of our member companies, laser-focused on the issues that matter most to their bottom lines. We see quite clearly the extraordinary value that you bring every day to the communities you serve.  We see the connection between your success—and the success of our nation in the digital age.  What we ask in return is that you stand with us.

For those who are working with us at USTelecom − thank you. For those who aren’t yet or aren’t anymore, I encourage you to take another look, and I thank you for your support and engagement with MTA.

Either way, I am proud to be your champion in Washington, and I understand we have some time for questions.