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It is not clear to us at this point that the natural and policy forces at work in the emerging NII will achieve all the important results outlined above. There is, unfortunately, something of a chicken-and-egg problem concerning open residential use of the NII. The emergence of innovative NII applications utilizing residential broadband capabilities depends on the existence of those capabilities, while justification for the deployment of those capabilities requires hypothesizing the existence of those applications. As a result, we have a situation where to some extent policy choices may need to precede market development. We do not suggest a move toward a highly regulated environment, since ultimately that is completely counterproductive to the development of a new industry. However, we do suggest that policymakers need to find ways to encourage the development of an eventual architecture that supports the full potential of the NII.

To some extent this notion is already present in the types of trade-offs being made to balance the cable industry's and telephony industry's developing competition in each other's businesses. We are simply encouraging policymakers to take a broader view of this set of problems that looks beyond this level of competition to include the rest of the infrastructure that the consumer will need to become a full citizen on the NII. Policymakers should see that more is involved than allowing content providers open access to consumers or considering what the competitive trade-offs should be between allowing cable systems to offer dialtone and telephone companies to offer video. They also need to look at the provision of general data services from the perspective of the consumer. We believe that more attention should be given to the provision of open, standardized, commodity-priced network access to the NII at large. We believe that only with this capability can we tap the PC's full potential to become the consumer's interactive access point to NII services and bring to the residential consumer the dynamics that have so dramatically benefited the corporate PC user.

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