[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]



 
           OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION

=======================================================================

                                HEARINGS

                               BEFORE THE

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               ----------                              

                       MARCH 14 AND JULY 24, 2007

                               ----------                              

                           Serial No. 110-18


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov


           OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION

=======================================================================

                                HEARINGS

                               BEFORE THE

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                       MARCH 14 AND JULY 24, 2007

                               __________

                           Serial No. 110-18


      Printed for the use of the Committee on Energy and Commerce

                        energycommerce.house.gov


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           OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION
?

                    COMMITTEE ON ENERGY AND COMMERCE

                        JOHN D. DINGELL, Michigan,       
                                   Chairman                
HENRY A. WAXMAN, California          JOE BARTON, Texas
EDWARD J. MARKEY, Massachusetts          Ranking Member
RICK BOUCHER, Virginia               RALPH M. HALL, Texas
EDOLPHUS TOWNS, New York             J. DENNIS HASTERT, Illinois
FRANK PALLONE, Jr., New Jersey       FRED UPTON, Michigan
BART GORDON, Tennessee               CLIFF STEARNS, Florida
BOBBY L. RUSH, Illinois              NATHAN DEAL, Georgia
ANNA G. ESHOO, California            ED WHITFIELD, Kentucky
BART STUPAK, Michigan                BARBARA CUBIN, Wyoming
ELIOT L. ENGEL, New York             JOHN SHIMKUS, Illinois
ALBERT R. WYNN, Maryland             HEATHER WILSON, New Mexico
GENE GREEN, Texas                    JOHN B. SHADEGG, Arizona
DIANA DeGETTE, Colorado              CHARLES W. ``CHIP'' PICKERING, 
    Vice Chairman                        Mississippi
LOIS CAPPS, California               VITO FOSSELLA, New York
MIKE DOYLE, Pennsylvania             STEVE BUYER, Indiana
JANE HARMAN, California              GEORGE RADANOVICH, California
TOM ALLEN, Maine                     JOSEPH R. PITTS, Pennsylvania
JAN SCHAKOWSKY, Illinois             MARY BONO, California
HILDA L. SOLIS, California           GREG WALDEN, Oregon
CHARLES A. GONZALEZ, Texas           LEE TERRY, Nebraska
JAY INSLEE, Washington               MIKE FERGUSON, New Jersey
TAMMY BALDWIN, Wisconsin             MIKE ROGERS, Michigan
MIKE ROSS, Arkansas                  SUE WILKINS MYRICK, North Carolina
DARLENE HOOLEY, Oregon               JOHN SULLIVAN, Oklahoma
ANTHONY D. WEINER, New York          TIM MURPHY, Pennsylvania
JIM MATHESON, Utah                   MICHAEL C. BURGESS, Texas
G.K. BUTTERFIELD, North Carolina     MARSHA BLACKBURN, Tennessee        
CHARLIE MELANCON, Louisiana          
JOHN BARROW, Georgia                 
BARON P. HILL, Indiana               
                         Professional Staff

 Dennis B. Fitzgibbons, Chief of 
               Staff
Gregg A. Rothschild, Chief Counsel
   Sharon E. Davis, Chief Clerk
   Bud Albright, Minority Staff 
             Director

                                  (ii)
          Subcommittee on Telecommunications and the Internet

               EDWARD J. MARKEY, Massachusetts, Chairman
MIKE DOYLE, Pennsylvania             FRED UPTON, Michigan
JANE HARMAN, California                  Ranking Member
CHARLES A. GONZALEZ, Texas           J. DENNIS HASTERT, Illinois
JAY INSLEE, Washington               CLIFF STEARNS, Florida
BARON P. HILL, Indiana               NATHAN DEAL, Georgia
RICK BOUCHER, Virginia               BARBARA CUBIN, Wyoming
EDOLPHUS TOWNS, New York             JOHN SHIMKUS, Illinois
FRANK PALLONE, Jr, New Jersey        HEATHER WILSON, New Mexico
BART GORDON, Tennessee               CHARLES W. ``CHIP'' PICKERING, 
BOBBY L. RUSH, Illinois                  Mississippi
ANNA G. ESHOO, California            VITO FOSELLA, New York
BART STUPAK, Michigan                GEORGE RADANOVICH, California
ELIOT L. ENGEL, New York             MARY BONO, California
GENE GREEN, Texas                    GREG WALDEN, Oregon
LOIS CAPPS, California               LEE TERRY, Nebraska
HILDA L. SOLIS, California           MIKE FERGUSON, New Jersey
JOHN D. DINGELL, Michigan (ex        JOE BARTON, Texas (ex officio)
    officio)
  
                             C O N T E N T S

                              ----------                              

                             MARCH 14, 2007

                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     2
Hon. Jane Harman, a Representative in Congress from the State of 
  California, opening statement..................................     4
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     5
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................     6
Hon. Nathan Deal, a Representative in Congress from the State of 
  Georgia, opening statement.....................................     8
Hon. Eliot L. Engel, a Representative in Congress from the State 
  of New York, opening statement.................................     9
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, prepared statement........................    11
Hon. Lois Capps, a Representative in Congress from the State of 
  California, prepared statement.................................    12

                               Witnesses

Kevin J. Martin, Chairman, Federal Communications Commission.....    15
    Prepared statement...........................................    17
    Answers to submitted questions...............................   168
Michael J. Copps, Commissioner, Federal Communications Commission    21
    Prepared statement...........................................    24
    Answers to submitted questions...............................    96
Deborah Taylor Tate, Commissioner, Federal Communications 
  Commission.....................................................    26
    Prepared statement...........................................    28
    Answers to submitted questions...............................   147
Jonathan S. Adelstein, Commissioner, Federal Communications 
  Commission.....................................................    34
    Prepared statement...........................................    35
    Answers to submitted questions...............................   120
Robert M. McDowell, Commissioner, Federal Communications 
  Commission.....................................................    38
    Prepared statement...........................................    39
    Answers to submitted questions...............................   263

                           Submitted Material

Jerry Brito, ``Failure to Communicate,'' Wall Street Journal, 
  March 13, 2007.................................................   286
Letter of January 26, 2007 from Dee May, Vice President, Federal 
  Regulatory, Verizon, to Marlene H. Dortch, Secretary, Federal 
  Communications Commission......................................   287

                             JULY 24, 2007

Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............   289
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................   291
Hon. Mike Doyle, a Representative in Congress from the 
  Commonwealth of Pennsylvania, opening statement................   292
Hon. Jane Harman, a Representative in Congress from the State of 
  California, opening statement..................................   293
Hon. John Shimkus, a Representative in Congress from the State of 
  Illinois, opening statement....................................   294
Hon. Bobby L. Rush, a Representative in Congress from the State 
  of Illinois, opening statement.................................   295
Hon. Joe Barton, a Representative in Congress from the State of 
  Texas, opening statement.......................................   296
Hon. Bart Stupak, a Representative in Congress from the State of 
  Michigan, opening statement....................................   297
Hon. Mike Ferguson, a Representative in Congress from the State 
  of New Jersey, opening statement...............................   298
Hon. Edolphus Towns, a Representative in Congress from the State 
  of New York, opening statement.................................   299
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................   299
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................   300
Hon. Nathan Deal, a Representative in Congress from the State of 
  Georgia, opening statement.....................................   301
Hon. Hilda L. Solis, a Representative in Congress from the State 
  of California, opening statement...............................   302
Hon. Charles W. ``Chip'' Pickering, a Representative in Congress 
  from the State of Mississippi, opening statement...............   303
Hon. Charles A. Gonzalez, a Representative in Congress from the 
  State of Texas, opening statement..............................   304
Hon. J. Dennis Hastert, a Representative in Congress from the 
  State of Illinois, opening statement...........................   305
Hon. Gene Green, a Representative in Congress from the State of 
  Texas, opening statement.......................................   306
Hon. Lois Capps, a Representative in Congress from the State of 
  California, opening statement..................................   308
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, opening statement.................................   309
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................   310
Hon. Eliot L. Engel, a Representative in Congress from the State 
  of New York, opening statement.................................   311

                               Witnesses

Kevin J. Martin, Chairman, Federal Communications Commission.....   313
    Prepared statement...........................................   316
    Answers to submitted questions...............................   402
Michael J. Copps, Commissioner, Federal Communications 
  Commission,....................................................   329
    Prepared statement...........................................   330
Deborah Taylor Tate, Commissioner, Federal Communications 
  Commission,....................................................   332
    Prepared statement...........................................   334
Jonathan S. Adelstein, Commissioner, Federal Communications 
  Commission,....................................................   344
    Prepared statement...........................................   346
Rob McDowell, Commissioner, Federal Communications Commission,...   357
    Prepared statement...........................................   358

                           Submitted Material

John M. Lawson, president and chief executive officer, 
  Association of Public Television Stations, letter of July 23, 
  2007, to Mr. Engel.............................................   397
CTIA--The Wireless Association, letter of July 16, 2007, to the 
  Federal Communications Commission..............................   399
Michael J. Copps, ``The Price of Free Airwaves,'' the New York 
  Times, June 2, 2007............................................   424
Letter of December 19, 2006 from Mr. Dingell to Kevin J. Martin, 
  and Mr. Martin's response of December 20, 2006.................   425


           OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION

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                       WEDNESDAY, MARCH 14, 2007

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:00 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Edward J. 
Markey (chairman of the subcommittee) presiding.
    Members present: Representatives Doyle, Harman, Gonzalez, 
Inslee, Hill, Boucher, Rush, Eshoo, Stupak, Engel, Green, 
Capps, Solis, Dingell, Upton, Hastert, Stearns, Deal, Cubin, 
Shimkus, Wilson, Pickering, Fossella, Radanovich, Walden, 
Terry, Ferguson and Barton.
    Staff present: Johanna Shelton, Tim Powderly, Mark Seifert, 
Colin Crowell, Maureen Flood, Dave Vogel, Neil Fried, Courtney 
Reinhard.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey. Good morning. The subject of today's oversight 
hearing is the Federal Communications Commission. This year, as 
we look to the operation of the Commission, we will have the 
chance to assess whether the agency that is tasked with 
overseeing an important and vital sector of our national 
economy is properly organized for such a role. In particular, 
our oversight will analyze whether it is operating at maximum 
efficiency, what constructive proposals can be considered to 
improve its operations, whether it is adhering to congressional 
intent in implementing our Nation's laws and to what extent its 
policy agenda advances the public interest. An overarching goal 
for this subcommittee during this Congress will be to develop a 
plan for achieving ubiquitous, affordable broadband service to 
every American.
    Right now, depending upon the ranking one chooses to cite, 
the United States is 15th in the world or 21st or 29th in 
broadband penetration. Certainly, some of the countries ahead 
of us in the rankings are not apt comparisons. Iceland, for 
example, is ahead of the United States but has half of its 
population in one city, Reykjavik, where the phone book lists 
people by their first name. Yet, several countries that have 
leapt ahead, Japan, the Netherlands, Sweden, Israel, Finland, 
Canada, Belgium, surpass the United States not only in 
broadband penetration, but also in speed.
    The Commission still defines broadband at a minimum of just 
200 kilobits per second, a speed that would only be considered 
broadband service in many other countries if it had a good gust 
of wind behind it. The reality is that America currently 
suffers from the lack of an overarching broadband plan, a low 
speed threshold, poor data and threats to the openness of the 
Internet. The Commission has a role to play with Congress and 
this subcommittee in each of these areas. The Commission should 
explore ways to create incentives for investment in new 
technologies; how to animate the technology already in the 
ground, the copper network, for broadband services and 
competition; how to modernize and rationalize universal service 
and how to ensure that wireless broadband networks, municipal 
broadband networks and others can interconnect with the 
incumbent in an efficient and cost-effective way.
    This subcommittee will hold several hearings on Internet 
freedom and network neutrality later this year, so I won't 
dwell on that subject here, other than to say it is an 
indispensable policy for the future of the Web and must be 
addressed in a way that safeguards the open architecture that 
has made the Internet so vital in so many sectors of our 
economy and our society.
    An important step the Commission could also soon take to 
advance our broadband goals would be to revamp its data 
collection and analysis. We simply need a better and more 
accurate picture of broadband service in America. This will 
help policy makers identify solutions and fine tune remedies 
for overcoming obstacles and achieving our national goals. 
Improved data collection is something that also is a dire need 
in the area of media ownership. It is imperative that the 
Commission know the extent of minority and women-owned 
licenses. The fact that this information is not readily 
available to the public is alarming and hinders the 
Commission's work on promoting localism, media ownership, low 
power radio, small business participation in wireless auctions 
and other important initiatives. I hope that this can be 
addressed soon, as well.
    And finally, I want to mention the Commission's cable 
franchise order, which the Commission adopted in December on a 
3 to 2 vote. I am very concerned about the process by which the 
order was adopted and the effect that this order will have on 
funding the PEG channels and institutional networks or INETs. 
These local cable access channels provide an important local 
voice in a media environment marked by consolidation and INETs 
are often used for public safety in homeland security purposes.
    This is an important hearing, and we welcome the FCC 
Commissioners here this morning, and we intend to have them 
appear as frequent guests of this subcommittee as we proceed 
forward this year. That concludes the opening statement of the 
Chair. We now turn and recognize the ranking member, the 
gentleman from Michigan, Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, Mr. Chairman. I am glad 
daylight savings time changed. We all got here, most of us, on 
time, as well. I thank you, as well as Chairman Martin and his 
colleagues for appearing before us this morning. While your 
positions may not be the most glamorous in government, they are 
indeed among the most important, and I welcome all five of you, 
and I look forward to having an in-depth discussion on a host 
of issues today.
    It is an exciting time in the world of telecommunications. 
Technology plays an integral role in all of our lives. We have 
seen tremendous advancements in the last decade, and one can 
only imagine what the next decade will hold. As the ranking 
member of this subcommittee, I envision a tech sector that is 
indeed ripe for growth. But we do have a responsibility to 
ensure that we do not over-regulate industry with burdensome 
red tape. Last year, the House overwhelmingly, by a super 
majority vote of 321 to 101, threw its support behind creating 
a national cable franchise process to knock down barriers and 
to streamline the process for the competitive cable entry into 
towns, cities, villages and counties all across the country.
    And while a national franchise is a commonsense solution 
that would have leveled the playing field and expedited new 
entrants into the marketplace, our legislation, unfortunately, 
did not survive the 109th Congress. But the end of the last 
Congress did not put an end to the conversation. Although our 
bill did not become law, the mission continues, and I applaud 
the FCC for attempting to accomplish some of the same 
objectives that we were striving for via their rulemaking 
process. The FCC's action was an important first step, and I 
hope that as they move forward, they take the necessary steps 
to include existing cable companies under the umbrella, as 
well.
    Our legislation struck the right balance for consumers, 
providers and municipalities, and I would like to think that 
our bill helped to lay the framework for States to purse their 
own franchise bills. California recently became the ninth State 
to change its law to allow statewide video franchise licenses 
and I am pleased that my State of Michigan also adopted a 
streamlined process, and 14 other States are also currently 
considering similar legislation.
    As each State allows statewide entry into the video market, 
consumers shortly thereafter reap the benefits, enjoying more 
services at lower prices. States changing their teleco laws 
also allow for the further deployment of broadband and while 
the tech sector is the engine that drives the Nation's economy, 
there is no question that our economic growth is directly 
related to broadband deployment. Broadband is the equivalent of 
the country's interstate highway system of the 1950s. 
Communities that were not located near an exit or an on-ramp 
experienced little growth through the decades. The same can be 
said as we look at broadband.
    As the chairman said, we are all embarrassed to say that 
the U.S. currently ranks 12th among developed nations in access 
to broadband, even behind Japan, Korea and Iceland. We must 
continue fostering greater broadband deployment and access 
nationwide through deregulation, as well as further development 
deployment of the spectrum, such as with the DTV legislation, 
which will help deliver broadband to communities throughout the 
country, including the most rural of locales. If our 
communities are not wired, then we will continue to fall 
further behind other nations.
    In addition to broadband deployment, I remain quite 
concerned on a number of issues. Media ownership caps continue 
to thwart the broadcast industry. As we speak, the WARN 
Commission is working to establish a national alert system for 
the 21st century. The NTIA's announcement this week on 
converter boxes reminds us that the DTV transition is on the 
horizon. I look forward to hearing the Commissioners' thoughts 
on these and other issues of critical importance.
    And lastly, I want to commend all of your work, 
particularly Chairman Martin, for being such a loyal partner in 
our effort to increase the fines for indecency by tenfold. The 
new law which President Bush signed last June delivered 
something of real value to families across the Nation, and I 
would remind all of us that it was with strong bipartisan 
support in not only this subcommittee, but the entire Congress, 
that saw the enactment of this important legislation.
    I want to thank all of you for being here this morning. 
Look forward to your testimony and the dialog that we will 
have, and I yield back. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. We recognize 
the gentleman from Pennsylvania, the vice chair, Mr. Doyle.
    Mr. Doyle. Thank you, Mr. Chairman, and thank you for 
holding this hearing. It is an important hearing, and welcome 
to the members of the Commission. Mr. Chairman, I have many, 
many questions today, so I am going to waive my opening 
statement and take the time on the back end.
    Mr. Markey. The Chair recognizes the gentlelady from 
California, Ms. Harman.

  OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Harman. Thank you, Mr. Chairman. I would like to 
welcome the members of a very important regulatory commission, 
especially Commissioner Tate, who is making her first 
appearance before us. That may be true of Commissioner 
McDowell, as well. Two out of five. You toil on matters big and 
small. In the small category, though big to my constituents, I 
want to thank you again for your heroic, though unsuccessful, 
efforts to block needless area code splits in California. As 
for the big category, as stewards of spectrum licenses, you 
decide who will get to use the public airwaves. For our 
Nation's first responders in the communities they serve, this 
can be, this is, a life and death decision.
    It is astonishing that leaps and bounds in technology, 
represented by the BlackBerries and cell phones in this room, 
seem to have passed over our firefighters and police officers. 
The DTV transition deadline is less than 2 years away. By my 
lights, it should be much sooner. But nonetheless, the auction 
of 700 MHz will take place in less than 1 year, and the $1 
billion grant program for inoperability will be out the door 
this fiscal year. We need a quick resolution on your 
rulemakings for public safety broadband networks in the 700 MHz 
band, otherwise we risk wasting Federal money and local 
agencies' time and efforts to build networks within a regional 
and national framework.
    I can't stress how important this is. As Katrina showed us, 
the lessons of the 9/11 attacks will haunt our Nation until we 
get it right. I am one who sadly believes we are probably in 
store for more natural and more terrorist attacks in this 
country, and they could come at any time. We still don't have 
the infrastructure for interoperable communications. A lot of 
this rests on you, and I would hope, as one member of this 
committee, that we can provide all the support you need to make 
the best and wisest decisions quickly so we can get on with it. 
I yield back the balance of my time.
    Mr. Markey. The gentlelady's time has expired. The 
gentleman from Mississippi, Mr. Pickering.
    Mr. Pickering. Mr. Chairman, I will waive the rest of my 
time and save those for the questions. Thank you.
    Mr. Markey. Gentleman from Oregon, Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. I, too, am going to 
waive and save the time for questions.
    Mr. Markey. The gentleman from Texas, Mr. Gonzalez.
    Mr. Gonzalez. Waive opening.
    Mr. Markey. The gentleman from Indiana, Mr. Hill.
    Mr. Hill. Mr. Chairman, I, too, will waive my opening 
statement and ask questions later on.
    Mr. Markey. The gentlelady from California, Ms. Eshoo.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you, Mr. Chairman. Chairman Martin and 
Commissioners, welcome to the Energy and Commerce Committee. I 
can't help but think that you might have needed someone to help 
guide you to the place because it has been a very long time 
since the Commission has been here. Actually, it is 3 years ago 
this month when the Commission was here at that time, the Janet 
Jackson-inspired indecency hearing, and I really don't recall 
the last time the full Commission has been here. So this is an 
important hearing, and Mr. Chairman, thank you for calling it.
    Chairman Martin, I am particularly pleased to see you 
because I am eager to hear from you about your management of 
this all-important agency. I continue to hear concerns from my 
constituents and many others; many, many complaints about 
matters before the Commission, complaints that the Commission 
is unresponsive, insular and even capricious, at times, in 
terms of its actions. From the mundane, everyday business of 
the Commission to actions surrounding mergers of some of the 
largest corporations in the world, there is a consistent thread 
about the Commission and that is that it is nontransparent, has 
a heavy-handed decision making process during your tenure as 
chairman.
    I am being very rough on you, but I think these are things 
that we really need to talk about and get out on the table, and 
as I said, it has been a long time since the Commission has 
been here. What concerns me most is the lack of transparency 
and the fairness in the Commission's deliberations regardless 
of the outcome. Sometimes we agree, other times we don't agree. 
That is not the point. Many of the actions taken by the 
Commission in recent years bear out what I just said. But I 
think that the consideration of the recently concluded AT&T-
BellSouth merger is the most troubling, at least it is to me.
    You were clearly intent on expediting the AT&T-BellSouth 
merger, and I think being expeditious is important, because 
these are timely decisions. And we can agree to disagree on 
whether completion of the merger was grounded, really, in the 
interests of consumers, but what I don't agree with and what I 
certainly don't support are the lengths to which you, as the 
chairman, went to to try to force the merger through the 
Commission.
    In particular, I think you are now the father of a new word 
in the English language, and that is ``unrecuse.'' I have never 
heard of unrecuse before. I thought if one recuses themselves, 
that that stands, and I found that tremendously troubling, and 
I salute Commissioner McDowell in how he conducted himself, but 
that essentially that he was forced to participate in the 
merger proceedings, I think is cause for deep concern. It is 
very difficult to develop consensus, but really, as policy 
makers, that is the job that is given to us, especially in the 
public square, because we are not here for ourselves, we are 
here to represent the people of our country.
    I don't think that action has instilled confidence in the 
Commission with the American people. This is all public and of 
all places, the Federal Communications Commission. So it is 
very troubling to me. And then once that failed and then you 
had to achieve a bipartisan consensus to approve the merger, 
you and Commissioner Tate, whom I welcome here today, took the 
extraordinary step, and I don't know if this has ever been done 
at the Commission before, to disavow many of the critical 
merger conditions to which you and AT&T had agreed. I mean, 
this is the equivalent of signing statements; where the 
president signs legislation and then says I don't like parts of 
it, so I am not going to honor it. And so I think we have to 
have a discussion of that.
    So welcome to the committee. I look forward to the 
testimony, and I certainly look forward to the questions that 
we will pose and your answers to them.
    Mr. Markey. The gentlelady's time has expired. The 
gentlelady is also right. It is unusual to have the FCC here. 
It may be impossible to reunite the Beatles, but for the first 
time in 3 years, we have reunited the FCC in front of this 
committee, so it is a big historic day. Let me turn and 
recognize the gentleman from Michigan, the chairman of the full 
committee, Mr. Dingell.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    The Chairman. Mr. Chairman, I thank you for your courtesy 
and I commend you for holding this hearing. It has been 4 long 
years since this committee conducted a general oversight 
hearing on the Federal Communications Commission. Indeed, this 
is the first such hearing for this chairman in his new role and 
for two of the remaining Commissioners.
    The FCC is an independent agency created by the Congress. 
It is an arm of the Congress. And this committee, a committee 
on which I have proudly served for some while, has jurisdiction 
over this agency and the Nation's telecommunications laws. I 
have great respect for the important work of the FCC and its 
Commissioners. The FCC writes regulations for industries that 
are vital to our democracy and to our economy. The laws charge 
the FCC with serving the public interest. That means all 
parties, rich, poor, minorities, small business owners, large 
business owners, rural residents, people with disabilities, 
should be fairly, properly and promptly treated by the 
Commission and its policies.
    It is equally vital that this committee exercise vigilant 
and proper oversight of FCC activities. For some time, the 
Commission has not been subject to an appropriate level of 
congressional oversight. This oversight slumber seems to have 
led to some rather unfortunate and unwelcome consequences. The 
FCC has strayed from its sole duty; that is to implement the 
laws as passed by the Congress. The FCC is not a legislative 
body. That role resides here, in this room, with the people's 
elected representatives. And it is also not an arm of the 
administration, something which no administration in my 
recollection has understood fully, but it is something that Sam 
Rayburn believed in very strongly, and it is something which 
the current occupant of the chair of this committee believes 
with equal strength.
    Now, when the FCC loses its proper role or proper sight of 
its proper role, consumers suffer, as does the credibility of 
the agency. I fear that this has too often been the case. Last 
December the FCC adopted a measure concerning cable television 
franchises. The matter was one on which Congress had been 
actively engaged. In 1984, those of us who wrote the law 
established well-defined and distinct roles in cable regulation 
for local governments and for the FCC. If reform of that 
regulatory structure is necessary, then it is the Congress's 
prerogative to undertake such action, as we have done before. 
It is not, however, a role for the FCC.
    In this case, the Commission, not the Congress, preempted 
local governments on matters involving municipal property. The 
Commission had good intentions, and I hope they were good, 
notwithstanding the fact that the Congress already has assigned 
franchising matters, such as franchising negotiations and 
universal build-out requirements, to local officials, not the 
FCC. I strongly support efforts to increase cable competition 
and lower prices for cable consumers and have been working for 
many years to achieve both of these goals.
    The Commission must work, however, entirely within the 
framework of existing laws to achieve that goal, and it must 
respect the laws that are enacted by the Congress and not 
exceed the authorities which it is given. That, however, did 
not happen here. The Commission chose to ignore the well-
settled divisions of responsibility. Such action is unwise and 
may, I fear, give rise to false hopes to consumers.
    Furthermore, the Commission appears to be continuing a 
disturbing practice of voting on measures long before they are 
complete. Once voted, the Commission often takes months to 
issue a proper order. One such delay, the AT&T-BellSouth merger 
order, has forced dissatisfied parties into court where they 
are compelled to sue over a press release. I find nothing on 
this in the Administrative Procedures Act or in the histories 
of the legislative government and the regulatory agencies. I 
find regulating by press release to be a curious way, then, to 
interpret the Administrative Procedures Act.
    There is also the matter of forbearing from certain 
statutory provisions due to arbitrary inaction. In a recent 
case, a 2-2 tie resulted in the grant of a forbearance 
petition. Because the Commission failed to release an order in 
that case, it is not clear as to the precise relief which is 
granted or the reason for the decision or who will benefit and 
who will be hurt. It is not apparent to me how the public or 
the courts can judge the wisdom of agency activity in such 
circumstances.
    There is also the matter of the Commission's responsiveness 
to consumers. I understand that the Commission has recently 
turned its attention to backlog consumer complaints, including 
thousands of do-not-call complaints dating back to 2003. We 
will be asking the Commission to make available to us some of 
these complaints and the Commission's response. I understand 
that the Commission's response, in some instances, is to return 
the complaint to the complainer with the request that further 
information be sent in complaints that are as much as 4 years 
old. I find this curious and discouraging, and I think that it 
raises questions about whether the Commission is working hard 
and whether we need to schedule an oversight hearing in this 
committee every month to keep the business of the Commission on 
track.
    The FCC is an important instrument of Congress, designed to 
help the public good. Whether you have worked for political 
campaigns, the executive branch, Capitol Hill or the private 
sector, it is important to remember that once one assumes a 
seat on the Commission, one is obligated to act independently 
and to promote the public interest. I hope that from this 
committee meeting will come some strides in that direction for 
the committee, for the executive and for the FCC. Thank you, 
Mr. Chairman.
    Mr. Markey. The Chair recognizes the gentleman from 
Nebraska, Mr. Terry.
    Mr. Terry. I will waive.
    Mr. Markey. The gentleman from Georgia, Mr. Deal.

  OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Deal. Thank you, Mr. Chairman, and I would like to 
thank the Commissioners for being present with us today. I 
would just like to raise a few issues with you and hopefully 
hear your comments during your testimony or during the 
questioning period.
    To start with, I would like to hear your opinion regarding 
the current Government regulated retransmission consent regime. 
When I first began talking about this issue a few years ago, I 
asserted that the system was broken and could cause harm to 
consumers. Recent events have unfortunately proven my assertion 
is true. Over the last 6 months, thousands of consumers have 
lost access to local broadcast programming due to failed 
negotiations. From what I understand, what we have witnessed to 
date may just be the tip of the iceberg. With everything I have 
seen, the retransmission consent system lacks the principles 
normally present in a free market. I will say it again. 
Retransmission consent regime lacks the principles that we find 
in a free market.
    I know the proponents of the current regulatory regime 
assert that because agreements are being reached, the system 
must be working. I am not convinced by that argument. Just 
because agreements ultimately are reached does not mean that 
the system is good and fair or that all parties are willing 
participants. The more I have learned about how this system 
works, the clearer it becomes to me that the retransmission 
consent negotiations are based on Federal regulations which do 
not grant a level playing field to all players. In short, I 
believe the current system leads to agreements based not on 
free market values but on who has the most leveraging power.
    Second, I would like to learn what the Commission plans, 
when it plans to complete its proceedings and issue a final 
order in regard to white spaces. I believe it is important that 
we move to facilitate the use of unlicensed white spaces, as 
they will lead to increased broadband access for millions of 
Americans and enable a wide range of innovative wireless 
devices and services.
    And lastly, I would like to ask the chairman, hopefully, to 
explain the Media Bureau's recent decision on set-top boxes. I 
have heard concerns from rural cable subscribers that the 
decision may lead them to pay $2 to $3 more on their cable 
bills each month, and it is possible that the Commission will 
soon review this issue.
    Thank you, Mr. Chairman. I look forward to the comments and 
the questions.
    Mr. Markey. The gentleman's time has expired. The gentleman 
from Michigan, Mr. Stupak.
    Mr. Stupak. Mr. Chairman, I welcome the Commission, and I 
would waive my opening and reserve my time for questioning, 
please.
    Mr. Markey. Gentleman from New York, Mr. Engel.

 OPENING STATEMENT OF HON. ELIOT L. ENGEL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Engel. Thank you very much, Mr. Chairman, for holding 
this important hearing. It is absolutely imperative that we 
have the Federal Communications Commission Chairman and 
Commissioners testify on a regular basis. I would like to take 
this opportunity to address some issues of concern to me, but 
first, I would like to start by thanking the Commission for 
allowing WRCR, a local radio station in my district, to change 
its operating frequency from 1300 to 1700 kilohertz.
    The change will greatly improve the coverage of this 
station. It is a valuable asset for Rockland County, NY, in the 
event of an emergency. Many people would turn their radio dial 
to WRCR for immediate, up-to-date information. Couldn't do it 
before because the signal wasn't good, and the new expanded 
coverage will guarantee that all residents of Rockland County 
will have this essential information, so I thank the Commission 
for its efforts.
    Today we will hear many of our colleagues bring up an array 
of important issues that are within the FCC's jurisdiction. One 
issue that is of particular importance, obviously, is the state 
of the DTV transition. The FCC has been tasked with the 
responsibility of the success of this transition. If they don't 
approach the analog cutoff date with care and consideration, 
the consumer, as we have said many times here before, millions 
of TV-viewing Americans will be left with a black screen on 
that day.
    I am concerned that the FCC is relying heavily on a Web 
site to inform consumers about the transition and how to 
prepare for the analog cutoff day. I don't believe that is 
enough. Twenty-one million U.S. households rely on over-the-air 
TV. Many of them are minorities and have a combined income of 
$30,000 or lower and do not have immediate access to the 
Internet, and I am not convinced that simply a Web site will 
help these families, by itself.
    The FCC has proposed a DTV program, which in 2008 was only 
allocated $1.5 million for outreach. If you contrast that with 
the city of Berlin, Germany, who accomplished an analog cutoff 
in 2003, city of 3.3 million, spent close to a million dollars 
in consumer education, while we have to educate 300 million 
citizens, and if we are only planning on spending $1.5 million, 
I really don't think that is enough, so I would like to explore 
that in some of the questions.
    Obviously, also, I am very concerned about broadband 
penetration. The U.S. continues to languish behind other 
nations in broadband penetration, and the Commission ruled on 
streamlining the franchising process recently, so I would like 
to hear some statements about that. When we are talking about 
having the FCC ensure that competitors have access to provide 
video service to apartments and condominiums, I think we need 
to have some questions about that. I have also, in New York, we 
have our new governor, who was then attorney general, 
investigated into alleged pay-for-play practices between major 
record labels and radio stations, and I intend to ask some 
questions about that.
    And I would also like to hear if we could sort of draw out 
the opinions of the XM and Sirius satellite radio services, 
which have decided to merge. We heard testimony just last week 
about that, and some of the argument is that satellite radio is 
just one part of the radio world, not just its own market. I 
would tend to agree with that and would wonder what the 
Commissioners have to say about that, so gentlemen and lady, I 
look very much forward to listening to all of you. It is nice 
to have two new Commissioners here and our three old friends, 
not really old, but our three friends, and again, thank you for 
the job you do. We may not always agree, but we know you do 
important work and we appreciate it. Thank you.
    Mr. Markey. I thank the gentleman. The gentlelady from New 
Mexico, Mrs. Wilson.
    Mrs. Wilson. Thank you, Mr. Chairman. I will reserve for 
questions.
    Mr. Markey. The gentlelady from California, Ms. Solis.
    Ms. Solis. I will waive.
    Mr. Markey. She will waive her time, as well.
    Mr. Markey. The gentleman from Illinois, Mr. Rush.
    Mr. Rush. Mr. Chairman, I will waive.
    Mr. Markey. The gentleman from Washington State, Mr. 
Inslee, will reserve. And the gentleman from Texas, Mr. Green.
    Mr. Green. I will reserve, Mr. Chairman.
    Mr. Markey. I think that that is all of the opening 
statements that the subcommittee will entertain, and that will 
give us an opportunity to turn to our extremely distinguished 
panel this morning. Statements will be accepted for the record.
    [The prepared statements of Mr. Pallone and Mrs. Capps 
follow:]

   Prepared Statement of Hon. Frank Pallone Jr., a Representative in 
                 Congress from the State of New Jersey

    Good morning Chairman Martin and other members of the 
Commission. I want to begin by thanking Chairman Markey for 
holding this long overdue oversight hearing.
     The FCC, like every other agency of Government, is 
accountable to the people and the Congress. Yet, this 
Commission has decided to not follow that principle. As a 
creature of Congress, their job is to interpret the law, not to 
legislate it. Instead, they have decided to give itself the 
authority to pick winners and losers in the telecommunications 
marketplace, and the consumer is suffering.
     We have witnessed inaction and backlogs over the past few 
years, which includes lengthy delays of very important matters 
to consumers. In fact, this FCC has the lowest output since 
1994.
     As a firm believer in competition, I have seen firsthand 
the benefits it provides to consumers. However, having only two 
realistic broadband choices is not competition. All consumers 
should have plenty of choices for broadband, leading to 
affordable prices and better services. But I am concerned that 
the FCC's recent policies and procedures have resulted in weak 
competition within the broadband marketplace.
     The United States is the country that invented the 
Internet. However, it has fallen to 16th in the world in 
broadband penetration. I am also worried about the lagging 
broadband deployment, as well as the FCC's unreliable broadband 
data.
     President Bush has urged that affordable high-speed 
Internet access be available to all Americans by 2007. However, 
he has not set out a national broadband policy. Meanwhile, the 
FCC recently released a ``Broadband Report'' in which they 
defined broadband with speeds of 200 Kilobits. This definition 
is from 1999 and is obsolete. Innovation has flourished over 
the past few years, and with services like YouTube and others 
that measure is no longer acceptable.
     The report also measures penetration by ZIP codes, 
assuming a ZIP code is fully serviced if only one person has 
broadband. These types of measurements are flawed. I do not 
believe this committee and this Congress can enact the right 
policies if we aren't given an accurate overall picture.
     More specifically, as the chairman of the Health 
Subcommittee, I recognize the importance high speed interactive 
broadband can have for health professionals and patients. As 
the Communications Workers of America cited in their recent 
report, ``Speed Matters,'' high speed ``enables remote 
monitoring, efficient chronic disease management and more 
effective responses to emergencies.'' Broadband gives 
healthcare great possibilities by increasing access, lowering 
costs and providing better flexibility.
     The FCC is not proactively recognizing their 
responsibility to the American people. I hope with some more 
guided oversight, we can begin to address these important 
issues.
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    Mr. Markey. The entire Federal Communications Commission, 
appearing before us. You can see that there is an intense 
amount of interest in your testimony here today. We welcome you 
back, Mr. Chairman, before the full committee. We look forward 
to your testimony and the testimony of any of the other 
Commissioners who wish to make opening statements and then we 
will turn to questions from the subcommittee members, so Mr. 
Chairman, whenever you are comfortable, please begin.

STATEMENT OF KEVIN J. MARTIN, CHAIRMAN, FEDERAL COMMUNICATIONS 
                           COMMISSION

    Mr. Martin. Well, thank you, and good morning, Chairman 
Markey and Ranking Member Upton and all the members of the 
committee, and thank you for the opportunity to be here with 
you today. I have had the privilege of serving at the Federal 
Communications Commission for over 5 years, including 2 years 
as the agency's chairman, and during this period, my colleagues 
and I, following guidance from this committee and Congress, 
have overseen a telecommunications industry undergoing rapid 
and unprecedented change.
    These changes have seen the telecommunications industry 
transition from a period of sharp decline to a time of 
significant growth. Ushered in by the broadband revolution, 
companies and consumers alike have finally found the promised 
land of convergence. Telephone calls are now being made over 
the Internet, television programs are increasingly watched on 
the computer, not on TV, and cell phones are mini computers. 
They take pictures, play songs, send e-mails and hopefully soon 
will even send and receive emergency messages.
    These technological advances and converging business models 
are creating unparalleled opportunities and considerable 
challenges. With this guidance in mind, the Commissioners try 
to make decisions based on the fundamental belief in promoting 
a robust, competitive marketplace. Competition is the best 
method of delivering the benefits of choice, innovation and 
affordability to American consumers. Competition drives prices 
down and spurs providers to improve service and create new 
products.
    The Government, however, still has an important role to 
play. The Commission has worked to create a regulatory 
environment that promotes investment in competition, setting 
the rules of the road so that players can compete on a level 
playing field. For instance, shortly after I became chairman, 
we removed legacy regulations like tariffs and price controls 
which discourage providers from investing in broadband 
networks. Since then, broadband penetration has increased, 
while the prices of DSL and cable modem services have 
decreased.
    The Government also must act, when necessary, to protect 
consumers and achieve broader social goals. Public safety has 
been and will continue to be one of the Commission's top 
priorities. In the first major role in my tenure, we applied 
stringent 911 rules to VOIP telephone service providers. Many 
believe that our actions were too aggressive; the Commission 
unanimously disagreed. The 911 rules we applied require that 
people receive the same guaranteed access to emergency services 
as do those using traditional phones.
    Broadband technology is a key driver of our economic growth 
and enables almost all of today's innovations. The ability to 
share increasing amounts of information at greater and greater 
speeds increases productivity, facilitates commerce and helps 
drive innovation. Perhaps most important, broadband has the 
potential to affect almost every aspect of our lives. During my 
tenure as chairman, the Commission has worked hard to create a 
regulatory environment that promotes broadband deployment. We 
have removed legacy regulations like tariffs and price controls 
that discourage carriers from investing in their broadband 
networks, and we work to create a regulatory level playing 
field among broadband platforms.
    And we have begun to see some success as a result of the 
Commission's policies. According to the Commission's most 
recent data, high speed connections increased by almost 52 
percent for the full year ending in June 2006. An independent 
study by Pew Internet and American Life Project confirmed this 
upward trend, finding that from March 2005 to March 2006, 
overall broadband adoption increased by 40 percent, from 60 to 
84 million, twice the growth rate of the year before.
    And perhaps most importantly, the Pew study found that the 
significant increase in broadband adoption was widespread and 
cut across all demographics. Broadband adoption grew by more 
than 120 percent among African Americans and by almost 70 
percent among middle income Americans. During the same time, 
the average price of broadband paid by consumers has also 
dropped. The Pew study found that in February 2004 to December 
2005 the average price for home broadband access fell from $39 
to $36 per month, and for DSL, monthly bills fell from $38 to 
$32, or almost 20 percent.
    And while the Commission has worked hard to promote 
broadband access, there is more we can do. The Commission is 
committed to obtaining better information about broadband 
deployment and services nationwide. Since I became chairman, we 
have already taken steps to improve the information we collect 
and report. For instance, for the first time last year, we 
began reporting information regarding different speeds of 
broadband connections. In addition, last September I brought 
forward proposals to gain an even better picture of broadband 
deployment in this country.
    Wireless service is also becoming an increasingly important 
platform to compete with cable and DSL as a provider of 
broadband. To promote more choice for consumers among broadband 
providers, the Commission has made a significant amount of 
spectrum available on both a licensed and unlicensed basis that 
can be used to provide broadband services in municipalities, 
rural areas and across the country. In September, the FCC 
closed its largest and most successful spectrum auction, 
raising almost $14 billion, and the Commission is currently 
preparing to auction 60 MHz in the 700 MHz band.
    The Congress recognized that competition in the video 
services market benefits consumers by resulting in lower prices 
and higher quality services. The cost of basic cable service 
has gone up at a disproportionate rate when compared against 
other communications sectors. The average price of the expanded 
basic cable package almost doubled between 1995 and 2005, 
increasing by 93 percent. However, where a second cable 
operator is present, cable prices are significantly lower, 
almost 20 percent lower. In December of last year the 
Commission took steps to streamline the franchise process and 
promote competition in the delivery of video programming.
    Promoting competition and choice must continue to be a 
priority in the voice area, as well. We need to continue to 
ensure that new entrants are able to compete with incumbents 
for telecommunications services. We recently made clear that 
new telephone entrants, such as cable and VOIP providers, must 
be given access to local telephone numbers and be able to 
interconnect with incumbents to deliver local calls.
    And finally, as I touched on in the beginning of my 
remarks, there are times when marketing forces alone may not 
achieve broader social goals. When I testified before this 
committee approximately a year ago, I recommended that 
unauthorized access to callers' phone records be made illegal 
and that the Commission's enforcement tools be strengthened. 
Since then I know the committee has been actively working on 
this issue, and the Commission has been working on its part, as 
well.
    I propose that the Commission strengthen our privacy rules 
by requiring providers to adopt additional safeguards to 
protect consumers' phone records from unauthorized access and 
disclosure. Perhaps no other issue before the Commission 
garners more public interest than the periodic review of media 
ownership rules. The attention devoted to media ownership 
issues is not surprising, as the media touches almost every 
aspect of our lives. And critical to our review of media 
ownership rules is the collection of objective facts and an 
open dialog with the public. We have commissioned multiple 
economic studies and are engaging in hearings across the 
country.
    I see that my time has expired, so I would just ask for my 
full written statement to be submitted for the record.
    [The prepared statement of Mr. Martin follows:]

                      Statement of Kevin J. Martin

     Good morning Chairman Dingell, Chairman Markey, Ranking 
Member Barton, Ranking Member Upton and members of the 
committee. Thank you for the opportunity to be here with you 
today. I have a brief opening statement and then I look forward 
to answering any questions you may have.
     I have had the privilege of serving at the Federal 
Communications Commission for over 5 years, including 2 years 
as the Agency's chairman. During this period, my colleagues and 
I, following guidance from this committee and Congress, have 
overseen a telecommunications industry undergoing rapid and 
unprecedented change.
     These changes have seen the telecommunications industry 
transition from a period of sharp decline to a time of 
significant growth. Ushered in by the broadband revolution, 
companies and consumers alike have finally found the promised 
land of convergence. Telephone calls are now being made over 
the Internet and cable systems. Television programs are watched 
when and where we want them and are increasingly on the 
Internet. Cell phones are mini-computers. They take pictures, 
play songs and games, send e-mail, and hopefully soon will send 
and receive emergency messages in times of disaster. Teens talk 
to one another over IM, SMS and MySpace, not the telephone. 
They ignore the TV and stereo, downloading songs onto MP3 
players and watching and posting videos on YouTube instead. As 
Time magazine recognized, 2006 was the year of the individual, 
thanks in large part to how communications technologies and 
innovations have empowered us all.
     These technological advances, converging business models, 
and the digitalization of services are creating unparalleled 
opportunities and considerable challenges. Faced with such 
fast-paced change, regulations and the Commission often 
struggle to keep up.
     The FCC is an independent agency and a creature of 
Congress. Our highest priority, therefore, is to implement the 
will of Congress. In the Telecommunications Act of 1996, 
Congress instructed the Commission on how to approach such 
challenges. The preamble reads:

     An Act to promote competition and reduce regulation in 
order to secure lower prices and higher quality services for 
American telecommunications consumers and encourage the rapid 
deployment of new telecommunications technologies.

    Preamble, Telecommunications Act of 1996, Pubic Law No. 
104-104, 110 Stat. 56 (1996). With this guidance in mind, the 
Commission has tried to make decisions based on that 
fundamental belief in promoting a robust, competitive 
marketplace. Competition is the best method of delivering the 
benefits of choice, innovation, and affordability to American 
consumers. Competition drives prices down and spurs providers 
to improve service and create new products.
     The Government, however, still has an important role to 
play. The Commission has worked to create a regulatory 
environment that promotes investment and competition, setting 
the rules of the road so that players can compete on a level 
playing-field. For instance, shortly after I became chairman, 
we removed legacy regulations, like tariffs and price controls 
which discouraged providers from investing in broadband 
networks. Since then, broadband penetration has increased while 
the prices of DSL and cable modem services have decreased.
     Government also must act when necessary to protect 
consumers and achieve broader social goals. Thus, while 
eliminating many economic regulations, the Commission 
recognizes that there are issues that the marketplace alone 
might not fully address. For instance, government should ensure 
that the communications needs of the public safety community 
are met and that new and improved services are available to all 
Americans, including people with disabilities, those living in 
rural areas and on tribal lands, and schools, libraries, and 
hospitals. For example, the Commission expanded the ability of 
the deaf and hard of hearing to communicate with their family, 
friends and business associates by requiring Video Relay 
Services (the preferred method of communication) to be offered 
24 hours a day, seven days a week, and by recognizing IP 
Captioned phone service as a form of Telecommunications Relay 
Service.

                    Increasing Broadband Deployment

    Broadband technology is a key driver of economic growth and 
enables almost all of today's innovations. The ability to share 
increasing amounts of information, at greater and greater 
speeds, increases productivity, facilitates interstate 
commerce, and helps drive innovation. But perhaps most 
important, broadband has the potential to affect almost every 
aspect of our lives. It is changing how we communicate with 
each other, how and where we work, how we educate our children, 
and how we entertain ourselves.
    During my tenure as chairman, the Commission has worked 
hard to create a regulatory environment that promotes broadband 
deployment. We have removed legacy regulations, like tariffs 
and price controls, that discourage carriers from investing in 
their broadband networks, and we worked to create a regulatory 
level playing-field among broadband platforms.
    We have begun to see some success as a result of the 
Commission's policies According to the Commission's most recent 
data, high-speed connections increased by 26 percent in the 
first half of 2006 and by 52 percent for the full year ending 
June 30, 2006.
    An independent study by Pew Internet and American Life 
Project confirmed this upward trend, finding that from March 
2005 to March 2006, overall broadband adoption increased by 40 
percent--from 60 to 84 million--twice the growth rate of the 
year before. The study found that, although overall penetration 
rates in rural areas still lags behind urban areas, broadband 
adoption in rural America also grew at approximately the same 
rate (39 percent).
    Perhaps most importantly, the Pew study found that the 
significant increase in broadband adoption was widespread and 
cut across all demographics.
    According to their independent research:

     broadband adoption grew by almost 70 percent among 
middle-income households (those with incomes between $40,000 
and $50,000 per year);
     broadband adoption grew by more than 120 percent 
among African Americans;
     broadband adoption grew by 70 percent among those 
with less than a high school education;
     broadband adoption grew by 60 percent among senior 
citizens.

    The average price of broadband paid by consumers also has 
dropped in the past 2 years. The Pew study found that, from 
February 2004 to December 2005, the average price for home 
broadband access fell from $39 per month to $36 per month. For 
DSL, monthly bills fell from $38 to $32 or almost 20 percent.
    While the Commission worked hard to promote broadband 
access and affordability, there is more we can do. The 
Commission is committed to obtaining better information about 
broadband deployment and services nationwide. Since I became 
Chairman, we have already taken some steps to improve the 
information we collect and report. For instance, for the first 
time last year, we began reporting information regarding 
different speeds of broadband connections (e.g., about services 
offered at speeds in excess of 200 kbps).
    In addition, last September, I put forward a proposal to 
gain an even better picture of broadband deployment in this 
country. This proposal asks questions about how we can obtain 
more specific information about broadband deployment and 
consumer acceptance in specific geographic areas and how we can 
combine our data with those collected at the State level or by 
other public sources. By improving our data collection, we will 
be able to identify more precisely those areas of the country 
where broadband services are not sufficiently available.
    I also have circulated our fifth inquiry into ``whether 
advanced telecommunications capability is being deployed to all 
Americans in a reasonable and timely fashion.'' 47 U.S.C. 
Sec. 157 nt. In this Notice, we seek comment on all aspects of 
broadband availability, including price and bandwidth speeds. 
In particular, we seek comment on whether, given the evolution 
of technology and the marketplace, we should redefine the term 
``advanced services'' to require higher minimum speeds. Between 
these two proceedings, it is my hope that the Commission will 
solicit the information necessary to better assess the 
competitive progress in the broadband market.

                    Encouraging Wireless Deployment

    Wireless service is becoming increasingly important as 
another platform to compete with cable and DSL as a provider of 
broadband. To promote more choice for consumers among broadband 
providers, the Commission has made a significant amount of 
spectrum available on both a licensed and unlicensed basis that 
can be used to provide broadband service in municipalities, 
rural areas and across the Nation.
    The Commission is working to make available as much 
spectrum as possible to put the next generation of advanced 
wireless devices into the hands and homes of consumers. In 
September the FCC closed its largest and most successful 
spectrum auction, raising almost $14 billion. The spectrum 
offered was the largest amount of spectrum suitable for 
deploying wireless broadband ever made available in a single 
FCC auction. The Commission specifically designated licenses 
for smaller and rural geographic areas to promote access by 
smaller carriers, new entrants, and rural telephone companies.
    The Commission is currently preparing to auction 60 MHz in 
the 700 MHz band. This spectrum is also well-suited for the 
provision of wireless broadband, and the upcoming auction 
represents a critical opportunity to continue deploying 
wireless broadband services, especially to rural communities. 
Again, the Commission will consider the need to provide for 
smaller geographic licensing areas. I also believe we should 
consider adopting more stringent build out requirements to 
facilitate broadband deployment in rural and underserved areas.
    On the unlicensed side, the Commission recently initiated a 
proceeding to resolve technical issues associated with ``white 
spaces'' to allow low power devices to operate on unused 
television frequencies. And the Commission has completed 
actions necessary to make available 255 MHz of unlicensed 
spectrum in the 5 GHz region, nearly an 80 percent increase.
    The Commission is also considering an order that would 
classify wireless broadband Internet access service as an 
information service. This action would eliminate unnecessary 
regulatory barriers for service providers. This classification 
also would clarify any regulatory uncertainty and establish a 
consistent regulatory framework across broadband platforms, as 
we have already declared high speed Internet access service 
provided via cable modem service, DSL and BPL to be information 
services. This action is particularly timely in light of our 
auctions which are specifically making available spectrum for 
wireless broadband services.

                         Promoting Competition

     Consumers today are benefiting from technological 
developments and innovation in media. DVRs, VOD and HD 
programming offer more programming to watch at any given time 
then ever before.
     While consumers have an enormous selection of channels to 
watch, they have little choice over how many channels they 
actually want to buy. For those who want to receive 100 
channels or more, today's most popular cable packages may be a 
good value. But according to Nielsen, most viewers watch fewer 
then two dozen channels. For them, the deal isn't as good.
    The cost of basic cable services have gone up at a 
disproportionate rate--38 percent between 2000 and 2005--when 
compared against other communications sectors. The average 
price of the expanded basic cable package, the standard cable 
package, almost doubled between 1995 and 2005, increasing by 93 
percent. The GAO and the Commission's most recent cable price 
survey found that while cable does face some competition from 
DBS, DBS and cable do not seem to compete on price. In other 
words, the presence of a DBS operator does not have an impact 
on the price the cable operator charges its subscribers. 
Significantly, however, where a second cable operator is 
present, cable prices are significantly lower--almost 20 
percent ($43.33 without competition vs. $35.94 where there is 
competition).
     Congress recognized that competition in the video services 
market benefits consumers by resulting in lower prices and 
higher quality of services. Indeed, one of the Communications 
Act's explicit purposes is to ``promote competition in cable 
communications,'' and Congress expressly prohibited local 
authorities from granting exclusive franchises. In December of 
last year, the Commission took steps to implement section 621 
of the Act, which prohibits local authorities from unreasonably 
refusing to award a competitive franchise.
     We need to continue to take steps to remove regulatory 
barriers to competition in the video market by, for instance, 
ensuring that consumers living in apartment buildings are not 
denied a choice of cable operators. We need to continue our 
efforts to create a regulatory environment that encourages 
entry by making sure that competitive providers have access to 
``must-have'' programming that is vertically integrated with a 
cable operator.
     Promoting competition and choice must continue to be a 
priority in the voice arena, as well. We need to continue to 
ensure that new entrants are able to compete with incumbents 
for telecommunications services. For example, we recently made 
clear that new telephone entrants, such as cable and other VOIP 
providers, must be given access to local telephone numbers and 
be able to interconnect with incumbents to deliver local calls 
to them.
    Similarly, the ability to port numbers between providers is 
critical. Customers should not be held hostage because a 
provider refuses to allow a customer to transfer his or her 
phone number to another wireless or wireline carrier. We need 
to ensure that porting numbers between providers, including 
between wireline and wireless carriers, is as efficient as 
possible.

                          Protecting Consumers

     There are times when market driven forces alone may not 
achieve broader social goals. And we must always be on alert 
for companies intentionally or unintentionally harming 
consumers. Among the issues the Commission is turning its 
attention to is the ability of unauthorized users to gain 
access to callers' phone records, or pretexting. As I testified 
before this committee approximately 1 year ago, the disclosure 
of consumers' private calling records is a significant privacy 
invasion. At that time, I recommended that this practice be 
made illegal and that the Commission's enforcement tools be 
strengthened. Since then, I know that this Committee has been 
actively working on this issue.
     The Commission has been doing its part as well. I have 
proposed that the Commission strengthen our privacy rules by 
requiring providers to adopt additional safeguards to protect 
customers' phone record information from unauthorized access 
and disclosure. Specifically, the Commission would prohibit 
providers from releasing call detail information to customers 
except when the customer provides a password. Similarly, we 
propose to modify our current rules to require providers to 
obtain customer consent before disclosing any of that 
customer's phone record information to a provider's joint 
venture partner or independent contractor.
     Recently, concerns about preserving consumers' access to 
the content of their choice on the Internet have been voiced at 
the Commission and in Congress. In its Internet Policy 
Statement, the Commission stated clearly that access to 
Internet content is critical and blocking or restricting 
consumers' access to the content of their choice would not be 
tolerated. Although we are not aware of current blocking 
situations, the Commission remains vigilant and stands ready to 
step in to protect consumers' access to content on the 
Internet. Moreover, to better assess how the marketplace is 
functioning and address any potential harm to consumers, I have 
proposed the Commission examine this issue more fully in a 
formal Notice of Inquiry which is presently pending before my 
colleagues.
     Perhaps no other issue before the Commission garners more 
public interest then our periodic review of the media ownership 
rules. Critical to our review of the media ownership rules is 
the collection of objective facts and an open dialog with the 
public. We have commissioned multiple economic studies and are 
engaging in hearings across the country in a range of markets. 
The goal of these hearings is to fully and directly involve the 
American people in this process. We held our first hearing in 
Los Angeles, where we focused on the ability of independent 
television producers to gain access to distribution. We also 
held a hearing in Nashville, in which we focused on the 
concerns of the music industry, and in Harrisburg, 
Pennsylvania, in which we focused on factors relevant to media 
ownership in that smaller market. The Commission's efforts to 
collect a full public record will continue in the months ahead.
     The attention devoted to the media ownership issue is not 
surprising. The media touches almost every aspect of our lives. 
We are dependent upon it for our news, our information and our 
entertainment. Indeed, the opportunity to express diverse 
viewpoints lies at the heart of our democracy. We must balance 
concerns about too much consolidation and too little choice 
with appropriate consideration of the changes and innovation 
that are taking place in the media marketplace. We must make 
sure that consumers have the benefit of a competitive and 
diverse media marketplace.
    At our public hearings, the Commission has heard a 
consistent concern that there are too few local and diverse 
voices in the community. Indeed diversity is one of the major 
principles underlying our rules governing broadcast ownership. 
Small and independently owned businesses can find it difficult 
to enter the broadcast industry due to financial and resource 
constraints. I have proposed several ways to better address 
these issues. For example, we could permit and encourage new 
entrants to operate broadcast television stations through 
voluntary arrangements with existing broadcasters. An eligible 
entity could lease a portion of a broadcaster's digital 
spectrum and obtain all the rights and obligations that 
accompany the operation of a broadcast television station. We 
also are considering other changes, such as modifying our 
``Equity Debt Plus'' rule to facilitate the ability of eligible 
entities to enter into partnerships, and evaluating how our 
leased access rules are working.

                        Enhancing Public Safety

     The events of September 11, 2001 and the 2005 hurricane 
season underscored America's reliance on an effective national 
telecommunications infrastructure. Public safety has been and 
will continue to be one of the Commission's top priorities. The 
Commission must make sure that the public has the tools 
necessary to know when an emergency is coming and to contact 
first responders. And we must enable first responders to 
communicate with each other and to rescue the endangered or 
injured. The public and private sectors must also work together 
so that our communications system can be repaired quickly in 
the wake of a disaster. We recently created a Public Safety and 
Homeland Security Bureau to focus exclusively on these 
important needs.
     Thank you for your time and your attention today. I 
appreciate the opportunity to share with you some of the 
Commission's recent progress. With that, I would be happy to 
answer any questions you may have.
                              ----------                              

    Mr. Markey. Without objection, the full written statement 
of the chairman will be included in the record, as will the 
full written statements of all of the members of the Federal 
Communications Commission. Now I am going to ask any of the 
other Commissioners who wish to make opening statements, and I 
will recognize Commissioner Copps if he wishes to make a 
statement at this time.

     STATEMENT OF MICHAEL J. COPPS, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Copps. I do wish to make a statement. Thank you very 
much. Thank you, Chairman Markey, Ranking Member Upton, members 
of the subcommittee, thank you for the opportunity to return, 
at least briefly, to the Capitol, which was home to me for so 
many years, beginning almost 37 years ago, actually, to discuss 
with you the state of communications in our country and the 
role the FCC is playing today and what else it might do as we 
seek to bring the wonders of modern communications to all of 
our citizens.
    I am constantly struck at how important this work is. 
Communications industries comprise one-sixth of our economy, 
according to many reports, and when you consider the social and 
cultural and political dimensions, there is no doubt in my mind 
that communications is the most formidable and influential 
enterprise in all of America. There is a lot of serious work 
ahead for all of us, if we are going to realize the potential 
of the technologies and the services rushing towards us in this 
hugely transformative digital age.
    This work involves every sector of communications. Our 
media make impressive contributions to our communities every 
day, but we still do not have a media environment that fully or 
even adequately serves our democracy and the vibrancy of our 
citizens. Regarding broadband, without a well thought out game 
plan to bring the wonders of the Internet to everyone across 
our great land, millions of people are at serious risk of being 
left behind. On public safety, despite the horrible costs of 9/
11 and Hurricane Katrina, we still are not ready for the next 
manmade or natural disaster. The last time a major disaster 
confronted our nation we were perhaps caught by surprise. If we 
are not ready next time, none of our fellow citizens is going 
to accept surprise as an excuse. So these three areas are my 
priorities at the Commission.
    Let me start with the issue which is closest to my heart, 
and that is broadcast media. I met with many local broadcasters 
who work hard to serve the public interest, but the public-
spirited part of the enterprise is being squeezed out. Too 
often the programs we receive are homogenized, creativity-
killing and often gratuitously violent. Perhaps even worse, the 
dearth of political and community coverage threatens our 
democratic dialog and the independent viewpoints we depend upon 
to help us make good decisions for the future of our country. 
Localism, diversity and competition are not abstract 
constructions, they are the essential ingredients for keeping 
our Nation's media and our Nation healthy, vibrant and growing.
    I am pleased that Chairman Martin is committed to complete 
our long-dormant localism proceeding before moving forward on 
media ownership, because so much of what is local has 
disappeared from so much of our media. In the last year I have 
participated in probably a dozen media hearings in localities 
around the country, and I am seeing a noticeable shift, and I 
think it is a remarkable one, in the last few months; a growing 
impatience with things as they are. Whether this is motivated 
by examples of new programming lows or the further 
consolidation of newsrooms, music playlists or a new spirit of 
change abroad in the land, I don't know, but I do know this, 
whatever the reason, millions of people are no longer content 
just to defeat bad new media consolidation rules.
    There is a thirst, and it is one that I share, for us to 
revisit the bad old rules that got us into this predicament in 
the first place. What many people want, and I wholeheartedly 
agree, is to bring back some basic public interest standards, a 
responsibility to serve the public good, to the broadcast media 
and to bring the spirit of public interest to our other media, 
as well. I hope we can talk more about this today, including 
the need for a credible broadcast re-licensing system and an 
equally compelling need to assure that the DTV transition in 
broadcasting is made to serve the public interest.
    Turning briefly to telecommunications, I worry that we are 
teetering on the edge of a digital divide in the 21st century 
that may be more difficult to bridge than the one we 
encountered in the century just past. Our biggest 
infrastructure challenge as a Nation is bringing broadband to 
all Americans, and I mean all of our people. Each and every 
citizen of this great country should have access to the wonders 
of the Internet, whether they live in rural areas or tribal 
lands or in our inner cities, whether they have limited incomes 
or disabilities, whether they are schoolchildren or seniors.
    The data are not encouraging. The ITU ranks your country 
and mine at 15th in the world in broadband penetration, and the 
ITU's more recent and nuanced Digital Opportunity Index has us 
at 21, right after Estonia and tied with Slovenia. That strikes 
me as 20 rungs too low for the United States of America. Do we 
expect our kids to enter the digital classroom and the digital 
world at dial-up speeds? We are paying a business and a 
competitive cost for this poor performance, too. Fewer 
Americans with broadband means a smaller Internet marketplace 
and a glass ceiling over the productivity of small businesses 
and entrepreneurs, especially in rural and inner city areas. 
Without this infrastructure, they enter the global competition 
with one hand tied behind their back. But what do we expect 
without having a real broadband strategy?
    Perhaps the first step in developing a national broadband 
strategy is to develop more granular broadband data to identify 
where the problems lie and how best to craft solutions. There 
are folks in far off places like Japan and a few right here at 
home, like in Kentucky, that are doing this. I hope the 
committee will push the Commission to develop better data, 
propose creative solutions and be more proactive in working 
with you to develop a broadband strategy in the 21st century.
    Let me just comment briefly on public safety, because that 
always is the most important obligation of a public servant. I 
believe that after 9/11, this agency allowed other people to 
marginalize or push aside the Commission, when we had the 
expertise and know how to meet the charge of title I, which is 
to protect the security and safety of the American people 
through the telecommunications infrastructure. Chairman Martin, 
to his credit, has made this a priority and in doing so has 
created a Public Safety and Homeland Security Bureau, and the 
Bureau is starting down this difficult road.
    And it has adopted an initiative that I long advocated, of 
using the FCC as a clearinghouse so that a first responder in a 
little town in rural America doesn't have to start from scratch 
every time they try to put together a plan for public and 
homeland security. And I think the chairman, I know, supports 
that, but it is going to take initiative and support, and we 
really need to make this happen, and your oversight will be 
helpful.
    One minor thing can I mention real quick?
    Mr. Markey. Very quickly.
    Mr. Copps. All right, very quick. I mentioned this in the 
Senate, too. I encourage you to consider modifying the closed 
meeting rules so that the five Commissioners, the Beatles down 
here, aren't just together in their act one time a month or a 
year or whatever it is up here, but let us get our act together 
down at the Commission. Let more than two Commissioners get 
together and meet and talk. I cannot think of a proceeding at 
the FCC that would not have been improved by our ability to get 
together and talk. Thank you very much. I ask permission that 
the rest of my statement be included in the record.
    [The prepared statement of Mr. Copps follows:]

                     Testimony of Michael J. Copps

     Chairman Markey, Congressman Upton, members of the 
subcommittee: Thank you for the opportunity to return, at least 
briefly, to the Capitol--which was home to me for so many 
years, beginning almost 37 years ago--to discuss with you the 
state of communications in our country and the role the FCC is 
playing today, and what more it might do, as we seek to bring 
the wonders of modern communications to all our citizens. I am 
constantly struck by how important this work is. Communications 
industries comprise one-sixth of our economy--and when you 
consider their social, cultural and political dimensions, there 
is no doubt in my mind that communications is the most 
formidable and influential enterprise in all the land.
     There is a lot of serious work ahead for all of us if we 
are going to realize the potential of the technologies and 
services rushing toward us in this hugely transformative 
Digital Age. This work involves every sector of communications. 
Our media make many impressive contributions to our communities 
every day, but we still do not have a media environment that 
fully, or even adequately, serves our democracy and the 
vibrancy of our citizens. Regarding broadband, without a well 
thought out game plan to bring the wonders of the Internet to 
everyone across our great land, millions of people are at 
serious risk of being left behind. On public safety, despite 
the horrible costs of 9/11 and Hurricane Katrina, we still are 
not ready for the next man-made or natural disaster. The last 
time a major disaster confronted our nation we were perhaps 
caught by surprise; if we are not ready next time, none of our 
fellow citizens is going to accept surprise as an excuse. These 
three areas are my priorities as a commissioner.
     Let me start with the issue many of you know is closest to 
my heart: the broadcast media. I have met with many local 
broadcasters who work hard to serve the public interest. But 
the public-spirited part of the enterprise is being squeezed 
out. Too often the programs we receive are homogenized, 
creativity-killing, and often gratuitously violent. Perhaps 
even worse, the dearth of political and community coverage 
threatens our democratic dialog and the independent viewpoints 
we depend upon to help us make good decisions for the future of 
our country. Localism, diversity and competition are not 
abstract constructions; they are the essential ingredients for 
keeping our Nation's media--and our Nation--healthy, vibrant 
and growing. I am pleased that Chairman Martin has committed to 
complete our long-dormant localism proceeding before moving 
forward on media ownership because so much of what is local has 
disappeared from much of our media. In the last year I have 
participated in probably a dozen media hearings in localities 
around the country. I am seeing in the last few months a 
noticeable shift--a growing impatience with things as they are. 
Whether this is motivated by examples of new programming lows, 
the further consolidation of newsrooms and music playlists, or 
a new spirit of change abroad in the land, I don't know for 
sure. But I do know this--whatever the reason, millions of 
people are no longer content just to defeat bad new media 
consolidation rules. There is a thirst--one that I share--for 
us to revisit the bad old rules that got us into this 
predicament in the first place. What many people want, and I 
wholeheartedly agree, is to bring back some basic public 
interest standards--a responsibility to serve the common good--
to the broadcast media and to bring the spirit of public 
interest to other media as well. I hope we can talk more about 
this today, including the need for a credible broadcast re-
licensing system and an equally compelling need to assure that 
digital broadcasting is made to serve the public interest.
     Turning briefly to telecommunications, I worry that we are 
teetering on the edge of a Digital Divide in the 21st century 
that may be more difficult to bridge than the one we 
encountered in the century just past. Our biggest 
infrastructure challenge as a nation is bringing broadband to 
all Americans--and I mean all of our people. Each and every 
citizen of this great country should have access to the wonders 
of the Internet--whether they live in rural areas, on tribal 
lands, or in our inner cities; whether they have limited 
incomes or disabilities; whether they are schoolchildren or 
seniors. The data are not encouraging. The International 
Telecommunications Union ranks your country and mine at 15th in 
the world in broadband penetration. And the ITU's more recent 
and nuanced Digital Opportunity Index has us at 21st-- right 
after Estonia and tied with Slovenia. That strikes me as 20 
rungs too low for the United States of America. Do we expect 
our kids to enter the digital classroom and the digital world 
at dial-up speeds?-- We are paying a business and competitive 
cost for this poor performance, too. Fewer Americans with 
broadband means a smaller Internet marketplace and a glass 
ceiling over the productivity of small businesses and 
entrepreneurs, especially in rural and inner city areas. But 
what did we expect without having a real broadband strategy?
     Perhaps the first step in developing a national broadband 
strategy is to develop better, more granular broadband data to 
identify where the problems lie and how best to craft 
solutions. There are folks in far off places like Japan, and a 
few right here at home, like in Kentucky, who are charting 
precisely where broadband is going, so we know the data can be 
gotten. I hope this Committee will push the Commission to 
develop better data, propose creative options and solutions, 
and be more proactive in working with you to develop a national 
broadband strategy for the 21st Century. We have at our agency 
some of the most skilled and talented experts in 
telecommunications in all the world; they can make a huge 
difference in helping us to meet and master the broadband 
challenge.
     Finally, let me just comment on one of the more vexing 
problems that I know each of you is focused on: public safety. 
The most important obligation of any public servant is the 
safety of our people. I believe that after 9/11 this agency 
allowed others to step in to do the job that the FCC has the 
expertise and the know how to do--improving our communications 
capabilities in times of emergency. Chairman Martin, to his 
credit, has made this a priority and in doing so has created a 
Public Safety and Homeland Security Bureau, and the Bureau is 
starting down this difficult road. And it has adopted an 
initiative I long advocated, developing a communications 
clearinghouse for public safety and homeland security ideas so 
that local hospitals, charities, public safety officers, small 
businesses, and many others need not start from scratch when 
developing emergency communications plans. They don't have the 
time, money or people to start from scratch, and we need to 
find ways to help them. The new Bureau has only begun this 
effort, and its success will require a meaningful, on-going 
commitment of resources. But if we stick to it, we can save the 
country time, money and, perhaps, even lives.
     During the Senate's FCC oversight hearing last month, I 
was pleased to hear bipartisan support for an admittedly more 
minor, but I think important, legislative initiative. I 
encourage you to consider modifying the closed meeting rule so 
that the five Commissioners could actually sit down and talk 
with one another occasionally. I can't think of any proceeding 
in recent years that would not have benefited from an open and 
frank exchange of ideas among us before we were expected to 
cast a vote. We are prohibited from doing this. The nine 
Supreme Court justices, the 435 members of this body, and most 
every other institution I can think of are encouraged to meet 
and exchange views before deciding outcomes. If it's good 
enough for them, it ought to be good enough for us.
     Finally, in addition to talking with one another, the 
Commission must always work to expand its conversations with 
our fellow citizens. Business is obviously an important 
stakeholder in the work we do at the Commission, and it should 
be. But in communications, every American is a stakeholder, 
because each of us is affected in so many important ways. I 
believe that an important part of being a commissioner is to 
reach out to non-traditional stakeholders as well as 
traditional, to ensure that Commission decisions do indeed 
reflect the wide public interest. If business, government, and 
non-traditional stakeholders work together to build public-
private partnerships, we can meet our many communications 
challenges in the coming years. In my view, that's how we built 
this great country, infrastructure challenge by infrastructure 
challenge. And it is how we can keep it growing and keep it 
great.
     Mr. Chairman, members of the committee, thank you for your 
attention, and I look forward to our conversation this morning.
                              ----------                              

    Mr. Markey. OK. Well, ``Let It Be.'' Now we will recognize 
Commissioner Tate. I think this is your first appearance before 
the committee, and I would like to give you an opportunity.
    Ms. Tate. Mr. Chairman, I am really less senior than Mr. 
Adelstein.
    Mr. Markey. No, we appreciate that, but what we are trying 
to do, as we did in our opening statements, is to go back and 
forth.
    Ms. Tate. How kind of you. I am sorry. Thank you.
    Mr. Markey. Different parties.
    Ms. Tate. It is my first time here.

    STATEMENT OF DEBORAH TAYLOR TATE, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Ms. Tate. Good morning to Chairman Dingell. It was 
wonderful to see him and Chairman Markey and Ranking Member 
Upton. Thank you all for having us and especially for your 
leadership on these issues, as Congresswoman Harman said, that 
are sometimes life and death issues. It is also about our place 
in the global economy and indeed, our own national security and 
personal security. I would like to commend the ongoing work of 
the subcommittee in addressing issues from consumer privacy and 
spoofing to the DTV transition, public safety, interoperability 
and of course, universal service. This work is vitally 
important to all Americans, every one of us.
    And I am glad we are having this dialog today, and I am 
glad we are going to continue to have these dialogs. I would 
like to thank Chairman Martin for his strong leadership and my 
fellow Commissioners for their commitment to trying to reach a 
consensus. We don't always agree, but we do it agreeably. The 
communications marketplace does continue to evolve every single 
day. Convergence, as we know, shakes the foundations of the old 
order, not only for consumers, but also for the industries that 
we oversee and of course, for we, the regulators, ourselves. It 
also creates real benefits through the introduction of dazzling 
innovations, incredible competition, not just among providers 
but across new market entrants and across platforms. It 
challenges us every single day to adapt our regulations to keep 
pace.
    One challenge involves our review, as you have heard, of 
our broadcast ownership rules. As a State official, I didn't 
have the opportunity to review the effects and form an opinion 
on the FCC's rules. Therefore as we continue to hold public 
hearings all across the country, we were in El Segundo, CA, we 
were in Pennsylvania and in my hometown of Nashville, I bring 
an open and inquiring mind to the issue. I look forward to 
joining my colleagues as we further the touchstone goals, your 
goals, of competition, localism and diversity.
    Other media related issues impacting children and families 
present different challenges. The enforcement of your 
restrictions on the broadcast of obscene, indecent and profane 
programming probably draw the most attention to what we do. 
Thank you for your work on the Broadcast Indecency Enforcement 
Act, increasing our fining ability. I am pleased that the FCC 
is also taking a leadership role with other Members of Congress 
regarding the national epidemic of childhood obesity through 
our task force, as well as our study on the effects of violent 
programming and advertising on children and the manner in which 
our children's programming rules will be applied to the new 
digital multicast world.
    Certainly, as everyone here agrees, deployment of broadband 
is one of the biggest challenges facing America and all of us 
here in this room. I am committed, personally, to doing all I 
can to encourage that deployment that is so critical to our 
Nation, as new advanced services hold the promise of 
unprecedented e-commerce, distance learning, and e-health 
opportunities for all Americans, no matter where they choose to 
live. I am encouraged that we are taking positive steps, and I 
look forward to working with the subcommittee.
    The almost uncontrollable growth in the Universal Service 
Fund represents another challenge. We have now reached almost 
$7 billion in outlays, $4 billion in the high-cost fund. Two 
weeks ago I was able to testify before the members of the 
Senate Commerce Committee working as the chairman of the Joint 
Board on Universal Service to ensure the sustainability of the 
fund in order to equip new generations of Americans to compete 
in this increasingly global economy. I believe that the time is 
now to take action and that we have made a great deal of 
progress in repair and revision of the fund. I look forward to 
working with all the members of the committee and my colleagues 
to ensure that all those, including those in high-cost areas, 
have affordable, quality communications and advanced services.
    Like Congress, we have also been involved in protecting the 
privacy of confidential and delicate consumer information. We 
are now poised to issue rules designed to ensure the privacy of 
consumer information maintained by telecom providers. And 
finally, like my colleagues, I would like to touch on the issue 
of public safety. Last year, when I went to our panel reviewing 
the impact of Hurricane Katrina in Jackson, Mississippi, I 
heard firsthand the tragic and personal accounts of that 
devastation and the clear message was the need for 
interoperability and redundancy of networks.
    I applaud the collaborative efforts that are ongoing with 
the entire communications and public safety industry. They have 
worked hard to address difficult policy and technical issues. 
We also established a new Public Safety and Homeland Security 
Bureau to facilitate more effective communications, no matter 
the disaster that we may face in the future, natural, terrorist 
or pandemic outbreak. These are both exciting and yet very 
sobering times to be at the FCC or to be on your committee.
    I appreciate your invitation, and I look forward to any 
questions. Thank you.
    [The prepared statement of Ms. Tate follows:]

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    Mr. Markey. Thank you, Commissioner Tate. Commissioner 
Adelstein, welcome back again, and whenever you are ready, 
please begin your testimony.

   STATEMENT OF JONATHAN S. ADELSTEIN, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Adelstein. Well, thank you, Mr. Chairman, Congressman 
Upton and members of the committee. I really appreciate the 
opportunity to testify here today. As Chairman Dingell noted, 
the Commission is an arm of the Congress, and it is good to be 
reattached to the body here today. I truly believe we function 
better to the degree that we are held accountable through 
oversight hearings like this. As an independent body of 
unelected officials, we will serve the public better to the 
degree that we are responsible to the people's representatives 
that are here today.
    I think today we have the opportunity, through technology, 
to connect this country in profound ways. We need to provide 
for all of our citizens, including those in rural areas, 
insular areas and other high-cost areas, Native Americans, 
residents of our inner cities, minorities, those with 
disabilities, non-English speakers and low-income consumers. 
And we can do all of this while protecting the important 
privacy rights of consumers. We should upgrade our 
communications infrastructure in every corner of this country 
and make new technologies more widely available and affordable 
to everyone. All of our citizens should have the access, no 
matter where they are, where they live or what challenges they 
face.
    To promote the communications needs of everyone in this 
country, we should focus on improving access to broadband 
services, modernizing universal service and promoting the 
public interest in our media. As a Commissioner, I have 
traveled to a lot of unique parts of this country, and I will 
never forget some of the things I saw. I remember on the Gulf 
Coast of Mississippi, near Congressman Pickering's district, we 
saw the devastation after Hurricane Katrina, and the enormous 
damage there reminds us of the needs of our public safety and 
national security communities, and those have to remain 
foremost in our minds.
    One of our central national priorities is promoting the 
widespread deployment of broadband. Even though we have made 
strides, I am concerned that we are not keeping pace with our 
global competitors. This is more than a public relations 
problem. Citizens in other countries are simply getting more 
megabits for less money. That is a productivity problem, and 
our citizens deserve better, and we can do better. We have got 
to restore our place as the undisputed world leader in telecom. 
It warrants a comprehensive national strategy.
    As you noted, Mr. Chairman, according to the ITU, the 
digital opportunity afforded to U.S. citizens is 21st in the 
world. It is not enough to battle our way to 20th place. We 
should be No. 1. We can start by improving our data collection 
to better ascertain our current problems and develop better 
responses. We must increase the status for investment and 
promote competition. We have got to make broadband truly 
accessible to everyone, even if that means communities tapping 
their own resources to the broadband systems. We must also work 
to preserve the open and neutral character that has been the 
hallmark of the Internet, maximizing its potential as a tool 
for economic opportunity, innovation and so many forms of 
public participation that we see on the Internet today.
    Some have argued that our low broadband rankings are due to 
our rural geography. I know a little something about that, 
coming from South Dakota, but if that is the reason, I think we 
better redouble our efforts to make sure that we promote 
broadband in rural areas of this country. In that regard, it is 
vital to keep universal service on a solid footing. As voice 
becomes just one application over broadband networks, we should 
ensure that universal service evolves to promote advanced 
services, as Congress instructed us in the 1996 Act.
    We must also do more to stay on top of the latest spectrum 
developments. Recent years have seen an explosion of new 
opportunities for consumers, like Wi-Fi. We have the creative 
approaches, technical, regulatory and economic, to get spectrum 
into the hands of all types of operators, large and small, 
particularly as we prepare for the upcoming 700 MHz auction, 
one of the most important undertakings that this commission, I 
think, will conduct in my time on it.
    As for the media, let us never forget that the airwaves 
belong to the American people. With our ownership rules, I 
think we need to take far greater care than we have in the past 
before allowing any further concentration. We need to open our 
airwaves to community-based and minority voices. We need to 
establish the public interest obligations for broadcasters as 
they enter the digital age.
    Finally, we were charged by Congress to perform as a law 
enforcement agency. We should be rigorous in enforcing all of 
the laws under our jurisdiction. We have a lot of issues before 
us, including the do not call directory, the junk fax rules, 
indecency, payola, video news releases and all of our 
sponsorship identification rules. We need to address them all 
vigorously. Mr. Chairman, I will carry out Congress's charge to 
keep the American public well connected and well protected. 
Thank you for the opportunity to testify, and I look forward to 
responding to any concerns you might have.
    [The prepared statement of Mr. Adelstein follows:]

                   Statement of Jonathan S. Adelstein

     Mr. Chairman, Congressman Upton and members of the 
subcommittee, today we have the opportunity through technology 
to connect this country in profound ways. Americans should be 
able to maximize their potential through communications, no 
matter where they live or what challenges they face. We need to 
provide for all of our neighbors, including those in rural, 
insular and other high-cost areas, as well as Native Americans, 
residents of our inner cities, minorities, those with 
disabilities, non-English speakers, and low-income consumers.
     We must upgrade our communications infrastructure in every 
corner of this country. And we must do a better job of making 
innovative communications technologies more widely available 
and affordable. Understanding the communications landscape 
requires us to take account of the rapidly-changing marketplace 
and to reach out to diverse communities. To promote the 
communications needs of all Americans, we should focus on 
improving access to broadband services, modernizing universal 
service, and protecting diversity, competition, and localism in 
our media.
     A top priority became starkly clear when I visited the 
Gulf Coast of Mississippi shortly after the devastation of 
Hurricane Katrina. The enormous damage to the entire region was 
unforgettable and remains a painful reminder that the 
communications needs of our public safety and national security 
communities must remain at the forefront.
     One of our central challenges is promoting the widespread 
deployment of broadband facilities to carry new and innovative 
services. This must be a greater national priority than it is 
now. An issue of this importance to the economy and the success 
of our communities warrants a coherent, cohesive, and 
comprehensive national broadband strategy.
     Virtually every other developed country has implemented a 
national broadband strategy. Even though we have made strides, 
I am concerned that the lack of a comprehensive plan is one of 
the reasons that the U.S. is nevertheless falling further 
behind our global competitors. Each year, we slip further down 
the regular rankings of broadband penetration. More troubling, 
there is growing evidence that citizens of other countries are 
getting a much greater broadband value, in the form of more 
megabits for less money. According to the ITU, the digital 
opportunity afforded to U.S. citizens is not even near the top, 
it's 21st in the world. This is more than a public relations 
problem. It's a productivity problem, and our citizens deserve 
better.
     We must engage in a concerted and coordinated effort to 
restore our place as the world leader in telecommunications by 
making affordable broadband available to all our citizens. It 
will mean taking a hard look at our successes and failures and 
improving our data collection. A true broadband strategy should 
incorporate benchmarks, deployment timetables, and measurable 
thresholds to gauge our progress. It is not enough to rely on 
poorly-documented conclusions that deployment is reasonable and 
timely.
     We must re-double our efforts to encourage broadband 
development by increasing incentives for investment, because we 
will rely on the private sector as the primary driver of 
growth. These efforts must take place across technologies so 
that we not only build on the traditional telephone and cable 
platforms, but also create opportunities for deployment of 
fiber-to-the-home, fixed and mobile wireless, broadband over 
power line, and satellite technologies. We must work to promote 
meaningful competition, as competition is the most effective 
driver of lower prices and innovation. This is increasingly 
important to ensure that the U.S. broadband market does not 
stagnate into a comfortable duopoly, a serious concern given 
that cable and DSL providers control 98 percent of the 
broadband market. We have got to make broadband truly 
affordable and accessible to everyone, even if that means 
communities tapping their own resources to build broadband 
systems. We must also work to preserve the open and neutral 
character that has been the hallmark of the Internet, 
maximizing its potential as a tool for economic opportunity, 
innovation, and so many forms of civic, democratic, and social 
participation.
     To accomplish these ends, we must be creative and flexible 
in our approaches. Some have argued that the reason we have 
fallen so far in the international broadband rankings is that 
we are a more rural country than many of those ahead of us. If 
that is the case, we should strengthen our efforts to address 
any rural challenges head-on.
     Congress and the Commission recognized early on that the 
economic, social, and public health benefits of the 
telecommunications network are increased for all subscribers by 
the addition of each new subscriber. Federal universal service 
continues to play a vital role in meeting our commitment to 
connectivity, helping to maintain high levels of telephone 
penetration, and increasing access for our Nation's schools and 
libraries. I have worked hard to preserve and advance the 
universal service programs as Congress intended.
     It is important that the Commission conducts its 
stewardship of universal service with the highest of standards. 
It is important that we strive to consistently improve our 
performance, while at the same time ensuring that even well-
intentioned reform efforts do not undermine the effectiveness 
of this critical program. Ensuring the vitality of universal 
service will be particularly important as technology continues 
to evolve. Increasingly, voice, video, and data will flow to 
homes and businesses over broadband platforms. In this new 
world, as voice becomes just one application over broadband 
networks, we must ensure that universal service evolves to 
promote advanced services, which is a priority that Congress 
has made clear.
     The Commission also must do more to stay on top of the 
latest developments in spectrum technology and policy. Spectrum 
is the lifeblood for much of this new communications landscape. 
The past several years have seen an explosion of new 
opportunities for consumers, like Wi-Fi, satellite-based 
technologies, and more advanced mobile services. But, we have 
to be more creative with a term I have coined ``spectrum 
facilitation.'' That means looking at all types of approaches--
technical, economic or regulatory--to get spectrum into the 
hands of operators ready to serve consumers at the most local 
levels.
     We should continually evaluate our service and 
construction rules to ensure that our policies do not undercut 
the ability of wireless innovators to get access to new or 
unused spectrum. I want to promote flexibility and innovation, 
but since the spectrum is a finite public resource, I want to 
see results as well--particularly in the area of wireless 
broadband, which has been a top priority for me while at the 
Commission. And I truly believe that our preparation for the 
upcoming 700 MHz auction is one of the most important 
undertakings the Commission will conduct in all of the time I 
have served.
     This is a time of great change in telecommunications 
markets with the emergence of new services, increased 
convergence, and seismic structural changes among the market 
participants. For many residential customers, there is an 
emerging rivalry between traditional telephone providers and 
new cable entrants, along with an increasing opportunity for 
use of wireless and VOIP services. Nonetheless, the Commission 
must continue to promote competition between providers and to 
be vigilant about the potential impacts of increased 
consolidation in these markets. I have been concerned about the 
adequacy and vigor of the Commission's analysis in its 
consideration of recent mergers and forbearance petitions. I 
believe that the Act contemplates more than just competition 
between a wireline and cable provider and that both residential 
and business consumers deserve more.
     As for the broadcast media, we should never forget that 
the airwaves belong to the American people. It is critical to 
preserve their access to what the Supreme Court has called the 
``uninhibited marketplace of ideas.'' As we review the 
ownership rules, we should first do no harm; we should take far 
greater care than we have in the past before permitting any 
additional media consolidation. Also, to make the media 
landscape look and sound like America, we need to open our 
airwaves to community-based and minority voices and improve 
minority and women ownership. The success of our review rests 
upon the degree to which the American people believe that their 
voices have been heard. Accordingly, transparency--relative to 
public hearings, Commission studies, and the public release of 
the specific rules before they are finalized--is essential.
     The FCC launched its localism proceeding in 2003 to assess 
whether TV and radio broadcasters were addressing and 
satisfying the needs of local communities. The Commission 
should complete its review, make real recommendations to 
Congress, enhance public participation in the license renewal 
process, and propose other meaningful regulatory changes for 
public comment. This proceeding should conclude before, not 
after, our review of the broadcast ownership rules.
     With less than 750 days to the end of analog broadcasting, 
I believe there is a critical need for greater national 
attention on the impending DTV transition. More focused 
leadership is needed. Currently, the DTV preparedness effort 
lacks a clear national message and a coordinated set of 
industry activities. To begin to address a general lack of 
public awareness, the Commission needs to take the following 
steps: (1) develop a unified, coherent message among Federal, 
State, local and tribal governmental entities; (2) coordinate 
the message and its delivery with the efforts of the broadcast, 
cable, satellite, and consumer electronics industries; and (3) 
educate insular communities about the consequences and benefits 
of the impending transition.
     Failure to administer a comprehensive national DTV 
transition plan will almost certainly result in a tsunami of 
consumer complaints to congressional and other government 
offices from viewers across the country. To better manage this 
potential national disruption, I would recommend establishing a 
clear chain of command. While the NTIA is principally charged 
with administering the converter box program, the FCC's 
technical and consumer outreach expertise makes us especially 
well-suited to spearhead a national consumer education 
initiative. The two agencies should work collaboratively to 
develop a unified Federal message about the DTV transition and 
to inform consumers about options they have to continue 
receiving broadcast programming after February 17, 2009.
     The Commission must also be mindful of the role of cable 
services in the media marketplace. The program access rules 
have played a key role in the development of competitive multi-
channel video providers. The Commission must quickly renew its 
program access rules that prohibit exclusive contracts for 
satellite-delivered programming between vertically-integrated 
programmers and cable operators. The limitation will expire on 
October 5, 2007. Our examination of this issue should consider 
the needs of new entrants into the video market, companies that 
are essential to the future of video competition. The 
Commission should also look at our commercial leased access 
rules, which require cable operators to set aside channel 
capacity for commercial use by video programmers unaffiliated 
with the operator. We must take a hard look to see what we can 
to do to ensure that we truly foster diversity in video 
programming sources.
     Finally, we are charged by Congress to perform as a law 
enforcement agency, and we should be rigorous in enforcing all 
of the laws under our jurisdiction. We have numerous issues 
before us regarding consumer complaints about the Do-Not-Call 
directory and our Junk Fax rules, indecency, payola, video news 
releases and our sponsorship identification rules. All of these 
laws are important, and all allegations of wrongdoing demand 
our resolute attention.
     Congress has charged the Commission with ensuring that the 
American public stays well-connected and well-protected. I will 
do everything in my power to carry out the law to promote these 
goals. Thank you for the opportunity to testify.
                              ----------                              

    Mr. Markey. Thank you, Commissioner, very much. And now 
making his debut before the Telecommunications and Internet 
Subcommittee, we welcome you, Commissioner McDowell. We look 
forward to your testimony. Please begin.

    STATEMENT OF ROBERT M. MCDOWELL, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. McDowell. Thank you, Mr. Chairman, and I thank you, 
Ranking Member Upton, and good morning to all the members of 
the committee. Thank you for having us here before you this 
morning. After 16 years in the private sector, my 9-month 
tenure at the FCC has been incredibly exciting. I have been 
deeply honored to serve the American people in this position. I 
am also immensely fortunate to work with such talented 
colleagues and staff.
    Today is a wonderful time to be at the FCC. Revolutionary 
technological developments are yielding untold opportunities 
for newly empowered consumers to improve the quality of their 
lives. This newest wave of dynamic disruption transcends 
traditional regulatory paradigms. From broadband availability 
to the incredible proliferation of wireless technologies, from 
universal service to localism and diversity in broadcasting, 
from wireless medical devices that improve thousands of lives 
each day to the greatest entrepreneurial explosion in history 
known as the Internet, the issues addressed by the FCC touch 
the lives of every American.
    I endeavor to approach each issue with a consistent 
regulatory philosophy; one that has served our Nation well 
since its inception; one that trusts competitive free 
enterprise to serve consumers best. Overall, I trust free 
people acting within free markets to make better decisions for 
themselves than those of us in Government. However, should the 
free market fail, governments should be poised to serve the 
public interest by addressing such failure in a narrowly 
tailored fashion. As we approach each matter before us, we 
should remind ourselves that free markets and free ideas are 
the essence of our free society and promoting freedom is the 
FCC's core mission. And we are doing exactly that.
    The Commission is adopting policies to encourage more 
freedom, especially through increased broadband deployment for 
all Americans. While America's rate of broadband deployment has 
more than doubled during the Martin chairmanship, from 20 
percent growth and penetration per year to 40 percent growth 
last year, to a current growth rate of 52 percent, we are 
pressing hard for greater advancements. In fact, we are all 
working hard to make it easier for entrepreneurs of all kinds 
to construct innovative broadband delivery platforms even 
faster.
    Opening these new windows of opportunity will create a new 
wave of capital investment that will stimulate our economy and 
make America more competitive across the globe. The 
construction of these advanced platforms also will enhance 
American consumers' ability to choose and therefore strengthen 
their freedom. All of us will benefit as a result.
    Among the highlights of my first 9 months was our advanced 
wireless services auction last summer. It was phenomenally 
successful and brought in nearly $14 billion to the U.S. 
Treasury. Over half of the successful bidders were small 
businesses or other designated entities. New uses for this 
spectrum will yield tremendous benefits. Furthermore, our 
recently issued video franchising order will enhance video 
competition and accelerate broadband deployment. And much more 
lies ahead, including launching the 700 MHz auction, ensuring 
the DTV transition goes smoothly, appropriate management of 
television white spaces, maximizing uses of the public safety 
spectrum, adopting a digital audio broadcast standard for HD 
radio, review of our broadcast ownership rules and universal 
service reform, just to name a few.
    In short, from my new perspective at the FCC, America's 
communications future has never had so much potential. 
Consumers have never been more empowered. The marketplace is 
bursting with more brilliant entrepreneurial ideas than ever 
before and the FCC is working hard to create an environment 
where private enterprise can meet an ever more sophisticated 
consumer demand as quickly as possible. In so doing, we are 
promoting consumer freedom.
    I look forward to meeting these challenges in partnership 
with Chairman Martin and my colleagues on the Commission, and I 
look forward to your continued direction, and your questions 
today and beyond. Thank you very much.
    [The prepared statement of Mr. McDowell follows:]

                    Statement of Robert M. McDowell

     Good morning Mr. Chairman and distinguished members of the 
subcommittee. Thank you for providing us with this opportunity 
to appear before you this morning. After 16 years in the 
private sector, my first 9 months on the FCC have exceeded all 
of my expectations. I have been deeply honored to be able to 
serve the American people in this capacity, and with such 
talented and dedicated colleagues and staff.
     Today is a wonderful time to be at the FCC. Revolutionary 
technological developments are yielding untold opportunities 
for newly empowered consumers to improve the quality of their 
lives. Similarly, new products and services are allowing 
businesses to improve their competitiveness and efficiency. 
This dynamic disruption transcends traditional regulatory 
paradigms. From the FCC's perspective, America's communications 
future has never looked brighter. Much work remains to be done, 
however.

                         Regulatory Philosophy

     From broadband availability, to the incredible 
proliferation of wireless technologies; from universal service, 
to localism and diversity in broadcasting; from wireless 
medical devices that improve thousands of lives each day, to 
the greatest entrepreneurial explosion in history known as the 
Internet: the issues addressed by the FCC touch the lives of 
every American. While advances in technology and 
competitiveness defy labeling under the regulatory stove pipes 
of old, I endeavor to approach each issue with a consistent 
regulatory philosophy; one that has served our nation well 
since its inception; one that trusts competitive free 
enterprise to serve the public interest the best.
     Free markets and free ideas are the twin cornerstones upon 
which we built America. My approach to each issue that comes 
before the Commission is to focus on my belief that the 
fundamental mission of the FCC is to promote freedom. I want 
consumers to have the freedom to have their demands satisfied. 
I want entrepreneurs to have the freedom to innovate and bring 
their products and services to market so they can satisfy those 
consumers' demands. Overall, I trust free people acting within 
free markets to make better decisions for themselves than those 
of us in government. Government should not adversely interfere 
with the relationships between consumers and entrepreneurs. 
Rather, government should try to remove barriers to entry and 
allow competition to flourish. I believe that the public 
interest is best served by following this approach.
     There are circumstances, however, when the government 
should address market failure to further the public interest so 
new entrepreneurial ideas have a chance to compete in the 
marketplace and succeed or fail on their own merits--and their 
own merits alone. Any remedies applied to market failure should 
be narrowly-tailored, and sunsetted, to maximize freedom for 
all market players.
     Today, disruptive new technologies pose challenges to 
existing providers of products and services--and to regulators 
and legislators. Part of the Commission's job is to help open 
new windows of opportunity to provide entrepreneurs new avenues 
for technologies to compete in the marketplace. Given this 
disruption, the FCC has to adapt and make a transition from 
legacy regulations that govern individual industries, to more 
nimble rules that ensure fair opportunities for all 
competitors. As regulators, we must be careful to avoid 
inhibiting innovation and technological advances. The FCC must 
continue to tear down barriers to entry and clear out 
unnecessary regulatory underbrush. Consumers, through the 
marketplace, rather than the Commission, should pick the 
winners. We should never lose sight of the fact that the 
ultimate shareholders in every endeavor we undertake are 
America's consumers.
     As the Commission analyzes these regulatory questions, we 
of course are mindful that we operate within the parameters 
that you, Congress, have established for us. On every issue, I 
first look to the relevant statute to determine whether the 
Commission has the authority to take the action proposed or 
implement a new policy.
    A Record of Accomplishments
     The Commission is adopting policies to encourage increased 
broadband deployment for the public. While America's rate of 
broadband deployment has more than doubled during the Martin 
chairmanship (from 20 percent growth in penetration per year, 
to 40 percent growth last year, to a current growth rate of 52 
percent), we are pressing hard for greater advancements. 
Accordingly, we are making it easier for entrepreneurs to 
construct new delivery platforms more quickly. Furthermore, our 
policies are paving the way for the owners of existing 
platforms to upgrade their facilities. The resulting new surge 
in capital investment will stimulate our economy and will give 
American consumers new tools to strengthen their freedom by 
enhancing their ability to choose.
     In just my nine month tenure, the Commission has taken 
important steps to promote competition in a number of areas. I 
believe that our actions will foster the ability of American 
consumers and businesses--whether located in urban or rural 
areas--to have access to new, advanced delivery platforms.
     Last summer, the Commission completed an auction for 
spectrum for Advanced Wireless Services (AWS) in the 1710-1755 
and 2110-2155 MHz bands, which are ideal for the delivery of 
bandwidth-intensive wireless applications. This auction was 
phenomenally successful and brought in nearly $14 billion to 
the U.S. Treasury. The Commission's action to establish a broad 
array of market sizes for AWS licenses attracted participation 
by many types of entities. In fact, of the 104 winning bidders, 
57 identified themselves as small or very small businesses, 
rural telephone companies, and businesses owned by members of 
minority groups or women. This represents 55 percent of all 
winning bidders. Wireless growth is rising rapidly due to 
robust competition and technological innovation. What was 
unimaginable just 10 years ago is now part of the daily routine 
of tens of millions of Americans. Innovative broadband services 
using advanced technologies allow customers to use new 
multimedia phones to watch TV, download songs, receive 
information and access content, such as sports, news and 
weather, at broadband speeds. I am committed to providing 
meaningful opportunities for entities of all sizes to bring 
their bold and innovative products and services into the 
dynamic wireless marketplace.
     Over the last 13 years, since the Commission issued its 
first Wireless Competition Report, wireless subscriber growth 
has grown exponentially, and competition among numerous 
providers has flourished. The overall wireless penetration rate 
in our country is now at 71 percent. Furthermore, our report 
estimates that revenue per minute (RPM) declined 22 percent 
last year alone. RPM currently stands at $0.07, as compared 
with $0.47 in December 1994--a decline of 86 percent. (By the 
way, that 47 cents in 1994 would be 60 cents today when 
adjusted for inflation.)
     While these positive trends benefit American consumers, I 
will continue to work to ensure that entities of varied types 
and sizes have meaningful opportunities to enter and thrive in 
the wireless marketplace. The Commission must ensure that our 
rules and policies pertaining to spectrum acquisition--whether 
at auction, through partitioning or disaggregation, or through 
spectrum leasing, for instance--are implemented and enforced in 
a manner that provides regulatory certainty and encourages 
market entry.
     The Video Franchising Order the Commission issued earlier 
this month advances the pro-consumer goals of enhancing video 
competition and accelerating broadband deployment. The order 
strikes a careful balance between establishing a de-regulatory 
national framework to clear unnecessary regulations, while also 
preserving local control over local issues. It guards against 
localities making unreasonable demands of new entrants, while 
still allowing those same localities to be able to protect 
important local interests through meaningful negotiations with 
aspiring video service providers.
     Many commenting parties, Members of Congress, and two of 
my distinguished colleagues have legitimately raised questions 
regarding the Commission's authority to implement many of these 
initiatives. I have raised similar questions. After additional 
study, I feel that we are on safe legal ground. The Commission 
has ample general and specific authority to interpret and 
implement section 621 and to issue these rules under several 
sections including, but not limited to, sections: 151, 154(i), 
201, 303(r), 622, 706 and many others. Furthermore, a careful 
reading of applicable case law shows that the courts have 
consistently given the Commission broad discretion in this 
arena, including the authority to grant interim regulatory 
relief as we did with this order.
     Although I would have liked to have provided the 
deregulatory benefits granted to new entrants to all video 
providers, be they incumbent cable providers, over-builders or 
others, the record in this proceeding did not allow us to 
create a regulatory parity framework just yet. I am pleased 
that the Commission has committed to release an order 
addressing parity for all cable competitors no later than six 
months from the release date of the Video Franchising Order.
     While we have worked hard to help foster the rollout of 
new delivery platforms, we have also endeavored to continue to 
make available to all Americans affordable telecommunications 
services. The Universal Service system has been instrumental in 
keeping Americans connected and improving their quality of 
life. However, this system is in dire need of comprehensive 
reform. In June 2006, we adopted interim changes to the 
Universal Service contribution methodology that were designed 
to help bridge the gap between the deteriorating status quo and 
a more sustainable Universal Service system of the future. The 
changes raised the interim wireless safe harbor and required 
VOIP providers to contribute to the Fund. By setting 
appropriate safe harbors and allowing wireless carriers and 
VOIP providers, in determining their USF contribution, the 
option of either using the safe harbor, utilizing traffic 
studies, or reporting actual interstate revenues, we provide 
the right balance of administrative ease and incentive to 
contribute based on actual interstate and international 
revenues. These interim measures also ensure that the Fund 
remains solvent for the near term and serve as an important 
first step toward broadening the Fund's contribution base to 
ensure equitable and nondiscriminatory support of the Fund in 
an increasingly digital world. In October, we also instituted a 
2-year rural health care pilot program to determine the extent 
of the need for advanced services to meet the rural health care 
objective, pursuant to section 254(h)(2)(A) of the 
Communications Act, and how we can tailor the rural health care 
support mechanism toward that end.
     Universal Service is intertwined with intercarrier 
compensation. We have to reform the current access regime; 
otherwise, it won't survive. I believe that all carriers should 
be compensated for the costs of carrying others' traffic on 
their networks. We have received comments on the ``Missoula 
Plan'' that was submitted by a NARUC Task Force last June. I 
look forward to reviewing those comments. We need to step back 
and see how competition and technology are changing the 
marketplace and examine where the current regime is in need of 
reform. We also need to promote efficiency, competition and 
technological innovation. It will be a long, cooperative 
process, but I look forward to working with all interested 
parties on this challenge.

                           Future Challenges

     During this year in particular we have our work cut out 
for us. We are currently in the process of analyzing the record 
and finalizing the rules for the commercial portion of the 700 
MHz spectrum band, which is well-suited for wireless broadband 
applications. The results of last summer's AWS auction, 
discussed above, provide good guidance as we design the band 
plan and implement the rules for the 700 MHz auction. I hope to 
be able to enhance and improve upon the positive aspects of the 
AWS auction to provide a second meaningful opportunity for 
participation in the 700 MHz auction. Along these lines, I am 
pleased to consider a draft order that proposes to classify 
wireless broadband Internet access service as an information 
service, which would clarify any regulatory uncertainty with 
respect to wireless services, including those utilizing the 700 
MHz band. Our comprehensive work in this area is especially 
time-sensitive given Congress's recent mandate that we commence 
auctioning the commercial 700 MHz spectrum no later than 
January 28, 2008, less than 1 year away. I am hopeful that we 
will complete our work this spring.
     In addition, I am pleased that the Commission acted in 
December to seek public comment on a proposal for a national, 
centralized approach to maximize public safety access to 
interoperable, broadband spectrum in the 700 MHz band. I expect 
that this discussion will enhance the ongoing dialog regarding 
partnerships among the public safety community and the 
commercial wireless industry, which is important given 
Americans' high expectations for reliable communications and 
effective coordination among emergency personnel as they 
undertake day-to-day activities and in crisis situations. As 
Congress recently mandated that analog broadcasting cease in 
the 700 MHz band (including the 24 MHz of spectrum it reserved 
for public safety) no later than February 17, 2009, it is 
important that we complete our work in this proceeding as soon 
as possible.
     We are also moving forward to create the opportunity for 
additional unlicensed operation in the ``white spaces'' of the 
TV broadcast bands. I am hopeful that our actions will foster a 
chain of events that will lead to an explosion of 
entrepreneurial brilliance toward creative uses for these 
bands. Mindful of our obligation to protect all users from 
harmful interference, our Office of Engineering & Technology is 
already working hard to analyze and test new devices and 
associated standards. Of course, the technology innovation 
spurred by the Commission's leadership in the white spaces 
proceeding plays a critical role in the wireless marketplace, 
including fostering job growth and related business 
opportunities. For this reason, I am hopeful that advances in 
technology and wireless service applications will facilitate 
entry of new and diverse players. Moreover, I am pleased that 
our timetable aims to ensure that new consumer equipment for 
these bands will be market-ready as soon as possible.
     I am excited about our work to prepare for the 700 MHz 
auction, public safety's forthcoming access to the 700 MHz 
band, as well as future deployment in the white spaces, because 
I am hopeful that the competitive opportunities presented by 
these proceedings will broaden the ability of entities seeking 
to enter the wireless marketplace. I am committed to ensuring 
that the Commission takes advantage of additional opportunities 
to spur technological innovation and increased access to 
advanced wireless services by a broad array of participants, 
including small businesses, rural telephone companies, and 
businesses owned by members of minority groups and women, 
whether licensed or unlicensed.
     This year, we are also advancing our comprehensive review 
of the Commission's broadcast ownership rules and are busy 
building a record. As you know, these rules must strike a 
difficult balance. They must take into account the dramatic 
changes that have occurred in the media landscape in recent 
years and, at the same time, continue to promote our long-
standing values of diversity, localism and competition. We must 
also carefully address the issues presented to us by the Third 
Circuit in the Prometheus decision. I hope we can develop a 
reasoned approach that resolves the regulatory uncertainty that 
followed the appeal of the order the Commission issued in June 
2003.
     I look forward to continuing our review of competition and 
the effects of consolidation among traditional media companies, 
as well as the emergence of new competing services. I also am 
eager to attend more field hearings around the country to learn 
more about competition, diversity and localism from the 
perspective of people with first-hand knowledge of the 
realities of their local market--be they consumers, 
broadcasters, programmers, artists, economists or academics. 
With respect to diversity, I am particularly concerned about 
the dearth of female and minority owners of broadcast 
properties. I anticipate learning more about the causes of this 
situation, especially as compared with other industries 
requiring similar amounts of capital investment.
     Hopefully, the Commission soon will release rules in our 
digital audio broadcasting proceeding. I applaud the ``early 
adopters'' of in-band on-channel (IBOC) technology for taking 
the initiative and embracing the capabilities of digital radio, 
particularly multicasting, to provide their listeners with 
better quality sound and expanded programming options, 
particularly for underserved and niche audiences. I believe 
that the service rules and other licensing and operational 
requirements we develop will provide both the regulatory 
certainty and the flexibility that the industry needs to 
expedite the transition to digital radio and to provide higher 
quality audio, diverse programming and innovative data services 
to the public.
     I hope that the Commission will extend the de-regulatory 
benefits we are providing to new entrants in our recently 
adopted Video Franchising Order to all video providers, both 
incumbents and overbuilders. Many of the statutory provisions 
we interpreted in the video franchising proceeding are 
generally applicable to all cable operators. I want to ensure 
that no governmental entities, including those of us at the 
FCC, have any thumb on the scale to give a regulatory advantage 
to any competitor. Resolving these important questions soon 
will give much-needed regulatory certainty to all market 
players, spark investment, speed competition on its way, and 
make America a stronger player in the global economy.
    Conclusion
     In sum, from my new perspective at the FCC, America's 
communications future has never looked more promising. 
Consumers have never been more empowered or savvy. The 
marketplace is teeming with more brilliant entrepreneurial 
ideas than ever before. And the FCC is striving to create an 
environment where private enterprise can meet ever-more-
sophisticated consumer demand as quickly as possible. In doing 
so, we are promoting consumer freedom.
     I anticipate meeting these challenges in partnership with 
my colleagues on the Commission, and I look forward to your 
continued direction. Thank you.
                              ----------                              

    Mr. Markey. Thank you, Commissioner McDowell, very much. 
That concludes opening statements of the Commission, and now we 
will turn to questions from the subcommittee members.
    Mr. Chairman, you and I had an exchange of letters on the 
issue of the National Security Agency obtaining consumer phone 
records without legal process from certain phone companies. As 
you know, the Communications Act prohibits disclosure of phone 
records except with approval of the subscriber or as required 
by law; the Commission enforces this provision.
    You wrote to me saying you would not open an investigation 
and cited court cases involving civil liberties groups and 
state secrets. An independent agency has its own duty to 
enforce its own governing statute. This NSA scandal is 
important to investigate, and communications laws are 
implicated. Mr. Chairman, are you now prepared to open an 
investigation? Have you reconsidered?
    Mr. Martin. Mr. Chairman, as I have indicated back and 
forth in our correspondence and in our personal discussions on 
this, the Department of Justice in the United States Government 
has taken a consistent position that the investigation of the 
phone records are covered by their national security 
privileges, so that we would be unable to get the underlying 
information from the carriers without threatening that.
    There have been several court cases that have ruled that 
these are covered by national security, including not only that 
were brought by private interest groups but by, for example, 
the Maine Public Utility Commission. One of the things is, and 
you and I, our personal discussions, we did discuss was 
confirming that the administration's position and the United 
States' position be the same in relation to the FCC, as well. 
And I have tried to confirm, in correspondence with the 
department, that that would be the same position if we had any 
investigations that were ongoing. And so as soon as I am able 
to confirm their response, I will provide that to you, as well.
    Mr. Markey. So you have written a letter to the Justice 
Department?
    Mr. Martin. Yes.
    Mr. Markey. Will you give us the response to that letter 
when you get it?
    Mr. Martin. Sure, of course.
    Mr. Markey. Can we receive a copy of the letter which you 
have sent?
    Mr. Martin. Of course.
    Mr. Markey. I think we can predict the answer which you 
will receive from Attorney General Gonzales, but I think it is 
important that we have the Commission proceed in this dispute 
with the Justice Department. I think it is absolutely critical 
that the communications laws of the country be protected, and 
only at the point at which there is a legally obtained court 
order should the consumer information which is now being 
compromised be made available to the Justice Department, so I 
commend you for that move, and if Justice thwarts your efforts, 
we will, as a subcommittee, as a full committee, pursue that 
with the Justice Department.
    Now, section 10 of the 1996 Act enables telecommunications 
carriers to petition the FCC to forbear from a regulation or a 
provision of the Act. If the FCC does not deny the petition 
within 15 months it is deemed to be granted. I have noticed 
that the FCC has been flooded with forbearance petitions over 
the last few years, primarily from the incumbents. Is the 
deluge of forbearance petitions draining FCC resources that 
could be spent establishing a broader FCC policy, such as 
broadband consumer protection, universal service reform and 
disability access, is that currently the practice that is 
occurring at the FCC, Mr. Martin?
    Mr. Martin. We certainly have a significant number of 
forbearance petitions in front of the Commission. I mean, we 
have had them in the past before, but we have a significant 
number of them, as well, now.
    Mr. Markey. So is that draining the resources that you have 
at the FCC to do other work?
    Mr. Martin. I am not sure that I would characterize it as 
draining the resources of the Commission. I mean, I would say 
that certainly I think that it is preferable for the Commission 
to end up trying to address issues in the context of 
rulemakings whenever possible, so I mean I think that that is 
preferable, but the Communications Act is very clear that 
parties are entitled to file forbearance petitions and if so, 
that we end up having to address them and if we fail to, that 
they are deemed granted.
    Mr. Markey. So if the forbearance petitions are not 
draining your resources, then why are the majority of the FCC's 
orders issued in response to industry-initiated actions like 
forbearance petitions and license transfers? It appears to me 
that the industry, not the FCC, is setting the FCC's agenda and 
determining how the FCC's resources are allocated.
    Mr. Martin. I think that the Commission has ended up trying 
to address the issues that we think are the most critical going 
forward for a telecommunications infrastructure. I think we 
will continue to work hard to do that. We obviously try to and 
are required to respond to forbearance petitions and try to 
respond to license transfers in a very timely manner. Those are 
very important issues, too, for the industry, so we do end up 
responding to them, of course.
    Mr. Markey. That is not the way we observe what is going 
on. Let me ask one final question. The FCC has an open 
rulemaking since 1999 that addresses the public interest 
obligations of TV broadcasting in a digital multicast 
environment. When will we see those rules?
    Mr. Martin. Well, the Commission has already indicated that 
all of the rules that apply for the public interest obligations 
for analog broadcasting are applied to digital broadcasting. We 
have also extended the children's television obligations and 
clarified and extended those in additional broadcasting rules. 
We have an order before the Commission right now that is 
actually extending an enhanced disclosure requirement so that 
they would report more on the kind of coverage they are doing 
at the local level.
     The remaining issues that are in front of us as a result 
of the comments that were filed in that original proceeding are 
actually asking the local broadcasters to commit to certain 
kinds of minimum content provisions like free over-the-air 
broadcasting.
    Mr. Markey. So when will we see the resolution of that? 
When will we see the rule on the obligations of the 
broadcasters?
    Mr. Martin. Well, I think we have addressed many of the 
rules that were part of that proceeding. In other words, we 
have addressed them in piecemeal rather than in one omnibus 
order. The one issue that is remaining is whether we are going 
to require minimum quantities of certain kinds of broadcasting. 
I am not convinced that that is necessary.
    Mr. Markey. Well, will there be a conclusion to the 1999, 
this rulemaking that has been open since 1999, will that 
rulemaking be concluded this summer?
    Mr. Martin. The 1999 proceeding wasn't a rulemaking. It was 
actually a notice of inquiry, so what we have done is start 
proposed rulemakings as a result of that, that address the 
different rules. That was actually only a notice of inquiry. We 
can do another report this year, if you would like, on the 
status of all of those, all of the issues, but we have had to 
address each individual rule in rulemakings. What we started in 
1999 was just a general notice of inquiry, not a rulemaking.
    Mr. Markey. That is 8 years ago. I just think it is 
important for this committee and the public to know what the 
obligation is going to be on the broadcasters in this digital 
era, and I would urge the Commission to resolve that this year. 
I turn to recognize the gentleman from Michigan, Mr. Upton.
    Mr. Upton. Thank you, Mr. Chairman. Chairman Martin, one of 
the big successes in the last 2 years was, of course, the 
enactment of the legislation moving from analog to digital that 
was included in the reconciliation bill in the last Congress. 
Where are we on the auction proceedings as it relates to the 
sale of the analog spectrum?
    Mr. Martin. The legislation requires the Commission to 
commence the auction by the beginning of next year and then to 
deposit the proceeds into the Treasury by the middle of next 
year. The bureau staff is working very hard to try to put us in 
a position to start that auction even earlier. We would like to 
be in a position to start it sometime next fall to make sure 
that we conclude it in time to collect the monies and have it 
deposited by the statutory date.
    Mr. Upton. In addition to setting the firm date for the 
transition, the DTV legislation funded the Digital Converter 
Box Program. It gave public safety 24 MHz of spectrum and a 
billion dollars for an improved emergency communications 
system. It made 60 MHz of spectrum available for wireless 
broadband and probably will raise at least $10 billion for the 
Treasury. As you have heard about the Cyren Call and the 
Frontline proposals, should those proposals move forward, would 
that jeopardize your timetable for the auction?
    Mr. Martin. The Cyren Call proposal would actually require 
legislative change. It would require Congress to decide not to 
go forward and auction all of the spectrum that we have been 
instructed to auction, so that would actually require 
legislation in order for us to not move forward. The Frontline 
proposal is a very recent proposal. We are still studying it. I 
don't believe it actually would require any changes in us being 
able to go forward. I am not sure that that actually does 
require any further changes.
    Mr. Upton. In 1999 the FCC granted deregulatory pricing 
flexibility for special access services when there was 
competition. Has anything changed with that regard? And I 
understand that there are a number of proceedings open on the 
special access issue. What is the status of those proceedings?
    Mr. Martin. We have got several proceedings that were open. 
One was on applying what they call performance metrics to 
special access, making sure that the carriers who were selling 
special access to other competitors were doing so in a way the 
competitors could readily access those services. And as a 
result of the mergers that have gone through and the conditions 
that have been imposed, along with one of the forbearance 
petitions that we have addressed, all of the incumbents are 
already subject to the kinds of performance metrics that were 
the subject of that proceeding, so they are already subject to 
that because of conditions.
     As a result, also, of some of those mergers, many of the 
incumbents are subject to certain kinds of price freezes on 
special access. In addition, we do still have an open 
proceeding of whether the Commission should re-impose direct 
price controls on special access, and that was opened in the 
beginning of 2005, and that is a proceeding that the Commission 
still has in front of it. We have got a record. There have been 
significant changes in the industry since then because of some 
of the transactions and mergers that have occurred, and I 
think, probably, what makes the most sense from the 
Commission's standpoint is to try to say what has been the 
impact of these changes in the industry into the underlying 
record in that proceeding.
    Mr. Upton. Do you have a guess as to when that might be 
concluded?
    Mr. Martin. I mean, I think on the special access 
proceeding, I think the Commission either needs to conclude it 
based upon the record prior to the mergers or to seek further 
comment. I think at this time it would make more sense to seek 
further comment in the next few months, this summer, so that we 
can see what the changes are that have occurred because of the 
mergers last fall and the previous fall, how that impacted the 
special access issue.
    Mr. Upton. Now, I understand that Liberty has agreed to be 
subject to the same conditions as News Corporation after the 
sale of DirectTV. Some of those conditions may not easily 
transfer. How will the FCC approach the former News Corporation 
conditions as it examines the sale of DirectTV?
    Mr. Martin. Well, one of the most important conditions that 
was imposed was making sure that News Corporation provided its 
regional sports, that it provided access to its regional sports 
networks to other video competitors. To the extent that, for 
example, that those regional sports networks are also being 
transferred to Liberty, then it would be important to make sure 
that those same kind of conditions were imposed.
    Mr. Upton. Last question that I have is, my time is 
expiring, is we talked a little bit earlier, Internet video 
applications such as YouTube and movie download services are an 
increasingly dramatic strain on the broadband networks. 
Broadband providers need not only to build bigger pipes, but 
also they need to build smarter pipes. Do you think that the 
broadband providers would make the investment necessary to 
respond to the increasing strain on the networks if they were 
subject to network neutrality requirements?
    Mr. Martin. Well, I am certainly concerned that if we 
subjected them to network neutrality requirements it could be a 
deterrent, potentially, to some of their investment. I think we 
need to make sure we have appropriate balance, the importance 
of a content development with infrastructure deployment, and I 
think that at this stage we need to focus a lot on the 
infrastructure deployment incentives to make sure that we are 
providing for the opportunity for carriers to invest in the 
underlying networks and recoup those in the services that they 
are providing.
    Mr. Upton. Thank you very much.
    Mr. Markey. Gentleman's time has expired. The gentleman 
from Pennsylvania, Mr. Doyle.
    Mr. Doyle. Thank you. Chairman Martin, you were a 
Commissioner in 2001 when the FCC announced that Mr. Dale 
Hatfield was to write a report on enhanced 911 services, and 
you were there when the Commission opened the docket for public 
comment in March 2002, and you were still there when Mr. 
Hatfield filed his completed report in October 2002. In fact, 
in April 2003 you gave a speech to the FCC's 911 Coordination 
Initiative where you said that Mr. Hatfield's first report on 
the enhanced 911 issue ``contains a number of important 
insights'' and that you ``strongly agree that an unusually high 
degree of coordination and cooperation among all stakeholders, 
both public and private, will be required.''
     In other speeches, you have said that ``the importance of 
E-911 becomes more clear every day. The ability to track the 
location of a 911 caller is vitally important. Too many lives 
are at stake.'' So 911 and E-911 have been an important 
priority for you, is that correct?
    Mr. Martin. That is correct.
    Mr. Doyle. Mr. Chairman, in 2005 you had been the chairman 
since March, that is correct?
    Mr. Martin. That is correct.
    Mr. Doyle. And I understand your agency contracted with Mr. 
Hatfield to write a follow-up report around the fall of 2005, 
is that correct?
    Mr. Martin. He was on contract from 2000 on, and it was 
renewed periodically. In September, the bureau did extend that 
contract again in 2005. I think that actually his request that 
he do an updated report had been in 2004, but yes, it was again 
extended in 2005.
    Mr. Doyle. In contrast to the first report, the agency 
didn't publicly announce that Mr. Hatfield had been retained by 
the Commission to conduct the second follow-up report. Your 
answer is you just extended his first report, that is why it 
wasn't----
    Mr. Martin. We extended his contract. He actually remained 
on contract every year.
    Mr. Doyle. But you did ask him to write a follow-up report?
    Mr. Martin. I think that that was actually done in 2004, 
but yes, there was a request that he try to work on a follow-up 
report and continue to provide expertise.
    Mr. Doyle. Thank you. Mr. Hatfield reported his tentative 
findings to the Commission staff around the spring of 2006, and 
then afterwards, it is my understanding your staff followed up 
on the matter, and around that time, Mr. Hatfield was told to 
cease his work and submit for his payment. Let me share with 
you, and I am going to paraphrase here, what I understand to be 
some of the tentative conclusions of that follow-up report.
    First, that there is a strong need for a uniform method of 
testing 911 location accuracy. Second, that the FCC take 
greater steps to address the problem of in-building accuracy, 
of in-building location. And third, that the Commission do more 
to solve the rural 911 location problem. And I want to say that 
again, do more to solve the rural 911 location problem, and 
that is critical, because in rural areas without overlapping 
cell phone towers, this is a critical thing that needs to be 
addressed, and I don't think it can be denied that these are 
critical issues for the public safety.
    Commissioner Copps, let me ask you, were you aware of this 
follow-up report that Mr. Hatfield was asked to do and the fact 
that the report was cancelled before it was written in its 
final form?
    Mr. Copps. No, sir, I was not aware of the report and only 
know about the developments basically through the news media.
    Mr. Doyle. Thank you. Do you think some of the conclusions 
which I have just read in the report are important conclusions 
were there a further study by the Commission?
    Mr. Copps. I think so. I think if an engineer with the 
credibility of Mr. Hatfield makes a suggestion, as you say he 
did, that maybe we need to be looking at the capabilities of 
wireless in buildings and the efficacy that, yes, that is 
important. We are talking about the safety of human beings 
here.
    Mr. Doyle. How about you, Commissioner Adelstein?
    Mr. Adelstein. I would agree. I think that Dale Hatfield is 
one of the best we have ever had. He was our chief technology 
officer. His initial study was a seminal study that guided our 
efforts on E-911 for many years. I think it is always helpful 
if these key factors are weighed. I think all of the issues 
that he raised in his study are very important. I think that 
study would be helpful to be made public for the benefit of 
Congress and the public, as well as us.
    Mr. Doyle. Commissioner Tate, were you aware of this study?
    Ms. Tate. No, sir, I was not.
    Mr. Doyle. Do you think the conclusions reached by Mr. 
Hatfield could have been valuable to the Commission?
    Ms. Tate. It sounds like they could have. I haven't had the 
opportunity to see the report.
    Mr. Doyle. Mr. McDowell?
    Mr. McDowell. Me, as well, sir.
    Mr. Doyle. Now, Chairman Martin, I want to point out that 
Mr. Hatfield gathered information by interviewing people, and 
since folks universally thought his first report moved the 
Commission and stakeholders in productive ways, they were 
looking forward to this follow-up report. Now, in today's 
newspaper, when you talked to, or your spokesman spoke to the 
USA Today, it seems to me that if I am quoting Tamara Lipper 
correctly, she said that you were simply trying to save the 
taxpayers money by not having the report come to conclusion. 
Now, the report cost, Mr. Hatfield was paid $9,500, I 
understand, to get to the point where he got, and I am not sure 
how much more it would have cost to put the report in writing, 
maybe a couple more thousand dollars. In a budget of over $330 
million, sir, is that really the reason you told him to stop 
the report?
    Mr. Martin. I think that it is important to understand that 
in this instance, actually, we had paid Dale Hatfield over 
$10,000 in 2004 to do an updated version of the report. We had 
actually paid him, the contract in 2005 was for an additional 
$10,000 to do an updated report. He never presented any of the 
initial findings to us, and indeed, when I found out about the 
contract, which I wasn't aware of until the spring of 2006, we 
actually asked him could he provide us a summary of his 
findings and where he was going on his report, which he 
declined to provide to any of us. As a result of his declining 
to provide any of the information of what he was doing, I 
didn't think it was important to renew the contract and 
continue to pay him anymore for that money. We have never seen 
the report, and if you have a copy or if anybody has a copy, we 
would love to see it.
    Mr. Doyle. You are telling this committee, and I want you 
to choose your words carefully, you are telling this committee 
that Mr. Hatfield did not sit with committee staff and go over 
his preliminary findings and that he did not sit with Mr. 
Campbell of your staff and go over these findings?
    Mr. Martin. No. Yesterday, according to press accounts, 
Dale Hatfield presented something to the bureau staff, but I 
was unaware of it and so was Mr. Campbell on my staff, and 
indeed, Fred Campbell, on my staff, called him when we found 
out about the contract and said could you provide us a copy of 
your report, and a copy of your tentative findings, and he said 
no. So the bottom line is we paid him for his contract, and if 
he has a report, we would welcome it. We would welcome it. 
There has been no chairman who has been any stronger on the 
importance of providing 911 to----
    Mr. Doyle. Isn't it true that Mr. Campbell told Mr. 
Hatfield not to finish the report, to stop his work where it 
was and to submit his bill? Are you saying that is not true?
    Mr. Martin. No. We said to submit his bill, and that we 
weren't going to continue to pay him anymore for it. We had 
paid him for 2 years, and we had no report. But he is more than 
welcome to provide the report if he would like to.
    Mr. Doyle. Isn't that the same as terminating his contract? 
Why wouldn't you demand a report? Why would you pay someone 
$10,000 and then not demand a report?
    Mr. Martin. We would be happy to have his report if he 
wants to provide it and if he provides it to us, we will be 
happy to provide it to the committee, but we weren't going to 
renew his contract again and pay him again for the third time 
when we still didn't have a report.
    Mr. Doyle. Mr. Chairman, do you think the conclusions that 
he reached in the report are important for the Commission to 
act on?
    Mr. Martin. I think that the conclusions are ones that not 
only do I think they are important for the Commission, we 
already had the Commission working on it. We established a 
Homeland Security Bureau to work on these very issues, and 
indeed, the conclusion that is in the newspaper today that says 
60 percent of the time people are using wireless phones inside 
buildings is readily available from J.D. Power and Associates, 
on Google's Web site, which I searched this morning----
    Mr. Doyle. If the Commission was already working on these 
issues, sir, then why did you ask this gentleman to do a 
follow-up report?
    Mr. Martin. I didn't ask him to.
    Mr. Doyle. Who did, Mr. Chairman?
    Mr. Martin. Chairman Powell did in 2004.
    Mr. Doyle. And you weren't aware of this?
    Mr. Martin. No, I wasn't.
    Mr. Doyle. So you don't know what your bureaus are doing 
when they let contracts out?
    Mr. Martin. In 2004 I was a commissioner, not the chairman. 
In 2005 they renewed it, and I didn't know about it, no. And 
then when I did become aware of it in 2006, I said that he is 
more than welcome, as I said, to present the report to us. Mr. 
Hatfield is obviously an esteemed public servant. He spent many 
years on the Commission, and we would welcome him to provide us 
his assistance, but I did not think it was necessary to 
continue to pay an outside contractor who, by the way, is also 
a contractor to many of the entities that lobby us, to continue 
to provide technical support when I think we have the technical 
expertise to be addressing these very issues. And indeed, I 
think it is important that we end up moving forward on these 
issues, and we are.
    Mr. Doyle. I see my time is up, Mr. Chairman.
    Mr. Markey. Gentleman's has expired. The gentleman from 
Mississippi, Mr. Pickering.
    Mr. Pickering. Mr. Chairman, thank you. To all the 
Commissioners, I am grateful for your service and for your 
presence this morning. As we look at where we are today in the 
post-implementation era of the 1996 Act and at the same time, 
after most, I believe, mergers have occurred and so the 
concentration and the transition to all-digital and mostly IP-
based services and applications, it is very important that we 
get the balance and the decisions and the policies right as we 
go forward in a period of convergence and hopefully continue 
the competition.
    My questions are going to try to address those things that 
I think will maintain healthy competition as we go forward. But 
the first question that I have for the Commissioners deals with 
something that Congresswoman Harman brought up and that is the 
interoperability as it relates to emergency services.
     As we in Mississippi and in the Gulf region discovered 
after Katrina, interoperability is a critical, vital service 
and after 9/11, it was one of the key findings that we needed 
to implement. I hope to work with this committee to introduce 
legislation that would set up a process for the industry and 
the emergency response community to come up voluntarily with an 
interoperability standard. But if there is failure to do so by 
a date certain, I would then hope to ascertain with the FCC to 
have an FCC proceeding to do it on a mandatory basis, if there 
is a failure to do it on a voluntary basis.
    Chairman Martin, is that, in your view, an appropriate way 
to achieve interoperability standards that we have yet to 
realize or achieve since 9/11 and after the Katrina experience 
and lessons from that storm?
    Mr. Martin. I think it is appropriate. I think that it is 
always preferable for the industry to try to find a way to 
address technical issues like interoperability through their 
own standard setting without the Government mandating a 
particular standard. However, this issue is too critical to 
allow for that to go unresolved over an extended period of 
time, so at some point if there is an inability to reach a 
common interoperability standard, I think it would be 
appropriate at some point for the Government to go in and say 
that we will mandate one because the industries are unable to 
come together on their own.
    Mr. Pickering. Commissioners Copps and Adelstein, would you 
agree with that approach, as well?
    Mr. Copps. Yes, I think you have hit the nail on the head 
with regard to that. My only addition to that would be it has 
been 5 years since 9/11. We still don't have the 
interoperability. We have had a lot of public sector/private 
sector dialog and talk about voluntary guidelines and voluntary 
standards. We don't really have the assessment to what extent 
they have been implemented by going around and talking to first 
responders around the country. I know it is not very wide so 
yes, getting this done is top priority.
    Mr. Adelstein. I certainly agree. I think it is an ongoing 
challenge for the Nation. It is critical that we promote 
widespread large-scale interoperability. The FCC has tried to 
push interoperability through general allocation, but the 
public safety spectrum is in different bands and always funding 
issues have presented themselves. I think technology is one of 
the keys to solving the problem. The national 700 MHz broadband 
solution is one way that we could possibly work to find some 
creative solutions to this.
    Mr. Pickering. Thank you. I look forward to working with 
you all to achieve those objectives. The next issue, in 
Communications Daily yesterday, reports that the FCC is looking 
to reinstate a 30 percent cap on cable ownership. As we just 
completed the largest mergers in telecommunications history, 
AT&T and Verizon, and as you look at broadcast ownership, 
shouldn't there be some type of ownership parity between the 
different platforms? And does it make sense to cap cable at 30 
percent when you have Verizon and AT&T and in the broadcast 
area no real equivalent of those types of caps on ownership so 
the different platforms, as they converge, can compete fairly 
and effectively? Do those caps make sense in today's world?
    Mr. Martin. Well, first I think it is important to 
understand that the cap actually applies to both the cable 
companies and the telephone companies to the extent that they 
are providing video services. So it already does apply to each 
platform as they converge, so that cap is not a cap on cable 
companies, it is a cap on providers of multi-channel video 
services, so it would apply to the telephone companies, as 
well.
     And then the second thing is that Congress actually 
instructed the Commission to adopt a cap on video ownership 
throughout the country, in part because of the concern that if 
there was one provider of video services at the retail end, 
they actually might have a monopoly power on the buying of 
content, and that same issue doesn't arise in the context of 
telecommunications. But again, it is important to understand 
that this cap would apply to the telephone companies, as well.
    Mr. Pickering. But only as it applies on video, is that 
correct?
    Mr. Martin. That is correct. It will apply to any of the 
video providers, but it would apply to telephone companies when 
they are providing video services, as well.
    Mr. Pickering. But on the video side, we don't expect the 
Bell companies to be able to get anywhere close to 30 percent 
in the near future, would we?
    Mr. Martin. I don't know. We will leave it up to the 
marketplace and see how they end up, what kind of progress they 
end up making, but what is important is that the reasons for 
the cap and also that Congress instructed the Commission to 
establish a cap were in part because of the concerns about the 
buying power of video content, which isn't present for Internet 
services because in that sense, the pipe is open so that 
anybody can go get whatever content they want.
    Mr. Pickering. On the 700 MHz, Mr. Chairman, what do you 
see as the timetable for moving forward on that auction on the 
rulemaking that would adopt the specifications for the 700 MHz 
auction, and what is your view on the size of the auction in 
varying markets?
    Mr. Martin. What we hear from parties is they are trying to 
have at least 6 months from when we adopt the final rules for 
the size of the markets to when we actually conduct the 
auction. It is helpful for them to be able to finalize and 
establish their credit to be able to participate in the 
auction. So for one, trying to participate in the auction 
sometime this fall, that would mean we want to have the rules 
in place 6 months before, which would be about April or May of 
this year we would like to be getting those in place.
    I am hopeful that we will be able to do it, actually, at 
the April meeting. I think it is actually critical that we 
continue to try to establish smaller and small geographic areas 
when we are auctioning off spectrum to make sure that smaller 
entities are able to participate vibrantly in the auction and 
also that we can make sure that people are buying spectrum in 
geographic areas that they will actually utilize so that we can 
make sure in rural areas it is getting built out.
    And then finally, I think and there has been increasing 
discussions about whether we should reconsider some kind of 
policies to make sure that people are actually building out and 
utilizing the spectrum that they are purchasing in geographic 
areas. There are various proposals like use it or lose it, or 
actually build out requirements, but I think we have got to 
make sure that rural areas, this spectrum is going to be 
incredibly valuable for the deployment of broadband 
infrastructure, and we have got to make sure that people that 
are participating in this auction have every intention of 
actually building it out and utilizing it to serve those in 
rural areas. And so I think we have got to do it on small bases 
and have strong build-out requirements.
    Mr. Pickering. One last question. Commissioner McDowell, 
your recusal policy ends when this year?
    Mr. McDowell. According to my ethics agreement with the 
Office of Government Ethics, it is a 1-year ban.
    Mr. Pickering. And that 1 year expires at what time?
    Mr. McDowell. June 1 of this year.
    Mr. Pickering. June 1. And at that point, would you be 
engaged in all proceedings and involved in all proceedings at 
the FCC?
    Mr. McDowell. To this point, Congressman, of course I have 
not actually cast a vote in such things as forbearance 
proceedings or matters involving specific parties. I will 
consult with my ethics agreement, the Office of General Counsel 
and the Office of Government Ethics as we go forward, but I 
anticipate being able to participate in more proceedings.
    Mr. Pickering. In your response to Senate questions, did 
you indicate that you would be available for all proceedings?
    Mr. McDowell. Ultimately, yes.
    Mr. Pickering. By June?
    Mr. McDowell. That was not specifically addressed. In all 
honesty, the footnote to Mr. Feder's memo of December 8 speaks 
to the appearance of a conflict issue perhaps lasting beyond 
June 1, and so these are questions we still need to resolve 
beyond that.
    Mr. Pickering. We all need you to be involved in all 
proceedings.
    Mr. McDowell. I would love to be involved with all of them, 
believe me.
    Mr. Pickering. Thank you.
    Mr. Markey. OK, the gentleman's time has expired. The 
gentlelady from California, Ms. Harman.
    Ms. Harman. Thank you, Mr. Chairman, and thank you, too, 
all of you, for your testimony. I hope we don't wait another 4 
years. I would suggest, Mr. Chairman, that we have regular, 
ongoing conversations with our FCC Commissioners, not all of 
them in a formal hearing setting. I think it would be useful to 
have informal meetings, as well. I know I personally have had 
informal meetings recently with four out of five of the 
Commissioners, and I look forward to getting to know 
Commissioner Tate.
    I want to go back to the issue I raised in my opening 
statement and the issue that has been raised by Mr. Upton and 
Mr. Pickering and that is the critical importance of making 
sure that the DTV transition goes forward so that we make 
available 24 MHz of spectrum in the 700 range for public safety 
communications. All of you have said that this is important. I 
just want to underscore the fact that it is on your watch. You 
won't be able to say that a prior chairman didn't do it, did do 
it, did something else. This is on your watch, and the clock is 
ticking. As Mr. Pickering said, Katrina was an embarrassment, 
especially since it came many years after 9/11, and we should 
have fixed the problem. I am not blaming this on you, but I am 
saying you are a central part of the solution. Does anyone 
disagree with that? No. You have issued numerous notices of 
proposed rulemaking. You were way into this. There was a very 
helpful, at least to me, op-ed in the March 13 Wall Street 
Journal called, ``Failure to Communicate,'' and Mr. Chairman, I 
would ask unanimous consent to put this in the record. It is by 
Jerry Brito.
    Mr. Markey. Without objection.
    Ms. Harman. Thank you. What that op-ed points out is that, 
and I am quoting, ``Responders often cannot communicate with 
each other because the Federal Government assigns to each of 
the 50,000 public safety agencies in the country,'' that is 
every hometown fire and police department, ``their own radio 
license and piece of the spectrum with which to build out a 
communications system.'' They point out that this affords great 
flexibility but that it comes at a cost, which is that more 
often than not, systems can't talk to each other. Anyone 
disagree with this? No.
    So we need to figure out a plan, and you are a critical 
part of this, to move police and fire and emergency prevention 
services to something that makes sense in the 21st century. 
Anyone disagree with that? No. OK. My question then, is, in my 
2 minutes, how it is, with some specificity, that you are going 
to make a decision about things like whether you split that 24 
MHz band in half, which is one of the things you are 
considering; whether you embrace some of these new ideas by 
Cyren Call and Frontline Wireless, which, as you said, you need 
to learn more about.
    What it is that we do, what it is that you do, as experts 
in charge of who gets licenses, to drive our earnest first 
responders to technologies that obviously fit much better the 
requirements of catastrophic attacks that we can expect or 
catastrophic natural disasters in the 21st century? Anyone is 
invited to comment.
    Mr. Martin. Sure. I think that there are a few options in 
trying to address the interoperability issue. I think that one 
is obviously this Cyren Call proposal that has been put forth. 
Again, as I reiterated earlier, that would really be up to 
Congress to decide whether to take away some of the spectrum 
that is being utilized for commercial auctions and provide it 
to public safety. We have put forth a proposal that would 
actually establish a national licensee by a non-profit that 
would be able to, then it would be license holder, and it could 
ensure interoperability among all these different public safety 
communities.
    Ms. Harman. And if I could just interrupt, do you think 
there is enough spectrum for that licensee to accomplish that 
task?
    Mr. Martin. I think there would be enough for them to at 
least be able to provide some basic broadband connectivity and 
then use that broadband connectivity as a platform that could 
then address the interoperability issues. It won't fix all of 
the radios that have already been bought that are not 
interoperable, but it would provide a piece of spectrum that 
could be utilized for broadband and IP technologies that then 
could be an area where people could communicate, but it won't 
fix all of the radios they have already bought.
    Ms. Harman. Does anyone else have a comment? I know my time 
is up, Mr. Chairman. I just wanted to invite comment to my 
statement on the need for this.
    Mr. Copps. Well, I think we have a number of things. We 
have to make sure the 800 MHz transition is working as it was 
intended to work. In addition, all of these decisions that we 
originally needed on the 700 and we really have to know exactly 
where we are and you asked an interesting question about the 
available public safety spectrum and we all have kind of an 
intuitive reaction to that, but what we really need to have is 
a really good inventory of exactly what is being used and how 
extensively it is being used and understand the problem before 
getting to the solution.
    Ms. Harman. Thank you, Mr. Chairman. I just hope we don't 
keep learning forever. I think we need to find a solution very 
quickly and we are going to be 4 years later than Congress 
promised, so let us get it right. Thank you.
    Mr. Markey. The gentlelady's time has expired. The 
gentleman from Oregon, Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. Appreciate that. I 
have a question involving the Universal Service Fund and all 
and I guess part of it, it is my understanding that the FCC 
designation of carriers eligible to receive Federal high-cost 
support has perhaps ignored some applications for a number of 
years. It seems like the companies deserve some sort of timely 
response, whether they are approved or denied. And I am curious 
if you can explain why some of these applications have been 
pending for a considerable length of time and why?
    Mr. Martin. The Commission is facing a significant 
financial problem with the number of CETCs that are receiving 
Universal Service money. When I arrived at the Commission, the 
first year we gave out $1 million to eligible 
telecommunications carriers. Last year we gave out $1 billion 
during my time at the Commission. So you have seen a dramatic 
increase. We estimate that under the current timeline, with no 
further applications being granted, we will give out somewhere 
between $1.3 and $1.4 billion this year.
     If we grant all the pending applications, some estimates 
are that could be as high as $1.7 billion this year. The 
Commission is facing a significant crisis in this area. The 
Universal Service joint board, which is composed of State 
commissioners and Federal commissioners and also a State 
consumer representative, are considering before it various 
proposals, including a proposal to cap the CETC fund right now. 
They anticipate that they are going to make a recommendation to 
the full Commission sometime within the next 4 to 6 weeks.
     And I think it is critical for us to see what that 
recommendation is with the kind of growth that we are seeing, 
we should see what that recommendation is before we further 
exacerbate the problem. To the extent that we are not going to 
take any kind of steps to address this issue, then you are 
right. We would need to grant all the applications and address 
it from a financial standpoint, but I think it is incumbent 
upon us, because we have this significant financial problem, to 
make sure we are moving very guardedly to try to protect the 
fund, as it is. And I think that waiting to see what the 
board's recommendation is, is important. When we see that kind 
of growth in a Government subsidized program in a very, very 
short period of time, I think we have a potential of having a 
real problem.
    Mr. Walden. I spoke with a number of people about a 
different issue, that involving white spaces, over the last few 
weeks, and I am just curious, from your perspective, as 
Commissioners, your views on white spaces and whether or not 
the technologies that are emerging, I know they have just 
presented you with some new equipment, literally, to be 
investigated, if there are concerns about interference or not. 
My understanding, too, is you have come to the conclusion, Mr. 
Chairman, that auctioning off this white space spectrum 
probably wouldn't make a lot of sense. Is that correct?
    Mr. Martin. That is right. In general, I think that this 
spectrum, the people utilizing the white spaces would not be 
the primary users of the broadcast spectrum, and when you are a 
secondary user, that is not usually the typical kind of license 
we auction off. Usually, it is someone who is the primary user 
and has very defined rights. And in this instance, we would be 
actually auctioning off the right to use it on a secondary 
basis and not interfere with the primary broadcasters, and that 
is more typically what we do on an unlicensed basis.
     We are concerned about making sure they don't have 
interference with the underlying broadcasters, and I think it 
is critical, particularly when we are going through the DTV 
transition, that we make sure we don't allow for there to be 
any ongoing interference with those broadcasters in that 
context. And the technologies have improved such that 
communications devices are actually able to incorporate 
sufficient technical capabilities, and actually listen in a 
geographic area before they speak, and then they could listen, 
as a broadcaster here, on channel 3 or channel 5, and if there 
is, then don't operate on that channel.
     That is what the device that was just delivered to our 
engineering lab this week says that they have developed that 
kind of a technical capability so that they will be able to 
make sure they are not interfering in each market and take that 
same device from market to market and have it not interfere. 
And to the extent that it truly does work that way, then this 
will be a good breakthrough to be able to utilize that white 
space.
    Mr. Walden. All right. Let me shift gears to an issue that 
I know all of you are concerned about, and so are we, and that 
is broadcast media ownership and various proposals, not only in 
broadcast but elsewhere across the spectrum and including, I 
understand, a recent submission to go to a 30 percent cap on 
cable. I would be curious to know why you think that proposal 
would withstand court scrutiny when the prior one did not.
     But moreover, I know we allow duopolies in major markets 
for television and yet I know in a district like mine, that is 
very rural, it is actually some of the small or medium sized 
markets where the broadcasters are struggling in deep 
competition for advertising dollars locally with cable and in 
some cases, radio. Their ad rates aren't much different and yet 
their costs are higher and I am just wondering why we allow 
duopolies in major TV markets but not in the smaller and medium 
markets.
    Mr. Martin. The Commission has always tried to find a 
balance between making sure that the broadcast companies are 
able to make sure they are making enough money to stay in 
business and continue to gather local news and at the same 
time, that we are preserving the diversity of viewpoints and 
voices in each market. And obviously, when there is a larger 
market and there is more broadcast stations that are available, 
there is less of a concern about making sure that we preserve 
the diversity of those. In the smaller markets, it is more 
difficult to make sure that there are enough different voices 
out there.
     And I think that that creates a natural tension because in 
many areas, in many small markets, that is actually where some 
kind of increased consolidation is critical and that is why we 
are finding this appropriate balance of how we make sure and 
preserve the local voices that we have got and that they have 
enough financial wherewithal to continue to gather news while 
at the same time we preserve the maximum number of voices in 
that market that we can. But it is ironic that yes, in areas 
that are smaller, there are fewer voices, but that may also be 
the area where they are under the most financial constraints.
    Mr. Walden. I would concur.
    Mr. Copps. Can I make a comment there?
    Mr. Walden. Sure.
    Mr. Copps. Much of the debate that we have had is whether 
you look at this problem just holistically or individually. So 
you pass, as Chairman Powell wanted to pass and did pass 
through the Commission, a law that just grants duopolies a 
green light, no questions asked and I think that is a bad idea. 
A duopoly, especially in the multicast era, does have 
tremendous power if it has got 12 streams of broadcast into a 
small locality like that.
     But we should have the ability, and I think we do, to look 
at these things on a granular basis and I have never said, for 
example, that I am against all consolidation and I have seen 
areas where maybe an area would be deprived of service without 
it, but you have to do that, make that public interest finding 
on an individual basis, rather than just flash some green light 
to every combination that the mind of man or woman can devise.
    Mr. Walden. I understand that and I don't think any of us 
is advocating that, but I usually disclaim here, as the only 
licensee in the Congress, I have also seen the benefit of 
consolidation, what you are able to do then to enhance 
programming opportunities in small radio markets, which is what 
I am familiar with. And I see that Clear Channel sometimes gets 
beat up as being this giant radio holding company and yet I 
think they are less than 10 percent of overall radio station 
ownership by stations and are actually shedding 400 of their 
radio stations and 40-some of their TV, so you see a sort of 
realignment going on out in the market to the other competition 
that is out there. So my time is expired, Mr. Chairman. Thank 
you, and I want to thank the Commission.
    Mr. Markey. The gentleman's time has expired. If I may, at 
this point, recognize the gentleman from Texas, the ranking 
member of the full committee, Mr. Barton. When I recognize two 
Democrats over here in order to--so let me turn and recognize 
the gentleman from Texas.
    Mr. Barton. Mr. Chairman, I thank you for your courtesy, 
but I think I am the last person to arrive today. I would wait 
my normal turn because I am very late, and I appreciate your 
courtesy.
    Mr. Markey. I don't even think I would have to say, without 
objection, to have you recognized out of order. I don't think 
there would even be a thought, but I thank the gentleman. I 
will turn and recognize the gentleman from Indiana, Mr. Hill.
    Mr. Hill. Thank you, Mr. Chairman, and thank you, Chairman 
Martin and the Commission members for attending today. I live 
in a town of 18,000 people. It is the home of John Mellencamp, 
the rock star, and the originator of that song, Small Town. My 
point is I live in a rural area and healthcare is one of my top 
concerns. I am aware that you recently announced a new $60 
million rural healthcare pilot program as part of the Federal 
Universal Service Fund. I am very interested in this program, 
and I want to learn more about whether telemedicine programs in 
Indiana can expect to receive funds from this new program and 
on what basis.
     I understand, from people in the rural telemedicine 
community, that a staff person from the Commission recently 
spoke at a Capitol Hill conference, and when he was asked how 
the FCC will determine who gets the pilot program grants, he 
replied that the FCC will be using the Goldilocks Rule, meaning 
whichever application feels just right. I think this statement 
has caused a lot of confusion. This is an important opportunity 
for my constituents, so I would like for you to clarify what 
that staffer meant by the Goldilocks Rule.
    Mr. Martin. I am not sure what they meant by the Goldilocks 
Rule, and so I don't know what they meant. What I can say is 
that the Commission has a rural healthcare program that we have 
never fully utilized, that we have about $400 million a year 
that we set aside for rural healthcare programs, and we have 
never utilized more than about 25 percent of it in any 
particular year.
     One of the things that I discovered in investigating this 
when I became chairman is that many of the rural healthcare, 
the rural programs, were not applying for additional funding, 
in part because they needed to be able to aggregate to apply 
for programs on a regional or at least a statewide basis for a 
network. And the same thing we saw in a lot of the Universal 
Service Schools and Libraries Program, that individual schools 
were having a hard time applying for money, but if we let 
school districts and/or States apply, it actually helped 
facilitate money getting out to them.
    So what we have done in the pilot program is allow for 
rural healthcare programs, the rural healthcare applicants, to 
apply on a regional network basis and also be able to fund a 
more significant amount of the money that would be used to 
deploy an infrastructure to cover a statewide network or a 
regional network and in some cases, it could even cross State 
lines.
    And I think that that is going to allow these consortiums 
to be put together to serve more of the rural healthcare needs 
in those local rural small communities. And I think that we 
actually wanted to encourage as many people to apply as 
possible because this has been an under-utilized fund. We do 
have a certain amount of a cap on the program of how much we 
can end up spending any particular year, so I think it will be 
difficult, and the Commission actually debated this last fall 
about how are we going to determine among the applicants that 
we get.
     And I think it was something that was a significant amount 
of debate last fall when we opened this program, we decided 
that it was more critical that we make sure and get the program 
up and going on a trial basis and do our best to judge which 
programs seem like the most likely to succeed. And we also 
thought we would try to make sure we picked them in several 
different geographic areas so they wouldn't all be in the same 
area of the country.
    Mr. Hill. But you are not going to be making decisions 
based upon if it just feels right, then, is what I hear you 
saying?
    Mr. Martin. No.
    Mr. Hill. OK. I have three questions I want to ask. I am 
assuming that all five Commissioners will have the opportunity 
to vote on the recipients for these grants?
    Mr. Martin. That is right.
    Mr. Hill. OK. Second, given that there is a great demand 
for this program in determining the recipients of the award, I 
assume you will be relying on telemedicine experts and the 
assistance of the national telemedicine organizations to peer 
review the applications before selections are made?
    Mr. Martin. I am not sure that we have proposed putting 
them out for peer review to outside consultants. We can 
consider that. The applications haven't even come in yet.
    Mr. Hill. OK. But so you are not considering this at all?
    Mr. Martin. I don't think anybody had suggested that to us. 
This is a suggestion that we will take back and consider 
whether there is enough time to do that, but I think that might 
be a helpful suggestion.
    Mr. Hill. I hope that you will keep this in mind as you go 
through the selection process, and I think this can be a very 
helpful, useful tool for you, especially for rural areas like 
mine.
    Mr. Martin. Sure.
    Mr. Hill. OK. Third, in many grant programs, the selection 
criteria are weighed to allow for objectivity and transparency 
in awarding of the grants. Will the Commission be releasing the 
selection criteria analysis for each of the winning awards in 
the first year so that applicants for the second year will 
better understand the program's requirements?
    Mr. Martin. Sure. And ultimately, what we are hoping to do 
with this pilot program is be able to get it established so 
that we can extend it to everyone who applies after that.
    Mr. Hill. OK. I yield back the remainder of my time.
    Mr. Markey. Gentleman's time has expired. Chair recognizes 
the gentleman from Nebraska, Mr. Terry.
    Mr. Terry. Mr. Chairman, I appreciate all of you coming up 
here today and engaging in discussions about our areas of 
interest that overlap your authority. One of mine is reforming 
the Universal Service Fund and using that as a tool, then, for 
ubiquitous broadband roll-out within the rural areas. It seems 
logical to me to, instead of us up here trying to recreate the 
wheel, a new program or tax credit program or whatever, we use 
what is already in existence, already has an infrastructure 
within the FCC, not only the telephone infrastructure, 
telecommunications infrastructure already existing in rural 
America, but also the dollars.
     And it seems to me that by reforming and in essence, 
loosening up Universal Service and keeping the dollars at the 
same, that we can meet our goals that I think several of you 
stated during your opening statements about having ubiquitous 
roll-out of broadband throughout America so that all Americans 
have access to it. We will define access in a minute. But I 
just wanted to ask a survey of sorts, of the Commission, 
starting with Mr. Adelstein, about your individual opinion 
about whether Universal Service is relevant today and whether 
or not it could be used as a tool to help speed up rollout of 
broadband throughout rural America.
    Mr. Adelstein. I think Universal Service absolutely can be 
critical to the rollout of broadband in rural America. 
Currently, it is under our policy, no barriers. A lot of 
companies are using Universal Service support to develop 
systems that are capable of broadband, but broadband isn't a 
supported service, directly. I think it is only a matter of 
time before that happens. It is going to be sooner rather than 
later because voice is increasingly becoming just one 
application over broadband pipes. It doesn't make sense just to 
subsidize one application.
     What we need to do is subsidize those pipes to make sure 
that they are every bit as thick in rural parts of the country 
as in the rest of the country, and we do need to bring costs 
under control in certain aspects in order to move towards this 
system, but Congress clearly envisioned that, in the 1996 Act, 
that we would move towards advanced services. It is mentioned 
five times in section 254 of the Act, and I think we need to 
take that into account, as a commission.
    Mr. Terry. Mr. Copps.
    Mr. Copps. Clearly, broadband could be and should be part 
of the Universal Service Fund. This is the central 
infrastructure challenge by time, getting this out, so we need 
to have that strategy, and we need to have that commitment. We 
have to have broadband, then, not just benefiting from the fund 
but contributing to the fund and increasing the base of the 
fund. It is not by now, and the Commission has gone in the 
wrong direction with regard to that. It still leaves the fund 
with considerable pressure on it, as you know, so I think 
another thing that needs to be considered at some point is 
extending the contributions from intrastate calls to the 
Universal Service Fund. I think if we had broadband in 
intrastate, we made an effort to true up wireless and VOIP, 
that should be most of the way there to putting the fund on a 
reasonably sound basis.
    Mr. Terry. Very good.
    Mr. Martin. I think that it is important to try to figure 
out a way to utilize Universal Service monies for broadband 
infrastructure. Indeed, Commissioner Copps and I, when we were 
on the joint board in 2002 and 2003, when the joint board 
considered this and didn't actually consider or allow it to be 
more directly utilized for Universal Service broadband support. 
But we do face a crisis, as I talked about, on the financial 
side today. Currently we anticipate that the contribution rate 
is going to rise, continue to rise directly just in supporting 
current voice services.
    One of the reasons why I think we need to move to what I 
call our reverse auctions methodology in distributing money is 
that we would be able to say we are going to increase the level 
of service that we are going to provide to a particular area, 
but we are not going to provide for duplicative networks to be 
built to provide just voice services. Right now, today, we use 
Universal Service funds to support multiple networks providing 
only voice grade services. Instead, what I think we should be 
doing is providing Universal Service support for one carrier of 
last resort in an area, but that one carrier of last resort, we 
should begin ratcheting up what we expect them to provide to 
its customers, including broadband capability.
     I think that the only way we are going to be able to do 
that and cap the money where we are now, which I think was also 
one of the things you said in the premise of your question, how 
we keep the money the same, is we have got to start saying we 
want more for the money we are giving you and we are not going 
to continue to pay for duplicative networks to provide voice. 
Instead, we are going to pay for one network, carrier of last 
resort, and provide broadband over it.
    Mr. Terry. Commissioner Tate.
    Ms. Tate. Yes. I want to thank you and Mr. Boucher for all 
your work in this area and obviously, I think we have got some 
short-term problems that need some reform quickly and I hope 
the joint board is going to move on that, as the chairman said 
and Commissioner Copps and so I hope that we will be coming 
back with some of those solutions and then some longer term 
solutions on both the contributions and the distribution side.
    Mr. Markey. OK. Quickly, please.
    Mr. Terry. Thank you again for all your work. I will be 
looking at all credible ideas regarding reform of the Universal 
Service Fund. As Commissioner Adelstein and Chairman Martin 
have already implied, there is already, sort of, indirect 
support of infrastructure, but we do need to fix the system 
first before we can talk about increasing costs on the 
distribution side, so I eagerly await the joint board's 
recommendation.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentlelady from California, Ms. Eshoo.
    Ms. Eshoo. Thank you for recognizing me, Mr. Chairman. In 
my opening statement I made references to the AT&T-BellSouth 
merger. So I would like to drill down a little on this for the 
benefit of the full committee. The question that I would like 
to ask, Commissioner Tate and the Chairman, is what is the 
authority that you draw from to approve and then refuse to 
implement the agreement? And I would like you to describe, 
reference the exact provisions of the Communications Act, 
sections of the FCC's rules. Commissioner Tate can go first. 
And other legal authority to support that action. But I ask 
because I think it is so highly unusual.
    Mr. Martin. Sure.
    Ms. Eshoo. You voted for it. There was a majority vote of 
the Commission, and then, as I described it in my opening 
statement, in my mind, it really mirrors these signing 
statements that are really troubling to people in the country. 
Commissioner Tate first, please. Can you tell us what authority 
you draw from to do that?
    Ms. Tate. Well, I suppose first, this was presented by the 
companies to us.
    Ms. Eshoo. You mean the companies told you that you should 
issue that statement afterward?
    Ms. Tate. No, the merger, itself.
    Ms. Eshoo. Well, I am not talking about the merger. I am 
talking about the statement that you and the chairman issued on 
the heels of a majority vote of the Commission, that you were 
not going to honor parts of the agreement of the merger that 
you had just voted for, so I am asking what legal authority, 
what authority do you draw from to have that stand? I mean, it 
is yes and no. Which one did you mean? The statement that you 
made after you voted for it or before?
    Ms. Tate. I voted for the merger.
    Ms. Eshoo. And what about the statement? Let me ask you 
this. What parts of the merger do you plan to enforce, and 
which parts of the merger do you plan not to enforce? Because 
that is really what that statement was about.
    Ms. Tate. I think that oftentimes when we vote on 
something, all of us, in fact, most every time we vote on 
something, there are five statements in the record. We may not 
agree with everything that is in the order that was adopted, 
and so I think that----
    Ms. Eshoo. Well, you can always talk about what you may not 
have agreed with in the vote. You have to develop consensus, we 
all do. A lot of times, it is 51-49 or 49-51, whatever way we 
see it, but I think it is rather extraordinary to commit to 
really not enforcing parts of the agreement of the merger that 
you voted for and I am asking you what authority? What was the 
meaning of it? Why did you say that?
    Ms. Tate. There was one condition that would have proposed 
that the company present a tariff to us.
    Ms. Eshoo. Did you vote for that? You voted for it. It was 
in the agreement.
    Ms. Tate. Well, the tariff has not been filed, to my 
knowledge.
    Ms. Eshoo. What about Chairman Martin? What parts of the 
merger do you plan to enforce and what parts do you not plan to 
enforce? Given your statement.
    Mr. Martin. Well, sure. First, I don't agree we were going 
to approve the merger and then refuse to enforce it. We are 
going to enforce it.
    Ms. Eshoo. All of it?
    Mr. Martin. Sure. And what legal authority I have for our 
statement is the order itself. The order itself says that while 
these conditions are voluntary and AT&T will comply with them, 
that it does not change our policy, that it does not, in any 
way change our precedent and that the Commission's policy and 
precedent will still go forward exactly as is. And its policy 
and precedent is that in separate actions, if you file a 
tariff----
    Ms. Eshoo. I have limited time. I have 33 seconds left.
    Mr. Martin. The order itself is----
    Ms. Eshoo. Let me go to Commissioners Adelstein and Copps 
to comment on this.
    Mr. Copps. I would just note that, for purposes of judicial 
review, that the conditions to a merger are treated as rules, 
and they are subject to deference, and the question we are 
talking about here doesn't go to future proceedings, but it 
goes to the instant proceeding and enforcing this particular 
merger about this particular condition.
    Ms. Eshoo. Commissioner Adelstein.
    Mr. Adelstein. Well, the normal process we use when there 
is a difference of opinion about an event is to dissent. If 
there is something somebody considers to be illegal or 
inappropriate in a merger, generally, I dissent if I don't 
think something is legal. And I have done that on a regular 
occasion. It is better to try and work it out in advance and 
get a consensus in advance rather than to subsequently say that 
something won't be implemented.
    Ms. Eshoo. Thank you. I think my time has just about 
expired, so thank you, Mr. Chairman. Very unusual.
    Mr. Markey. The gentleman from Georgia, Mr. Deal.
    Mr. Deal. Thank you, Mr. Chairman. As you heard from my 
opening statement, I am concerned about the retransmission 
consent as it is currently in place. I would like to ask some 
procedural questions first and then maybe move to your views on 
the way the system is currently operating. Chairman Martin, I 
guess I will ask you these procedural questions first. It is my 
understanding that when a content provider or programmer 
reaches an agreement with a distributor cable company, that 
those contracts generally contain nondisclosure provisions in 
the contracts. Is that generally the rule?
    Mr. Martin. That is correct.
    Mr. Deal. And does that mean that after the contract is 
concluded that they cannot disclose, even to the FCC, the terms 
and conditions?
    Mr. Martin. That is correct. We don't even have the 
information about that in many instances.
    Mr. Deal. Do you have authority to demand disclosure of 
that?
    Mr. Martin. I would have to go back and research it and 
give you an exact answer, but I am not sure we have authority 
currently.
    Mr. Deal. Well, that is after the contract is concluded. 
During the course of the negotiations, are you made privy to 
the terms of the offers and counter-offers?
    Mr. Martin. No. The only instance in which we were was when 
someone filed a complaint at the Commission, but other than 
that, no.
    Mr. Deal. Do you have authority during that period to 
require disclosure of it?
    Mr. Martin. Again, I am not sure. I am not sure that we do 
because we don't have a specific role in that, and the 
Commission has determined that unless someone files a complaint 
with us about it, I don't think we do.
    Mr. Deal. Well, isn't the overall test whether or not the 
negotiations are in good faith, and if you have no knowledge of 
what the negotiations entail, how do you make a determination 
of good faith?
    Mr. Martin. That is right. What I meant is that we only 
evaluate whether it is in good faith or not if someone comes 
and complains that it is in bad faith.
    Mr. Deal. So if someone complains?
    Mr. Martin. If someone complains, then it comes to our 
attention, but other than that, we are not privy to what is 
going on.
    Mr. Deal. So if a complaint is made, you then have 
authority to require disclosure?
    Mr. Martin. I think so. In the context of a complaint, I 
think we would be, if someone was saying this is in bad faith, 
then we would ask the parties about the allegations of bad 
faith. If that involved the underlying prices, then we 
potentially could.
    Mr. Deal. And what would be the remedy if you determined 
that the negotiations are not in good faith?
    Mr. Martin. In 1999 or 2000, the Commission determined that 
actually the only remedy was to order them to go back to the 
negotiating table and then engage in conducting good faith. The 
Commission actually determined that they didn't have the 
authority to order carriage at a certain price in the 
implementation of the Satellite Home Viewer Act; the Commission 
determined it didn't currently have the authority to order 
that.
    Mr. Deal. And I believe, in the most recent Sinclair 
dispute, the Media Bureau said they didn't have authority to 
order arbitration. Has the Commission, as a whole, made a 
similar determination?
    Mr. Martin. They did in the context of the Satellite Home 
Viewer Act implementation, which was based upon the Cable Act 
retransmission consent negotiation standard, so they did. That 
is why the bureau was able to do that, and the current appeal 
of that decision is before the other commissioners now.
    Mr. Deal. All right, let me start down the road, then. Mr. 
Adelstein, first of all, what is your overall view of the way 
retransmission consent is functioning, currently?
    Mr. Adelstein. Well, it provides broadcasters with the 
opportunity to negotiate compensation for their programming. I 
understand that. It is not clear whether Congress achieved its 
intent, though, to prioritize the interests of viewers ahead of 
the cable operators and broadcasters. The FCC's role is, as you 
said, to ensure good faith negotiations. There has got to be a 
way that we do that. In fact, there was a colloquy in the 
United States Senate during the adoption of this bill that did 
indicate that we would have the authority to enforce and ensure 
that there is a completion of these negotiations. I think the 
FCC should protect the viewing public through prompt 
resolution, binding arbitration, if necessary, and interim 
carriage are things that are, according to legislative history, 
potentially within our authority to do if no consensus is 
reached between the parties.
    Mr. Deal. Mr. Copps.
    Mr. Copps. I would agree with Commissioner Adelstein. Our 
latitude to act in retransmission consent is not wide, 
basically limited to the good faith negotiations. We do need to 
protect the consumer, and I think there is a need for an 
overall look at whether retransmission consent is working as it 
was originally intended to work and whether it is really 
protecting small broadcasters, protecting small cable. I think 
an argument can be made that maybe the way it is working out 
now, it is really kind of encouraging consolidation in the 
industry rather than competition.
    Mr. Deal. Chairman Martin.
    Mr. Martin. I think our current authority is very limited 
as to what we are able to end up doing when there is a 
complaint back and forth. I think the concerns about the way 
the retransmission consent is working with the broadcast 
providers is a symptom of the larger problem of how content 
providers are increasingly charging consumers for all of the 
content that is included in the expanded basic cable package. 
And all of it being done without any kind of transparencies as 
to how much consumers are having to pay.
    Mr. Deal. I appreciate that part of your testimony. As you 
know, it is a concern of mine.
    Mr. Martin. And I think that you have to put it in the 
context that the broadcasters are asking for sometimes 
significantly less than many of the other cable content 
providers are asking for and demanding when they are including 
expanded basic. I think that some additional opportunity for 
consumers to see how much they are paying for all of their 
content would be helpful across the board, not just in 
broadcast, but in all of cable.
    Mr. Deal. Ms. Tate.
    Ms. Tate. Yes. I think you all heard about one issue that 
had come up, but generally, I think that the process is working 
and that thousands of these agreements are being done every 
day. I do think we need to continually review the roles that we 
have before us.
    Mr. Deal. Mr. McDowell, you only get 10 seconds.
    Mr. McDowell. I am used to that, being the most junior 
member of the Commission. I do think we need an overall 
thorough view of why the cost of content, overall, is going up, 
so as a preliminary matter, I agree with Commissioner Tate that 
the vast, vast majority of retransmission consent negotiations 
are going well, and we don't read about them or hear about 
them, and that is good news, but we do need to certainly focus 
to see if there is something else that can be done. I hesitate 
to put the Government's thumb on the scale in this regard, but 
on November 26, when it came, for instance, to the Mediacom 
Sinclair dispute, I did ask both CEOs of both companies to come 
in and join me and Commissioner Adelstein to see if we could 
help them facilitate in some way a private sector solution to 
this. I think it ultimately did help bring a resolution to that 
problem, which came on the eve of the Super Bowl.
    Mr. Deal. Even though you will never know what the 
negotiation finalized was?
    Mr. McDowell. Well, I think by the fact that both parties 
consented to an agreement, that is probably a sign that they 
can at least tolerate the terms of their agreement, so that is 
a little ray of hope.
    Mr. Deal. Thank you, Mr. Chairman.
    Mr. Markey. OK, gentleman's time has expired. Gentleman 
from Michigan, Mr. Stupak, is recognized.
    Mr. Stupak. Well, thank you, Mr. Markey, for holding this 
hearing, and thank you, Commissioners, for joining us. As it 
has been said, the last time we had all five Commissioners here 
was like over 3 years ago. As chairman of the Oversight and 
Investigations Subcommittee, I intend to work with Chairman 
Dingell and Chairman Markey to exercise vigorous oversight of 
the agency. I hope our relationship can be productive, and that 
is why I was concerned, Chairman Martin, when I heard that you 
had a closed door meeting with the Republican members of the 
Energy and Commerce Committee.
     You should feel free to share with all of us things you 
have on your mind at that meeting, and I look forward to having 
public and frequent dialog with you. It is astounding what this 
one hearing can lead to. According to press reports, the 
Commission is cleaning house. The FCC has asked industry to 
withdraw petitions from as far back as 1995. That is over 12 
years ago. I am not even sure we had e-mail on Capitol Hill in 
1995. Congress makes laws and we expect the FCC to enforce 
them. Leaving petitions sitting for 12 years doesn't seem like 
enforcement to me.
    So Mr. Chairman, my first question is ignoring consumer 
complaints is also not enforcement. The Commission is finally 
attempting to clean up approximately 70,000 do not call 
registry complaints from as far back as 4 years ago. So is it 
true the FCC is now sending letters to Americans about their 
complaints saying, in essence, we have received your complaint, 
but we need more information to act on it. Yes or no?
    Mr. Martin. Yes, the Commission is sending letters to 
consumers who didn't file enough information for us to act on 
the complaint, that can you give us more----
    Mr. Stupak. Do you close out the consumer complaint after 
sending out one of these request letters?
    Mr. Martin. Yes. We say that we can't act on it without 
getting further information.
    Mr. Stupak. Well, I think that reflects pretty poorly on 
the Commission's ability to create and enforce consumer 
protections. So let me ask you this, turning to consumer 
protections, when the Commission reclassified DSL and cable 
modem services as information services, the Commission failed 
to clarify what consumer protections applied to these services. 
That is over 54 million broadband subscribers lacking consumer 
protections. In fact, the FCC asked for comment on this issue 
in 2004 as it relates to VOIP and again in 2005. Today, the 
Commission still has not issued consumer protection rules. Is 
the Commission going to establish consumer protection standards 
for broadband services?
    Mr. Martin. I think the Commission has taken some steps to 
address some of the consumer protection issues that were raised 
in that notice. We have taken individual actions on things like 
911 and Universal Service and making sure that we updated our 
rules to reflect that already. We have also tried to take steps 
in the disability area, but I think we will issue generally 
rules, yes.
    Mr. Stupak. You expect some more rules to come out. When do 
you expect them to be out?
    Mr. Martin. I think we have tried to address them in order 
of how critical they were, but I think we will probably be able 
to--I would assume this year we will probably address the 
remaining issues that are there.
    Mr. Stupak. OK. In 2006 I joined with several of my 
colleagues on this committee in sending you a letter regarding 
small auction areas for the 700 MHz auction that is supposed to 
be at the end of the year. At a minimum, one band of this 
spectrum should be auctioned by cellular market areas, rather 
than the economic area groupings. This would break down the 
spectrum auction into 734 geographic areas, rather than six, 
which I think is very critical for rural build-out. Mr. 
Chairman, do you support auctioning at least one band by 
cellular market areas rather than the economic area groupings?
    Mr. Martin. I definitely support auctioning off multiple 
bands in smaller areas than the largest groupings you 
identified.
    Mr. Stupak. And would you go with the cellular market 
areas, then, which are 734 as opposed to the six biggies?
    Mr. Martin. I think there is a current proposal in front of 
the Commission that was put forth by a group of rural wireless 
providers who asked for a smaller----
    Mr. Stupak. When would you expect to issue an order on 
that?
    Mr. Martin. That is the order that we need to be issuing to 
be able to go forward with the auction, in April, to go forward 
with the auction in October, and I think we will try to 
accommodate exactly what the rural wireless providers have 
asked for.
    Mr. Stupak. And you expect that to be in April?
    Mr. Martin. Yes.
    Mr. Stupak. OK. Let me ask you another question on 
spectrum. The Commission has before it a proposal called the 
Broadband Optimization Plan, BOP. This plan would re-band the 
24 MHz for public safety to allow public safety to do broadband 
in addition to narrowband or voice communications within their 
newly allotted 24 MHz. It is my understanding that public 
safety is strongly in support of BOP. Mr. Chairman, do you 
support this plan, the BOP plan, yes or no?
    Mr. Martin. Yes.
    Mr. Stupak. How about the other Commissioners? Mr. 
McDowell, do you support the BOP plan?
    Mr. McDowell. I am still examining it.
    Mr. Stupak. All right. Ms. Tate?
    Ms. Tate. I had a meeting this week, but I am still looking 
at it.
    Mr. Stupak. OK. Mr. Copps?
    Mr. Copps. I think the objective sounds good, but I need to 
look at the details of it.
    Mr. Stupak. OK. Mr. Adelstein?
    Mr. Adelstein. Yes, we have looked at it. I think it is a 
very good idea, and I am hopeful that I can support it.
    Mr. Stupak. OK. Two out of five. We only need one more. Any 
idea when some of these decisions will be made? Some of you 
indicated more information.
    Mr. Martin. The decisions regarding the spectrum auction on 
the commercial side need to end up being made, as I said, in 
April or May for us to continue with the auction in the fall. I 
think that that would then allow us to move forward with some 
of these public safety issues this year and probably in the 
timeframe of the fall, while the auction is going on. We can 
then try to identify what the public safety should be doing 
with these pieces of spectrum that aren't being auctioned.
    Mr. Stupak. All right. I represent small providers, and 
when Mr. Hill speaks of a city of 18,000, that is the biggest 
city I have, so that is big time. Should change that song to 
``Big City.'' But my small providers have provided a service in 
their communities and they want it at a low price. The small 
cable systems in my district, and we are talking about systems 
with fewer than 500 subscribers, are very, very concerned about 
how some regulations that have been put on them are going to 
impact their ability to offer broadband or even stay in 
business.
     I am a strong supporter of CALEA and giving law 
enforcement tools they need, but I have heard concern from a 
number of my small providers about the cost of CALEA for these 
very small systems. Northside TV Corporation in my district may 
have to drop broadband now because the upfront costs for CALEA 
are approaching $10,000 plus $750 a month. I would like your 
response, in writing, about whether there is a way to allow the 
small systems a waiver until they have a higher number of 
subscribers, maybe a thousand.
     And that is what I would like, in writing, because I would 
like this to be given a little bit more thought, because these 
companies are really the most responsive to local law 
enforcement because they live in the communities, and many of 
these providers are actually municipal providers. So if you 
could, I would like that in writing, if I can.
    And moving to interconnection, Mr. Chairman, while the vast 
majority of Americans still receive their telephone service 
from incumbent local telephone companies, VOIP providers are 
making incredible progress in rolling out new products. Do VOIP 
providers have guaranteed interconnection rights that will 
allow them to compete?
    Mr. Martin. Yes. Actually, the Commission just issued an 
order reaffirming that in South Carolina, Time Warner was 
having difficulty getting interconnection with the local 
incumbent. We acted on that order confirming that they do have 
those interconnection rights, and they also have the rights to 
local numbers in that area so they can compete.
    Mr. Stupak. OK, very good. I think I will follow that up 
with you later. Just one more thing. I have been looking 
through the FCC Inspector General reports and I have some 
questions on the report about the FCC's 2005 financial 
statements, and we will follow it up at a later time.
    Mr. Martin. Thank you.
    Mr. Stupak. With that, I guess my time has expired. Thank 
you, Mr. Chairman.
    Mr. Markey. Right. Gentleman's time has expired. Chair 
recognizes the gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman, and I welcome the 
Commissioners here. We all have our own little niche markets 
that we address, and although it seems like there is nothing 
good going on, I don't know. We had, and Anna Eshoo was with me 
there last night at the E-911 awards banquet. Usually one of 
you all are there. Did anybody make it to the E-911 awards 
banquet? Commissioner Adelstein, you usually are there.
    Mr. Adelstein. We were actually preparing for this morning.
    Mr. Shimkus. Good answer. Why I mentioned that is because 
we have had some great successes with Government and industry 
nationally and locally working to get their own deployment, and 
there are some great success stories. We have also had, and my 
colleague, Mr. Doyle, I am going to have to talk to him off of 
hearing time, we have had Mr. Hatfield here numerous times 
throughout those years. I am going to have to ask you, I was 
trying to follow that line of questioning, and I just couldn't 
understand what was that all about, so if you would give me 
some time, I would be happy to discuss it with you.
     Because as far as the first time responders and the 
progress we made in just my 10 years on 911 and then E-911 is 
just truly remarkable, and it is from working together, 
understanding that the industry, the local governments and the 
PSAPs, all those have to, and they are not all there at the 
same time. And so sometimes it is the corporate entity that is 
well ahead, and sometimes it is the PSAP that is well ahead, 
and sometimes the ILEC is behind, and so there have been some 
positive success stories.
     And hopefully, that will also encourage, we start with 
inoperability, and we try to encourage people to work together 
and push because most of us, especially in this committee 
arrangement, have a hard time dealing with post-9/11 and their 
inability to communicate interoperably at Katrina. We are 
embarrassed by it, and we just can't sustain that again, I 
mean, as a nation and as public policy folks, so it sounds like 
there is a lot of interest in that.
    I have a couple questions. One just follows up on what we 
moved originally in the act on this side. It was inserted into 
the Safe Port Act at the end of the year; a big success so far. 
But there is an advisory committee report that is due, it looks 
like October 14 of 2007. Chairman Martin, do you think that 
they will meet the guidelines on that report by the time 
stated, and do you have any ideas where they are headed?
    Mr. Martin. I don't have any ideas on where they are 
headed, but I do think that the advisory committee has met 
several times already. They have met as recently as earlier 
this week, and I am confident that they will meet their 
timeframe for making those recommendations to us, and I 
certainly agree on the progress we have made on 911 issues, in 
general, on both implementation for VOIP 911 and E-911.
    Mr. Shimkus. And I am glad you mentioned VOIP because one 
of the award winners last night was a former legislative 
staffer for NENA who now works for Vonage, an IP provider, and 
of course, we had the 911 issue there, and it looks like Vonage 
is almost 95 percent covered, at least that is the bio that 
they told me to read when I helped give this award, 6600 local 
communities, the PSAPs, they work with Vonage to do that. That 
is a great success versus where we were just last year.
     Using Vonage as an example, if they are at 94 and they got 
6 percent, you are looking at other IP providers, one of the 
dilemmas is the inability for the IP providers to have the same 
limited liability protection as voice. Can you speak to that 
and what we might be able to do to make sure--it is tough to be 
able to help first line people in your industry if you know 
that even if you do all you can to connect the dots and get 
people there, then you are going to be sued for not being quick 
enough.
    Mr. Martin. I think that the Commission has done all they 
can on trying to make sure that voice providers are providing 
that service and are protected at the maximum most they can. We 
can't do anything else on limited liability. I have testified 
before that that is actually one of the things I think will be 
helpful for Congress to end up addressing. I know that was in 
your bill in the last Congress, in Senator Nelson's bill on the 
Senate side, and I think that is a very helpful thing to 
address, along with several other issues.
     I think that it is critical to have an understanding that 
our voice over IP 911 rules that we implemented shortly after I 
became chairman in May of 2005, initially, all of the voice 
over IP providers said that it was on a timetable that couldn't 
end up being done and that this was something that was 
unreasonable, and as you said, many of those same voice over IP 
providers today are at over 90 percent coverage, and it was by 
working hard, holding their feet to the fire, working with the 
public safety community to make sure that this ended up getting 
done. And indeed, I wasn't there last night, but I was at the 
E-911 Institute dinner last year, where I received, on behalf 
of the Commission, their award for what we have done in that 
area.
    Mr. Shimkus. Thank you. And just to follow up, do you think 
that the liability protection issue is a legislative fix that 
has to be moved through here?
    Mr. Martin. I think that is a legislative fix. I don't 
think that is anything that the Commission can end up doing.
    Mr. Shimkus. Mr. Chairman, I recommend that we claim that 
jurisdiction from the Judiciary Committee and move it. I yield 
back.
    Mr. Markey. Gentleman from Texas, Mr. Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman. How much 
time do I have? I waived opening.
    Mr. Markey. You have 8 minutes.
    Mr. Gonzalez. Eight minutes. I didn't even notice. Thank 
you very much. The first question, and I apologize, obviously, 
being in the majority has many advantages, unfortunately, the 
drawback is we are just expected to be many more places, but it 
is nice to have a voice, believe me. The first question is 
going to be on Universal----
    Mr. Barton. Times are tough in the majority.
    Mr. Gonzalez. The good thing, it wasn't a real hard act to 
follow. Let us go on. Universal Service Fund. Would you agree, 
and this is directed to the Chairman and to Commissioner Copps, 
the revenue source is shrinking and that the recipient base is 
growing?
    Mr. Martin. Yes, we did try to expand the revenue base just 
last summer and trying to take into account voice over IP 
providers and increase the rates for, the safe harbor rates for 
wireless, but yes, in general, long distance rates or long 
distance revenue is shrinking, so we did try to expand the base 
there.
    Mr. Gonzalez. All right. And the recipient base is growing.
    Mr. Martin. Oh, yes. I am sorry. Yes, the recipient base is 
growing.
    Mr. Gonzalez. Commissioner?
    Mr. Copps. Yes and yes.
    Mr. Gonzalez. All right. So then the question is what do we 
do to address each of those particular points?
    Mr. Martin. I think that we should move on the contribution 
side to something that is both technologically neutral and 
broader, and I think we should move to a numbers-based 
contribution system in which we assess telephone numbers, 
Universal Service contributions and telephone numbers. That not 
only expands the base quite dramatically, but also establishes 
an economic value to telephone numbers.
    As Congresswoman Harman and I have talked about many times, 
people don't see any reason why they shouldn't be able to take 
telephone numbers and hoard them, or they are using telephone 
numbers and area codes for gas pumps and ATM machines. And 
because there is no economic value to them, they are utilizing 
them in a wasteful manner that harms small business. I think we 
should be assessing Universal Service based upon telephone 
numbers as a broader base, and that would be technologically 
neutral.
    And then on the distribution side, I think we should be 
moving to reverse auctions, which would allow for us to 
increase the capability that is being provided but get rid of 
the duplication that is occurring on the distribution side 
today. And I think that that would allow us to say we are going 
to provide funding for one carrier of last resort in an area 
and say for how little money can you provide service and what 
quality of service can you provide as opposed to how many 
networks can we fund to just provide voice services today.
    Mr. Gonzalez. Thank you.
    Mr. Copps. I agree on the need for a fix. I am not 
convinced that we need to go quite that far, as I tried to 
indicate in response to an earlier question. I think if we had 
authority to assess on intrastate, we would greatly reduce the 
contribution factor and expand the revenue base. We have to 
decide what Universal Service is for and if it is going to 
include broadband, and if indeed it is, then we need to start 
collecting from broadband. Certainly, we have to do something 
about the identical support I think that is given to 
competitive ETCs in the area. I think if you did those things, 
and we have already tried to true up wireless and VOIP, and 
have vigorous oversight of the fund and make sure we do an 
auditing of the fund, I think we would be pretty well down the 
road toward a solution to the problem of Universal Service.
    Mr. Martin. Let me just add. I don't disagree with 
Commissioner Copps on if we had the ability to assess 
intrastate revenue. Indeed, Commissioner Copps and I have both 
signed a letter to Congress before suggesting that would be a 
helpful authority for the Commission to have when we were both 
joint board members. And Commissioner Adelstein, I believe, 
supports it, as well. So the ability to assess intrastate 
revenue would be an additional potential source. We are 
prohibited now by statute and by law; a Fifth Circuit decision 
in 1998 prohibits us from doing that, currently.
    Mr. Gonzalez. All right. Thank you very much. The second 
part, and I apologize, since I was at another hearing, I wasn't 
aware of the previous questions. This happens often enough. So 
I may be repetitive. And for that I do apologize to the 
witnesses and to the members of the committee. This question 
would go to Chairman Martin and Commissioner Adelstein, and it 
goes to net neutrality. I am sure that it has been touched on, 
and you know it is highly controversial. As the markets play 
out, technology moves forward. Business models change day to 
day. It is ever evolving.
     And I understand that individuals say that keep the 
democratic nature, small ``d,'' of the Internet, the open 
architecture and such. But the truth, there are so many forces, 
dynamic forces out there. I know everyone out there that may be 
reading about it and listening to it, they believe that their 
ability is going to be diminished in sending an e-mail or doing 
a search. This issue is really not about that. This issue is 
really about the commercial context of the Internet and what it 
represents and the way of doing business, and I mean, this is 
the most incredible thing that has happened, probably in the 
history of the United States.
     See if you agree with me, because I was talking to 
somebody and this is the information that they indicated was 
accurate, that downloading a single half hour TV show on the 
Web consumes more bandwidth than does receiving 200 e-mails a 
day for a full year. Downloading a single high-definition movie 
consumes more bandwidth than does the downloading of 35,000 Web 
pages. And I guess you know where I am going.
     In today's technology, where we are today, as far as the 
capacity and the ever increasing use of bandwidth on video and 
such, where are we today as far as still being able to service 
the commercial uses, the individual purposes of the Internet, 
and what needs to be done in the future, if anything, to ensure 
that capacity will be there? And I will go to Chairman Martin.
    Mr. Martin. Well, certainly when you talk about net 
neutrality concerns that people have raised, you are absolutely 
right. I mean, the Commission has rules that say that network 
operators can't block consumers' access to the Web sites and 
they can't block consumers' access to e-mail, so the Commission 
has principles in place that we have demonstrated in the past 
we would enforce. What we are trying to find is an appropriate 
balance on how you provide incentives for infrastructure 
deployment so that the people that are wanting to hook up 
consumers to broadband networks are able to do so in a way that 
they are still able to recoup some of those costs. And I think 
you are raising the concern that consumers are demanding more 
and more video over their Internet or using more and more of 
that underlying capacity, which is why continuing to find and 
create a regulatory environment that allows for them to invest 
in that infrastructure and then still be able to recoup those 
costs is critical to ensuring that we have a broadband 
deployment like I think we need.
    Mr. Gonzalez. Thank you. Commissioner.
    Mr. Adelstein. Well, this is certainly a difficult issue. I 
think that promoting broadband and freedom on the Internet go 
hand in hand. Consumers have great appreciation for the ability 
to go wherever they want, to have access to different 
applications providers and not to have a network operator that 
may have a dominant position in the market be able to control 
their access to the Internet, so they consider that very 
important.
     And we have been very careful in thinking about how 
network management issues can be protected while ensuring the 
consumers' rights to have the kind of freedom that they have 
come to enjoy on the Internet are protected. Consumers, I 
think, really see this as a remarkable source of innovation; a 
world of economic and social opportunities opened up to them 
and we want to preserve that open nature of the Internet that 
has always been its character. I think the FCC's work isn't 
done on this.
     I know Congress has done a lot of work on this. I think 
that we have to continue to monitor the situation. I certainly 
think that we need to explore the parameters of various network 
neutrality ideas. We came up with one on our own in conjunction 
with AT&T with regard to their merger that was something that 
after that was adopted, AT&T's stock hit an all-time high. So 
certainly, Wall Street doesn't see that proposal as in any way 
being an impediment to broadband deployment.
    Mr. Gonzalez. And thank you very much. All that 
accomplished without legislation. I yield back.
    Mr. Markey. OK, gentleman's time has expired. The 
gentlelady from Wyoming, Mrs. Cubin.
    Mrs. Cubin. Thank you, Mr. Chairman. In the audience today 
is our representatives of a company called TCT Communications, 
out of Basin, WY, and Basin, WY has a population of about, I 
don't know, around 500 people, I think. At any rate, this is 
the kind of district that I am representing, and I think while 
reverse auctions seems like a good idea on its face, unless it 
is properly set up, it could be extremely harmful to companies 
like TCT and other small companies.
     And the problem boils down to this, as you know, as a 
matter of policy, the current policy that we have would allow, 
for example, just example, Verizon to bid zero on a reverse 
auction because they could absorb the costs elsewhere, and what 
would happen, then, in that case is they would win the auction, 
and companies like TCT would have a big investment in the 
equipment and so on that they have deployed, and so they would 
be left out of the USF completely. So I guess what I would like 
to know is, is there any possibility of eliminating the 
identical support rule? Is that reasonable at all? Mr. 
Chairman.
    Mr. Martin. Eliminating the identical support rule?
    Mrs. Cubin. Right. Or changing it to protect the companies 
that actually have a large investment.
    Mr. Martin. Oh. I think that whenever you talk about trying 
to change our Universal Service distribution going forward, you 
have to take into account the companies that have invested in 
their underlying infrastructure based on the expectation that 
they are going to continue to get Universal Service. So we 
would have to find a way, when we make this kind of a change, 
to phase this in so that people would be able to take that into 
account in their underlying capital infrastructure going 
forward. So I think we do need to end up doing that.
    Mrs. Cubin. Did you say we need an update on that?
    Mr. Martin. We need to phase that in. If we make the kind 
of change I was talking about, we would need to phase that in 
over time to allow and give people enough notice that they 
would be able to still recover the costs of the investments 
they had made in the past, so I think we would need to end up 
doing that.
    Mrs. Cubin. OK, obviously you think that would cover the 
entire problem. How about you, Commissioner Copps? And by the 
way, I think that I actually have 3 more minutes than is on the 
clock since I didn't give an opening statement. Mr. Copps.
    Mr. Copps. I think there is much to recommend in your 
statement of addressing the identical support rule. It won't be 
easy to do that, but I think that may be the preferable way to 
go, vis-a-vis a cap on the CETCs. A word on reverse auctions 
that you have raised, because a number of questions have been 
raised. This has been referred to the joint board, and there is 
no unanimity there on this subject right now, I think it is 
fair to say. It raises a lot of questions.
     Some may see this as kind of a deregulatory initiative and 
all, but it raises a lot of questions with regard to does it 
encourage kind of minimal kinds of service rather than really 
investment? What happens when the winner of the auction maybe 
leaves carrier of last resort responsibilities and so on, and 
so I think we have to be aware of that, and I think it implies 
some kinds of standards so those who think it is less intrusion 
from the FCC may discover that it is more intrusion, in the 
final analysis, to administer something as complicated as that.
    Mrs. Cubin. Thank you. I understand that the Commission's 
recent notice of proposed rulemaking on program access says it 
does not cover the issue of shared headends and that this 
committee, in the COPE Act last year did pass that, so I wonder 
if the FCC, if the Commission thinks that it is appropriate to 
amend their rule, to change the order on this, or do you think 
legislation is necessary if we wanted to get shared headends 
passed again?
    Mr. Martin. The issue you are referring to is what they 
also call the terrestrial loophole. In other words, the program 
access rule doesn't apply to content that cable operators 
distribute only over the ground, that don't use satellites to 
distribute. And currently, that was the way statutory program 
access provisions were put in place and so I agree that it 
presents some problems and challenges for not being equitable 
in the way that that statute was implemented. I think that the 
Commission has traditionally been concerned that the statute 
was very specific on how the program access rule should apply, 
and I think that we didn't think we had the authority to extend 
it on the terrestrial basis to get to the so-called loophole 
issues you are talking about. So I think if Congress addressed 
it like they did last year, obviously the Commission would 
implement it. We have actually put conditions on some of the 
mergers in the past but have tried to say that the same kind of 
rules should apply to address in that manner.
    Mr. Markey. The gentlelady's time has expired. In order to 
claim 8 minutes, a member of the committee has to be here 
before the conclusion of opening statements in order to claim 
the additional 3 minutes, and those are the rules of the 
committee that were in order when the Republicans controlled 
the majority, and we are just maintaining the same rules.
    Mrs. Cubin. Mr. Chairman, I was 30 seconds late because 
there was an enormous backup of traffic on the George 
Washington Parkway and so therefore--I have a very expensive 
piece of evidence that I would like to show, so I would ask 
unanimous consent for an additional----
    Mr. Markey. As the author of the controversial daylight 
savings time amendment with Mr. Upton, I can understand there 
are some people still making adjustments to the lost hour, and 
so since the gentlelady was only 30 seconds late, I ask 
unanimous consent that she be granted the 3 minutes.
    Mrs. Cubin. Thank you. And I won't go over, but I do have a 
chart. This is about DMAs. And I just want to point out how 
ridiculous DMAs in some areas are. The chart is a little 
confusing from down there, I am sure, but what I want to point 
out to you is that here is one DMA, this whole area. And here 
we have a Casper Riverton TV station area, but here this comes 
all the way from Denver. This DMA goes all around here, all the 
way up to the northern part of the State, this distance is 
probably 700 miles, 600 or 700 miles, and we have a station 
here, we have one here. Then here is another one. Rapid City is 
the area that broadcasters shared in Wyoming, halfway across 
the State, and these are really vast areas, and so the point 
that I want to make is that it makes no sense the way these 
DMAs have been divided, and I wonder if the Commission would 
comment on this and make any suggestions for changing.
    Mr. Martin. Sure, sure. The Commission has in front of it 
an order I put in front of it last fall that would say that for 
situations like this in which DMAs cross State lines, consumers 
in those areas should be able to say that they want their local 
broadcast stations covered even if their city is technically in 
another DMA. For example, you are talking about Denver up to 
Casper, so it is crossing State lines. The order in front of us 
would say that we should, under those circumstances, say that 
the local broadcasters should be carried by their local cable 
systems and their satellite systems even if they were 
technically in a different DMA and so I think that this is 
creating some confusion, and I think that the Commission has a 
way to try to address it.
    Mrs. Cubin. But it is only person by person allowing them 
to----
    Mr. Martin. Oh, no. We would do it city by city for the 
DMAs that are crossing State lines and creating this confusion.
    Mrs. Cubin. Thank you. And thank you, Mr. Chairman.
    Mr. Markey. The gentlelady's time has expired. Chair 
recognizes the chairman of the full committee, Mr. Dingell.
    Mr. Dingell. Mr. Chairman, thank you for your courtesy. 
These questions are to Chairman Martin. Mr. Chairman, these 
questions can be answered, I believe, yes or no. First, an 
agency should base its action on a solid record that is fair 
and impartial and created in an open and transparent manner. Do 
you agree?
    Mr. Martin. Yes.
    Mr. Dingell. Mr. Chairman, at the meeting on December 20, 
2006 the Commission voted to preempt local governments on cable 
television franchising. Is that correct?
    Mr. Martin. Under certain circumstances, yes.
    Mr. Dingell. Well, all right. At that meeting there was a 
disagreement about the sufficiency of the record of franchising 
abuses, an issue on which you and another Commissioner 
differed. Is that correct?
    Mr. Martin. Yes.
    Mr. Dingell. Would you submit to us a copy of the relevant 
parts of the record of that discussion, please?
    Mr. Martin. Sure.
    Mr. Dingell. A month later, on January 26, Verizon stated, 
in a letter to your office, that you requested that they submit 
an additional filing into the official record after the 
Commission voted on the order. Is that true?
    Mr. Martin. No, we actually asked for clarification after 
the city of Tampa had written us a letter.
    Mr. Dingell. Was that done in writing, or was that done 
orally, or was that done at the time the record was completed?
    Mr. Martin. The city of Tampa wrote us after the hearing 
and after the open meeting.
    Mr. Dingell. Was that in writing?
    Mr. Martin. It was in writing.
    Mr. Dingell. Would you submit that to the committee, 
please?
    Mr. Martin. Of course.
    Mr. Dingell. I have here a copy of the letter to the 
Commission in response from Verizon, which I ask, Mr. Chairman, 
be inserted into the record.
    Mr. Markey. Without objection, it will be inserted.
    Mr. Dingell. Now, this document, then, was placed in the 
record after the Commission had voted and adopted the item. 
That submission concerned the very matter on which you 
disagreed with another member of the Commission. Is that 
correct?
    Mr. Martin. It was actually one of the issues we had 
disagreed with one of the other members of the Commission.
    Mr. Dingell. Now, do you believe that asking outside 
parties to submit new facts after a vote is an appropriate way 
to assume and to assure a fair and impartial record upon which 
an agency vote is based?
    Mr. Martin. I think it was in this circumstance, because 
the city of Tampa had first written us and had said something 
we relied upon was inaccurate after the record had closed, so 
we asked, since they had made an assertion after the record was 
closed that something was inaccurate, we asked for the other 
parties that were also involved to submit theirs.
    Mr. Dingell. Was any other party to that proceeding 
afforded the same right to make additional submissions?
    Mr. Martin. The other parties that were involved in the 
city of Tampa allegations were given that right then.
    Mr. Dingell. They were. Were they notified they were given 
that right?
    Mr. Martin. Yes. The city of Tampa and Verizon----
    Mr. Dingell. Was that done in writing, or was that done 
orally?
    Mr. Martin. We called them and asked them for clarification 
in light of the city of----
    Mr. Dingell. Would you submit the telephone log on that 
matter, please?
    Mr. Martin. We will try to find the telephone log book.
    Mr. Dingell. Just a question. When you afford one party a 
right and you notify the other, isn't this a matter which 
should be done formally and on the record and not just orally?
    Mr. Martin. That is why we actually asked for Verizon to 
respond in writing and put that in the record.
    Mr. Dingell. But you didn't ask in writing for the other 
participants to the proceeding to submit additional information 
on this particular point, did you?
    Mr. Martin. There were only two parties to it, the city of 
Tampa and Verizon, and we wanted to make sure both had an 
opportunity.
    Mr. Dingell. But you never submitted that request to others 
in writing to respond on the record to these points, did you?
    Mr. Martin. No, I didn't ask them in writing. I asked them 
orally.
    Mr. Dingell. OK. Now, I have a curiosity here. We have 
talked about this business of preemption. The order that came 
out of the proceeding that was recently held, the Commission 
says that the order was based on removing unreasonable barriers 
to entry. Is that language used anywhere in section 621?
    Mr. Martin. Section 621 says that local franchising 
authorities cannot unreasonably refuse to grant a second 
franchise.
    Mr. Dingell. Does it say unreasonable barriers anywhere?
    Mr. Martin. No, it says unreasonably refuse.
    Mr. Dingell. All right. Now, the barrier justifies 
preempting local law, but it does not make such requirements 
against State law. Is that correct?
    Mr. Martin. That is correct.
    Mr. Dingell. Now, I find this curious. The local units of 
governments are creations of the State, and as such, when they 
do such orders within State law, their orders are respected 
under State law, is that not so?
    Mr. Martin. Yes. Obviously, if the State----
    Mr. Dingell. OK.
    Mr. Martin. That would preempt what the local 
municipalities have done.
    Mr. Dingell. So here, through some rather quaint process, 
you appear to have said we will not preempt State action, but 
we will preempt the action of a State subdivision. Is that 
correct?
    Mr. Martin. We said that to the extent that the local 
communities were acting under the authority of the 
Telecommunications Act, then we said that these were parameters 
around what would be an unreasonable refusal to grant, to 
franchise. The States that had acted separately, we said we 
didn't have enough of a record to determine whether or not 
those would violate the statute.
    Mr. Dingell. Let us look at this. The local community may 
act under two authorities. One is the authority of the Federal 
Communications Act. The other is the authority that they are 
given and have been given long ago by the States to supervise 
affairs within their city boundaries, is that not so?
    Mr. Martin. That is right.
    Mr. Dingell. So you have then preempted their action under 
the Federal Communications Act. What have you done with regard 
to local law? Have you also preempted that?
    Mr. Martin. The State laws we did not preempt, so to the 
extent that there were State laws that they were acting under, 
no, we did not.
    Mr. Dingell. If a city acts under State law, are you 
preempting the action of the city if they are acting under 
general authority given them by the State?
    Mr. Martin. No, the Telecommunications Act said that they 
could not unreasonably refuse to grant a franchise and we said 
that these would be the parameters of that. If they are acting 
under separate authority, then no, that wasn't involved.
    Mr. Dingell. I want this to be very, very clear on the 
record that we will be submitting to you an inquiry on this 
particular matter in writing because I want the record to be 
very clear on that. Now, Mr. Chairman, I would like to submit a 
letter of inquiry in addition to the matters before the 
committee and I notice that several members of the committee 
have made similar requests to me. I would ask unanimous consent 
that the record remain open so that those may be inserted in 
the record.
    Mr. Markey. Without objection, so ordered.
    Mr. Dingell. And Chairman Martin, I assume that you will 
respond to the questions.
    Mr. Martin. Of course.
    Mr. Dingell. Thank you. Now, yes or no. Will you complete 
the 2004 and 2005 VOIP and Broadband Consumer Protection 
proceedings by no later than 6 months from this time?
    Mr. Martin. We will try to. I think I said that I thought 
we could try to do it by the end of the year, but we will try 
to do it in the next 6 months, of course.
    Mr. Dingell. Now, there is a very interesting matter that 
has come to my attention. The FCC, in January 2005, began an 
investigation into potential violations of sponsorship 
identification rules involving a certain commentator by the 
name of Armstrong Williams. He had a contract with the 
Department of Education that stated that Mr. Williams would 
regularly comment on certain matters during television 
broadcasts in response to generous payments by the Department 
of monies. Have you completed an investigation on this matter?
    Mr. Martin. We began an investigation of the 12 
broadcasters who are identified as ever having provided 
Armstrong Williams----
    Mr. Dingell. Have you completed an investigation?
    Mr. Martin. We completed the investigation in relation to 
seven of them who came back and said they did not put on any of 
the Armstrong Williams shows in question. And there are three 
that we have ongoing investigations and we sent further follow-
up letters to----
    Mr. Dingell. So you have an ongoing investigation going on 
at the agency?
    Mr. Martin. Yes.
    Mr. Dingell. I was on this committee years ago when we went 
into the question of payola. Have you studied the history of 
that?
    Mr. Martin. I would try, but not enough----
    Mr. Dingell. There was an interesting thing. It resulted in 
departure from public service by a large number of people, 
including folks at the Commission. And if my memory serves me 
correctly, it also resulted in some goodhearted folks going to 
jail. This sort of reminds me of this. Is there other 
information you need on these matters?
    Mr. Martin. From at least one broadcaster, as I understand, 
we did not get complete information on the most recent letter 
we just received from them last week. So there is some more 
information, but I will have to get back to you on the exact 
status of what information we need from the three----
    Mr. Dingell. Now, I do not want to help you with the 
substantive----
    Mr. Barton. Mr. Chairman, can I gently point out that the 
full committee chairman's time has expired?
    Mr. Dingell. I was looking. It says I got 1 minute 53 
seconds left.
    Mr. Barton. You are reading it wrong.
    Mr. Dingell. Well, Mr. Chairman, I know my colleague, the 
ranking member, my dear friend, Chairman Barton, would like to 
hear what I do, so I ask unanimous consent to proceed for 2 
additional minutes?
    Mr. Markey. No objection is heard. The Chair is recognized 
for 2 additional minutes.
    Mr. Dingell. Would you, Mr. Chairman, give us a full report 
in writing as to the status of the investigation of the Federal 
Communications Commission on this matter? And I would like, in 
that matter, to have you inform us what further information you 
need, what your judgments might be with regard to Mr. Armstrong 
Williams' settlement with the Department of Education and how 
close the FCC is to concluding four major payola investigations 
in the music industry. It seems like not just the musical 
industry, but very frankly, the Government, engaged in a little 
payola. And we would also like to have a statement as to 
whether you have adequate resources to address this, and again, 
we would like this report in the next 30 days, if you please.
    Mr. Martin. Sure. Provided for both on the Armstrong 
Williams investigation and the status of them.
    Mr. Dingell. Thank you, Mr. Chairman, and I hope this was 
informative to my dear friend from Texas for whom I have the 
most enormous affection.
    Mr. Barton. I am totally enthralled.
    Mr. Markey. We have a 15-minute vote on the floor followed 
by two additional 5-minute votes. We have 5 minutes left to go 
to actually make those votes. I will leave it up to the 
gentleman from Texas.
    Mr. Barton. I would like to take my 5 minutes and then rush 
to the floor and hope that the new majority will keep the vote 
open for 3 additional minutes on the floor.
    Mr. Markey. The gentleman is recognized for as long as he 
has to take.
    Mr. Barton. Just 5 minutes, Mr. Chairman, because I was not 
here at the opening gavel. First of all, I got to tell you, I 
am bummed out that you are being so fair. I am being totally 
treated fairly, and I guess I am used to being treated 
unfairly, i.e. given exceptional treatment, so I have to 
commend you on being so fair in the way you are treating the 
minority.
    My first question is to the chairman of the FCC. I have had 
a number of cable operators in to see me in the last couple of 
months, and they are of the opinion, Chairman Martin, that you 
are picking on them, that you are treating them unfairly and 
that the Commission is treating them unfairly on a whole series 
of issues, the most recent of which is this issue of the 
national video franchising rule which I am supportive of with 
the exception of the fact that the incumbent cable operators 
weren't allowed to have those same new rules. What is your 
answer to the concern that they have told me about that they 
are being picked on?
    Mr. Martin. Well, I don't think we are picking on them, but 
I have to admit, I have to confess, I think most of the 
industries we regulate complain at one time or another that I 
am picking on them whenever we don't end up agreeing. As far as 
trying to end up implementing, giving them the same relief on 
national franchises, we actually committed, the Commission 
committed that we would address their issues within the next 6 
months, and we hadn't actually sought notice on applying the 
changes that we were talking about making to section 621 to 
them originally, and I didn't think we had the legal notice to 
actually apply the rules to them, so we immediately sought that 
notice, and we will make a determination. We tentatively 
concluded that we will extend it to them, and we will within 
the next 6 months.
    Mr. Barton. Commissioner McDowell, had you not recused 
yourself, is it a fair statement to say that you would not have 
voted to impose some of the restrictions on the AT&T-
Southwestern Bell merger that were imposed?
    Mr. McDowell. Congressman, because I did not look at the 
record, I have not even read the order or the statements, I 
don't know because I have not examined the record.
    Mr. Barton. All right, then I will ask Commissioner Copps 
and Commissioner Adelstein, the House voted against network 
neutrality provisions similar to the provisions that you two 
gentlemen required for the merger by an overwhelming vote. Do 
you think it is fair to impose those restrictions when the 
House had gone on record on opposite views to what you two 
gentlemen supported in the AT&T merger?
    Mr. Copps. I believe that the condition that was agreed to 
is a merger specific agreement with a company that controls 22 
percent of the United States broadband facilities, has 12 
million DSL customers in 22 States. This merger would accord 
significant new powers over the distribution of broadband, and 
I thought it was reasonable to be talking with them about 
getting assurances that the networks would be kept open. I 
think we came up with a very flexible and a very basic network 
neutrality outcome.
    Mr. Barton. Even though the House had expressed a 
dissimilar position?
    Mr. Copps. I repeat what I said. I think this was a merger 
that was--and a condition that was merger specific. I think we 
are constrained to look or charged to look at these things that 
range rather widely. When we are considering a merger, we are 
supposed to be concerned about the possibility of future harms, 
and if a merger does not meet the public interest balance test, 
we can consider ameliorative steps to deal with it, and I think 
that comes under our public interest authority and section 303 
authority----
    Mr. Barton. Mr. Adelstein, I am about to run out of time 
and have to rush to the floor. What is your view on that?
    Mr. Adelstein. I think it is very important that we always 
defer to Congress. I looked very carefully at what the Congress 
did. Of course, what we ended up applying in the AT&T merger 
was not identical to what the Congress or the U.S. House voted 
on. At the same time, I do believe that it is important that we 
follow the law, and in this case, the law requires us, in the 
case of merger review, to apply a public interest standard. 
Here we were, creating the Nation's largest wireline, broadband 
and wireless provider all in one massive new package, and the 
question was whether or not the public interest was served by 
ensuring that those large networks remained open, and I thought 
ultimately they did. We were able to work it out in conjunction 
with the parties in such a way that they felt that they were 
able to conduct their business appropriately while adhering to 
that condition. Thank you.
    Mr. Barton. My last question, very quickly, Chairman 
Martin. I support your reverse auction provision on the 
Universal Service Fund reform, but I question the need for a 
Universal Service Fund in today's high tech society. Why do we 
need a Universal Service Fund when more people have cell phones 
than have hard line phones and there is no USF requirement at 
all for cell phones?
    Mr. Martin. I think there are certainly some rural areas 
where the cost is extremely expensive to deploy infrastructure. 
I think one of the benefits of reverse auction is that it would 
allow us to lessen our reliance on Universal Service over time, 
and that would give us a sense of where we really need it and 
where we don't.
    Mr. Barton. Thank you, Mr. Chairman.
    Mr. Markey. The hearing will be in recess for approximately 
25 minutes.
    [Recess.]
    Mr. Markey. Thank you all very much. The subcommittee will 
reassemble, and the Chair will recognize the former Speaker, 
Dennis Hastert, to question the witnesses.
    Mr. Hastert. Thank you, Mr. Chairman. Yes, I wasn't 30 
seconds late, but I ask to put my statement in the record, if 
that is possible.
    Mr. Markey. Without objection.
    Mr. Hastert. Thank you very much. In reply to Mr. Stupak's 
comment a little while ago about a closed door meeting with the 
Republicans, I just have to say some Republicans weren't 
invited to that closed door meeting, so I don't know who all 
was in that, but anyway, I would like to talk to Mr. Martin. 
Chairman Markey talked about this issue, intelligence agencies 
going into telecom companies and getting information.
    I need to talk very carefully, and I want to say what I am 
saying is only what has been said in the open record, otherwise 
reprinted in newspapers, because I can't say everything, 
obviously, that I know. But when that decision was made to do 
that, eight members of the Congress, including the Senate and 
the House, Democrats and Republicans, were read into that 
program, and there was a question at the end, do you think we 
need legislative action to move forward with this, and it was 
unanimous, at that time, in that room, no, we don't.
    There was legal ability to do that. So it is not like this 
thing just happened or somebody in the dark of the night with a 
bag over their shoulder went in there and started doing this. I 
have to tell you that this intelligence was probably one in 
every 15 billion phone calls. It targeted certain individuals 
overseas that were calling into this country and then the calls 
that were related to that, so I just want to say there should 
be a cautionary note on how you look at this and what the basis 
of it was. I hope you would take that under consideration. You 
don't really have to comment on that.
    I would like to ask Commissioner Tate a couple things. I 
wrote the telecom act in Illinois in 1984, before we had PCs, 
cell phones, and all these things and one of the big issues was 
Universal Service, trying to keep Aunt Sally on the end of the 
line, so she could get her grocery calls and call her sisters, 
so Universal Service is an important thing.
    When telephones kind of unbundled and competition came in, 
one of the main issues of that was to get away from the cross-
subsidies because, for instance, AT&T, in my area, not only put 
in your telephone, they serviced it, they had long distance, 
they had local telephones, and there was a great cross-subsidy 
from some of those services that paid for other services, so 
back in the 1980s and I remember, most of you don't remember 
the 1980s, that was an issue.
    So we constantly have kept a cross-subsidy issue in there. 
Do you agree that you should do away with cross-subsidies, that 
they should be taken out of the system and entities ought to 
stand on their own?
    Ms. Tate. If I could be so bold as to say that we are going 
through this process right now with the joint board, and we are 
trying to kind of look at both short-term and longer term 
solutions, and I think that we should look at implicit type of 
subsidies and that there are just so many issues that we need 
to look at, and what I am trying to say is I am hoping to build 
a consensus across the joint board for us to make some 
recommendations to the full Commission.
    Mr. Hastert. Well, to make my point, and I only have a 
little bit of time, the basic issue of Universal Service, as we 
have it in the telephone act today, basically is a cross-
subsidy. My district is an interesting district. I have the 
suburbs of Chicago and some of the--so there is really a lot of 
country. Actually, my suburban folks are paying for the subsidy 
to keep people connected out in the country, and today, with 
the diversity of ways of getting information across wires and 
across the air, I am not sure there is a real issue out there 
and I think who is paying for what and what is fair and what is 
not fair, and we ought to take a look at that.
    And finally, very quickly, Mr. Martin, can you respond 
whether you think that the decisions to what Commissioner 
Adelstein refers to as harmed or helped the competition when he 
talked about the AT&T-BellSouth merger. I really should ask Mr. 
Adelstein first, but I don't have the time. Are those helpful 
or those issues help create competition, or does it undercut 
competition?
    Mr. Martin. I think I was certainly concerned with some of 
the conditions and whether they were really going to facilitate 
competition. I know I expressed my concern with some of the net 
neutrality requirements that were put forth and that they might 
actually undermine some of the incentives to invest in the 
underlying network infrastructure, so I am not sure that they 
actually helped, in that sense.
    Mr. Hastert. OK. Sorry, Mr. Adelstein, I have run out of 
time. I would like to have your report, too, but maybe I can 
get it some other way. Thank you, Mr. Chairman. I yield back.
    Mr. Markey. Thank you. I thank the Speaker. The gentleman 
from New York, Mr. Engel.
    Mr. Engel. Thank you, Mr. Chairman. I have a bunch of 
questions. I am going to try to go fast, and some of them have 
been touched on by other people, but in my opening statement I 
talked about DTV, and I had a bill before the last Congress 
addressing DTV consumer education, and in my opening statement 
I mentioned that in 2008, only $1.5 million was allocated for 
outreach, and I think that that is not significant, so I would 
like to ask the chairman, are you prepared to do what it takes 
to lead and coordinate a real robust consumer education 
campaign, and what do you intend to do besides the Web site? 
Are you going to implement programs like advertisements on 
buses and subways and things that are very visible so the 
American public knows what is really happening with DTV?
    Mr. Martin. Well, I am certainly prepared to try to work 
with all the industries to make sure that they also are helping 
us put forth a vibrant consumer education campaign, and I met 
with some of the broadcasters and their proposals they put 
forth just in the last few weeks to try to educate consumers 
about it. The Commission has actually asked for money in the 
past, in our budgetary request and this year, as well. Last 
year we asked for some money, not even $1.5 million, for DTV 
education, and we actually didn't receive any funds for it.
    This year we do have a request in there and we will use 
that to get the information as widespread as we can if we do 
get those resources. But I would also point out that it is not 
just the FCC that is a part of the Federal Government that is 
trying to educate consumers. And one of the reasons we didn't 
get money last year is NTIA has the primary responsibility for 
educating consumers about the DTV transition, and they actually 
have additional resources. So we have tried to work with them 
in making sure that we were coordinating with them and are 
doing everything we can to support them in their educational 
efforts.
    Mr. Engel. Well, let me ask you, let me change and ask you 
about broadband penetration that Chairman Dingell sort of 
touched on some of this, but this committee is obviously 
committed to the acceleration of broadband deployment. The 
Commission recently ruled on streamlining the franchising 
process, and will this ruling accelerate the deployment of 
broadband? And let me throw in another one, Mr. Martin. In your 
recent testimony before the Senate Commerce Committee, you 
spoke of your interest in having the FCC assure that 
competitors have access to provide video service to apartments 
and condominiums and would give obviously a choice and probably 
lower prices to my constituents, who live in these multiple 
dwelling units. So I want to ask you about that, what authority 
does the Commission have to prevent future exclusive access 
agreements and enforcement of such existing agreements?
    Mr. Martin. I think our efforts to make sure that 
competitors are able to deploy infrastructure to provide video 
is an important component of broadband penetration rights, as 
well. The ability to deploy infrastructure and provide services 
over those, including video services, is critical to making 
sure that they have the opportunity and the incentive to invest 
in the underlying infrastructure and recoup those investments. 
And there are several economic studies that were provided to 
the Commission in the record that said that actually one of the 
most important things you could do to help facilitate broadband 
investment is also making sure that that investment can be 
utilized to provide video services.
    I think that that is not only in trying to streamline our 
franchise reform process that we did, but also as you 
mentioned, the MDU issue. It has got to be that consumers that 
live in apartment buildings have the same opportunity to have a 
choice of video providers as people who don't live in apartment 
buildings, and so I think we do have to make sure that those 
consumers aren't locked, so to speak, and have exclusive 
contracts that they are not able to end up having the same kind 
of opportunities, so I actually think the Commission needs to 
take action on that front, as well.
    Mr. Engel. Thank you. Let me ask Mr. Adelstein a question. 
I mentioned, in my opening statement and I think the chairman 
also touched on it, our new governor, who was then attorney 
general, Eliot Spitzer, investigated alleged pay for play 
practices between major record labels and radio stations, and 
there were multi-million dollar settlements with several labels 
and two broadcasters, and last week, according to numerous 
press reports, the FCC reached a $12.5 million settlement with 
these groups. It included some FCC oversight and a separate 
airtime arrangement for local independent music, so I would 
like to ask you if you can comment on that, and has the 
Commission identified other broadcasters based on the Spitzer 
documents who might have engaged in similar practices, and does 
the Commission intend to investigate these, as well?
    Mr. Adelstein. Well, we are on the verge of an historic 
settlement on this issue. I would like to commend the 
leadership of our chairman, Chairman Martin, for working with 
us to really come up with a package that I think will hopefully 
take care of the payola issue for some time to come. It is 
historic in nature; it is comprehensive. It does only deal, 
however, as you noted, with four of the largest radio groups 
that were implicated. There are a number of other broadcasters 
who also, there is allegations in the Spitzer documents, have 
engaged in practices that may violate Commission rules, and I 
am hopeful, I have talked to the chairman, that we are going to 
investigate all of those, as well.
    Mr. Martin. We will. The settlement that we have reached 
deals with the four largest. There are several others, as you 
indicated, at least, and we will deal with all of the 
broadcasters in a similar manner.
    Mr. Engel. Thank you. And finally, one quick thing. We had 
testimony last week about the merger between XM and Sirius. I 
wonder if anyone would care to comment on that. The proponents 
of the merger say that satellite radio was just one part of 
entertainment, not in its own entity, and I am wondering if 
anyone feels they can comment. I know it has got to come before 
you, but I would be interested in hearing anyone's thoughts. I 
think that is a reasonable statement, by the way.
    Mr. Martin. The applications haven't even been filed with 
the Commission yet, and I know we all review the record and 
review the applications when we get them.
    Mr. Engel. OK. Thank you. Thank you.
    Mr. Doyle [presiding]. The gentleman's time has expired. 
The gentleman from California, Mr. Radanovich.
    Mr. Radanovich. Thank you, Mr. Chairman. I was going to 
state how bad the traffic was on the GW Parkway this morning, 
and it was really, really bad. This always works for Cubin, 
so----
    Mr. Doyle. I ought to give you 30 more for that.
    Mr. Radanovich. I have three questions. Just wanted to make 
sure that--and it should not need extra time, but would like to 
make sure that these get answered. And welcome to the 
committee. I really appreciate the fact that you are here. 
Chairman Martin, wireless telephony is an interstate device. It 
has flourished in a deregulatory environment and become a great 
example of a competitive market. It now appears that having to 
comply with many different sets of local and State regulations, 
although well-intentioned, is hindering the wireless service. I 
am wondering if you could comment on that, and should the FCC 
set certain Federal standards regarding wireless services to 
address this problem?
    Mr. Martin. The Telecommunications Act tries to create a 
careful balance in which many of the wireless issues are done 
at the Federal level. States do have certain general consumer 
protection laws that still apply on the wireless side. There 
are petitions in front of us saying that some of the State laws 
that you have referenced have gone too far and gone beyond just 
general consumer protection laws and go towards the specific 
regulation of wireless prices, which would be something that 
would be in front of the FCC, not in front of State 
commissions.
    And so we have pending petitions on it that the Commission 
hasn't acted on, and I think it is something that we have all 
struggled with. The only other insight I might have is that to 
the extent that the Commission did preempt some of the State 
actions, we would then be taking on the burden of establishing 
what would be an appropriate regulatory framework from a 
consumer protection standpoint on the wireless side.
    So I think that to the extent that we did act, that means 
that we would be saying what would be appropriate or 
inappropriate in terms of like early termination fees, which is 
one of the issues that is in front of us. And I think that that 
is something that we should make sure we are thinking through 
cautiously deciding because I think once you take on that 
responsibility, then it is a responsibility that we also craft 
what is an appropriate regulatory framework, as well.
    Mr. Radanovich. Assuming that we both want a deregulated 
framework if it is the best for service for the consumer, there 
are a couple ways we could achieve that, I am sure, through the 
FCC or through bills passed by the Congress. In your view, do 
you think that is going to be necessary? Do you think the FCC 
can make it happen on their own?
    Mr. Martin. I am not sure. Obviously, if Congress ends up 
acting to address this issue, that means that there isn't an 
issue in front of the Commission to decide anymore in this 
controversial issue, and I think whenever Congress can try to 
help clarify, provide guidance and clarify for us is helpful, 
so I always think that is a helpful thing on the contentious 
issues.
    In the absence of congressional action, the Commission will 
try to determine is the current petition something that we 
should be addressing; is itwithin our jurisdiction or is it 
within the States? And I think it is something that is timely 
for us to go in and address. I had a joint meeting, actually, 
with the consumer interest groups, AARP, the Consumers Union, 
and the wireless industry just in the last few weeks, saying 
that if we are not able to come up with a joint resolution, it 
is probably time for the Commission just to decide this one way 
or another.
    Mr. Radanovich. All right, thank you. My next question is 
for Commissioner McDowell. Welcome to the committee. Yesterday 
the NTIA issued rules for the converter box program, which was 
designed to help consumers who may want to continue using 
analog television with rabbit ears after the transition. At the 
same time, the Media Bureau recently denied waivers for some 
cable companies to seek to offer low-cost set-top boxes, which 
some might use with analog televisions after the transition. 
Does it make sense to help reduce costs for the small number of 
over-the-air consumers and then raise them for the much larger 
number of those using cable service?
    Mr. McDowell. Well, of course, those two types of set-top 
boxes are for different functions and different policy goals. 
The Commission, at the bureau level, has acted on some waiver 
requests to the separation ban, which, of course, Congress set 
up in 1996. The Commission, of course, a few years ago, invited 
companies to go ahead and file waiver requests, and many have 
done so, and we are, as a commission at the bureau level, are 
working on a number of those, and some have been denied at this 
point. I think where we all want to go, whether it is the cable 
industry or the consumer electronics industry or those of us at 
the Commission, would like to see downloadable security as the 
standard in the future, so whatever we can do to get there more 
quickly, the better.
    Mr. Radanovich. So the Commission is open to making sure 
that the end result is the consumer gets that at the cheapest 
price possible, those that are being provided through the cable 
operators do afford that same type of attention, I would think, 
as well, right?
    Mr. McDowell. Correct. And there is a balancing here. There 
is low end set-top box waiver requests, as well. Those issues 
have not come up to what we call the eighth floor of the 
Commission level, at this point, but we will look at that more 
if it does.
    Mr. Radanovich. OK, thank you. Mr. Chairman, may I ask 
unanimous consent for just one more question? It should only be 
a minute or two. OK, thank you, sir. Chairman Martin, can you 
please tell us what evidence the FCC has other than the Madison 
River issue of broadband operators blocking or degrading 
content on their networks, and given the lack of evidence, 
which I think you might find--I am giving you the whole 
question here--it seems that preemptive rules in this area are 
premature and could stifle innovation. What harm do you think 
would occur if Congress overreaches in this area of net 
neutrality?
    Mr. Martin. Well, I certainly agree that we don't have any 
current evidence of there being any blocking capabilities and 
that rules and restrictions in the absence of evidence of 
particular harm could have an adverse impact on the ability and 
incentive for network operators to deploy additional 
infrastructure.
    Mr. Radanovich. Perfect. Thank you. Thank you, Mr. 
Chairman.
    Mr. Doyle. The gentlelady from California, Mrs. Capps.
    Mrs. Capps. Thank you, Mr. Chairman. Thank you, again, to 
the Commissioners, each of you, for coming. We waited a long 
time, I guess, and now we are really putting you through an 
ordeal of a long, long session, but it is an important one. As 
you know, Chairman Martin, the U.S. has been falling down in 
the world rankings in terms of broadband deployment.
    This has been mentioned several times already today, that 
according to the International Telecommunications Union, we are 
now down to 21st in the world in terms of digital opportunity, 
whereas in 2001, we were in the top five. That is very 
remarkable. The part of this I wanted to ask is the fact that 
the FCC doesn't even have a good measure for which areas of the 
country have broadband. The Commission is still using a measure 
based on broadband availability to one customer in a ZIP code. 
It is deceptive on the face of it, because as you know, ZIP 
codes can be quite large geographic areas covering almost 
States, entire States, some of them.
    And the fact that one household has cable broadband, say, 
on one edge of the ZIP code doesn't give everyone else who 
lives there the ability to get broadband. The GAO has sharply 
criticized this methodology in a 2006 study. My question to you 
is why hasn't the FCC done more to make sure it knows which 
areas need service? Does the fact that there is one broadband 
subscriber within an entire ZIP code mean that that ZIP code is 
being served? Mr. Martin.
    Mr. Martin. No, it doesn't mean that the fact that one 
subscriber in an entire ZIP code being served doesn't mean that 
they are all being served, and actually, I agree with many of 
the concerns and have, when I was a Commissioner, spoken out 
about the concerns I have with the way we collect data on ZIP 
codes and the fact that the speed of only 200 kilobits counting 
as broadband is insufficient with the technology changes. The 
Commission actually has, and they just adopted an order I 
circulated last fall, in September, that would do a notice of 
proposed rulemaking to ask how we change both of those issues. 
They were issues that I remember being debated when I was a 
staffer working for Commissioner Furchtgott-Roth when those 
standards were adopted in 1998 as being insufficient. That was 
one of the things he advocated at the time, and it was 
something that I think we should be changing, so it is 
something that Commissioner Copps and I have actually----
    Mrs. Capps. I appreciate your concern. Why has it taken 
this long?
    Mr. Martin. I can't describe exactly why I think it took 
the other Commissioners a little while to review the item. It 
took us a while to come up with the proposal once I became 
chairman, but I think this is something that we need to change.
    Mrs. Capps. And just last September you even then began to 
question? How long had you been chairman, Mr. Martin?
    Mr. Martin. I was chairman for a little over a year when I 
put that item forth, and when I came on board, I addressed some 
of the other issues that I thought were of the utmost 
importance: public safety, 911 on VOIP. We have several mergers 
that we were doing, and then in the spring of last year, I 
asked the Bureau to begin examining how we could reform our 
collection of data, and it is something that I think that 
actually I have had an ongoing dialog with the other 
Commissioners about that I think we all agree needs to be 
reformed.
    Mrs. Capps. This is our watch. Well, let me follow up with 
another question. The FCC's measures are also inadequate in 
other ways, as you probably are aware. The fact that a few 
households have broadband access in a ZIP code doesn't mean 
that they even have access to the two most common pipes of DSL 
and cable. And your definition of broadband, just 200 kilobits 
a second downstream, doesn't make sense in a world where 
consumers in other countries have access to speeds that are 50 
or even 100 times faster. So here is my follow-up question. Do 
you believe 200 kilobits a second is an effective measure of 
broadband?
    Mr. Martin. No. And actually, the first thing I did when I 
was chairman, in our first year, we actually, for the first 
data collection, for the first time collected data on more than 
just 200 kilobits in five different tiers of speeds. That was 
the first thing that we did, and it was that collection of data 
that enabled us to put forth, in our Notice of Proposed 
Rulemaking, the fact that that was insufficient.
    Mrs. Capps. OK.
    Mr. Martin. So we did make changes the first year, and we 
are going to continue to make those changes.
    Mrs. Capps. All right. I appreciate that. Let me give 
another side an opportunity to respond. Commissioner Copps, 
would you comment on the FCC's definition of broadband and 
statistics on deployment, and do you believe the FCC should 
keep statistics on broadband prices and penetration by socio-
economic group?
    Mr. Copps. Just to put it in context of what we are 
actually talking about, if you were going to download a 90-
minute movie from a studio and you were proceeding 17\1/2\ 
hours to download that. If you were one of the lucky customers 
in Japan where you have up to 50 megabits, you could download 
that movie in 4 minutes. Just think about the difference there 
and what we are talking about.
    Mrs. Capps. What do you think is taking so long? This is 
such an embarrassment.
    Mr. Copps. I don't know. We are 10 years, we are 10 years 
way too late. Just the differences in bandwidth. Even if we 
could measure the bandwidth we have right now, what are we 
going to do to get the strategy to get real bandwidth out 
there, so that we can be competitive?
    Mrs. Capps. Let me ask you and/or Mr. Adelstein to follow 
up with something Mr. Stupak got into that is so important, 
about consumer protections like slamming and disclosure of 
consumer information that were lost for broadband providers 
after the FCC ruled it was governed by title I. Could you 
comment on this, if you feel like the topic has not been 
exhausted and the status of rulemaking on broadband consumer 
protection?
    Mr. Adelstein. When we issued the order that took broadband 
out of title II and all the protections for disabilities and 
consumers that involves and went to title I, we launched a 
Notice of Proposed Rulemaking, but we still haven't acted on a 
number of provisions. Very important questions are still out 
there and I think it is urgent that we act, and I appreciate 
the fact that the chairman said he was going to try to get that 
done within 6 months, I believe. I think it is incredibly 
urgent. I think it should have been done already, but I think 
we recognize the urgency of moving forward and making sure 
there are consumer protections that go forward into this title 
I world.
    Mrs. Capps. Any other comments from you, Mr. Copps, on that 
issue, or do you think that is saying it sufficiently?
    Mr. Copps. Yes, ma'am.
    Mrs. Capps. I have brought up fairly large topics. I have a 
little bit more than a minute. If any of the rest of you 
Commissioners I didn't get to would like to speak to the ways 
that we could get better statistics on deployment of broadband, 
I would appreciate any comment.
    Mr. Adelstein. I spoke with the chairman's office about 
just this, and I think we all benefit, and we all agree that we 
need more ways to slice and dice and gather that data and get 
more detail, so I think that will be to everyone's benefit and 
I think you probably have agreement that the more data we have 
in front of us, the better.
    Mrs. Capps. I will yield back, Mr. Chairman, and with the 
comment that this, to me, underscores the fact that we ought to 
be meeting with these Commissioners much more often than we 
have.
    Mr. Doyle. I thank the gentlelady. Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman. Chairman Martin, I 
had the opportunity to write a letter to you on June 30, 2006. 
We urged the Commission and many of us had signed this letter 
and the letter urged the Commission to immediately commence its 
review and revision of the local radio ownership rules so that 
free, over-the-air local broadcast radio remained an important 
part of the new world of audio communications, and I guess my 
question is just dealing with broadcast media ownership. I 
guess the industry is still operating under broadcast ownership 
restrictions that the courts have found invalid. Can the FCC 
justify any broadcast ownership restrictions? If so, when will 
we see them? I give you lots of latitude on this question, too.
    Mr. Martin. The Commission did commence a review of the 
ownership rules last summer. We have committed to doing several 
public hearings around the country, and it is about 10 
different studies on the various aspects of media ownership, 
and I am hopeful that we will be able to send back up to the 
Third Circuit, who overturned our other set of rules, you know, 
revisions to our media ownership rules. The industry is still 
operating under the rules prior to that decision, and those 
were rules that were put into effect previously and in the case 
of radio, for example, had been upheld. Those were not ones 
that had been overturned, and it was only the changes that got 
overturned, so the rules they were operating under were ones 
that were legal at the time.
    Mr. Stearns. OK. The second question is the FCC has 
classified broadband services over wire, cable and powerlines 
to be information services. I guess in the interest of parity, 
when will the Commission apply these same rules to wireless 
Internet access services?
    Mr. Martin. There is an item pending before the Commission 
to do that. It has been for several months, and I notified the 
other Commissioners if we didn't end up adopting it before, we 
might do that at the next open meeting, which is next week.
    Mr. Stearns. Now, if anybody, other Commissioners would 
like to comment further on these questions, feel free to. 
Otherwise, I will just direct them to Mr. Martin and if anybody 
else would like to say anything dealing with that.
    Mr. Doyle. The Chair would note that we have three votes 
coming up. We are going to finish Mr. Stearns and Ms. Solis and 
Mr. Inslee, if possible, and then we will wrap up.
    Mr. Stearns. The third question, I guess again, for 
Chairman Martin is, in September 2005 the FCC classified DSL as 
an information service. Between June 2005 and June 2006 there 
was a 38 percent increase in DSL and fiber lines in the United 
States and a 58 percent increase in terms of overall U.S. 
broadband numbers. Where would we be if the FCC had not 
deregulated DSL?
    Mr. Martin. Obviously, I don't know for sure where we would 
be, but I would say that I think that our provision of making 
sure that DSL was treated in the same regulatory manner as 
cable modem services and in a less regulatory manner, the 
information services, was critical to allowing and encouraging 
further DSL deployment and further DSL penetration. Prior to 
our implementation of that rule, cable subscribers to 
broadband, the cable companies were signing up customers 2 to 1 
to DSL services and after we put those two services on equal 
footing, they have actually been subscribing 1 to 1.
    So it has been more equal competition between cable and 
telephone companies in their deployment of broadband services 
since we deregulated telephone companies, put them on the same 
level playing field as cable companies, and I think that has 
been critical to fostering a competitive environment in which 
they have both been able to rollout additional services and 
increase their penetration rates.
    Mr. Stearns. Yes. And for that, I think Congress 
compliments you, and I guess maybe a larger question, what 
could we do in the future to get even more competition for 
broadband deployment? Is there something like this that you 
think should be done and you might just give us some insight?
    Mr. Martin. I mean, I think that the next, the other thing 
that is critical that I see on the immediate horizon, is making 
sure we are putting the same kind of regulatory environment in 
place for wireless services, which could be an additional 
platform. That is why it is critical that we go on and clarify, 
prior to the auction, that wireless broadband services are also 
subject to a less regulated set of rules, the information 
services rules, not telecommunications rules, and then we make 
sure we auction spectrum in such a manner that guarantees that 
consumers are going to receive the benefits of wireless 
broadband build-out.
     The spectrum that we are going to be auctioning later this 
year is some spectrum the technical characteristics of which 
make it very unique in the capability of providing broadband 
services. So we want to make sure we are doing everything we 
can, from a regulatory standpoint, to make sure it can be an 
additional broadband competitive platform, and I think that is 
the most important thing I can see us doing in the very short 
run.
    Mr. Doyle. Gentleman's time has expired. Chair recognizes 
Mr. Inslee.
    Mr. Inslee. Thank you. I would like to ask you about white 
spaces, which might be the best thing in human evolution since 
the White Album, so we are really excited by this. We have 
heard at least three of the Commissioners express support for 
moving forward on white spaces, and we are happy about that. I 
would like to ask you to comment about your thoughts on 
extending this to portable devices, to extend this great work 
that is going on in white spaces to portable devices, presuming 
we can do this without interference, so if I could just ask you 
each to tell us if you support white space usage through 
portable devices and what circumstances? Thank you.
    Mr. Martin. Yes, I support it as long as it is not creating 
interference with the current licensees. We actually just 
received our first piece of equipment for testing, that would 
be portable devices that could be utilized in the white space 
spectrum, earlier this week, I think it was yesterday, 
actually. And our labs will be undergoing testing. We 
anticipate we will be able to finish that testing by summer, by 
mid to late summer, and that will allow us to then finalize our 
rules for white spaces sometime in the fall.
    Mr. Inslee. I want to make sure Representative Solis can 
talk. Does anybody have anything to say sort of contrary to 
that view on the panel? I appreciate that. Is there any reason, 
assuming that we do show a lack of harmful interference, is 
there any reason that the Commission should delay sale and use 
of these devices until after the DTV transition, February 17, 
2009? Is there any reason that we would want to delay that?
    Mr. Martin. No. Once they have been able to go through our 
engineering labs and demonstrate that they are not going to 
create interference, then we wouldn't want to hold that up 
artificially.
    Mr. Inslee. Great. I would like to ask about media 
consolidation. My area of western Washington has been a real 
hotbed of interest in this, and we have talked to the 
Commissioner about potentially holding an official hearing to 
make sure that western Washington can weigh in on this issue. 
Have we made any progress on that? Is there any way I can work 
with you to get that going?
    Mr. Martin. Obviously, we would be happy to continue to try 
to work with you to end up scheduling our hearings. We have 
three hearings left. I know we are going to try to do one in 
Tampa. We just announced yesterday that we are going to do a 
hearing in Tampa, that all the Commissioners had weighed in on 
as an appropriate place to end up doing it. There are several 
different requests from members of Congress to go back to your 
home State, to Illinois and to Chicago and a few other 
requests, as well.
    Mr. Inslee. I will look forward to that. That is a hopeful 
yes, thank you. I would like to yield to Congresswoman Solis.
    Ms. Solis. Thank you. First of all, I would like to thank 
Commissioners Adelstein and Copps for coming to Los Angeles, my 
campus at USC, and having a hearing on media consolidation. I 
can't tell you how important it was to address those 200 to 300 
people that came that wanted to hear exactly what was going on 
with media consolidation. So first of all, I just want to say 
thank you.
    And I want to begin my questioning to Mr. Adelstein. I am 
very troubled by the 621 order passed by the Commission in 
December, mainly because I think it disadvantages low income 
and minority communities, and I would like to get your opinion, 
if you can explain your position on the FCC's limitation on 
build-out requirements in your 621 Order in the face of clear 
evidence that build-outs are critical to effective anti-
redlining enforcement.
    Mr. Adelstein. Well, I was troubled by it, as well, because 
the law says that we can only limit build-out in terms of the 
time of the build-out. Section 621 of the Act clearly says that 
the only limitation that Congress placed upon the build-out is 
the time which they can build-out to all citizens of a 
community. I think our order went further. I think our order 
went further than the law allows us to do. Now, if Congress 
wants to tell us that we can limit build-out, that is another 
thing, but that is not what Congress said; that is what the FCC 
said. I think the result is not only unfortunate in terms of 
policy, but it could also result in us being overturned in 
court, which would create only more confusion and chaos and 
certainly not help broadband build-out.
    Ms. Solis. Thank you. My next question is for Chairman 
Martin. Thank you, also, for being here. I understand from a 
recent study on female and minority ownership of broadcast 
stations, just 3 percent of those are licensed, full-powered 
television stations that is female and minority-owned and 5 
percent or fewer than 5 percent are actually owned by women. In 
my opinion, the FCC has been grossly negligent in their efforts 
to address diversity in media ownership.
    Most analyses of a la carte cable programming find that an 
a la carte regime would likely lead to a decrease in diversity 
and minority interest programming, particularly with programs 
like Vet, CTV, Lifetime Television, Oxygen Network, could be 
dramatically affected. Mr. Chairman, are you suggesting that 
programs targeting minorities and women have such little value 
that we should not care if they survive?
    Mr. Martin. No, but I am suggesting that I think consumers 
should be able to control some of their own content that is 
coming into their homes and choose which channels they want to 
purchase, like they do in other markets, and indeed, the 
hundred percent rise in cable rates that has occurred over the 
last 10 years means that I think it is critical that the 
Commission and that policy makers talk about what is going on 
with the increasing cable prices.
    Cable operators are saying that up to 40 to 50 percent of 
those increases are a direct result of content providers asking 
for increases in the amount that they are supposed to charge 
their consumers, and I think that if content providers want to 
provide that content for free, then they should be carried. But 
to the extent that they want to increase the charges that they 
were putting on end users, end users should be able to have 
some control over that when they are seeing their prices rise 
10 and 15 percent every year.
    Ms. Solis. Well, I understand the marketplace has a lot to 
do with the decisions that are made, but as I just reported, we 
have very few representations of women and minority owners in 
this media, in this spectrum, and I don't think that by making 
it more challenging for programming that actually shows the 
diversity of our country is going to help make any improvement. 
But my next question is, moving on to another aspect of 
diversity, I understand you have an Advisory Committee on 
Diversity for Communications in the Digital Age, which was 
established in 2003, to recommend practices to increase 
diversity. By its charter, the committee is required to meet at 
least two times a year. Is that correct?
    Mr. Martin. I don't know, but I assume. I don't know how 
many times they are supposed to meet.
    Ms. Solis. OK, you became chairman in 2005. Can you tell me 
how many times the Diversity Committee met in 2005?
    Mr. Martin. No, I can't.
    Ms. Solis. OK, it is my understanding, also, that the 
committee met formally December 10, 2004, then again by 
teleconference on April 25, 2006, and in person December 21, 
2006. The committee was in violation of its charter in 2005, 
and in 2004 the committee adopted several recommendations. 
Looking at their Web site, I counted 20 recommendations from 
2004, including several spectrum related resolutions. Can you 
tell us how many of the 2004 recommendations the Commission 
acted on?
    Mr. Martin. The Commission actually hasn't acted on them, 
and I just recently proposed that the Commission take several 
steps that would act on some of them. For example, extending 
the opportunity time for construction permits for designated 
entities, allowing designated entities more easily get around 
what we call our debt and equity rule, which means that they 
would be able to more easily partner with the largest groups. 
And more importantly, I have been working with some of the 
consumer advocates on this area to try to say why don't we 
utilize the opportunity for broadcasters to move from an analog 
to a digital world to allow them to lease some of their 
capacity to designated entities like minorities and women.
    Ms. Solis. Can you please provide the committee with the 
information on those recommendations?
    Mr. Martin. Absolutely. Those recommendations are all 
before the Commission.
    Ms. Solis. Thank you, OK. My next question, before my time 
is up, I would like to direct to Commissioner Tate. Welcome, 
Commissioner. As one of the only women Commissioners on the 
FCC, I wanted to get your opinion about the portrayal of women 
on television, particularly in the Spanish language 
programming, as seen in the U.S., which is important and does 
not reflect, in many cases, our standards of what is 
appropriate. Does the FCC monitor the content of Spanish 
language television or Spanish language radio aimed at U.S. 
Hispanics, and specifically, how many Spanish language 
analysts, whose specific role is to monitor Spanish language TV 
and radio, does the FCC employ?
    Ms. Tate. As you know, Congresswoman, we take complaints, 
and so we have a complaint driven process. It is not that we 
are monitoring or censoring any type of content or programming. 
I am not sure whether or not we have specific Spanish language 
speakers. I know that we do in our complaint area, but I will 
be glad to check and get back with you on that. And yes, I 
share your concerns about how women are portrayed across the 
media.
    Ms. Solis. OK. And does the FCC have a process in place to 
review or assess its internal infrastructure that supports 
monitoring? I guess you kind of are not, to your knowledge are 
not aware of that or maybe Chairman Martin?
    Mr. Martin. We don't have ongoing monitoring of content. 
What we do is respond to individual complaints that are filed, 
and in that context we do have translators who can help us for 
content that there are complaints about for Spanish language 
content.
    Ms. Solis. Mr. Chairman, I would like to just submit the 
rest of my questions.
    Mr. Markey. Without objection, I would ask the Commission 
to respond to those questions.
    Ms. Solis. Thank you very much.
    Mr. Markey. The gentlewoman from California's time has 
expired. We apologize to the members. There are now another 
series of roll calls on the House floor and this room is going 
to be used for another hearing immediately after the conclusion 
of this hearing, so we apologize to the members.
    Mr. Doyle. Will the chairman yield?
    Mr. Markey. I would be glad to yield to the gentleman.
    Mr. Doyle. Yes, I just very briefly want to get on the 
record to piggyback on what Mr. Radanovich and Mr. Deal said 
with regard to the waiver request for cable set-top boxes. 
There are seven requests pending. Some have been sitting there 
over 200 days. This has the potential to save consumers 
hundreds of millions of dollars. I think this is something that 
the Commission should vote on, and I would ask the chairman of 
the Commission and all of the Commissioners to consider voting 
on the set-top boxes. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. With the 
thanks of the committee to the Commission, we appreciate the 
attention that you have paid to these issues. You can see that 
almost every member of the committee came and stayed and the 
level and intensity of interest is very, very high, and we will 
be inviting you back on a regular basis.
    Mr. Martin. We will look forward to it.
    Mr. Markey. But we thank you so much for your attention to 
our interests today.
    Mr. Martin. Thank you, Mr. Chairman.
    Mr. Markey. This hearing is adjourned.
    [Whereupon, at 1:35 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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                         Failure to Communicate

    By Jerry Brito
    Wall Street Journal
    March 13, 2007

    For more than two decades, the Nation's first responders to 
emergencies have had to contend with radio communications that 
were not up to the task. Each time a major calamity such as the 
Oklahoma City bombing, 9/11 or Hurricane Katrina throws a 
spotlight on the problem, a blue-ribbon panel is convened. And 
each time the panel invariably offers the same prescription: 
more funding and more radio spectrum for public safety 
agencies.
    It's no different this time around. Responding to the 9/11 
Commission's recommendations, Congress has given public safety 
communications 24 MHz of the 80 MHz of electromagnetic spectrum 
that will become available as television migrates from analog 
to digital signals over the next 2 years. The rest is to be 
auctioned, and first responders will also get $1 billion in 
equipment grants from the proceeds of the auctions.
    Senator John McCain has upped the ante, introducing 
legislation early this month to allocate half of the spectrum 
now slated for commercial auction to public safety. Meanwhile, 
a bill to implement the 9/11 Commission recommendations that 
recently passed the House and is right now being debated in the 
Senate, establishes yet another public safety-communications 
grants program that could cost billions.
    But this kind of treatment has never solved the problem. It 
targets the symptoms, not the disease. First, responders often 
cannot communicate with each other because the Federal 
Government assigns to each of the 50,000 public safety agencies 
in the country--that's every hometown fire and police 
department--their own radio license and piece of the spectrum 
with which to build out a communications system. This is 
undoubtedly beneficial in so far as it affords localities great 
flexibility to build a system that best suits their needs. But 
it comes at a cost: More often than not the custom systems 
can't ``talk'' to each other.
    Fortunately, the FCC has recognized the drawbacks of the 
old way of doing business, and in an ongoing proceeding it has 
put forth the idea of creating an interoperable, national 
broadband network, using 12 of the 24 MHz of spectrum that 
Congress has allocated for public safety.
    Meanwhile, Nextel founder Morgan O'Brien has been pushing a 
new venture, called Cyren Call, to create a public-private 
network for first responders. His interoperable network would 
be built by the private sector, and first responders would 
subscribe to it just as consumers subscribe to cell phone 
networks. An added bonus: The capacity that public safety 
agencies don't use on the network would be available to 
commercial subscribers, increasing the network's overall 
customer base and thereby improving economies of scale.
    This would be a terrific proposal, but for a couple of 
serious hitches. Cyren Call would build the network on 30 MHz 
of spectrum now designated for auction, but which would instead 
be sold to a nonprofit corporation at a discounted rate. The 
drawback? The Federal treasury would needlessly lose out on the 
revenue from an auction; and consumers would needlessly do 
without the new services and lower prices that commercial 
carriers would offer if that portion of the spectrum were sold 
at full market value. Why needlessly? Because, as the FCC 
proceeding affirms, a national broadband network for first 
responders can be built over spectrum already designated for 
public safety use.
    Frontline Wireless, another private initiative, is backed 
by former FCC Chairman Reed Hundt. It involves building an 
interoperable network over spectrum purchased at auction; but 
Frontline wants the FCC to restrict that spectrum to public 
safety use. The restriction would dramatically reduce what the 
spectrum would fetch for the treasury at auction. Senator 
McCain's bill would facilitate both types of approaches.
    Here is a better idea: Offer Cyren Call, Frontline and 
others the opportunity to bid on spectrum already restricted to 
public safety use. That would allow firms to build national 
interoperable networks without affecting how much spectrum will 
be available for commercial use. At the very least, if spectrum 
now slated for commercial auction must be used, the government 
should identify an equal amount of existing public safety 
spectrum that can be auctioned commercially once the new public 
safety networks are built.
    Whatever path we take, we should ensure that at least two 
competing networks are built. This works well for wireless 
services such as cell phones; subscribers to one service have 
no trouble speaking to subscribers on another while prices are 
kept low.
    A private-sector national network for public safety first 
responders is not an untested idea. In the U.K., the national 
network that supports police, fire and over a hundred other 
public safety services is owned and operated by O2, a private 
firm. We can do even better, using competition to spur the 
innovations that monopoly rarely provides.
                              ----------                              

    January 26, 2007

    Ex Parte

    Ms. Marlene H. Dortch
    Secretary
    Federal Communications Commission
    445 12th Street, SW
    Washington, DC 20554

    Re: Implementation of section 621(a)(1) of the Cable 
Communications Act of 1984 as Amended by the Cable Television 
Consumer Protection and Competition Act of 1992, MB Docket No. 
05-311

    Dear Ms. Dortch:

    Verizon submits this letter in response to a request from 
Chairman Martin's office. On March 6, 2006, Verizon filed an 
errata in this docket correcting its earlier comments 
concerning its negotiations with a franchising authority in 
Florida over PEG support. Verizon corrected its comments to 
state as follows:

     When Verizon rejected this demand [to meet the incumbent 
operators cumulative payments for PEG, which would exceed $6 
million a year over 15 years,] and asked for an explanation, 
the LFA provided a summary ``needs assessment'' in excess of 
$13 million for both PEG support and equipment for an expansion 
of its I-Net.

    The March 6, 2006 filing further corrected one paragraph of 
the earlier declaration attached to Verizon's comments in order 
to state:

     For example, one franchising authority in Florida demanded 
that Verizon match the incumbent cable operator's cumulative 
PEG payments, which would exceed $6 million over the 15-year 
term of Verizon's proposed franchise. When Verizon rejected 
this demand and inquired as to its basis, the LFA stated it was 
Verizon's portion of a $13 million ``needs assessment'' for 
both PEG and equipment for an expansion of its I-Net. THe LFA 
stated this was based on a back-of-the-envelope ``needs 
assessment.'' Negotiations with this LFA are still ongoing.

    Attached is a copy of the ``summary `needs assesment'  '' 
referenced by Verizon in the March 6 filing. This document was 
provided to Verizon by the city of Tampa during the course of 
franchise negotiations.

    Respectfully submitted,

    Dee May
    Vice President, Federal Regulatory
    Verizon
    1300 I Street, NW
    Washington, DC 20005

  0PEG and I-Net Community Needs over the Next 15 Years Not Currently 
                               Being Met

    PEG Capital:

    Public Access--$500,000
    Educational Access--$500,000
    Gov't Acess--$500,000

    Total--$1.5 million

    I-Net Related Expansion and Equipment Costs:

    Total--$4,775,000

    Public and Educational Access Operational (over 15 years)

    Public--$2,850,000
    Educational--$4,500,000

    Total--$13,625,000
                              ----------                              



       OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION--PART 2

                              ----------                              


                         TUESDAY, JULY 24, 2007

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 9:30 a.m., in 
room 2123 of the Rayburn House Office Building, Hon. Edward J. 
Markey (chairman) presiding.
    Members present: Representatives Doyle, Harman, Gonzalez, 
Inslee, Towns, Rush, Eshoo, Stupak, Engel, Green, Capps, Solis, 
Dingell, Upton, Hastert, Stearns, Deal, Shimkus, Wilson, 
Pickering, Fossella, Radanovich, Walden, Terry, Ferguson and 
Barton.
    Also present: Representative Blackburn.
    Staff present: Amy Levine, Tim Powderly, Mark Seifert, 
David Vogel, Neil Fried, and Courtney Reinhard.

OPENING STATEMENT OF HON. EDWARD J. MARKEY, A REPRESENTATIVE IN 
        CONGRESS FROM THE COMMONWEALTH OF MASSACHUSETTS

    Mr. Markey. Good morning. I want to thank everyone for 
being here today. I especially want to thank the five 
commissioners of the Federal Communications Commission for 
testifying this morning, especially the chairman, who has had 
recent eye surgery which has inhibited his ability to read. We 
appreciate your willingness, Mr. Chairman, to come and to 
answer questions today. The Commission has several important 
issues with which it is wrestling. For instance, the Commission 
has the central role to play in the overall digital television 
transition, and we look forward to working with the Commission 
on this matter.
    The Commission is also contemplating whether to adopt or 
modify recommendations from the Federal State Joint Board on 
Universal Service. The recommendations, in my view, risk 
putting equitable comprehensive reform out of reach yet again. 
I hope the Commission will choose to tackle this issue 
forthrightly and more broadly, because the temporary measures 
imposed by the Joint Board are anti-competitive and ultimately 
anti-consumer.
    I also want to mention the special access proceeding, and I 
want to commend the chairman for quickly putting this issue out 
for renewed comments. I want to commend Commissioners Copps and 
McDowell and Adelstein for their recognition of the need to 
reach a resolution of this proceeding on a timely basis, 
ideally in this September.
    And also looming at the Commission are several forbearance 
petitions. These petitions seek widespread relief of 
obligations that incumbent carriers have to discharge for 
competition policy. The effect of granting these petitions 
would be to usurp congressionally enacted statutes in a 
sweeping manner. I have great concern about the effect on 
competition and consumers that these petitions pose, and I 
trust the Commission will weigh the public interest carefully 
while considering whether to grant or to deny these petitions.
    And finally, the Commission must soon establish rules for 
the upcoming auction of valuable frequencies which will become 
available for other uses when broadcasters relinquish them as 
part of the digital television transition. I want to commend 
Chairman Martin for proposing, in his plan for this so-called 
700 MHz auction, a beachhead for consumer choice and innovation 
in the wireless marketplace. Creating a platform for 
entrepreneurial activity and investment is vital in this 
sector.
    In context, Chairman Martin's plan is quite modest. It does 
not propose requiring existing wireless licensees who serve 
over 200 million consumers today to permit openness for 
wireless applications or allow consumers to switch from carrier 
to carrier and take their phone with them. Neither does the 
chairman's proposal encompass such consumer-friendly and 
innovation-fostering service rules for the entirety of the 700 
MHz auction.
    Rather, it is a proposal covering roughly one-third of the 
spectrum to be auctioned, and frankly, I would prefer the 
Commission went further in order to better unleash the 
disruptive nature of market forces into the wireless and 
applications market, but the chairman has clearly made a good 
start to open things up. And this new openness is desperately 
needed. The problem today is that for millions of consumers, 
the term mobile phone has become an oxymoron, like jumbo shrimp 
or Salt Lake City nightlife. There are no such things. It isn't 
really mobile because you can't take it with you when you 
switch carriers. Moreover, exorbitant early termination fees 
also make consumers feel trapped.
    This scenario undermines the congressional and Commission 
policy. Today millions of consumers pay monthly fees on their 
wireless bills for number portability. What is the point of 
charging consumers for the ability to take their phone numbers 
with them if they can't take their new $500 phone with them to 
a new carrier? I mentioned at our last hearing that this 
inability fosters a Hotel California-type wireless service. You 
can check out any time you like, but you can never leave with 
your phone.
    As the Commission proceeds on this matter in the coming 
week or so, it should be guided by the law Congress enacted for 
the auction process. The objectives in the law underscore that 
Congress knew that simply throwing more spectrum into the 
marketplace by selling it to the highest bidder does not, in 
itself, create the highest value for consumers. Moreover, 
absent sufficient competition, the sale of more licenses for 
additional spectrum does not, in itself, mean innovative new 
services and gadgets will necessarily arrive for all consumers 
in all neighborhoods or arrive in timely fashion.
    The Commission has a rare opportunity to promote consumer 
choice, foster innovation, re-inject competition into the 
wireless marketplace and advance the deployment of broadband 
services and applications. I look forward to working with all 
of the commissioners towards the achievement of these 
objectives. Again, we thank you for coming to our hearing. The 
chairman's time has expired, and I will turn and recognize the 
ranking member, the gentleman from Michigan, Mr. Upton.

   OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Upton. Well, thank you, my friend and chairman of the 
subcommittee and certainly welcome to all of the members of the 
FCC. This hearing today is particularly timely, and I look 
forward to the testimony and engaging in questions following.
    The most pressing topic this morning certainly is the 
upcoming 700 MHz auction and in particular, what has been 
revealed in the press about the banded plan that is being 
considered by the Commissioners. The proposal now circulating 
sounds like an experiment. Sounds as though the Commission is 
asking the question is there a business model to support a so-
called open access approach to wireless, but I see it as a 
gamble, and at stake is the success of the DTV transition, 
billions of dollars in taxpayer funds and public safety. This 
seems like far too much to put on the line, and I have always 
been a staunch defender of the taxpayers.
    Our folks back home should not be asked to take a flier and 
see whether this business plan will necessarily work. Free 
market does work best, and successful auctions work best 
without encumbrances, and if Google is really right, that there 
is a market demand for their business model, they should be 
lining up to bid in a fair auction without the requirements. 
Google is, after all, one of the richest companies in the 
country, with a market cap of more than $160 billion. That is 
$40 billion more than Verizon, and if Google wins the auction, 
it is free to operate the network as it proposes.
    You can try to mitigate the risk by having a very high 
reserve price, but now you are price fixing in addition to 
rigging the auction for particular business models and parties. 
And even with the reserve price, you are unlikely to get the 
$20 billion overall proceeds that the industry believes that 
you might otherwise raise. Every nickel below that price is a 
subsidy provided by the taxpayers without ever asking them 
whether they want to invest. Government shouldn't be in the 
business of subsidizing entry into a competitive marketplace.
    And this industry is very competitive. Four national 
wireless providers, AT&T Mobile, Sprint, T-Mobile, Verizon 
Wireless, as well as several large regional providers such as 
Alltel and US Cellular. Indeed, 98 percent of consumers in 2005 
lived in counties served by at least three facilities-based 
providers and 94 percent lived in counties served by at least 
4, according to the FCC. Average minutes of use per month have 
grown from 140 in 1993 to 740 in 2005, while the cost per 
minute has dropped from 44 cents in 1993 to just 7 cents in 
2005.
    Indeed, the FCC itself stated in its most recent wireless 
competition report that competitive pressure continues to drive 
carriers to introduce innovative pricing plans and service 
offerings and to match the pricing and service innovations 
introduced by rival carriers. The market is also extremely 
innovative. The Apple iPhone is only the latest. For example, 
T-Mobile is already offering a Wi-Fi enabled device, and 
Verizon has a BlackBerry that we know works both here in this 
country, as well as in Europe.
    The auction proposal insulates bidders from competition. I 
don't know how many potential bidders will decide not to 
participate if the auction rules are adopted, but I promise you 
that some will and that auction will have been distorted, and 
the taxpayers can be harmed. The right way to go about this is 
to adopt rules that are free of encumbrances; write the rules 
that won't have the effect of distorting the auction. Let the 
business folks determine what the business models are. An 
unencumbered auction would not preclude a company or investor 
from using an open access business model, but don't conduct the 
experiment at the expense of the American taxpayer.
    Chairman Martin and Commissioners, I hope that your take-
away from today's hearing is that the plan we read about isn't 
quite ready for prime time. I hope that you revise the plan to 
ensure that these valuable frequencies aren't encumbered and 
avoid the distorting effects that the plan is otherwise going 
to have. And I appreciate being here. Mr. Chairman, I look 
forward to the testimony and the questions.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Pennsylvania, Mr. Doyle.

   OPENING STATEMENT OF HON. MIKE DOYLE, A REPRESENTATIVE IN 
         CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

    Mr. Doyle. Thank you, Mr. Chairman, and thank you for 
convening this hearing. And welcome to the members of the 
Commission. When you came before the committee in March, I 
questioned each of you about wireless enhanced 911. E-911 can 
truly save a person's life in an emergency, and I am glad that 
the Commission is acting to improve E-911 standards. And I am 
especially glad that we will be looking at critical issues, 
such as improving location accuracy inside buildings.
    There are some concerns, however, that the draft proposal 
bites off more than it can chew, and I hope that you can fix 
those concerns by the time you finish the item. Our time is 
short, so I am going to apologize for only giving you a taste 
of the issues I am looking at these days, things like these 
forbearance requests, which, if granted in my district, will 
directly and negatively hurt the competitive industry who has 
been playing by the rules, and it will hurt my constituents 
that they serve.
    Things like special access. If it were up to me, I would 
change the name to critical access because that is how critical 
those pipes are to providing competitive wireless and Internet 
service. Things like piecemeal attempts to reform the Universal 
Service Fund, when it really needs an overhaul. Things like 
cable box waivers that would split the baby and provide both 
competition and low-cost boxes. I asked for a vote on that 
issue in the last hearing, and I still haven't seen one yet.
    Roaming open-source software defined radios and my 
opposition to the XM-Sirius merger, these are all very 
important issues. But make no mistake, the auction of the old 
DTV spectrum is almost certainly one of the most critical 
decisions the FCC will make in decades. This auction is a test 
for each of you that history will long remember. Unless this 
upcoming auction delivers Americans a new broadband competitor, 
history will record it not just as a missed opportunity but as 
a failure.
    I want to walk out of here confident that all five 
commissioners are doing everything possible to bring us new 
broadband competition for Internet services and wireless 
devices. America needs an open broadband platform, one that new 
entrepreneurs can use to get their idea out to the market. An 
open platform that can give regional and local carriers a 
national footprint. An open platform that can guarantee us 
robust competition, even if an incumbent makes the highest bid.
    America, take note. For once we really have a good public 
policy proposal being advocated by a wide variety of interests, 
a wholesale marketplace that is open for all devices and 
applications. Technology policy doesn't have to be lost in 
partisan bickering. The people who play ball on this field 
aren't right or wrong just because they have a D or R next to 
their name. This country is thirsting for us to get together 
and do the right thing for the American people. If the FCC 
takes advantage of the opportunity it has in this auction and 
creates an open wholesale market, then it will have done the 
right thing for the American public. Give us new broadband 
competition, give us an open platform. Mr. Chairman, I yield 
back.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Nebraska, Mr. Terry.
    Mr. Terry. Thank you, Mr. Chairman. I have an excellent 
written statement on the necessity for comprehensive universal 
service reform that I would like to submit.
    Mr. Markey. Without objection, it will be included in the 
record, and the gentleman yields back his time, reserves his 
time. The Chair recognizes the gentlelady from California, Ms. 
Harman.

  OPENING STATEMENT OF HON. JANE HARMAN, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Harman. Thank you, Mr. Chairman, and good morning to 
all. I know that there are many subjects being discussed today, 
but no one will be surprised that I want to focus on the 700 
MHz opportunity. Last week a new 50-page national intelligence 
estimate painted a grim picture for our national security. Al-
Qaeda has regrouped, enjoys a safe haven in the Pakistani 
tribal areas and has the intent to deploy nuclear, chemical or 
biological agents against U.S. targets if it can acquire them.
    Near simultaneous coordinated attacks on American soil are 
not a movie treatment. They are a real threat. Even if we 
suffer low tech attacks, such as vehicle-borne attacks or 
suicide attacks, they could be enormously disruptive. The 
question is are we ready? Six years after 9/11, I look at our 
first responders' emergency communications capabilities, and 
the answer is a resounding no. Since that day, we have done 
little to shore up disparate, non-interoperable systems across 
this country. Billions in grant dollars have not taken us far 
enough. Six years after 9/11, we are still not ready.
    I have worked hard on the interoperability problem since 
the towers fell. As a result of the DTV transition, which some 
of us pushed for by 2006, the FCC has a historic opportunity to 
fix this gaping hole in our nation's security, and all of you 
know that. I applaud the proposal for a nationwide broadband 
network for first responders outlined in the draft auction 
order, and as you are aware, Mr. Pickering, whom I don't see 
yet, and I have been sending you letters, making phone calls, 
meeting with you and in other ways trying to encourage you to 
stick to its basic outlines or something perhaps even better.
    This unprecedented opportunity will not come again soon, 
and none of us can afford to let it slip by. The public-private 
partnership idea is sound. It is a win-win, and without it, I 
think we will have a lose-lose. I think we will end up with 
very pricey operable communications networks all over the 
country, but then when we face the big one, which could be a 
California earthquake or these terror attacks, we will not have 
one nationwide interoperable network that we will need.
    Chairman Martin, recently your wife gave birth to a baby 
boy. I know this, and I saw his cute picture on your cell 
phone. That is an advantage of cell phones. We finally got the 
images up. Your cell phone works; that is good. I congratulate 
you on this recent addition to your family, and I think there 
are some other babies among all of you. I notice Commissioner 
McDowell, too, has a new baby. But here is my point. These new 
children should inspire us to try our hardest, in the brief 
time we have in public service, to enact policies that will 
keep them safe. And unless we do the right thing about this 
once-in-a-lifetime opportunity on interoperable communications, 
I think we will have squandered that opportunity. Yield back 
the balance of my time.
    Mr. Markey. The gentlelady's time has expired. The Chair 
recognizes the gentleman from Illinois, Mr. Shimkus.

  OPENING STATEMENT OF HON. JOHN SHIMKUS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Shimkus. Thank you, Mr. Chairman. I will be brief. I 
want to associate my comments with Ms. Harman and some of the 
work that Anna Eshoo and I have been doing on E-911 and this 
interoperability. It is really key, and I appreciate her 
passion and her focus. I will just briefly talk about the issue 
of putting restrictions on spectrum that goes up for auction, 
and here is my concern, and I will have it in a question later 
on, is that based upon the testimony we had a couple weeks ago, 
many folks said that obviously, that makes it, for some, less 
likely because you are putting restrictions on the spectrum.
    And my concern is if that shifts them to some of the rural, 
small market areas and bumps out smaller carriers that are 
going to compete in rural America, that is my concern. They 
don't bid on the big block because of restrictions. It frees 
them up to come into other areas, and then they can cherry pick 
away from some of the really rural areas where we really want 
to encourage and incentivize coverage. So that is where my 
questions will be. You all have a lot on your plate. I 
appreciate the work you do, and I yield back my time, Mr. 
Chairman.
    Mr. Markey. The gentleman's time has expired, and the Chair 
recognizes the gentleman from Illinois, Mr. Rush.

 OPENING STATEMENT OF HON. BOBBY L. RUSH, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Rush. I want to thank you, Mr. Chairman, for 
recognizing me, and I want to thank you also for calling this 
hearing. I want to welcome our witnesses. It is always good to 
have our friends from the FCC here before this committee. Mr. 
Chairman, in the years that I have sat on this committee and on 
this subcommittee, I have consistently voiced my concerns over 
the lack of diversity in ownership interests in the 
telecommunications industry. This lack of women and minority 
ownership is particularly disturbing to me in the wireless and 
broadcasting industry, given that spectrum is, indeed, a public 
asset that ultimately belongs to the American people.
    Mr. Chairman, it is bad enough that we have so little 
diversity in telecom sectors, such as high-speed data services 
and that so few women and minorities own chunks of 
infrastructure that delivers those services. But given the 
Federal Government and the FCC, that they play such a critical 
role of determining how our public airwaves are distributed to 
private interests, the lack of women and minority participation 
in broadcast, wireless and satellite companies is downright 
shameful. It is a sign, quite frankly, that this Congress and 
that this commission simply do not care.
    And I hope that we can reverse this trend of indifference. 
People of color make up almost 35 percent of the population, 
and this percentage is rapidly increasing. Yet, the 
participational rates of people of color and the ownership of 
the public airwaves is markedly disproportionate to the general 
population and has actually fallen. Nationally, minorities own 
no more than 3 or 4 percent of the radio and television 
broadcast industry, and minority ownership of wireless services 
is nearly zero. How is this possible? How can this be 
acceptable to this commission or to this Congress?
    Under section 309(j) of the Telecommunications Act, the FCC 
is required to promulgate rules for, and I quote, 
``disseminating licenses among a wide variety of applicants, 
including small businesses, rural telephone companies and 
businesses owned by members of minority groups and women.'' As 
we approach the upcoming 700 MHz auction, I, for one, want to 
hear how the FCC is going to do a better job of promoting 
minority and women-owned businesses and their ownership 
interest in the public spectrum.
    Mr. Chairman, I am tired of seeing the same faces 
consistently playing the big roles, getting all the big goodies 
in these auctions and reaping, thereby, billions of dollars. It 
is time that other businesses from disadvantaged backgrounds be 
able to sit at the table and carve up the pie and not be left 
with mere crumbs. I thank you, Mr. Chairman, and I yield back 
the balance of my time.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the ranking member of the full committee, Mr. 
Barton.

   OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Barton. Thank you, Mr. Chairman. I have been flagged on 
one of my earmarks, so I am going to have to go to the floor 
sometime pretty early in the hearing to try to de-flag the 
flag, and so it is not an insult to our distinguished 
commission, but I may have to leave briefly. But I am glad we 
have all five of our Commissioners here. I know it is tough to 
come over here to the House when you could be over in the 
Senate, you know, a little more media coverage over there, 
little fancier cufflinks, but we are the people's body, and we 
have every right to have your eminences before us, and we 
appreciate your willingness to come, and we appreciate Chairman 
Markey's willingness to hold the hearing.
    I have a couple of issues that I would like to raise and I 
hope to be here to ask some questions. The first one is the 
Universal Service Fund. I think it is broken, and I don't think 
it can be fixed. I would repeal it if I had a majority of the 
votes; I don't. But I do hope that we can reform it. Last year, 
this fund assessed about $7 billion on users of our telephone 
system and I believe sent about $6 billion of those dollars 
back out to various subsidies. We have a very perverse system 
in which, in some cases, the more cell phones you have, the 
more subsidies you get, and the less efficient the market 
becomes.
    I know that the Joint Board has sent in a reform suggestion 
that you cap the number of funds that can be given to a 
particular program or a particular carrier. I wish you guys 
would really bite the bullet and just go ahead and really 
restructure the program. I have talked to most of you on an 
individual basis, and you all nod your heads and agree that 
something needs to be done. So maybe this is the year that that 
can happen.
    The second issue I want to raise is the upcoming 700 MHz 
auction. I am very disappointed that apparently a majority of 
the Commission, including our chairman, wants to put conditions 
on this auction. I know that there is a diversity of political 
affiliation on the Commission, and that is as it should be. 
People like me, that have an R by our names, we generally, and 
I, specifically, support free markets. I think the less fetters 
you have in terms of conditions on an auction and the more open 
the process, the better it is going to be. I think, also, you 
are going to get more money if you do it that way.
    I am very disappointed that Chairman Martin has come up 
with this plan. It is not quite as bad as the Frontline plan, 
but I don't think it is as good as an absolute, no-condition 
auction. Now, I heard what my good friend from Chicago Mr. Rush 
said, and I think he has got some points, and maybe we ought 
to, at some point in time, look at some minority set-asides and 
things like that. Over time, a market-based principle will set 
the general conditions on what you have to have in terms of the 
ability to compete and in terms of financing the bid that you 
come up with. Then let whoever has the most innovative way to 
use the spectrum do it. If that doesn't work, you can always 
take it back, and over time, that is going to give us the best 
telecommunications system that is possible.
    I am told that the votes are there for the Martin plan. 
Maybe this hearing today may change a couple of minds, who 
knows? So anyway, Mr. Chairman, those are my general concerns. 
I do appreciate you holding this hearing, and I think it is 
very important we have the Commission before this subcommittee. 
We spend a lot of time arguing over healthcare policy and 
energy policy and environmental policy, but right now, 
telecommunications policy is driving the economy of our 
country, in terms of innovation and productivity, really is 
telecommunications policy. So this is big stuff. With that, Mr. 
Chairman, I appreciate your willingness to hold the hearing, 
and I yield back.
    Mr. Markey. Thank you, Mr. Chairman. Thank you, Mr. Barton. 
The Chair recognizes the gentleman from Michigan, Mr. Stupak.

  OPENING STATEMENT OF HON. BART STUPAK, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Stupak. Thank you, Mr. Chairman, and thank you for 
holding this hearing. I would like to welcome our distinguished 
panel of witnesses today. Having all five commissioners before 
our committee twice before the August recess must be a record. 
This is a very timely hearing as the Commission is expected to 
finalize the rules for the 700 MHz auction by the end of the 
month. These rules will have a great impact on the future of 
public safety communications and broadband service in rural 
America, two areas I care deeply about.
    Press reports indicate the Commission may require the 
winner of one block of spectrum to build its network to the 
specifications of public safety in an effort to construct a 
nationwide public safety network. I support this proposal and 
commend the chairman for taking this bold step. I also urge the 
Commission to finalize the band plan for public safety spectrum 
in a way that does not penalize first responders by putting 
them on a different frequency than their Canadian and Mexican 
counterparts.
    Turning to the issue of rural broadband, the 700 MHz 
auction is often talked about being the savior of rural 
broadband deployment. This will only be the case if the rules 
are done right. I wish to urge the commissioners to give small 
and regional carriers the chance to compete in both the lower 
and upper bands of the 700 MHz auction. These carriers are 
located in rural America, they know rural America and they want 
to serve rural America. They should be allowed, to the maximum 
extent possible, an opportunity to compete with the national 
carriers.
    Finally, I supported the strong requirements proposed by 
the chairman this spring. I am hopeful the Commission will take 
a measured approach when weighing industry's concerns with the 
need to make sure wireless broadband is actually deployed in 
rural America. I was less encouraged by the Joint Board's 
recent proposal to cap USF wireless support. As I said at a 
subcommittee hearing earlier this month, temporary policies at 
the FCC tend to become permanent.
    The cap would permanently freeze wireless service in areas 
of the country where service is woefully lacking. The chairman 
has indicated he wants to act quickly on this issue, but I 
encourage the Commission to act comprehensively on wireless 
support rather than choose the easy option of simply freezing 
support. I look forward to delving into these and other issues 
during the questions, and I yield back the balance of my time, 
and thank you again to the Commission for being here.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from New Jersey, Mr. Ferguson.

 OPENING STATEMENT OF HON. MIKE FERGUSON, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF NEW JERSEY

    Mr. Ferguson. Thank you, Mr. Chairman. Thank you and Mr. 
Upton for holding this hearing. I want to extend a warm welcome 
to Chairman Martin and the commissioners. Thank you very much 
for being here, and thanks for your important work at the 
Commission. Quite a bit has happened in the telecommunications 
arena in the past 4 months, both in the private sector, and the 
public sector and I look forward to hearing your views on all 
of these different issues and topics.
    One issue that has received a lot of attention, lately, is 
the pending 700 MHz auction. In about a half a year's time, the 
FCC is set to begin auctioning 60 MHz of spectrum. It is 
extremely important, I believe, that this auction proceeds 
uninhibited by conditions or by regulation. From the billion 
dollars allocated to help our first responders to buy 
interoperable equipment to the $1.5 billion for converter 
boxes, we have made a commitment to the American taxpayers to 
maximize the revenue that the auction will generate.
    While I am on the subject of adverse effects of regulation, 
I want to briefly address a couple of other issues that, in 
turn, have significant impact on my constituents in New Jersey. 
The first relates specifically to the DTV transition, something 
all of us want to make sure that we get right. Chairman Martin 
decided recently to propose dual carriage obligations on cable 
operators, despite the fact that the Commission twice rejected 
dual must carry.
    Many thought that this issue was behind us, yet somehow, in 
the latest DTV proposal, this issue has been revived. Last 
session the leadership of this committee negotiated an 
agreement with the cable industry for limited dual carriage 
during the DTV transition. Putting up what, frankly, I would 
consider, possibly, an unconstitutional roadblock, at this 
point, is hardly the way to facilitate a seamless DTV 
transition.
    The second issue concerns Chairman Martin's integrated set-
top box waiver decision. Some waivers were granted, others were 
not, creating a marketplace where some consumers will be forced 
to pay more than others for the same service. I am particularly 
troubled by the denial of Comcast's request to offer a low-cost 
set-top box that could actually encourage consumers to switch 
to digital television without using a Government subsidy.
    In my district, Verizon offers video, and they received a 
waiver, which I support. Cablevision offers video; they 
received a waiver for different reasons, and I support that, as 
well. But Comcast, which counts a huge number of my 
constituents also as customers, didn't receive a waiver. So I 
have constituents paying more for a set-top box from Comcast 
that has no different functionality than the box Verizon or 
Cablevision provides. It is pretty tough for me to try and 
explain this to my constituents or explain some rationale for 
why there is this discrepancy.
    Whether we are talking about the 700 MHz auction or the DTV 
transition or fostering a competitive telecommunications 
marketplace, selective regulation and conditional policy making 
are not the answer. I strongly urge the Commission to avoid 
this route as you move forward. Again, I welcome you all here 
today. I look forward to hearing your views. I certainly 
appreciate the important work that you do on behalf of our 
country, and I thank you, Mr. Chairman, and I yield back.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from New York, Mr. Towns.

 OPENING STATEMENT OF HON. EDOLPHUS TOWNS, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Towns. Thank you very much, Mr. Chairman. Let me thank 
you for holding this hearing and also Ranking Member Upton and 
to thank the five commissioners for coming again. Of course, we 
look forward to the testimony. I also would like to thank each 
of the witnesses for their long record of public service. Each 
of you have shown great dedication, and I applaud and 
congratulate you for that. I hope your testimony will assist us 
in understanding the future of the industry and how our 
constituents may be affected by upcoming events and how our 
constituents may be affected by these things. And we must keep 
the constituency in mind as we move forward.
    I am pleased with the exceptional growth and innovation 
taking place in this sector today, but we must look at ways to 
improve diversity. The issue can no longer be ignored because 
it is one of fairness and we must be about fairness at all 
times. As we move forward, I will work with my colleagues to 
make sure the FCC is hearing all sides of the issues and 
relying on sound technological study to make its decisions.
    The primary beneficiary of its work should be the American 
consumer. I will work with my colleagues to make sure they have 
the choices they want. I will also work with this committee to 
make sure the industry has the certainty it needs to take risks 
and make the investments to create jobs and revenue. I look 
forward to hearing your thoughts on these and other issues, and 
of course, Mr. Chairman, I think that we need to continue the 
dialog because we need to know a little more about ways and 
methods how we can bring other people in, and I think that we 
are not focusing on that enough and that the same folks are 
just sitting at the table over and over again, so we need to 
make certain that some new people are brought in, and the only 
way we can do it is through this process. So thank you very 
much, and on that note, I yield back.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Florida, Mr. Stearns.

 OPENING STATEMENT OF HON. CLIFF STEARNS, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF FLORDIA

    Mr. Stearns. Good morning, and thank you, Mr. Chairman. Let 
me compliment you on the number of hearings you are having. We 
thank this particular group of individuals or witnesses for 
their forbearance for waiting through our opening statements. 
You know, we see with the iPhone that sort of the convergence 
of all the different wireless, cable, phone, everything is 
coming together, and so the auction of the 700 MHz is going to 
also work in that area. We saw incredible innovation of 
deployment of next generation mobile broadband, voice, video 
and data last year, with the advanced wireless services 
auction. We saw both new and existing licensees spend almost 
$14 billion, creating three more nationwide licensees which 
will compete against the four existing nationwide carriers, not 
to mention additional regional carriers. And of course, we have 
the auction now of the 700 MHz.
    I think a lot of folks on both sides have talked about the 
imposition of the open access rules. I think that is one of the 
key areas that we would like to hear what your rationale is for 
it. I think we have been a little critical on this side. We 
wrote a letter to you, Mr. Chairman; I think 12 of us signed it 
recently asking for a little bit more information on the open 
access rules. We think, obviously, they would affect the 
auction for one business model over another and depress the 
auction revenues that are earmarked for important things such 
as deficit reduction, the public safety operability grants, and 
so I look forward to hearing from not just the chairman, but 
all of you, how you feel about this.
    One broad theme which I think members of this committee are 
interested in is the rules and procedures the Commission just 
uses in general, and particularly, I am interested to see why 
the FCC has refused to implement some procedures or standards 
for the proper disposition of forbearance petitions. As co-
author of this provision in the 1996 telecom act, I am well 
aware of Congress's intent in this matter to deregulate based 
on proper analysis of the competitive market, so that is 
another area that I hope to hear some of your comments on.
    I believe, given the increasing number of forbearance 
petitions being filed with the FCC, there needs to be some 
formal process established to govern the implementation of the 
forbearance statute. The FCC has the authority to do so, it 
just doesn't appear to want to do it. Perhaps it doesn't have 
the will, it is not the consensus, so it is just an area I 
would like to talk about. So those are the areas, Mr. Chairman, 
that I have in my opening statement. Thank you.
    Mr. Markey. Gentleman's time has expired. The Chair 
recognizes the gentlelady from Silicon Valley, Ms. Eshoo.

 OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Eshoo. Thank you, Mr. Chairman, for holding the 
hearing. Good morning, Mr. Chairman, and the commissioners. It 
is good to have the FCC here again. I want to congratulate you, 
Mr. Chairman, on your new child, and I hope that everything has 
settled in your household. I know that there was obviously a 
lot of joy with the new child, but there were a series of 
things that kind of rocked your household, so I hope all is 
well now.
    I want to begin by acknowledging the Commission's efforts 
to ensure that consumers have a choice. I think it is very 
important across the board but certainly in set-top boxes that 
they use to receive cable service. I think I raised this the 
last time the commissioners were here. While I think it has 
taken much, much longer than I would have preferred to 
implement these provisions of the 1996 telecom act, competitive 
alternatives are now appearing in the marketplace, and I think 
that that is very good.
    Now, if the press accounts are accurate, the Commission is 
also considering a plan for the 700 MHz auction next year that 
includes open access service rules for a portion of the 
spectrum. This represents what, about a third, I think, of the 
spectrum, so this is very, very important. Now, it is a 
curiosity to me to hear how some members describe what is being 
considered. I think where some have really been restrictive 
about access, now opening it up is being called restrictive, so 
there is a play on words here. But I think I would like to go 
with the dictionary's definition of open and encourage the 
Commission to look at it that way, as well. I think that these 
are the kinds of requirements or rules of the road for the 
future, that certainly the subcommittee chairman and some other 
members have really encouraged and advocated for some time.
    There are, I think, many other aspects of the Commission's 
work that really give me pause, though. In particular, I am 
concerned about the Commission's recent implementation of 
section 10 of the 1996 act, commonly known as forbearance, and 
I think there has been at least one member, maybe others, that 
have raised this. Under section 10, if the FCC does not deny a 
petition for forbearance from enforcement of any portion of the 
act within 1 year of the date it is filed, the petition is 
deemed granted.
    The forbearance process has recently been used by large 
telephone companies to terminate the enforcement of key 
provisions in the act that were designed to spur competition 
and promote innovation. I think that this has really kind of 
twisted into a pretzel, what the Congress's intent was at the 
time. And I really don't see how the full commission can defend 
this. This is an area that really needs work, and by the way, I 
don't think these are partisan issues. I think that we really 
have to clean this up.
    Finally, I want to call my colleagues' attention to--if you 
haven't read it--we will distribute this, an op-ed last month 
that Commissioner Copps wrote about public broadcast licenses, 
so I would like to place that into the record. I would 
recommend it to my colleagues' attention, and I think that 
there are obligations that come with the license renewal. I 
know I am past my time. I am glad that you are here and look 
forward to asking you questions. Thank you, Mr. Chairman, for 
your forbearance.
    Mr. Markey. The gentlelady's time has expired. The 
gentleman from Georgia, Mr. Deal, is recognized.

  OPENING STATEMENT OF HON. NATHAN DEAL, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF GEORGIA

    Mr. Deal. Thank you, Mr. Chairman. I would like to welcome 
the commissioners back again and to thank you at the outset for 
responding to my post-hearing questions last time. As you may 
recall, one of the questions that I was concerned about was the 
most efficient and timely use of the white space spectrum after 
the DTV transition. In your responses, there was almost 
unanimous consent that an unlicensed approach would be a most 
efficient and beneficial use of the spectrum for the American 
people. As you may know, Representative Inslee and I have 
introduced legislation which would allow for the operation of 
unlicensed devices in television white space.
    Commissioner McDowell, in your opening statement, you 
mentioned you expected the Commission's Office of Engineering 
and Technology to issue a report on its testing of the white 
space devices later this month. I believe Chairman Martin has 
set the deadline of July 31. I am eager to hear if you plan to 
meet that deadline and if the report will include a full 
analysis of the feasibility of the devices.
    As I have said in the past, I believe it is important for 
the Commission to conclude its testing in a timely fashion so 
that we can move to facilitate the use of unlicensed white 
spaces, as they will lead to increased broadband access for 
millions of Americans and enable a wide range of innovative 
wireless devices and services. It is my belief that a 
deregulated open white space spectrum will allow for greater 
innovation and the development of new devices and tools which 
will enable more economical broadband deployment in rural and 
underserved areas and ensure the efficient utilization of 
unused spectrum.
    Before concluding, I would like to mention something that 
Ms. Eshoo also mentioned and that is the number of forbearance 
petitions which are currently pending at the Commission. I 
would like to encourage you to rule on these petitions using 
the normal full administrative processes rather than allow 
these petitions to go through without proper consideration. As 
you know, many companies with varying interests, including a 
number located in my home State of Georgia, are concerned with 
how these petitions could affect them and their consumers. I 
would encourage you to give full consideration to all of the 
parties as you consider these forbearance petitions. Mr. 
Chairman, I thank you, and I thank all the commissioners for 
being here today, and I yield back my time.
    Mr. Markey. The gentleman's time has expired. The 
gentlelady from California, Ms. Solis, is recognized.

 OPENING STATEMENT OF HON. HILDA L. SOLIS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Ms. Solis. Thank you, Mr. Chairman, and I appreciate the 
hearing that you are having today and I am especially pleased 
to see our FCC commissioners. And I am interested in hearing 
from the chairman and our commissioners about a number of 
topics, especially the ongoing consumer education campaign in 
advance of the digital television transition. Households with 
over-the-air television sets and no cable or satellite service, 
as you know, will be the most impacted by the DTV transition. 
These households, in my opinion, are disproportionately low-
income and Spanish speaking. And I hope that each of you will 
address outreach efforts to households with limited Internet 
access and language barriers and outline creative solutions to 
ensure that consumers are not left behind in the digital 
transition.
    I am also concerned about the recent decisionmaking process 
at the FCC. The automatic approval of forbearance petitions 
without action by the FCC runs contrary to congressional 
intent. And in addition, if the FCC does not act on such a 
petition and it is deemed granted, any benefits to consumers 
could be overshadowed by the questionable process. Another 
matter pending at the FCC, in my opinion, is the sale of the 
Tribune Company, which owns a number of media outlets, 
including the Los Angeles Times in my area. The Commission has 
an important duty in reviewing the sale to ensure that local 
interests and the public interest are well served. And I have 
concerns about the current proposed structure of the Tribune 
sale because it places a heavy debt burden on employee stock 
ownership plans without giving those employees a true voice on 
that board of directors or input on the governance of the 
company.
    Finally, I look forward to learning more about the 
forthcoming rules of the 700 MHz auction. We all know that this 
auction could be the turning point in our country to close the 
digital divide and ensure broadband Internet access for all. 
But this goal can't be realized if the auction rules allow for 
continued consolidation of spectrum licenses with a few large 
companies. I was pleased at some of the chairman's recent 
proposals to allow for open access on some of that spectrum.
    And I urge the Commission to go forward and adopt rules 
that would promote diversity amongst spectrum license holders, 
promote innovation and new technology and increase public 
safety. I hope that the auction rules regarding designated 
entities will strike a good balance between small business. 
Thank you again, and I am pleased that our witnesses are here 
today. I yield back the balance of my time.
    Mr. Markey. The gentlelady's time has expired. The 
gentlewoman from New Mexico, Mrs. Wilson, is recognized.
    Mrs. Wilson. Thank you, Mr. Chairman. I will waive my 
opening statement.
    Mr. Markey. The gentleman from Mississippi, Mr. Pickering, 
is recognized.

  OPENING STATEMENT OF HON. CHARLES W. ``CHIP'' PICKERING, A 
    REPRESENTATIVE IN CONGRESS FROM THE STATE OF MISSISSIPPI

    Mr. Pickering. Mr. Chairman and to the panel, I look 
forward to the hearing today. Let me first go through the 
issues that I would like to address. First, the 700 plan and 
then talk about specialized forbearance. But on the 700 plan, 
as we try to measure whether the 700 plan addresses the needs 
of the country, there are several criteria that I use. One, 
does it increase the security of our country? For the 
individual, does it increase individual choice, freedom and 
property rights? For the market, does it increase competition, 
innovation, investment? And for the country, from rural areas 
to urban areas, does it build the infrastructure that we need 
for our economy to grow and for commerce to flourish for Small 
Town, Mississippi or New York City?
    And I think on each of those criteria, the 700 plan 
increases, enhances, improves and makes progress on all of 
those serious, very important objectives for our Nation and 
criteria as we judge the policy. That is why I want to commend 
the chairman for putting together something that does build out 
a public safety network using a private sector partner. For 
giving individuals the property rights and the freedom to 
control their device and to open up what happens with very 
important devices from the BlackBerry to other things that can 
be greatly beneficial to the individual.
    As we look at free markets, and this is as a conservative, 
if you look at the most innovative, where capital flows, where 
innovation and investment is greatest, it is traditionally in 
open systems. The interstate system is probably the greatest 
success story of creating the level of economic growth over the 
last generation. The Internet, natural gas, energy systems that 
are open, produce the investment and the competition and the 
choice for free market capitalism to work.
    And so for those on my side of the aisle, when somebody 
says open it, do not think that this somehow contradicts our 
core beliefs, principles and philosophy. It enhances our core 
beliefs, philosophy and principles. And what the chairman is 
doing today is strengthening markets, enhancing capital, 
increasing innovation and investment. And so I want to commend 
him, philosophically and in principle and for the boldness of 
what he is trying to accomplish and achieve.
    And then I would also like to say, as someone from a small 
State, the requirements to actually build the infrastructure so 
that we can have broadband in Mississippi and broadband 
anywhere in the country, just like the interstate system, it 
will enhance commerce and growth from all parts of the country 
and all sectors and all segments. This is a balanced, good 
plan. I look forward to working through the rest of the week 
with my colleagues and with the Commission in making sure that 
this very important policy decision, probably the most 
important wireless decision of the next decade, is completed in 
a good way.
    I do have other issues. The special access decisions should 
be done in a timely way, a proper analysis is done and I look 
forward to the time that I will have for questions on 
forbearance and Universal Service and thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The gentleman 
from Texas, Mr. Gonzalez, is recognized.

OPENING STATEMENT OF HON. CHARLES A. GONZALEZ, A REPRESENTATIVE 
              IN CONGRESS FROM THE STATE OF TEXAS

    Mr. Gonzalez. Thank you very much, Mr. Chairman. Welcome, 
the chairman and members of the FCC. I am more concerned, I 
guess, today, and I hope to remain through the whole hearing, 
regarding the auction, and I guess the question that I would 
have and I think is going to be addressed in your testimony is 
what predominates. One is are you going to try to get us as 
much money as possible, and the reason for that is Congress has 
already spent that money, and it would be really nice if you 
could give us more than we spent, or is it really going to be 
about giving consumers more device choices and spurring 
innovation, or could it be a scheme or a plan to assure the 
greatest investment in build out, maintenance and improvement 
of the network. I just want to hear your thoughts on those.
    The other thing is putting things in context. My fear is 
this thing about open access means so much to so many different 
people, and I am afraid it is being misrepresented because I am 
not real sure, and I am hoping that you address some of the 
elements that are out there right now in circulation and that 
is we understand, from the network point, what open access may 
mean or may not mean. What I am thinking, in terms of 
manufacturers and software application providers, how they 
might impact choice and innovation. And what I mean by that is 
are you going to be able to dictate to Apple and iPhone a 
different system than iTunes when it comes to music now that we 
have a convergence and we know what the iPhone is?
    There is a story today in the Post about Nokia buying 
Twango, acquiring Twango, a closely held media sharing Web site 
and it says Nokia will divide its cell phone business into 
three units: mobile devices, services and software, and a 
markets division. Twango service is free, but Nokia plans to 
add elements for which customers will have to pay, so now I am 
going to have a device maker that has some sort of other 
consideration, and I am sure one is going to be tied to the 
other.
    Will it restrict the ability of the manufacturer or an 
application provider or software provider to enter exclusive 
contracts, because surely, that would have some sort of a 
chilling effect on choice and innovation. To all MySpace 
subscribers, would it address the limits that are imposed on 
them on software tools that they could use in their pages? How 
about Bear Stearns or a private enterprise that is not going to 
sync their existing systems so that people can use their 
iPhones?
    All of that, people really believe that this open access is 
going to address all of that. Open access will also allow me to 
use Google's Checkout as opposed to eBay's PayPal. Will it make 
sure that Microsoft's operating system Vista doesn't mitigate 
against a search engine as provided by Google? There are truly 
people out there that believe you are going to address all that 
with this open access model, so I would like for you all to 
actually maybe go beyond networks into the other aspects of the 
Internet. Thank you very much, and I yield back.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Illinois, Mr. Hastert.

 OPENING STATEMENT OF HON. J. DENNIS HASTERT, A REPRESENTATIVE 
             IN CONGRESS FROM THE STATE OF ILLINOIS

    Mr. Hastert. Thank the chairman. I would certainly like to 
welcome the FCC commissioners here today and welcome the 
timeliness of today's hearing, Mr. Chairman. We all know that 
within the next couple of weeks the Federal Communications 
Commission will adopt rules that will affect prime real estate 
in the communications sector, ultimately changing the way 
spectrum is used here in the United States. I was here in 1993. 
I was on this panel in 1993. I know what the legislative intent 
of the 1993 act said. I also know things have changed a lot 
since 1993. You have to look at all those other issues.
    I guess I won't be as flowery as my good colleague from 
Mississippi was, but in 1993, when Congress passed the Omnibus 
Budget Reconciliation, Congress moved spectrum allocation to an 
auction-based method to ensure that spectrum is efficiently 
allocated to those who valued it most. As a result, the 
auction-based method generated billions of dollars in revenue 
for the Federal Government, then produced numerous economic 
benefits for people in this country. These benefits are present 
in the competitive wireless market today, innovative service 
offerings.
    Now the FCC has another opportunity to do what Congress 
intended with the 60 MHz of spectrum cleared by the digital 
television transition. Without onerous service conditions, the 
auction can also raise billions of dollars for taxpayers and 
enable carriers to provide the next generation of wireless 
broadband services.
    Instead, I am disappointed to hear that Chairman Martin has 
been circulating a plan that will impose regulations, such as 
open access, to more than half of the 60 total MHz up for 
auction. Imposing mandates on 32 MHz that will harm consumers, 
provide less for all and crowd out the small and rural carriers 
from bidding in the auction. Rather than help the goals Mr. 
Martin claims to achieve, he structures the most important 
auction of the century to tilt in favor of a business model 
that has not committed to bidding unless they receive all of 
their conditions.
     The FCC is charged to manage and secure our Nation's most 
secure resource, and I urge the Commission to review its rules 
and policies and open the auction to a market that will utilize 
the spectrum most efficiently. This is the only way to ensure 
that the auction proceeds on schedule. I look forward to 
hearing the answers from the Commission today. Mr. Chairman, I 
thank you and yield back my time.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Texas, Mr. Green.

   OPENING STATEMENT OF HON. GENE GREEN, A REPRESENTATIVE IN 
                CONGRESS FROM THE STATE OF TEXAS

    Mr. Green. Thank you, Mr. Chairman, and I want to welcome 
our FCC commissioners to the first hearing where we have had 
our commissioners for the new Congress and thank the chairman 
for holding the hearing. There are a number of important issues 
on the horizon that the FCC will be acting on and involved 
with, and it is important that our subcommittee provide that 
oversight. The DTV transition is fast approaching. I look 
forward to hearing what the Commission has been doing to ensure 
that the transition goes smoothly. This transition has the 
potential to impact tens of millions of people. We need to make 
sure Americans are aware it is coming.
    It seems that there has not been a widespread public 
awareness campaign. With the transition less than 2 years away, 
we need to ensure that these pockets of the population who 
heavily rely on over-the-air broadcast, the elderly, the low-
income and non-English speaking households, know the transition 
is coming and how to apply for the converter box coupon. The 
DTV transition is also going to open up spectrum, part of which 
will be designated to the public safety communications network. 
I look forward to hearing more about the 700 MHz plan for 
public safety communications and the Commission's plans for 
promoting a public-private partnership to build a nationwide 
network.
    Last week the National Telecommunications and Information 
Administration announced nearly $1 billion in public safety 
interoperable communications grants, and I am pleased that NTIA 
awarded these grants in a manner many of my colleagues, as well 
as mayors from some our Nation's largest cities, supported by 
giving priority to urban area security initiative tier 1 
cities. The funding for these grants, which will come from the 
sale of the 700 MHz, will provide significant support for tier 
1 cities to improve their communication systems.
    One of the most widely covered issues lately has been the 
part of the proposal that would impose open access on the 
largest blocks in the upper section of the 700 MHz spectrum to 
be auctioned. Spectrum is a limited commodity and 700 spectrum 
even more so because of its unique characteristics. Placing 
conditions on any block in the upcoming auction would limit the 
number of bidders and benefits a limited number of companies. 
The current plan, however, of an open access block has not 
appeared to please any possible bidders.
    I understand the intention of the plan is to promote new 
competition in wireless broadband, and I am concerned about the 
intents by companies and groups to pressure the FCC to go even 
further than it already has to condition a block or blocks of 
spectrum that will limit what license winners can do with the 
spectrum and limit the number of bids on that block. Open 
access and wholesale are terms that should be included in a 
business model and not imposed on companies through a 
Government auction.
    Two of the last issues I would like to mention that I 
contacted the FCC about in the last year are cable set-top box 
waivers and the XM-Sirius merger. That is why I wrote to each 
of you expressing my concern that if the FCC did not grant 
certain waivers of the rule, costs for the set-top boxes would 
rise, resulting in fewer customers having access to digital 
programming and slowing the transition to all digital 
platforms. Since then, the Media Bureau has rejected numerous 
waiver requests, and I am concerned this will make it harder 
and more intrinsic for cable companies to bring digital 
services to their customers.
    Just 2 years ago, the FCC recognized how important 
availability of low-cost, limited function set-top boxes would 
be to advancing the digital transition. With cable companies 
working with electronics manufacturers to develop and download 
security software, Mr. Chairman, I would also mention that 72 
of my colleagues joined me in signing a letter to the FCC 
concerning the XM-Sirius merger, and I appreciate the 
Commission discussing that. Thank you.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Oregon, Mr. Walden.
    Mr. Walden. Thank you, Mr. Chairman. I just want to welcome 
the commissioners. I will waive my opening statement and 
reserve the extra time for questions. Thank you.
    Mr. Markey. The Chair recognizes the gentlelady from 
California, Mrs. Capps.

   OPENING STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mrs. Capps. Here we are again, Mr. Chairman, as you 
promised. Thank you for holding this second subcommittee FCC 
oversight hearing, and welcome back to all five of the 
commissioners. I believe the FCC is a more effective agency 
when this subcommittee aggressively exercises its oversight 
responsibility, and I hope that everyone agrees with that. The 
last hearing I asked Chairman Martin and Commissioner Copps 
about the FCC's lack of important data on broadband deployment 
and the inadequacy of the speed the FCC uses for broadband.
    While this subcommittee considers a legislative solution to 
these problems, I would like to urge the Commission to collect 
more useful data on broadband penetration by looking deeper 
than the standard of one subscriber per ZIP Code and updating 
the definition of broadband to a sensible speed. There is some 
urgency, I believe, because unfortunately, our Nation continues 
to fall in international comparisons of broadband deployment. I 
hope the FCC will take the opportunity afforded by the upcoming 
700 MHz auction, as my colleagues have mentioned, as well, to 
increase the competition in the broadband market.
    I want to commend Chairman Martin for proposing the 
inclusion of wireless Carterfone rules in a portion of spectrum 
to be auctioned. At our last hearing, Professor Tim Wu of 
Columbia Law School told the subcommittee that the United 
States is the leading innovator in most areas of developing 
technology with the major exception being the wireless base. It 
seems to me that applying Carterfone to a portion of the 
spectrum might help us to rectify that situation.
    I also want the FCC to continue to consider other 
conditions with the auction including, perhaps, wholesaling 
requirements. I also would urge the Commission to require 
anonymous bidding so as to reduce the chance that companies can 
collude to keep out competitors. I know there are other plans 
to increase broadband availability pending at the Commission 
and call upon you to fully consider that.
    Two other brief matters to discuss briefly. They are not 
brief. I believe the Commission should work for greater 
transparency in the special access market. Competitive local 
exchange carriers, wireless providers and other companies pay 
special access fees to access incumbent networks. The FCC 
should ensure that these fees are fair and not set or collected 
in a manner that reduces competition. Finally, as a public 
health nurse, I want to commend the work of the FCC's task 
force on obesity. I am particularly pleased that the 11 
companies who have entered into a voluntary initiative to 
restrict their food advertising to children have agreed not to 
mix healthy and unhealthy messages. That was an issue I raised 
in an earlier subcommittee hearing on images kids see on the 
screen. We actually had one that mixed.
    Instead, the companies will not advertise unhealthy food to 
children under 12, period. We must make sure, however, that the 
food companies' definition of unhealthy food is sensible and I 
also want to ask the commissioners in the task force to work to 
bring media companies to this table, as well. So I thank the 
commissioners again and to our chairman. I yield back.
    Mr. Markey. The gentlewoman's time has expired. The Chair 
recognizes the gentleman from Michigan, Mr. Dingell.

OPENING STATEMENT OF HON. JOHN D. DINGELL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF MICHIGAN

    Mr. Dingell. Mr. Chairman, thank you. I commend you for 
this hearing, and I am delighted to welcome the five members of 
the Federal Communications Commission to the committee. I am 
particularly pleased, Chairman Martin, that you are here this 
morning. I am aware that you recently underwent emergency eye 
surgery and that you have had some real honest problems in 
terms of reviewing much of the material that you would normally 
do in advance of this hearing. I hope my colleagues will keep 
this in mind when they ask questions of the chairman. I 
certainly will, and Mr. Chairman, I wish you a speedy recovery.
    I also want to thank the members of the Commission for 
being here. Thank you, ladies and gentlemen. And I would like 
to thank you all for the recent full consumer actions that the 
FCC has taken since our last oversight hearing. Ensuring a 
smooth DTV transition is one of the most important tasks facing 
the Commission. While much work remains to be done, I am 
particularly pleased that the FCC brought enforcement actions 
against TV manufacturers for importing non-DTV compliant sets 
and against retailers for failing to properly label analog 
sets.
    The Commission has also re-chartered its consumer advisory 
committees and increased their focus on the DTV transition. I 
commend you, ladies and gentlemen, for that. The most immediate 
issue at the Commission, in my view, is the 700 MHz auction. I 
understand that the chairman has circulated a draft order that 
includes some variation of the Carterfone or device portability 
rules for one block of spectrum. If done correctly, these rules 
could provide great consumer benefits. Given the proposal's 
limited scope, this would be an opportunity to open one small 
slice of the public's airwaves to greater consumer choice and 
to much greater technological innovation. The Commission must, 
however, be careful, as I am sure they know, to ensure that 
this proposal does not result in increased costs to consumers.
    I am also interested to know how the Commission will 
address the needs of public safety communications. The answer 
is through the auction. Improving communications 
interoperability must be a priority as the Commission completes 
the rules. This is a crucial issue for the public safety 
community and indeed, for the country. I am concerned about the 
Commission's process relating to waiver requests on integrated 
cable set-top boxes. The statute requires the Commission to 
grant waiver requests within 90 days of when the application is 
filed. Many requests were pending for much longer than that. 
The statute allows the Commission to grant a waiver, when 
necessary, to assist the introduction of new or improved 
services.
    In some cases, however, the Commission determined that even 
though a waiver request did not meet this statutory 
requirement, the Commission could grant waivers pursuant to 
other means. I find this a matter of great concern. I am 
concerned that this procedural maneuvering has not been fair, 
open and transparent to all policies involved and to all 
parties involved. It certainly does not give me comfort in how 
that has been done.
    Finally, 1 year ago today, Senators Inouye and Dorgan, 
Chairman Markey and I sent a letter to the chairman concerning 
forbearance petitions. I was concerned then, as I am now, that 
it is possible that a forbearance petition could be deemed 
granted when a minority of the commissioners support it. We ask 
the Commission to take steps to see that such procedural 
failure does not occur again. I hope the Commission provides 
details today on how it will avoid the problem of action 
through inaction in the future.
    Mr. Chairman, I thank you and your associates and 
colleagues at the Commission for being here today, and I look 
forward to hearing your testimony. Mr. Chairman, I thank you 
for your courtesy. I yield back the balance of my time.
    Mr. Markey. The gentleman's time is yielded back, and we 
now recognize the gentleman from Washington State, Mr. Inslee.
    Mr. Inslee. I will reserve my time, Mr. Chairman. Thank 
you.
    Mr. Markey. The gentleman's time has been reserved, and by 
unanimous consent, the gentlelady from Tennessee, although she 
is not a member of this subcommittee, can be recognized to make 
an opening statement. Without objection, you are so recognized. 
Welcome.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman, and again, I 
appreciate your consideration for allowing me to participate by 
unanimous consent in the hearing today, and I am looking 
forward to the testimony from our commissioners. I think the 
time is certainly ripe for rigorous oversight of the FCC, and 
you are currently presiding over a host of issues. I think it 
is a staggering docket of critical issues that will shape the 
long-term future of American communications law, including 
wireless spectrum, the auction, wide ranging broadband 
expansion proposals, digital TV transition and so many other 
issues. It is therefore critical for Congress to remain 
actively engaged in the Commission's regulatory process and 
today's committee hearing is an excellent opportunity to follow 
up on several outstanding issues that were raised during this 
subcommittee's work on March 14 in that oversight hearing.
    Our colleagues have an active interest in several issues 
that will arise as we move forward, but I think none is more 
pressing than the 700 MHz auction that is upcoming. Mr. 
Chairman, as you know, it is well known to all our colleagues 
that the Commission will soon determine the rules that will 
govern this auction. The auction was authorized by Congress 
during the Deficit Reduction Act of 2005, which I believe is an 
important factor that many times gets glossed over as we 
discuss this issue and have a debate, and it is important that 
the Commission establish a fiscally responsible free market 
oriented process that will govern the auction.
    Anything else may threaten the goals that Congress passed 
and the president approved in 2005, which is to save the 
taxpayer money and to reduce the deficit. The Commission 
therefore has an opportunity to accomplish this goal while at 
the same time spurring innovation in the wireless market. 
Neither of these goals will be achieved, however, if the 
Commission imposes burdensome and unnecessary open access 
regulations or licenses on our licensees that might jeopardize 
the potential for revenue generation and corporate interest in 
the auction.
    The auction process enacted by Congress and implemented by 
the Commission has developed a track record of success in the 
wireless industry for over a decade, and as a result, wireless 
licenses were granted to entities that provide billions of 
dollars in proceeds for the U.S. Treasury and made efficient 
use of spectrum as determined by the market during this time. 
The auctions were successful due to an FCC-governed process 
that did not saddle licensees with burdensome regulation.
    Mr. Chairman, let us keep our eye on the ball and achieve 
the goals that Congress established in the Deficit Reduction 
Act and ensure that the 700 MHz auction will drive the next 
wave of innovation in the wireless market and make it a 
success. I yield back.
    Mr. Markey. The gentlelady's time has expired. While the 
gentlelady was speaking, the New York delegation arrived at our 
hearing, and we will begin by recognizing the gentleman from 
New York, Mr. Engel.

 OPENING STATEMENT OF HON. ELIOT L. ENGEL, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF NEW YORK

    Mr. Engel. Thank you very much, Mr. Chairman, for holding 
this important hearing. I would like to thank the commissioners 
for their time today and am pleased to welcome them back to the 
committee. I especially thank Commissioner Copps, who I met at 
the Harry Potter screening not long ago. I would like to start 
by thanking Chairman Martin and the commissioners for granting 
experimental authority to the Metropolitan Television Alliance 
to operate a digital television system on select channels in 
New York City.
    Several of my colleagues on the committee, including the 
distinguished chairman and ranking member of the subcommittee 
and my New York colleagues on the committee, Congressmen Towns 
and Fossella, joined me in sending a letter to the FCC 
requesting they expedite and grant a temporary authorization to 
MTVA, and shortly after the application was approved. I believe 
it is an important step to ensure that there are adequate 
digital signals from the Empire State Building. Obviously, New 
York has had a great problem with this since September 11. 
Needless to say, we do not want to leave the largest media 
market in the dark in February 2009, and I thank the Commission 
for their efforts to help New York.
    Today we will hear many of our colleagues bring up an array 
of important issues that is within the FCC's jurisdiction. One 
issue that is of particular importance to me is the state of 
the DTV transition. The FCC has been tasked with the 
responsibility of the success of this transition. While I am 
pleased to learn of some of the recent actions taken by the 
Commission to educate the consumer of this historic transition, 
I believe more needs to be done. I always mention this. That is 
why I introduced the National Digital Television Consumer 
Education Act. I am pleased to report that the Association of 
Public Television Stations have endorsed this important bill. 
Mr. Chairman, I ask unanimous consent to submit their letter of 
support for the record.
    Mr. Markey. Without objection, it will be included.
    Mr. Engel. Thank you. Last week, NTIA and the Department of 
Homeland Security announced the distribution of a $1 billion 
interoperability grant program that I, along with several of my 
colleagues on this committee, Mr. Stupak and others, set aside 
in the last Congress. The funding for this important program 
will come from the upcoming 700 MHz spectrum auction. This is 
just one example of how important the revenue from the auction 
will be. I urge the Commission to keep that in mind as they set 
out to create rules for the auction. I encourage the Commission 
to generate the largest amount of revenue from the auction and 
that it is reflective of the true value of the spectrum.
    I am also concerned about placing unlicensed personal and 
portable devices in the TV band and the potential interference 
that can arise. Since 9/11, New York has had problems with its 
TV towers, making consumers in the market more susceptible to 
interference. Given the risks involved, I encourage the 
Commission to thoroughly test these new devices in areas like 
New York to guarantee there will be no interference to DTV 
receivers.
    Finally, I would like to point out that just yesterday, 
Sirius and XM satellite radio announced that should the 
proposed merger be completed, they will be able to offer 
consumers a variety of programming options that can better fit 
individual tastes and financial flexibility in choosing their 
programming choices, so I again welcome the Commission today at 
this hearing. I am eager to hear what the commissioners have to 
say about these important issues and look forward to the 
opportunity to engage them during my question time. I thank 
you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from New York, Mr. Fossella.
    Mr. Fossella. No statement.
    Mr. Markey. And I think that all time now for opening 
statements from members of the subcommittee has been completed, 
so we will turn to our very distinguished panel, the Federal 
Communications Commission, and first we will recognize the 
chairman of the Commission, Chairman Kevin Martin. We know that 
over the last month or so you have been in a competition with 
Job for all of the bad things that can happen to one family, 
but in my conversations with you, they all seem to be turning 
out well in the end and for that, we are all glad, and we don't 
mean to add to your woes yet today, but perhaps compared to 
what you have been through, this now is something that doesn't 
quite seem as onerous. We hope so, anyway. So we welcome you, 
sir, and whenever you are ready, please begin.

     STATEMENT OF HON. KEVIN J. MARTIN, CHAIRMAN, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Martin. Thank you, and thank you for your comments 
about my personal situation. I appreciate it very much. Good 
morning, Chairman Markey and Ranking Member Upton and all the 
members of the committee. Thank you for inviting me to be here 
with you this morning. I will offer some brief comments, and 
then I look forward to hearing your thoughts and answering any 
questions you may have. Let me also say that I appreciate your 
flexibility and understanding in providing me some additional 
time to respond to your recent written questions in light of 
the recent eye surgery that I have had.
    When I last appeared before you, I explained that the 
Commission was focused on accomplishing several critical goals: 
increased broadband deployment, encouraging wireless 
deployment, promoting competition, protecting consumers and 
enhancing public safety. We have continued to vigorously pursue 
these objectives during the past few months, and I look forward 
to continuing our dialog on the Commission's efforts.
    This morning I would like to spend some time updating you 
on two key issues that have been at the forefront of Congress's 
attention and the Commission's agenda: the upcoming spectrum 
auction of the 700 MHz band and the DTV transition. Both of 
these issues present both great opportunities for consumers and 
difficult challenges for policy makers. In implementing 
Congress's directive to reallocate the airwaves, the Commission 
must balance often competing interests while maintaining its 
focus on serving the public interest and the American people.
    The upcoming 700 MHz auction presents the Commission the 
opportunity to address several important policy goals. I 
believe I have put forth a fair and balanced plan that will 
help facilitate next generation wireless broadband services in 
both urban and rural areas; establish a public-private 
partnership to deploy a wireless broadband network for public 
safety that will address the interoperability problems of 
today's system; and provide a more open wireless platform that 
will facilitate innovation and investment.
    One of the most important steps we can now take to provide 
affordable broadband to all Americans is to facilitate next 
generation wireless broadband service. A coalition of companies 
that support a national wireless broadband alternative, Intel, 
Skype, Yahoo, Google, DirecTV and EchoStar, urged the 
Commission to structure the auction in such a manner that it 
would maximize the opportunity for a new national wireless 
broadband service to emerge. They urged the Commission to make 
available at least one 11 MHz paired block offered over large 
geographic areas with combinatorial bidding so that national 
services could be established. I put forward a proposal that 
would meet these requirements. My proposal will also 
significantly increase opportunities for small and rural 
carriers to obtain spectrum at the auction as well. The 
proposed plan would provide for a variety of geographic license 
areas and spectrum block sizes. I am also proposing stringent 
build-out requirements, the strictest build-out that the 
Commission has ever proposed, to help ensure that the rural and 
underserved areas of the country will benefit from the 
provision of new services that this spectrum can facilitate.
    Meeting the needs of public safety is critically important. 
Recent crises like 9/11 and Hurricane Katrina have made us well 
aware of the problems that are created when public safety 
officials cannot communicate with one another. To that end, my 
proposal for the upcoming auction would help create a truly 
national interoperable broadband network for public safety 
agencies to use during times of an emergency. Many national and 
local public safety organizations expressed support for a 
public/private partnership approach. A national commercial 
licensee would work together with a national public safety 
licensee to build such a shared network. Providing for shared 
infrastructure will help achieve significant cost efficiencies, 
while maximizing public safety access to interoperable 
broadband spectrum. My proposal would also include a number of 
requirements and procedures to safeguard services to public 
safety entities and address concerns about the success of the 
partnership.
    Finally, I have proposed that the license winner for about 
one-third of the spectrum be required to provide a platform 
that is more open to devices and applications. Consumers would 
be able to use the wireless device of their choice and download 
whatever software they want to use on this platform. Currently 
American consumers are too often asked to throw away their old 
phones and buy new ones if they want to switch cell phone 
carriers. And when they buy that new phone it is the wireless 
provider, not the consumer, who chooses the applications the 
consumer will be allowed to use on the Internet using that new 
handset. Wireless consumers in many other countries face far 
fewer restraints. For example, they can take their cell phones 
with them when they change carriers, and they can use widely 
available Wi-Fi networks available in their homes, and at the 
airport or at other hot spots, to access the Internet.
    The upcoming auction provides us a rare chance to promote a 
more open platform, encourage wireless innovation without 
disrupting the existing networks or business plans. To be 
clear, I have not proposed to apply these same principles to 
the entire 700 MHz band or to the other existing networks. Nor 
have I proposed to apply network neutrality obligations, 
unbundling or mandatory wholesale requirements for this or any 
other block. I do believe, however, this modest step can help 
ensure that the fruits of innovation on the edges of the 
network swiftly pass into the hands of consumers. In addition, 
the Commission must recognize that spectrum is a unique public 
asset, and we must obtain a fair return on that asset for the 
American people.
    To ensure that a fair price is paid, I have proposed a 
reserve price for this block of spectrum, as well as an overall 
reserve price for the entire auction. These reserve prices, 
which are based on the winning bids for the spectrum in our 
most recent AWS auction, will safeguard the value of the 
spectrum for the American taxpayers.
    The second issue I would like to highlight briefly this 
morning is the broadcaster switch to digital television, 
digital technology itself. The transition will enable viewers 
to enjoy movie quality picture and sound, multiple program 
choices and interactive capabilities. Success, however, depends 
upon ensuring the appropriate policies are in place to minimize 
the burdens and the costs borne by consumers. It also depends 
upon Government and industry working together to promote 
consumer awareness. As I recently assured you, Chairman Dingell 
and Chairman Markey, the Commission is working consistent with 
its statutory authority and budgetary capacity to ensure that 
no American is left behind in this part of the digital 
revolution.
    The Commission, therefore, has initiated several rulemaking 
proceedings designed to facilitate the upcoming transition. In 
one recent proceeding the Commission proposed to ensure that 
cable subscribers do not lose access to broadcast signals 
because of the digital transition. About 50 percent of cable 
subscribers today, at least 32 million people, 32 million 
households, subscribe to analog and not digital cable. These 
consumers are at risk of losing their ability to watch 
broadcast television after the digital transition unless the 
Commission acts. And just last week the Commission adopted a 
notice of proposed of rulemaking on several DTV education 
initiatives that were originally suggested by Chairman Dingell 
and Chairman Markey.
    In addition to our policymaking activities, we have also 
been vigorously enforcing our digital transition-related rules. 
I recently presented my colleagues with a notice of apparent 
liability against several large retailers for violating the 
Commission's television labeling requirements. These fines in 
the aggregate total over $3 million. And finally, in addition 
to our policy and enforcement activities, we have devoted 
resources to promoting consumer awareness of the upcoming 
transition, through education and outreach efforts.
    The Commission must keep working to ensure that through the 
upcoming wireless auction and digital transition, consumers are 
able to experience the best that technology has to offer. This 
means that we must work to both minimize the negative impact of 
the digital transition on consumers and introduce more 
competition and innovation in the wireless broadband market. By 
doing so, we can ensure that consumers can reap the vast 
rewards that the digital revolution offers. The Commission's 
ultimate trust and responsibility is, after all, the public 
interest, and it is from the public's airwaves that these 
opportunities flow. In both the 700 MHz auction and the DTV 
transition, we cannot lose sight of that goal.
    Thank you very much, and I look forward to your questions.
    [The prepared statement of Mr. Martin follows:]

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    Mr. Markey. We thank you, Mr. Chairman, very much. And now 
we will recognize the other commissioners, each for 5 minutes, 
to make opening statements if they should so desire. We will 
begin by recognizing Commissioner Michael Copps. Welcome, sir.

     STATEMENT OF MICHAEL J. COPPS, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Copps. Thank you, Mr. Chairman, and thank you all, 
members of the committee, for being here this morning. Let me 
use a few moments to focus on the same three priorities that I 
talked about last time we gathered together, public safety, 
media and broadband, because these are priorities that just do 
not go away.
    First, public safety. The 700 MHz auction raises a lot of 
difficult issues, and you have raised many of them this 
morning. But the most important, by far, is how we use this 
auction to enhance the safety of the people. We have here a 
once-in-a-lifetime opportunity to provide the Nation's first 
responders with access to a nationwide interoperable broadband 
network. My first preference, by far, would have been a 
dedicated federally-funded network reserved solely for first 
responders. At this late date, that is apparently not to be.
    Given this reality, I believe that pursuing a shared 
public/private model becomes the right choice. The challenge is 
to make sure that this network actually works for public 
safety. To me, this means it is built to public safety 
standards and that its effectiveness cannot be curtailed by 
commercial decisions, and it means strong ongoing FCC 
involvement all along the way. I can support public safety 
negotiating a network sharing agreement with a commercial 
licensee, but if that agreement is not sufficiently protective 
of public safety's interest, I believe the Commission must 
retain the right to reject it. I would rather go back to the 
drawing board than approve an arrangement that would compromise 
our Nation's first responders. This is one proceeding where we 
must not fail.
    Second, media. This is so important to me because it is so 
important to our democracy. The good news is that the world has 
changed since the Commission's misguided media ownership 
proceeding 3 years ago. We can aim higher now. We still need to 
be vigilant about stopping bad new rules from being adopted, 
but I think there is an opportunity now and a real hunger out 
there to go back and change some of the bad old rules that 
helped get us in this mess in the first place. We can start 
with the FCC licensing process. Let us get back to an honest to 
goodness licensing system that doesn't grant slam dunk renewals 
but looks at whether a licensee is really doing his job to 
serve the local community. The FCC's lax licensing process no 
longer provides any incentive for broadcasters to do the right 
thing. Those that serve their local communities and those that 
do nothing receive the same rubberstamp renewal. It is time to 
end the free ride and require that all broadcasters meet 
certain minimum public interest obligations.
    The other media issue desperately requiring our attention 
is the DTV transition. This one should keep us up at night. 
Huge and potentially very disruptive changes are on their way 
to TV consumers. Yet a survey earlier this year found that 61 
percent of consumers still have no idea that the transition is 
coming and what is in it for them. Contrast this with a report 
from the UK, where 8 in 10 are already aware of the switchover, 
and their transition runs from 2008 to 2012.
    The first message that consumers hear cannot be about how 
to get a converter box for a transition they have never heard 
of before. We first need to explain to them why the transition 
is happening and how it benefits them. To the extent that 
consumers feel that this is something the Government is doing 
to them rather than for them, we will face a very messy 
backlash. So we had better do outreach in a more serious way. 
Web sites and pamphlets are fine, but they are not going to get 
the job done. The best way to reach analog television viewers 
is through analog television programming. And I want to thank 
Chairman Dingell and Chairman Markey for their suggestion that 
we consider mandatory public service announcements by broadcast 
licensees. That is a great idea.
    Third, broadband. Our biggest infrastructure challenge as a 
Nation is bringing broadband to all of our citizens, and we are 
not doing a very good job. By any measure, no matter how you 
cut the salami or slice the baloney, Americans are getting too 
little broadband at too high a price. The 700 MHz auction could 
help turn this around. If we get it right, this auction offers 
the prospect of new competition, innovation and consumer 
choice, perhaps even a third broadband pipe. Here is another 
huge step we could take: include broadband as part of 
comprehensive Universal Service Fund reform to keep our Nation 
competitive in the global economy.
    And I am going to end this statement like I ended my 
statement the last time, on the closed meeting rule. Think 
about this for a minute. This hearing is probably the only time 
before we five commissioners vote on the 700 MHz proceeding, 
with all of its far-reaching implications, the only time we 
will be able to talk about it together. Wouldn't it make more 
sense and wouldn't it be better for the country if we had some 
opportunity to sit down and have a full and frank discussion of 
all of these important proposals and all their implications? So 
I respectfully suggest again that you consider modifying the 
closed meeting rule so that more than two of us can meet and 
talk at one time.
    Thank you for your attention, and I look forward to our 
conversation this morning.
    [The prepared statement of Mr. Copps follows:]

                     Testimony of Michael J. Copps

     Chairman Markey, Congressman Upton, members of the 
subcommittee: Thank you for the invitation to return here this 
morning. In this brief statement, I will focus on the same 
three priorities I discussed with you last time we gathered 
together--public safety, media, and broadband. They just don't 
go away.
     First, public safety. Before us now is the 700 MHz 
auction. It raises many difficult issues, but the most 
important by far is how we use it to enhance the safety of the 
people. We have here a once-in-a-lifetime opportunity to 
provide the Nation's first responders with access to a 
nationwide, interoperable broadband network. My first 
preference--by a long shot--would have been a dedicated, 
federally-funded network reserved solely for first responders. 
At this late date, that is apparently not to be. Given this 
reality, I believe that pursuing a shared public-private model 
becomes the right choice. The challenge is to make sure that 
this network actually works for public safety. To me, this 
means it is built to public safety standards and that its 
effectiveness cannot be curtailed by commercial decisions. And 
it means strong, ongoing FCC involvement all along the way. I 
want to make one thing clear at the outset. I can support 
public safety negotiating a network sharing agreement with a 
commercial licensee. But if that agreement is not sufficiently 
protective of public safety's interest, I believe the 
Commission must retain the right to reject it. I would rather 
go back to the drawing board--whatever the political 
consequences for doing so--than approve an arrangement that 
would compromise our Nation's first responders. In my visits 
with many of you, I have shared my belief that the FCC was less 
proactive and aggressive than it should have been following 9/
11. Chairman Martin, to his credit, is working to reverse that, 
and I am working with him, and all of my colleagues, to make 
sure we get this particular proceeding right. We cannot--we 
simply cannot--fail.
     Second, media. This is so important to me because it is so 
important to our democracy. Whatever great issues confront us--
war and peace, health care, the education of our children, you 
name it--are filtered through the media. And Americans are 
rightly concerned when they feel that more and more of the 
information they receive is filtered for them by fewer and 
fewer big media giants.
     The good news is that the world has changed since the 
Commission's misguided media ownership proceeding 3 years ago. 
We can aim higher now. We still need to be vigilant about 
stopping bad new rules from being adopted, but I think there is 
an opportunity now--and a real hunger out there--to go back and 
change some of the bad old rules that helped get us in this 
mess in the first place. With apologies to one past FCC 
Chairman, television is not a ``toaster with pictures,'' and 
it's high time we cast that 1980s world-view aside and get to 
work creating a public interest standard for the 21st century.
     We can start with the FCC licensing process. Let's get 
back to an honest-to-goodness licensing system that doesn't 
grant slam-dunk renewals but looks at whether a licensee is 
really doing its job to serve the local community. Did the 
station air programs on local civic affairs? Did it meet with 
local citizens to receive feedback? Is its children's 
programming really educational? And let's put that information 
up on the Web so citizens can know how their airwaves are being 
used. Of course many broadcasters want to serve their local 
communities. But the pressures of consolidation and the 
unforgiving expectations of Wall Street have made that 
difficult. Just as bad, the FCC's lax licensing process doesn't 
provide any incentive for broadcasters to do the right thing. 
Those that serve their local communities and those that do 
nothing receive the same rubber-stamp renewal. It's time to end 
the free ride and require that all broadcasters meet certain 
minimum public interest obligations.
     The other media issue desperately requiring our attention 
is the DTV transition. This one should keep us up at night. 
Huge and potentially very disruptive changes are on their way 
to TV consumers--yet a survey earlier this year found that 61 
percent of consumers still have no idea that the transition is 
coming and what's in it for them. The first message consumers 
hear cannot be about how to get a converter box for a 
transition they've never heard of. We first need to explain to 
them why the transition is happening and how it benefits them. 
To the extent consumers feel that this is something the 
government is doing to them rather than for them, we will face 
a very messy backlash.
     So we had better do outreach in a more serious way. Web 
sites and pamphlets are fine, but they're not going to get the 
job done. The best way to reach analog television viewers is 
through analog television programming. I want to thank Chairman 
Dingell and Chairman Markey for their suggestion that we 
consider mandatory public service announcements by broadcast 
licensees. I hope that the Commission will act quickly on this 
suggestion, among others they made, and that this Committee 
will maintain its extremely beneficial oversight of the 
Commission's DTV consumer education efforts.
     Third, broadband. My view of how we are doing has not 
changed much in the last four months. Our biggest 
infrastructure challenge as a nation is bringing broadband to 
all of our citizens, and we're not doing a very good job. Since 
we last convened, the OECD ranked the United States 15th in 
broadband penetration, down from 12th in 2006. But if you don't 
like that study, there are many others conducted by 
international organizations, industry associations, think tanks 
and business analysts that have us at 21st, 11th, 12th, or 
24th. By any measure, we're getting too little broadband at too 
high a price. The 700 MHz auction could help turn this around. 
If we get it right, this auction offers the prospect of new 
competition, innovation and consumer choice--perhaps even a 
third broadband pipe. Here's another huge step we could take: 
include broadband as part of comprehensive Universal Service 
Fund reform to keep our nation competitive in the global 
economy.
     I'll end where I ended last time--the closed meeting rule. 
Think about this: today is probably the only time before we 
vote that the five Commissioners will be in the same room to 
talk about the 700 MHz auction with all its far-reaching 
implications. Wouldn't it be better if we had some opportunity 
for full and frank discussion of these important proposals? So 
I respectfully suggest that you consider modifying the closed 
meeting rule so that more than two of us can meet and talk at 
one time.
     Thank you for your attention, and I look forward to our 
conversation this morning.
                              ----------                              

    Mr. Markey. Thank you, Commissioner. And now we will hear 
from Commissioner Deborah Tate. Welcome.

    STATEMENT OF DEBORAH TAYLOR TATE, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Ms. Tate. Good morning, Chairman Markey and esteemed 
members of the subcommittee. I have a brief opening but would 
request that my written statement be submitted for the record.
    Mr. Markey. Without objection.
    Ms. Tate. Thank you. I appreciate, obviously, the 
opportunity to appear before you all today. As I have stated 
before, I firmly believe that it is important for us to 
maintain a dialog about the issues that we are discussing today 
and those that we will discuss in the future at the FCC. At the 
outset I would like to commend Chairman Dingell and Chairman 
Markey, Ranking Members Barton and Upton, for their continued 
leadership in striving to meet the challenge of shaping our 
communications policies to keep up with the ever-changing 
digital world, in the best interest of the American public.
    As noted, just since the last time that we were here before 
you just a few months ago, the communications marketplace has 
continued to evolve, with new ideas, new concepts, new devices 
and new technologies being announced almost every day. This 
constantly challenges us to adapt our regulations to these 
market changes. In doing so, wherever possible my goal is to 
promote balanced, technology-agnostic regulation, which 
provides incentives to continued investment and encourages 
innovation.
    Today, I would like to take a moment to focus on three 
major areas. First is the important work that we do on behalf 
of children, families and consumers, including the areas of 
media and childhood obesity, as well as broadcast programming 
for children, both encouraging programming that is positive and 
family-friendly and healthy, as well as programming which may 
be having a negative impact on our children, specifically that 
we recently provided a violence report to Congress and 
appreciate Chairman Markey's hearing on that topic as well.
    Other consumer-focused initiatives include soliciting input 
to broadcast ownership and localism across the country and our 
efforts to ensure that the public is fully educated regarding 
the DTV transition. We have also initiated steps to improve 
access to communications services for those with disabilities; 
to strengthen our safety and privacy rules; to protect the 
stealing of citizens' most private information.
    Second, I would like to discuss the Commission's efforts at 
continuing to increase the deployment of broadband to all parts 
of this country. We launched two initiatives that will allow 
the Commission to gain an even better picture of broadband 
deployment, where it is and where it is not across the country, 
along with more accurate data. And I look forward to hearing 
more from you today, as we continue to discuss the historic 
upcoming 700 MHz auction, which does present us with 
unprecedented and exciting opportunities for truly ubiquitous 
broadband to all corners of the Nation and for all Americans to 
access new innovations for their work, for entertainment, for 
education and for healthcare, as well as for our Nation's 
global competitiveness.
    Last, I want to touch on I think what we all believe is the 
most important issue the Commission deals with, and that is 
public safety and homeland security. The upcoming 700 MHz 
auction also presents a unique opportunity to facilitate the 
establishment of this nationwide interoperable broadband 
communications network for the benefit of State and local 
public safety users and in the end, for every single American 
citizen.
    Moreover, the Commission is evaluating whether we are 
measuring wireless E-911 location accuracy in the most 
appropriate manner and whether other new communications 
services should be required to send more accurate information. 
The Commission also continues to implement various 
recommendations of our independent panel reviewing the impact 
of Hurricane Katrina. As I heard in Mississippi, the 
dissemination of this vital information and interoperable 
communications are indeed the backbone of our defense not only 
against natural disasters but attacks on our homeland and the 
possibility of a pandemic health-related or environmental 
attack.
    Again, I appreciate your invitation, and I am pleased to 
answer questions.
    [The prepared statement of Ms. Taylor Tate follows:]
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    Mr. Markey. Thank you, Commissioner, very much. And now we 
will hear from Commissioner Jonathan Adelstein. Welcome.

   STATEMENT OF JONATHAN S. ADELSTEIN, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. Adelstein. Mr. Chairman and members of the 
subcommittee, thank you very much for inviting me to testify 
here today and discussing the challenges ahead of us. My goal 
is certainly to keep all of our communities connected and to 
bring the latest technologies into the reach of everyone in 
this country.
    One of our central national priorities that this committee 
has talked about so much is performing the widespread 
deployment of affordable, truly high-speed broadband. Broadband 
allows our citizens to expand their economic, their 
educational, and their healthcare opportunities. As we saw last 
night in Charleston by way of the YouTube debate, it is 
revolutionizing the way that citizens participate in the 
democratic process. To make sure that all of our citizens can 
reap the benefits of these opportunities, we need to make sure 
that broadband is the dial tone of the 21st century, available 
and affordable to everyone.
    While we have made progress, we have failed to keep pace 
with our global competitors. For Americans in rural areas, for 
low-income consumers and small businesses, the problems are 
even more acute. The problem lies in that citizens of other 
countries are getting a much better broadband value in the form 
of more megabits for less money. This is more than a PR 
problem. It is a major productivity problem for our economy, 
and we have got to do better. It is time to stop making excuses 
and to start making solutions. We have got to engage in a 
concerted effort to restore our place as the world leader in 
telecommunications. All of our citizens need access to 
affordable, true broadband, capable of carrying voice, data and 
video.
    An issue of this importance to our future warrants a 
comprehensive national broadband strategy. A true broadband 
strategy should incorporate benchmarks, deployment timetables 
and measurable thresholds to gauge our progress. As 
Congresswoman Capps noted, we need to set ambitious goals, 
beginning with updating our current anemic definition of 
broadband at just 200 kilobits per second to something more 
akin to that used by our global competitors in other countries 
that are magnitudes higher. We need more reliable specific data 
than the FCC currently compiles, as you also suggested, so we 
can better ascertain our current problems and develop 
responsive solutions. We should give Congress and consumers a 
clear sense of the price per megabit and better mapping of 
broadband availability, as you have suggested, Mr. Chairman. 
Our strategy has got to include incentives for investment, 
promote competition, and preserve the open character of the 
Internet. We have got to channel universal service support also 
toward broadband deployment. I detail in my written testimony 
many more steps that Congress can take outside the purview of 
the FCC, implementing a truly national broadband strategy.
    Another critical component for promoting broadband and 
providing competition is maximizing the potential spectrum-
based services. We have heard a lot this morning about the 
upcoming 700 MHz auction and how we can use that to best 
facilitate the development of broadband. We have a historic 
opportunity with this auction to make sure that we do 
facilitate the emergence of a third broadband channel--I don't 
call it a pipe, I call it a third broadband channel--into the 
home, because in this case we are talking about wireless. That 
could provide a truly high-quality national wireless broadband 
network, identifying spectrum on which to establish a 
meaningful open access environment to promote badly needed 
broadband competition over these airwaves. The spectrum also 
gives us new opportunities, as my colleagues have said, to come 
to grips with our Nation's public safety dilemma.
    In our immediate agenda we face key issues, including media 
ownership, particularly among women and minorities, as 
Congressman Rush noted, public interest and localism 
obligations. I have traveled to hearings across the country and 
in many of your districts. I have participated with some of 
you, such as you, Congressman Inslee. We have heard from the 
people, and I can report that the concern remains very high 
among many of our citizens about the negative impact of 
consolidation on competition, localism and diversity. With 18 
months before the end of the analog broadcasting era, we need 
greater national attention on the impending DTV transition, as 
Congressman Engel noted. While we have made some progress, more 
focused leadership is certainly needed from us at the FCC. I 
think the failure to run a well-coordinated transition plan 
would lead to a tsunami of consumer complaints from 
disenfranchised viewers. And you would certainly hear from them 
in Congress, we would hear about it at the FCC, and all the 
affected industries would hear as well.
    And as Congresswoman Solis noted, we need to reach 
especially out to hard-to-reach communities, such as those that 
don't speak English as their primary language, elderly, 
minorities, many other communities that need special attention 
to make sure that they all hear about it and those communities 
particularly that rely heavily on over-the-air television.
    To better manage this potential disruption, I recommended 
that the FCC take strong action. We should establish a clear 
national message among Federal, State and local and tribal 
governments, we should coordinate the array of industry 
activities, and we should create a Federal DTV transition task 
force, once and for all. FCC action on these initiatives is 
already overdue, and we certainly appreciate the leadership of 
Chairman Dingell and Chairman Markey. The letter that you sent 
us has certainly encouraged us along, and I think we are better 
along the way as a result of your efforts on that front.
    Congress charged us with keeping the American public well 
connected and well protected, and I will do everything I can as 
a commissioner to make sure that I implement the laws as you 
have intended. Thank you for your leadership, and thank you for 
the opportunity to testify here today. Thank you.
    [The prepared statement of Mr. Adelstein follows:]

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    Mr. Markey. Thank you, Commissioner, very much. And our 
final commissioner, Rob McDowell. Whenever you are ready, sir, 
please begin.

    STATEMENT OF ROBERT M. MCDOWELL, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. McDowell. Thank you, Mr. Chairman and Ranking Member 
Upton, Mr. Shimkus and other distinguished members of the 
subcommittee. Thank you for inviting us to appear before you 
this morning. Since we last met on March 14, the Commission has 
taken a number of significant steps that are bringing new 
technologies to consumers, increasing competition and lowering 
prices. Before us are some of the most important issues ever 
reviewed by the FCC, so it is timely that we appear before you 
today to answer your questions and exchange views on these 
critical matters.
    This year in particular the Commission is in an excellent 
position to ensure that the wireless marketplace is open to an 
even wider variety of entities. I have been focusing on 
creating new opportunities for all types of spectrum license 
applicants as well as unlicensed operators. In March, I 
supported our action to classify wireless broadband Internet 
access service as an information service and therefore create 
regulatory parity. This determination, which the Commission had 
previously taken for Internet access over cable modem, wireline 
and powerline facilities, will maximize innovation and consumer 
benefits by ensuring that the market-driven framework 
established by Congress is fully realized as wireless services 
continue to flourish and evolve.
    With respect to spectrum license applicants, the chairman 
recently circulated a draft order setting forth service rules 
and other policies pertaining to the 700 MHz band. In my 
deliberations over this important proceeding, I am considering 
many ideas that could provide meaningful market entry 
opportunities, including the pros and cons of various 
geographic market sizes, different ideas for dividing the 
available spectrum, geographic-based versus population-based 
build-out requirements, and creating the proper mix of 
incentives that would facilitate a public/private partnership 
to build and operate a nationwide broadband public safety 
network. As always, I look forward to hearing your views on 
these important issues.
    With respect to unlicensed spectrum use, the Commission's 
Office of Engineering and Technology, or OET, as we call it, is 
completing its testing of several devices developed for use in 
the spectrum located in between TV channels, also known as the 
white spaces. I understand that OET is on course for reporting 
these testing results later this month and to make them 
available for public comment. Our goal is to finalize rules 
this fall. I am optimistic that technological innovation in 
this area will yield progress towards many of the public policy 
goals being discussed today, including some issues being 
analyzed in the 700 MHz proceeding.
    In the media sector we have made several strides to further 
the digital transition. I was pleased to support several 
Commission actions that will enable progress in the digital 
transition for television and radio. We have provided a 
progress report on the digital TV transition and proposed 
deadlines and procedures to facilitate the broadcasters' final 
steps toward meeting the February 17, 2009 deadline and 
required that retailers disclose to consumers that analog tuner 
televisions will not be able to receive over-the-air broadcast 
signals without a converter box, after the transition.
    For radio, we adopted an historic order that established 
rules for in-band, on-channel technology. These flexible rules 
will expedite the transition to terrestrial digital radio and 
provide higher-quality audio, diverse programming and 
innovative data services to the public, on free over-the-air 
stations. We also have made strides toward regulatory parity 
among competitors in the multi-channel video distribution 
marketplace, by opening a proceeding on exclusive contracts for 
video service in multiple-dwelling units and issuing an order 
on building access for such providers.
    With the advent of the triple play of video, voice and 
high-speed Internet access being offered by cable, telephone 
and other companies, it is important that the Commission's 
regulations treat similarly-situated competitors the same when 
possible. In the wireline arena we have received the Joint 
Board on Universal Service recommendation to adopt an interim 
cap on the amount of support a competitive eligible telecom 
carrier can receive. I am studying the positions of the parties 
in that proposal and look forward to receiving more 
recommendations regarding fundamental reform later this year. 
And I thank my three colleagues who serve on that joint board, 
Chairman Martin and Commissioners Copps and Tate, for their 
tireless efforts in pursuit of meaningful universal service 
reform.
    Regarding special access, we recently acted to refresh the 
record of that proceeding, an updated record that better 
reflects today's marketplace. It will hopefully provide us with 
the data necessary to render a timely decision. And finally, we 
initiated a Notice of Inquiry concerning the state of the 
market for broadband and related services. This should provide 
us with a record to judge whether additional policies 
regulating the Internet are warranted or not.
    In conclusion, I am still optimistic that America's 
communications future is very bright. I look forward to 
continuing to work with my fellow commissioners and you, the 
Congress, to resolve these important issues so that our 
policies bring new technologies to American consumers. Thank 
you.
    [The prepared statement of Mr. McDowell follows:]

                    Statement of Robert M. McDowell

     Good morning Mr. Chairman and distinguished members of the 
subcommittee. Thank you for providing us with this opportunity 
to appear before you this morning. Since we last met in March, 
the Commission has taken a number of important actions that I 
would like to highlight for you.

                                Wireless

     We have been busy on the wireless front. This year in 
particular the Commission is in an excellent position to ensure 
that the wireless marketplace is open to a wide variety of 
entities. We have been working hard to create new windows of 
opportunity for all types of spectrum license applicants, as 
well as unlicensed operators.
     In March, I supported our action to classify wireless 
broadband Internet access service as an information service 
and, therefore, create regulatory parity. This determination, 
which the Commission had previously taken for Internet access 
over cable modem, wireline and powerline facilities, will 
maximize innovation and consumer benefits by ensuring that the 
market-driven framework established by Congress is fully 
realized as wireless services continue to flourish and evolve.
     With respect to spectrum license applicants, following the 
Further Notice of Proposed Rulemaking adopted in April, the 
Chairman recently circulated a draft order setting forth 
service rules and other policies pertaining to the 700 MHz 
band. As you know, Congress has mandated that this spectrum be 
auctioned no later than January 28, 2008. As a result, I am 
currently actively considering many ideas intended to stimulate 
meaningful opportunities, including, for instance, geographic 
market sizes, construction requirements, and possible 
incentives for the private sector to partner with public safety 
agencies. As always, I am interested in hearing your views 
regarding this important proceeding, and I am pleased to have 
an opportunity to do that in person today.
     With respect to unlicensed spectrum operators, at this 
time, the Commission's Office of Engineering & Technology (OET) 
is completing its rigorous testing of a number of protocol 
devices developed for unlicensed use in the spectrum located in 
between the TV channels. I understand that OET is on-track for 
reporting these testing results later this month and that the 
chairman intends that the Commission finalize rules this fall. 
Of course, the technology innovation spurred by the 
Commission's leadership in the white spaces proceeding plays a 
critical role in the wireless marketplace, including fostering 
job growth and related business opportunities. I am optimistic 
that technological innovation in this area will yield progress 
toward many of the public policy goals being discussed today.
     I am hopeful that our work to prepare for the 700 MHz 
auction and future deployment in the white spaces, along with 
the certainty created by our action to classify wireless 
broadband Internet access service as an information service, 
will broaden the opportunities available to entities seeking to 
enter the global wireless marketplace, whether as licensees or 
as unlicensed service providers.

                                 Media

     In the media sector, we have made several strides forward 
as well, particularly with respect to the digital transition 
for both television and radio, as well as taking steps toward 
regulatory parity among competitors in the multichannel video 
distribution marketplace.
     In March, we adopted a historic order for the radio 
industry. In the order, we adopt service rules and other 
licensing and operational requirements for terrestrial digital 
radio using in-band, on-channel (IBOC) technology. Our rules 
provide both the regulatory certainty and the flexibility that 
the broadcasting industry needs to expedite the transition to 
digital radio and to provide higher quality audio, diverse 
programming and innovative data services to the public on free, 
over-the-air stations. Our Order enables broadcast 
entrepreneurs to bring to the marketplace this powerful new 
technology--which enables a single station to provide multiple 
streams of programming--to the benefit of all American 
consumers.
     In April, I was pleased to support several Commission 
actions taken to further the digital television transition. 
First, in a Notice of Proposed Rulemaking, we provided a 
progress report on the digital transition and proposed 
deadlines and procedures to ensure that the February 17, 2009 
transition date is met and to offer regulatory flexibility to 
broadcasters to facilitate their construction of digital 
facilities by the deadline. Since Congress established the 
transition deadline, the Commission has moved beyond simply 
ensuring that stations were capable of operating in digital to 
focus on facilitating broadcasters' construction of their 
final, post-transition channel facilities. In this Notice, we 
analyze and consider the specifics on when stations may and 
must cease analog operations, when they may and must begin 
operating on their post-transition digital channel and what 
regulatory flexibility we can provide to ensure that the 
complicated, coordinated switch to DTV becomes a reality.
     To address the issue of consumer education about the DTV 
transition, we also issued an order that requires that 
retailers disclose, at the point of sale, that televisions that 
include only an analog tuner will not be able to receive over-
the-air broadcast signals without a converter box after 
February 17, 2009. The disclosure requirements we adopted will 
ensure that consumers have this material information before 
they make a purchase. One of the biggest challenges the 
Commission faces over the next 2 years is moving our Nation 
from analog to digital television with minimal consumer 
disruption. Consumer education about the transition to DTV has 
been limited so far. This order takes a big step forward to 
educate consumers.
     Given Congress's DTV deadline for broadcast stations, the 
natural next step for the Commission is to review how cable 
operators will carry the broadcasters' digital signals. In 
April, I was pleased to support a notice of proposed rulemaking 
in which we seek comment on the obligations of cable operators, 
after the conclusion of the digital transition, to ensure that 
the digital signals of ``must carry'' stations are not 
materially degraded and are viewable by all cable subscribers, 
as required by law. Even though broadcasters will be all 
digital by the deadline, some analog cable equipment will 
remain in cable systems and in the homes of cable subscribers. 
Accordingly, we must address how to ensure that cable 
subscribers are able to view the higher quality signals 
provided by the broadcast stations in their communities. The 
notice initiates our review.
     The Commission also has been working to achieve regulatory 
parity between incumbent telephone companies, incumbent cable 
companies and new entrants into the voice, video and data 
markets. To help create an environment where investment, 
innovation and competition can flourish, it is imperative that 
government treat like services alike, preferably with a light 
regulatory touch. With the advent of the ``triple play'' of 
video, voice and high-speed Internet access services being 
offered by cable, telephone and other companies, it is 
important that the Commission's regulations treat all 
competitors the same when possible.
     In March, we issued a notice of proposed rulemaking to 
uncover whether there is a need for the Commission to regulate 
exclusive contracts for the provision of video services to 
multiple dwelling units (MDUs) and whether the Commission has 
the authority to craft such regulations. In the notice and in 
an order adopted in May on access to wiring inside MDUs, we 
examine building access issues in a platform neutral manner 
with respect to all video providers, be they telephone 
companies, incumbent cable providers, over-builders or others. 
I hope that competition for all services, and across all 
platforms, does not stop, literally, at the doorstep of 
apartment and office buildings across America.

                  Public Safety and Homeland Security

     In addition to considering the public safety matters 
related to the 700 MHz band, which I discussed earlier, I have 
supported a number of recent actions in support of public 
safety and homeland security efforts. First, in May, I voted to 
approve a Notice of Proposed Rulemaking that invites comment 
and debate on a proposal that would require licensees subject 
to our Enhanced 911 rules to satisfy a more stringent location 
accuracy requirement. Certainly it is of paramount importance 
that E911 service satisfies the needs of public safety 
personnel, as well as the expectations of America's wireless 
consumers, and I am hopeful that our inquiry will serve as a 
positive start to a challenging task.
     Also in May, the Commission took steps to increase the 
reliability, security and efficacy of the Nation's Emergency 
Alert System (EAS) network to enable Federal and state 
authorities to communicate rapidly with the public in times of 
crisis. Specifically, we adopted an order that: requires EAS 
participants to accept messages using Common Alerting Protocol 
(CAP) when CAP is approved by FEMA; requires common carriers 
providing video service to participate in EAS as broadcasters 
and cable and satellite providers already do; and permits the 
transmission of state-level EAS alerts that are originated by 
Governors or their designees. This Order establishes a 
framework for the next generation of EAS, which through 
innovative technologies will provide a redundant, more 
resilient system for delivering emergency alerts. The upgraded 
EAS that CAP will enable also will ensure better outreach to 
all Americans, including non-English speakers and persons with 
hearing and vision disabilities.
     I also supported our action to move forward on a number of 
the recommendations made by the Independent Panel Reviewing the 
Impact of Hurricane Katrina on Communications Networks. I found 
this action to be particularly constructive in that our efforts 
regarding emergency preparedness have broad applicability, 
given the need to plan for not only natural disasters such as 
hurricanes, but also for incidents like terrorist attacks, 
influenza pandemic outbreaks and industrial accidents. Any of 
these emergencies could result in sudden and significant 
shortages of personnel, a surge in communications traffic, 
possible disruptions to communications networks (due to 
increased telecommuting during an influenza pandemic, for 
example), and lack of manpower to immediately repair affected 
communications networks. I am pleased that we have built upon 
the lessons learned from the Hurricane Katrina disaster to 
promote more effective, efficient response and recovery 
efforts, as well as heightened readiness and preparedness.

                               Satellite

     In April, I was pleased to support a constructive step 
forward to create new opportunities for more competition in the 
satellite industry. The services offered in the 17/24 GHz band 
will include standard-definition and high-definition formats, 
and will provide a mix of advanced, multi-media services to 
residential and business subscribers located not only in the 
continental United States but in Alaska and Hawaii as well. I 
am particularly pleased that these new rules require operators 
to construct each satellite to accommodate the provision of 
service to Alaska and Hawaii in the event the satellite 
reaches, or is moved to, an orbital location that would provide 
this coverage. Because of our light regulatory touch, this 
action will ease the ability of diverse entrants to introduce 
exciting new services to American consumers living in urban, 
rural and insular areas.

                                Wireline

     We have received the Federal-State Joint Board on 
Universal Service recommendation to adopt an interim, emergency 
cap on the amount of universal service high-cost support that 
competitive eligible telecommunications carriers receive. The 
Joint Board is considering more fundamental reform 
recommendations to the Universal Service Fund which we expect 
to receive sometime this fall. Now that comments on the interim 
cap recommendation have been filed with the Commission, I look 
forward to working with my fellow Commissioners to forge a 
solution to the crisis facing the Universal Service Fund.
     On July 9, the Commission requested parties to refresh the 
record in the special access proceeding. I support this 
opportunity for parties to supplement their comments to reflect 
the mergers and the GAO Special Access study so that we will 
have a complete record to determine the best approach. I would 
support an effort to make a decision at a time when the 
Chairman sees fit.
     In March, I supported a Notice of Inquiry that asks broad 
questions about the state of the market for broadband and 
related services, whether abuses are occurring in the market 
that affect the offering of content on the Internet or the 
development of new technologies, and the ultimate effect on 
consumers. This gives parties who fear market failure an 
opportunity to present evidence, of which we have none. It also 
gives those who argue that the market is working well and no 
further regulation is needed to make their case. Now that 
comments have been filed, I am reviewing the record to see 
whether additional policies related to regulating the Internet 
are warranted.
     In summary, I continue to be optimistic that our Nation's 
communications future holds great potential for consumers. I 
look forward to working with my fellow Commissioners, with your 
continued guidance, to bring new technologies to the 
marketplace.
                              ----------                              

    Mr. Markey. Thank you, Mr. Commissioner. And now the Chair 
will recognize himself for a round of questions.
    When you go into a store to buy a TV, the person in the 
store doesn't ask you: ``Do you subscribe to Verizon or Comcast 
or Time Warner? Do you have DirecTV? Do you have cable?'' You 
just buy the TV set, and you assume it is going to work with 
all of them. So my question to the commissioners is this: 
Chairman Martin has a proposal that for one-third of the 
spectrum, that Carterfone principles will apply for that part 
of the spectrum. You will be able to take your device that you 
purchase with you from one service to another. But no matter 
what device you buy, you will be able to use it on that part of 
the spectrum. Do you agree with that, Commissioner Adelstein?
    Mr. Adelstein. Well, I certainly do. I have looked at what 
is going on in Europe and Asia, and they have much more 
flexibility there. We had a group of frustrated entrepreneurs 
from Silicon Valley that came before us.
    Mr. Markey. So your answer is yes?
    Mr. Adelstein. Yes.
    Mr. Markey. You do support?
    Mr. Adelstein. Yes.
    Mr. Markey. Commissioner Copps?
    Mr. Copps. Yes, I do, as one of the folks who pushed for 
principles of access.
    Mr. Markey. Your answer is yes?
    Mr. Copps. My answer is yes.
    Mr. Markey. Commissioner Tate?
    Ms. Tate. I know that you want me to have an answer, Mr. 
Chairman, but at this point I really don't. I am still weighing 
all the commenters. I have a meeting with Google and other 
people this afternoon that I haven't met with since the 
chairman's item was put out on the floor. So as to this I have 
an open mind.
    Mr. Markey. As a consumer, would you want to be able to use 
any device that you purchase with the cell phone service that 
you have?
    Ms. Tate. As a consumer, yes, sir.
    Mr. Markey. Thank you. Commissioner McDowell.
    Mr. McDowell. Thank you, Mr. Chairman. I am still studying 
the issue as well. I would like to see the marketplace go 
there. The question is whether it goes there through a natural 
evolution or through a Government mandate.
    Mr. Markey. We waited for 100 years for the marketplace to 
give people a choice of black rotary dial phone in everyone's 
living room or something else, and the marketplace never went 
there because the telephone companies never gave people that 
option. So this is the opportunity for the Federal 
Communications Commission to give people an option to do so.
    Mr. McDowell. I understand it is an open situation. It is 
very fluid. I have an open mind on all of this, but I do look 
at the fact that we have about 10 Wi-Fi enabled phones that are 
usable on any Wi-Fi network. Some are proprietary. That would 
be probably on the order of about 14 phones there in the 
industry. I believe that the walled garden model is one that is 
doomed to fail. Just go ask America Online about that. But at 
the same time----
    Mr. Markey. So right now your answer is yes or no?
    Mr. McDowell. I am considering all of the arguments.
    Mr. Markey. OK, please do so, and please let me keep my 
phone and let me take it wherever I want. I would ask that of 
you. Commissioner Tate, in your joint letter with Chairman 
Martin to me about childhood obesity and children's TV 
advertising you stated, ``restrictions on the type of 
advertising that airs during children's programming may be 
necessary, absent sufficient industry guidelines.'' We recently 
had 11 food companies come forward with voluntary pledges, but 
other than Disney, which I praise, and Sesame Workshop, which I 
do as well, we do not have similar commitments from 
broadcasters or, importantly, cable programmers such as Viacom 
and Time Warner. Do you continue to believe that the Commission 
may have to act in this area if the media companies do not take 
voluntary action soon?
    Ms. Tate. Well, I continue to be optimistic that they will. 
And in fact, the reason that our childhood obesity task force, 
I think, was so important is because it did bring together not 
only the food and beverage companies and all of those folks 
that are involved in the food preparation in our country, but 
it also brought together the advertisers and the media.
    Mr. Markey. So is your answer a yes, that you think that we 
may have to----
    Ms. Tate. My answer is that I would like to wait until 
September to see what comes out of our obesity task force.
    Mr. Markey. And if they don't, if the media companies don't 
make any commitment to protect children, do you think the 
Commission will have to act?
    Ms. Tate. I would certainly be open to reviewing it at that 
point.
    Mr. Markey. I would strongly urge that that be the case. 
And Chairman Martin, millions of consumers pay a wireless 
termination fee of $175 or $200. This inhibits the ability of a 
consumer to switch carriers. Often a consumer has a fee renewed 
when a consumer extends service, or adds minutes to a plan, 
without getting a new phone. Do you think that these plans are 
unfair, too high, anti-competitive? Could you give us your 
view?
    Mr. Martin. Sure. I am concerned about some of the 
practices that are going on in the wireless industry, as it 
relates to early termination fees, particularly when you talk 
about early termination fees, that the arguments for why the 
carriers are all imposing them is to recoup the cost of the 
equipment and yet that equipment is something that the 
consumers are not allowed to take with them afterwards. So I 
think that there are some practices I am concerned about.
    Mr. Markey. Would it undermine your wireless Carterfone 
proposal if that particular issue is not fixed?
    Mr. Martin. I don't think it would necessarily undermine 
it, but I think it is something that the Commission is going to 
have to look at trying to address in a comprehensive way, 
anyway.
    Mr. Markey. And I hope that you do that as well. I just, 
again, feel that consumers are put in a very unfair position in 
their relationship with their phone companies. Let me now turn 
and recognize the gentleman from Michigan, Mr. Upton.
    Mr. Upton. Well, thank you, Mr. Chairman, and I apologize 
to the commissioners for having stepped away. We had an 
important issue on the House floor that dealt directly with my 
State, and I needed to participate, and we will have a vote on 
that a little bit later this afternoon.
    Chairman Martin, it is clear from Google's filing this last 
Friday that they probably have no intention of participating in 
the auction unless you give them all of the conditions that 
they are asking for. So if that is the case, why not just drop 
the conditions and have a fair auction rather than jeopardize 
the spectrum and the auction proceeds, with the complicated 
reserve price and perhaps delay and even the need for a re-
auction of that part of the spectrum?
    Mr. Martin. The proposal I have put forth isn't designed to 
facilitate the entry of any one particular company. Indeed, it 
isn't the plan that has been proposed or supported by any 
company. I think it is actually, though, the plan that is in 
the best interest----
    Mr. Upton. So everyone is against it?
    Mr. Martin. I am not sure consumers will be against it. I 
actually think consumers will like the ability to take devices 
from one service to another. The criticisms that have come 
forth from the wireless industry about consumers not wanting to 
be able to take devices from one network to another are very 
similar to the criticisms they put forth saying that consumers 
didn't want to take their telephone number from one service to 
another. And they all said that if consumers wanted that, the 
wireless industry would have provided it on its own. As soon as 
the Commission required it, 32 million consumers switched 
wireless carriers and took their telephone number with them. I 
think this is another example of where, just because the 
wireless companies haven't offered, it doesn't mean consumers 
won't want it. While I admit that there isn't a company that 
supports what I propose, I think consumers will.
    Mr. Upton. Well, all of us are aware of the difficult 
business environment that newspapers are experiencing today, 
and we know that the Tribune Company has filed for a temporary 
waiver to the FCC's cross-ownership rule so that in fact it can 
reorganize. I know that you have received letters and comments 
from both sides of the aisle, including just from this 
committee, Mr. Rush, Hastert, Shimkus, as well as Senators 
Reid, Durbin, Schumer, asking to move expeditiously, and 
certainly, as you know, I have associated myself with their 
comments. Are you able to give us the status and the potential 
timeframe for where things may be in terms of reviewing this 
and taking some action?
    Mr. Martin. Sure. That merger application was filed. The 
comments have just finished coming in on that. We try to review 
those kind of mergers within 180 days, which would put this 
merger, that would put the Commission considering this 
transaction sometime in the fourth quarter of this year. And 
while it is very complicated and obviously raises a lot of 
controversial issues, I would hope that we would be able to try 
to meet that same kind of timeframe that we have tried to do on 
other complicated and contentious mergers.
    Mr. Upton. By some estimates, the unencumbered auction 
could bring in as much as $20 billion. The CBO number was a 
little lower than that, but I think many of us think that we 
will be able to hit that $20 billion. But if we have this 
proposal with the minimum reserve price with an encumbered 
provision, there are a number of folks who actually think that 
that price may be less than that, in terms of the calculations. 
If the reserve price isn't met, which spectrum gets re-
auctioned and when? And if there is a re-auction, if that does 
happen, how are you going to be able to meet the statutory 
requirement that the proceeds be deposited by June 30, 2008, in 
terms of making the accommodations that you will have to make?
    Mr. Martin. Well, if the reserve price isn't met, then all 
of the commercial spectrum would end up being re-auctioned, 
with the exception of the public safety private partnership, to 
make sure that that piece that was already put forward to 
address the public safety needs, which is the most critical and 
most important issue, is maintained. All of the rest would be 
re-auctioned without the imposition of that condition.
    Mr. Upton. And how quickly could that happen?
    Mr. Martin. We think that the auction would easily be able 
to still be completed in time to have the proceeds provided 
under the statutory timeframe by the middle of next summer, 
about a year from now.
    Mr. Upton. OK, thank you. I yield back.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from Pennsylvania, Mr. Doyle.
    Mr. Doyle. Thank you, Mr. Chairman. Chairman Martin, in 
April of this year you said, ``Depending on how we structure 
the upcoming auction, we will either enable the emergence of a 
third broadband pipe, one that would be available to rural as 
well urban America, or we will miss our biggest opportunity.'' 
In June you told the USA Today that you wanted an auction where 
consumers can ``use any wireless device and download any mobile 
broadband application with no restrictions.'' And in the draft 
order on the DTV spectrum auction, you established a reserve 
price of $4.6 billion, showing you are committed to making sure 
this auction pays the Treasury. I think these are three very 
important principles, and I agree with each one of them, and 
none of them are mutually exclusive. I ask you today, do you 
still agree with these principles, Mr. Chairman?
    Mr. Martin. I do, I do.
    Mr. Doyle. Thank you. I have looked at a lot of proposals 
for the DTV spectrum auction and the only idea that meets each 
of those three tests is a wholesale model. Now, AT&T endorses 
open devices; that is great. But that is one part of the 
problem. Open platforms, like wholesale, fix the other part of 
the problem. People tell me that might be fine, but it won't 
draw enough bidders to meet the reserve price. Well, Google put 
up and made the opening bid. Tell me, Commissioner Copps, 
because my time is limited, what do you think of the wholesale 
model generally and what Google and others like Frontline, Free 
Press, and the Wireless Founders Group are asking for 
specifically?
    Mr. Copps. Well, I think it is time for us to use part of 
the spectrum, this one-third of the spectrum, to be a little 
creative and to be a little innovative to try a new model. 
Others have gone down this line in other countries, to their 
benefit and to our discomfort. We need, as several members have 
pointed out, to encourage new entrants. We need small business 
and rural consumers. We need minorities. These auctions have 
been somewhat stacked in favor of incumbents over the years, 
with the tremendous resources they have. If we are going to 
ever get innovation and creativity, this is the time to do it, 
so I think that is why we ought to be entertaining these 
proposals for wholesale open access.
    Mr. Doyle. Chairman Martin, do you agree with that?
    Mr. Martin. I am concerned about the imposition of the 
additional wholesale requirement. It is not only that you want 
someone to meet the reserve price, but you also want to have 
the maximum incentive for them to invest in the underlying 
wireless network. I am concerned about the impact that a 
wholesale requirement might make on their willingness to invest 
in the build-out of that network. I don't think that the kind 
of open platforms, where you have to be open to devices and 
software, should in any way impede their ability to invest in 
the underlying towers for a network. But I am concerned that if 
they have to sell the access to those towers at a discounted 
price, they might be less willing to build out the network. So 
that is why I am concerned about that additional condition.
    Mr. Doyle. Commissioner McDowell, if we don't wholesale, 
how can we guarantee a new competitor, a new entrant, into the 
market?
    Mr. McDowell. Well, Congressman, I have been focused on 
smaller market sizes, and I think that addresses a lot of the 
public policy concerns here. If we have a variety of market 
sizes, small, medium and large, for small, medium and large 
bidders to bid on, we have a home for the large carriers, a 
home for the medium sized carriers and then a home for 
entrepreneurs. This is a last 20-mile technology, not a last 
mile technology, and it holds tremendous potential, but it also 
holds tremendous potential that we might have a local, small-
town entrepreneur or a regional entrepreneur like Stelera, who 
testified before this committee a couple of weeks ago, that may 
be interested. So we are talking about a third broadband pipe. 
Actually, we have the potential here for six more broadband 
pipes to go to American consumers, depending on which band plan 
you want to pick. So if we have small, medium and large market 
sizes available, I think that would solve the open access issue 
that folks are looking at. It would solve the build-out 
provision, the build-out concerns, as well. And also let us not 
forget what we are doing in the white spaces. Our white spaces 
proceeding is really all about open access and will hopefully 
be a constructive, positive, disruptive force.
    Mr. Doyle. Thank you. And Commissioner Adelstein, 30 
seconds, because I have one more question I want to ask you 
all. Do you think that wholesaling locks in a business model, 
or does it guarantee, no matter who wins, new competition?
    Mr. Adelstein. I think it is more likely to guarantee new 
competition. The beauty of wholesale is, no matter who wins, 
and the large incumbents could win as well as Google or anybody 
else, that they have to provide open networks. They have to 
provide for competition and all kinds of new entrants with new 
applications and new ideas can get involved, can use that 
small--small licensees as well. Small operators can use that on 
a wholesale basis. I think it really opens up a whole world of 
competition.
    Mr. Doyle. Thank you. One final question for the panel. In 
2004 the FCC issued a report to Congress on a low-power FM 
interference testing program, after getting public comment on 
the engineering studies it commissioned. After reviewing all 
the facts, the data and potential for interference, the FCC 
said in the report, ``Congress should readdress this issue and 
modify the statute to eliminate the third adjacent channel 
distance separation requirement for LPFM stations.'' Does 
anyone disagree with that? Mr. Chairman, let the record show 
that the silence was deafening. My friend Lee Terry and I have 
a bill to allow the FCC to expand the benefits of low-power FM 
on to more places on the radio dial across the country. This 
has been critical during emergencies like Hurricane Katrina, to 
religious groups trying to spread their message, and to 
community groups interested in serving their communities. It is 
my hope that the Commission will continue to support these 
stations until and after we get this bill signed into law. And 
I yield back.
    Mr. Markey. The gentleman's time has expired. The Chair 
recognizes the gentleman from New Jersey, Mr. Ferguson.
    Mr. Ferguson. Thank you, Mr. Chairman.
    Mr. Markey. Excuse me. I am sorry. The gentleman from 
Nebraska, Mr. Terry. I apologize to the gentleman.
    Mr. Terry. I love it. Thank you, Mr. Chairman. First, I 
want to ask Chairman Martin about the joint board's 
recommendation that caps CETC carriers. I have written a letter 
suggesting that was a proper move at the right time. I am 
wondering if the entire board, if the FCC is discussing how to 
handle that recommendation.
    Mr. Martin. Sure. We certainly are, and I plan on trying to 
address some kind of, and potentially multiple kinds of, reform 
for the Universal Service Fund, and I think that trying to 
establish a cap is an important measure in trying to control 
the growth that occurred on the CETC side. Since I came to the 
Commission, the first year I was there, they received about a 
million dollars. Last year they received a billion dollars in 
universal service subsidy support. And at that kind of growth 
rate, I am concerned we can't afford to continue to do that, so 
some kind of change has to be done. I think a cap is one 
option. I would support that. There may be other options, but I 
would support something to control the growth of the fund.
    Mr. Terry. I appreciate the comment about supporting 
something. In the Terry-Boucher Bill, one of the issues with 
just generically new entrants, we feel that we should look at 
actual cost.
    Mr. Martin. Yes.
    Mr. Terry. And I will open it up to anyone on the board if 
they want to discuss the caps versus actual costs or maybe even 
a combination of them.
    Mr. Martin. I think that that would, I think, require 
everyone to plot their own actual cost. To meet the same kind 
of standard that is done for the incumbents would be another 
good reform. I think either one would control the growth of the 
fund, and so I would support either, but I can----
    Mr. Terry. What are you hearing from your comments, from 
the comments submitted to the FCC?
    Mr. Martin. I think that there are obviously some that are 
concerned about, some companies that are concerned about it, 
but I think that it is important for the Commission to try to 
take some measure of reform to control the growth in the fund. 
So I hope that we will get support for one of those kind of 
proposals.
    Mr. Terry. Commissioner Copps?
    Mr. Copps. I think it is time for the Commission to catch 
up with folks like you and others in Congress who have urged 
general comprehensive universal service reform. I have 
suggested that one thing that Congress could do would be to 
give us the authority to collect on intrastate funding, but 
also, we need the inclusion of broadband on both sides of the 
equation. I would support the idea of getting rid of the 
identical support rule and doing audits, and I think if we 
would do those four things, we would have a pretty good running 
start on doing something serious about universal service and 
crafting it for the 21st century.
    Mr. Terry. I respect and appreciate those criteria. 
Commissioner Adelstein?
    Mr. Adelstein. Well, I think the Boucher-Terry Bill is 
loaded with provisions that would help us to secure the future 
of universal service and make sure that it was run in a 
fiscally responsible manner at the same time. Certainly 
expanding broadband into supported services makes imminent 
sense. I think expanding the contribution base is something 
that would make it better for everybody. We need to tighten 
CETC criteria, as you suggested. I think it is a great idea to 
eliminate the identical support rule. It doesn't make any sense 
to have people pay to their universal service on the basis of 
somebody else's costs and not their own. Three years ago I 
called for that, and I dissented over on the joint board. I 
can't believe we didn't do it, and I think it is well overdue 
that we control costs through that mechanism immediately.
    Mr. Terry. I appreciate that. Commissioner Tate?
    Ms. Tate. Yes, Congressman, and I want to thank you for all 
your efforts on your bill, and I want to make clear that when 
the joint board made this decision, certainly it wasn't looking 
at this as a long-term solution and said that in its decision. 
And I agree. Certainly we need to target this to unserved 
areas, which was the entire purpose underlying that and that it 
doesn't make sense to fund multiple carriers when we have 
decided that an area is a high-cost area to serve. So the other 
thing, I guess, that I wanted to say is regarding the joint 
board recommendation and that is that it is really when you 
asked the chairman about the comments, it has really spurred a 
lot of excellent comments, some suggestions of pilots in areas 
and certainly back to your point of having more cost-based 
subsidies.
    Mr. Terry. I appreciate that. Commissioner McDowell?
    Mr. McDowell. Thank you, Congressman. There are a couple of 
items, in particular, in your bill that I like, which is to 
base support on actual cost and thereby eliminate the identical 
support rule. I think the identical support rule is illogical. 
As well as allow the targeted use of support to more specific 
wire centers, at the wire center level. I came to this job with 
five principles in mind regarding USF reform, and No. 1 on that 
list is to slow the growth of the fund; also to broaden the 
contribution base, among others; make sure it is competitively 
neutral; and I think anything we can do to go in that general 
direction is positive and constructive.
    Mr. Terry. Very good, since all of those principles are 
inherent to this bill. Chairman Martin, are there any parts of 
the discussion of universal service reform that are necessary 
for Congress to do versus what you can do on your own at the 
FCC?
    Mr. Martin. There are several proposals for us to expand 
the contribution base in a more technologically neutral manner. 
We can move to collecting universal service estimates based 
upon telephone numbers. That is within our current authority. 
Several people have proposed that the Commission should also 
expand that to look at including inter- and intrastate revenue 
so that it would no longer try to make that distinction. That 
is something the Commission could not do; Congress would have 
to do.
    Mr. Terry. All right, so we would have to do that. All 
right. Any other items that you feel that you would prefer, at 
least, to have legislative----
    Mr. Martin. On this or any issue, I always prefer to have 
legislative guidance on exactly what you end up doing. But even 
if not, I think we have the authority to do most of the other 
proposals, most of them.
    Mr. Terry. Thank you, Chairman. Commissioner Adelstein?
    Mr. Adelstein. One thing that we could really use 
congressional help on is adding intrastate revenues into the 
base. That would make the base much larger and much fairer for 
everybody. I think it is also important that we, as you 
suggested, exempt universal service from the Anti-Deficiency 
Act and that is something we could use help from Congress on. 
And of course we would welcome your guidance on clarifying how 
support for CETCs could be handled.
    Mr. Terry. Anybody else?
    Mr. Copps. I think that legislative involvement is 
necessary from the statutory standpoint on intrastate 
contributions. I think it is desirable but not necessary in 
clarifying to all of us the proper role of broadband in the 
universal system, where I think we already have authority but 
have been a little bit reluctant to exercise that authority.
    Mr. Terry. Very good. I appreciate that. Mr. Chairman, I 
will yield back my time.
    Mr. Doyle [presiding]. I thank the gentleman. The Chair now 
recognizes the chairman of the full committee, the gentleman 
from Michigan, Mr. Dingell, for 5 minutes.
    Mr. Dingell. Mr. Chairman, thank you. This question, 
members of the Commission, is for all the commissioners. I am 
pleased that the Commission is considering adopting rules that 
would enhance consumer choice in the wireless device and 
application markets. I am concerned, however, that this new 
approach could possibly lead to higher prices for consumers, 
either for services or for handsets.
    Now, ladies and gentlemen, because of the limits on time, I 
would very much appreciate a yes or no answer to this question, 
and we will start with the chairman. Are all of you confident 
that this proposal will not result in higher consumer costs? 
Mr. Chairman?
    Mr. Martin. I don't think that it will result in higher 
consumer costs, particularly when you allow for competition in 
those handsets.
    Mr. Dingell. Could the other commissioners please respond?
    Mr. Copps. Yes, I am confident.
    Mr. Dingell. Commissioner?
    Mr. Adelstein. Yes.
    Mr. Dingell. Madam Commissioner, yes or no?
    Ms. Tate. I hope that it will not.
    Mr. Dingell. Hope. Sir?
    Mr. McDowell. No, I am not confident, Mr. Chairman.
    Mr. Dingell. Now this question, again, for all 
commissioners. Members of the Commission, this relates to blind 
bidding. One of the goals of the auction that is going to occur 
on the 700 MHz band should be to facilitate new entry into the 
broadband market. That is congressional policy, and I am sure 
that it is the policy of the Commission. Some have argued that 
the incumbent providers might just bid at the auction to keep 
new entrants out. One way the Commission could avoid this 
problem is to implement blind bidding. Mr. Chairman and then 
other members of the Commission, can each of you please tell me 
if you have considered adopting blind bidding at this auction?
    Mr. Martin. Yes, I have considered and I think that we 
should increase the use of blind bidding for this auction, over 
what we have done in the past.
    Mr. Copps. On balance, yes.
    Mr. Dingell. Sir?
    Mr. Adelstein. I am supportive of blind bidding for this 
auction.
    Mr. Dingell. Madam Commissioner?
    Ms. Tate. I think that more information can help carriers 
on knowing how best to bid.
    Mr. Dingell. Thank you. Commissioner?
    Mr. McDowell. Yes, I have considered it.
    Mr. Dingell. Now, Chairman Martin, 1 year ago Mr. Markey, 
Senators Inouye, Dorgan and I wrote in concerning the 
Commission's treatment of a petition for forbearance filed 
under section 10 of the Act. This section, as you know, 
provides that any petition not acted upon by the Commission, 
within the applicable timeframe, shall be deemed granted. Now, 
could you give me a yes or no answer to this? Could a petition 
for forbearance be deemed granted even when the majority of the 
Commission opposes it?
    Mr. Martin. When the majority of the Commission opposes it?
    Mr. Dingell. Yes.
    Mr. Martin. No. In the Commission our internal processes 
have already provided that we would circulate an item prior to 
that forbearance deadline, that statutory deadline, and give 
the Commission an opportunity to vote on it. And if the 
majority of the Commission voted on it in a certain way, the 
Commission would have to act that way.
    Mr. Dingell. Well, if, however, Mr. Chairman, the 
Commission does not act upon the petition within the applicable 
timeframe, it is going to be deemed granted, isn't it?
    Mr. Martin. Yes, sir, and I would say that, while I have 
been chairman and while I am chairman, I would always give the 
majority of the Commission an opportunity to vote, and we 
always have. The one instance in which there was a forbearance 
that was granted was because we were without a majority of the 
Commission, because we were missing Commissioner McDowell. He 
had not joined the Commission and/or was recused. So as a 
result, the Commission was tied 2-2. It wasn't that I didn't 
put forth an item; I did. The problem was there was no majority 
of the Commission, one way or another.
    Mr. Dingell. Members of the Commission, your comments, 
please.
    Mr. Copps. Could that happen? Yes. Should that happen? No. 
And I think we really need to have clarity, long-term, rather 
than just relying upon the instincts of one particular chairman 
along the line.
    Mr. Dingell. Thank you. Commissioner?
    Mr. Adelstein. Certainly it could happen. If the chairman 
decided that he was in the minority, that he would not allow it 
to come to a vote. We have heard that Chairman Martin would 
operate differently, and I very much respect and appreciate 
that, but we should have procedures in place that would require 
a vote on this up or down so that it couldn't be defeated by a 
minority.
    Mr. Dingell. Thank you. Madam Commissioner?
    Ms. Tate. I thank Chairman Martin for his thoughtful 
comments. I agree that he is correct and that the circumstance 
that you all are both discussing was just a very unique one.
    Mr. Dingell. Commissioner?
    Mr. McDowell. I will also associate my comments with 
Chairman Martin's, as well. However, I hope, on a going-forward 
basis, we have a chance to vote on all forbearance petitions.
    Mr. Dingell. Thank you, ladies and gentlemen. One last 
question. I am concerned that new approaches at the Commission, 
adopting rules that would enhance consumer choice, might lead 
to higher costs. Is this a worthwhile apprehension or not? Mr. 
Chairman?
    Mr. Martin. I think it is obviously worth being concerned 
about, but I think that the benefits outweigh the costs or the 
concerns, in allowing consumers to be able to pick and choose 
or being able to take their devices when they go with them and 
have a more open platform. I think the benefits outweigh the 
costs on that.
    Mr. Dingell. Members of the Commission, please.
    Mr. Copps. I think, on balance and over the long run, that 
consumer choice and competition will lead to lower prices.
    Mr. Dingell. Commissioner?
    Mr. Adelstein. I think a competitive market would 
ultimately result in, hopefully, lower prices for consumers.
    Mr. Dingell. Thank you. Madam Commissioner?
    Ms. Tate. We all hope that there would be lower prices, but 
we can't control what the market will do.
    Mr. Dingell. Thank you. Commissioner?
    Mr. McDowell. We should always be concerned if a Commission 
action results in higher prices.
    Mr. Dingell. Thank you. Mr. Chairman, thank you for your 
kindness.
    Mr. Doyle. Thank you. The Chair now recognizes my good 
friend from Texas, the ranking member of the committee.
    Mr. Barton. Thank you. Thank you, Mr. Chairman. It is good 
to see you in the Chair. Let me start off on a positive note. 
Commissioner Copps had a suggestion at the end of his written 
testimony, that we modify the closed meeting rule so that the 
commissioners could, more than two of them could meet at a 
time, and I support that. I don't know if we need to do 
anything legislatively, but if we do, I will be happy to work 
with the majority, if it is their will. I think you guys should 
get together and talk about things. It could be a good thing.
    I want to start off with the chairman, Mr. Martin, on this 
700 MHz auction. I have got all kinds of quotes here from my 
staff, things you have said about how fierce the marketplace is 
and how intense the competition is and how the competitive 
marketplace is the best way to get improved results instead of 
some sort of a regulatory approach. And yet on this auction you 
have come up with this modification that puts conditions. Why 
shouldn't we just let Google bid? If they have got a better 
idea, why don't they go into the marketplace and bid their $4 
billion or $5 billion or whatever it is and let them use their 
spectrum like they want? Why should we set some conditions on 
it?
    Mr. Martin. The conditions that I proposed aren't designed 
to help any particular bidder, Google or anyone else. Indeed, 
there is no particular company that likes, necessarily, what I 
have proposed. Google is as upset about non-inclusion of some 
of the wholesale requirements as other companies are upset 
about the inclusion of an open handset or a device portability 
requirement. I think the reason I proposed that is not about 
any of the companies but about the consumers. In the past, 
although the wireless market is competitive, particularly on 
the voice side, the Commission has still had to impose certain 
rules to protect consumer interest, like the ability to take 
numbers from one carrier to the next.
    Mr. Barton. But I mean, why wouldn't you just let whatever 
entity bid and if they want to do some of these things, let 
them use the spectrum like they claim? I still don't see why 
that is a bad approach.
    Mr. Martin. I think that I am concerned that, actually, in 
the current environment, there hasn't been any wireless 
providers who have been willing to provide that kind of option 
for consumers, just like there wasn't any wireless provider who 
allowed any consumer to take their number with them. And 
ultimately we had to take some intervention to make sure that 
consumers had the ability to take numbers with them when they 
changed service providers, and I think that it may require the 
Government to provide some kind of impetus to allow consumers 
to be able to take their cell phones that they have purchased 
with them as well. We are talking about a requirement that 
consumers often had to pay $400 for a device that becomes 
virtually useless if they try to take it to another carrier, 
and I think that that is not appropriate for consumers.
    Mr. Barton. There is nothing. If you have an open, 
unfettered auction, it doesn't prevent who wins it, if they 
want to make their product line so that anybody that uses their 
services can use any product, we don't prevent that.
    Mr. Martin. We don't prevent that, and I am not sure that, 
it could very well be the incumbents, even with this open 
handset requirement and an incumbent wins that auction. I am 
not concerned about this for any particular company. I am 
concerned about trying to allow consumers to have the option of 
being able to have a more open platform where they can take 
their devices and they are in an unlocked nature.
    Mr. Barton. Well, you must have some concern about your 
conditions, because you are going to apparently set a minimum 
bid. And in case, if the minimum bid is not met, you are going 
to come back with an unfettered auction.
    Mr. Martin. I was concerned, and I was concerned about your 
concerns about the impact, which is why I made sure and put a 
high minimum bid on there, because I was concerned about the 
letter that you wrote, saying that any of these kind of 
conditions might actually lead to lower prices.
    Mr. Barton. I am impressed that you are aware that I wrote 
you a letter.
    Mr. Martin. I am always well aware.
    Mr. Barton. That is progress.
    Mr. Martin. And I make sure that we actually set the 
highest--we took the highest bid that anyone was willing to pay 
for any of the spectrum in the most recent AWS spectrum. And 
there were people that pay for different amounts of spectrum, 
depending on how large an area we were auctioning off. We took 
the highest bid possible, and we said, on that basis, if we 
multiplied that by the amount of spectrum auctioned off here, 
how much would that be? And that is the opening bid. So we took 
the winning bid in the last auction, and that is the starting 
bid for this piece of spectrum.
    Mr. Barton. Let me ask Commissioner McDowell a quick 
question. Do you have any concerns that by setting these 
conditions on this spectrum in this particular auction, that we 
set a precedent for future auctions?
    Mr. McDowell. If I understand the question correctly, 
certainly there is a precedent set, whatever we do in this 
auction. As someone said earlier, this is the most important 
auction of the century, so what we do here is crucial for what 
we do going forward. When I was first looking at this auction, 
I was looking at the AWS auction, perhaps, as a model where a 
majority of the winning bidders who walked away were small 
businesses or women and minority-owned businesses, and I 
thought that was a good way to go initially. So I certainly had 
concerns going forward that what we do here will have a 
tremendous effect.
    Mr. Doyle. The gentleman's time has expired.
    Mr. Barton. Could I ask one more? It is just kind of a yes 
or no. We have a bill, H.R. 608, that would require more public 
outreach for the DTV transition. It has been introduced by 
myself and Mr. Hastert and Mr. Upton. Does the Commission have 
a position on that, Chairman Martin? It is pretty 
straightforward education.
    Mr. Martin. We certainly appreciate any additional efforts 
on consumer outreach, on the DTV transition, so we are 
supportive of that.
    Mr. Barton. Thank you. Thank you, Mr. Chairman.
    Mr. Doyle. The Chair now recognizes the gentleman from 
Illinois, Mr. Rush.
    Mr. Rush. Thank you, Mr. Chairman. This is a question to 
all the commissioners, and I want to be fairly brief because I 
have a number of questions. Can each of you describe, for this 
committee, how you believe the rules that will govern the 
upcoming 700 MHz auction will promote women and minority 
ownership? Beginning with Commissioner Adelstein.
    Mr. Adelstein. Yes. The most important aspect of it is the 
designated entity rules. I think they are a little bit tight, 
frankly, to make it easy for small companies to come in. They 
were changed in the last auction, and we should review those. 
One other element that would be very helpful for women and 
minorities, because this is going to be very, very expensive 
spectrum, this is beachfront property, it is going to go for a 
lot of money, as the chairman just said. What we might need to 
do is put a wholesale requirement on it so that small 
businesses can participate, small businesses can come in and 
have access to spectrum on a wholesale basis, and that would be 
probably the best opportunities for small business and 
entrepreneurs to really get a piece of this action.
    Mr. Rush. They don't currently exist?
    Mr. Adelstein. There is no current proposal before us about 
wholesale. A lot of entities have asked for it. Some of the big 
companies want that to be an open, completely open spectrum on 
the 22 MHz. And if that would happen, I think it would really 
facilitate entry by women and minorities.
    Mr. Rush. Commissioner Copps?
    Mr. Copps. Well, the DE rules that Commissioner Adelstein 
mentioned, the 25-percent bidding credit and then having a 
diversity of market sizes, license sizes, available for people 
to bid on, I think all of those would help. But it is such a 
glaring problem and it is so needed for us to make some 
progress on this front.
    Mr. Martin. I think it is important for us to both try to 
have a variety of geographic and spectrum sizes so that smaller 
bidders can participate, and we have done that. And I also 
think it is important that we have DE bidding credits, which we 
do have, up to 25 percent.
    Ms. Tate. Obviously, as the only woman, I do share your 
concerns. We do have the bidding credits in place. I am hopeful 
that maybe women and minorities will be able to bid, because of 
the mix of sizes of licenses and sizes of geographic areas.
    Mr. McDowell. Again, I will also associate my comments with 
my distinguished colleagues. One concern I do have is, should 
the upper band, as it is now drafted, be deemed too encumbered 
for larger players to bid on, they may go down to the lower 
band where those smaller market sizes are and the smaller 
spectrum blocks are and outbid the smaller entities or 
minority-owned entities. So I think that is something we all 
need to look at.
    Mr. Rush. Are there currently any participants right now in 
any of the auctions? Do you have any current applications from 
minorities and also from women? Can we ascertain a specific 
number right now?
    Mr. Martin. We can't ascertain a specific number right now, 
because where we are in the process, all the people haven't 
come forward who want to qualify to participate in the auction, 
so we can't do that.
    Mr. Rush. It has been suggested that if you lessen the 
geographical service area that carriers bid for, bid on for 
spectrum, this will allow smaller players and startup companies 
to take part in the auction. Otherwise only a handful of 
companies will be able to actually come up with the capital to 
bid on spectrum that serves too much territory. It is argued 
that shrinking the service area would help women and minority-
owned businesses to compete. Can you comment on that?
    Mr. Martin. Sure. I think it is important that we try to 
provide an opportunity for some smaller pieces of spectrum, 
some smaller geographic areas for smaller entities to 
participate but also provide some on a larger basis, because it 
is important for different kinds of services. Particularly 
trying to provide them on a larger geographic area can be 
important for people who are trying to come and compete on a 
new nationwide basis. So I think that we have got to design an 
auction that has a large percentage of the spectrum that is 
being sold on a smaller basis and a large percentage of it is 
being sold on a large basis. So I think it is important that we 
try to find an appropriate balance.
    Mr. Rush. And merger review. The FCC has been accused of 
``bootstrapping'' and using its authority to approve the 
transfer of licenses to impose other conditions, reportedly for 
the public good, on the merged entity. Has the Commission ever 
used this authority to promote women and minority ownership?
    Mr. Martin. There have been instances in which the 
Commission has required divestitures. Prior to my time at the 
Commission, the Commission had required some divestitures that 
I know had gone to some women and minority companies. Certainly 
when Chairman Kennard was there I know that occurred. I don't 
recall off the top of my head the exact context of the order, 
whether it specifically required it in that context, which 
requires the divestitures, and they ended up in those hands. I 
don't know.
    Mr. Rush. Under your tenure?
    Mr. Martin. No, no, I am sorry. That was under Chairman 
Kennard. Under our tenure we have required divestitures, but we 
haven't required it to any particular company.
    Mr. Rush. Commissioner Copps, do you have something?
    Mr. Copps. Yes. Under the merger standard we have authority 
to range rather widely across the whole spectrum of public 
interest considerations, and one of those is clearly diversity, 
and this is an area where we not only can but need to act more 
proactively.
    Mr. Rush. Did you have something?
    Mr. Adelstein. I would just add that when we look at the 
vast array of mergers among media companies, that media 
ownership by minorities is at horribly low levels, 3 percent, 
when a third of the country is minority, 3 percent own these 
licenses, and we have got to do something about it. So allowing 
further consolidation of the media only takes these licenses 
further out of reach of women and minorities, and I think we 
have to be very cautious about allowing any further media 
consolidation. And anything we do to change the rules on media 
ownership should ensure that we enhance and not detract the 
level of minority ownership in this country.
    Mr. Doyle. The gentleman's time has expired. The Chair now 
recognizes the gentleman from New Jersey, Mr. Ferguson.
    Mr. Ferguson. Thank you, Mr. Chairman. Thanks again to 
Chairman Martin and all of our commissioners for being here 
today. Chairman Martin, while the committee has been successful 
in implementing the E-911 with a class of VOIP provider that is 
so-called interconnected, there seems to still remain a 
significant gap. Today there are VOIP services being marketed 
at Radio Shack and Wal-Mart and other stores every day as a 
replacement service. These services are not interconnected, yet 
they offer outbound calling. They offer calls to regular 
everyday telephone numbers. Can you explain why these services 
are not required to also require 911?
    Mr. Martin. To be a replacement service for your local 
telephone, you have to be able to do two things, you have to be 
able to call someone, and someone has to be able to call you. 
For that to occur, you have to be interconnected into the 
telephone network. So what we have said is, if it is a 
replacement of your local telephone, then they should be 
required to provide 911. But if it is only a service that does 
one side of that, if it only makes calls or only receives 
calls, then it can't be a replacement for your telephone 
because it only has half of those services. So we haven't 
required 911 services of them. The one outstanding issue that 
remains before the Commission is what if someone--what if a 
service operator tries to combine those aspects, so they are 
trying to sell you inbound and outbound together? We have 
actually got an outstanding notice on looking at shouldn't we 
extend 911 to those kind of service providers, because they 
would be combined in a way that it would be able to be a 
substitute. And I think that that would be a good step, and I 
have talked about that with the other commissioners, and I 
think that would be a good thing for us to do.
    Mr. Ferguson. I would encourage that. It just seems that 
there is a history here of treating like service alike, and we 
can get muddled up in some of the specifics and some of the 
details, but clearly, I have got a spreadsheet, right, a VOIP 
overview of two carriers, comparing, just for instance, Vonage 
and Skype, Skype, which is now an unregulated service. I mean, 
they both require broadband. They both can be used in multiple 
locations. They both can be used with traditional phones. You 
can have local and long distance calling. You can now have 
international calling on both. You can both make calls to 
traditional phone numbers. I mean, it goes on and on. I mean, 
these are like services, it seems, and it just seems a fair-
minded person would say like services ought to be treated 
alike.
    Mr. Martin. I completely agree. The reason why we didn't 
apply it at first to Skype was because they weren't offering 
both outbound and inbound calling. They were only offering 
outbound calling. So I think that when they start to offer 
both, we should apply the same rules to them.
    Mr. Ferguson. Yes. Well, it just seems to me that, to be 
fair, that would make a lot of sense. Commissioner McDowell, 
turning then back to the spectrum, I referenced the spectrum 
auction in my opening statement. What happens if the winner of 
the spectrum concludes that certain devices and applications 
just won't work on its network and that, notwithstanding, the 
open access requirement that has been proposed, won't the FCC, 
won't you all be forced to get back involved in all sorts of 
technical specifications on networks and devices and 
applications? I mean, couldn't we avoid that?
    Mr. McDowell. Congressman, you pointed out a very relevant 
issue: one of the unintended consequences of a possible 
encumbrance is the waiver process that comes after we have a 
licensee. So will licensees or winning bidders be filing 
waivers if they can't accommodate the rules? That is a 
legitimate question to ask and one of the questions that I am 
weighing in my deliberations.
    Mr. Ferguson. Well, I appreciated something that you had 
mentioned before. I, myself, am of the view that good spectrum 
management should allow entrepreneurs, rather than the 
Government, to determine how best to maximize our limited 
spectrum resources. Do you think that a departure, the 
Commission's seeming departure from this mentality, can be 
implemented? I mean, is this going to foster more flexible and 
market-oriented spectrum? It seems what I am hearing is a bit 
of a departure from this mentality that has been relatively 
consistent in the past. Is that wise at this point?
    Mr. McDowell. Well, another one of the questions I am 
asking is not only is the marketplace starting to dissolve the 
walled gardens, which, as I said earlier, I think is a business 
model that is doomed to fail, but we have the introduction of 
Wi-Fi enabled handsets. But we also, in the wireless industry 
as it currently exists, have about 40 resellers, we call them 
MVNOs, out there now. Does that mean a wholesale model, 
mandate, rather, is not required? That is something we need to 
continue to analyze.
    Mr. Ferguson. And as my last follow up, I mean, the 
Commission took a proscriptive approach when it wrote the rules 
to multi-channel, multi-point distribution service, interactive 
video and data services, digital electronic message service. 
Each of these services failed. Don't you worry that the same 
fate awaits the open access regime that has been proposed?
    Mr. McDowell. A fair question, Congressman.
    Mr. Ferguson. Do you?
    Mr. McDowell. Yes, absolutely.
    Mr. Ferguson. Thank you.
    Mr. Doyle. The gentleman's time has expired. The Chair now 
yields to my friend from California, Ms. Eshoo.
    Ms. Eshoo. Thank you, Mr. Chairman.
    Mr. Doyle. Will the gentlelady yield for a second?
    Ms. Eshoo. Certainly.
    Mr. Doyle. The Chair just wants to make an announcement 
that at 12:15, the House is scheduled to make six votes, so I 
would encourage Members--we are going to try to stay within the 
bounds of the clock here and see if we can't get this all in 
before votes are in, if possible. If not, we will come back. 
The gentlelady.
    Ms. Eshoo. Thank you, Mr. Chairman. Nice to see you in the 
Chair. First to Chairman Martin. This is certainly my own 
observation, but I did note that you issued a press release in 
early June, on the Second Circuit Court of Appeals decision 
relative to the indecency issue, and I think you conclude your 
press release by suggesting that a la carte would somehow solve 
the situation. I don't know what that has to do with it. But my 
unsolicited advice is, because I looked again yesterday, you 
still have that press release up, and I don't really think it 
is becoming of an FCC chairman to have something like that, I 
mean, in terms of the language it contains. So that is 
unsolicited advice, and we will just go from there.
    At a recent public hearing that you had, Mr. Chairman, on 
localism in Portland, ME, you stated that ``establishing and 
maintaining a system of local broadcasting that is responsive 
to the unique interests and needs of individual communities is 
an extremely important policy goal for the Commission. Indeed, 
along with competition and diversity, localism is one of the 
three goals underlying the media ownership rules.'' First, I 
think it is terrific that you had the field hearing and I 
understand that you have another one coming up in September in 
Chicago, and I think the more you do those, the better off 
people are in the communities. So I would congratulate you for 
doing them and hope you do more beyond Chicago.
    Now, we know that broadcasters are given the right to use 
the public airwaves that are worth billions and billions of 
dollars, in exchange for serving the public interest. Now the 
primary tool at your disposal is to enforce these obligations. 
If they are not enforced, then that obligation is not brought 
to bear and with that you have approval of broadcast licenses. 
But I think that that has really become a ministerial act. I 
observed that a broadcaster's license is up for renewal, isn't 
it like once every 8 years? That is a golden moment when that 
comes up. That is like essentially once in a decade, once in a 
decade, 10 times in a century, essentially. So what evidence 
does the Commission have before it to ensure that broadcasters 
have really fulfilled their public interest obligations? What 
does a broadcaster have to provide? What is your yardstick for 
measuring this obligation? It is very important. It is a 
critical obligation, and I think it is really being diminished. 
So how do you measure it?
    Mr. Martin. There has been an increase in concern about how 
we should be measuring----
    Ms. Eshoo. Well, I know there is an increase in concern. 
That is why I am asking you the question.
    Mr. Martin. That is right.
    Ms. Eshoo. I don't think anything is being done, most 
frankly, but maybe you can whet our appetite about what you 
plan to do.
    Mr. Martin. Well, actually, I can tell you what I have 
already proposed to do, and it has been proposed before the 
commissioners and sitting there for a long time, that I 
proposed at about the same time we testified last time, that 
the Commission go on and require broadcasters to disclose more 
of what they are doing. We don't adopt, actually, minimum 
requirements about what they are doing on a local level for a 
certain amount of local news or a certain amount of local 
programming. So we don't have a minimum amount they have to 
report on their license renewal process, but we do have--I 
would propose that we have a whole new set of categories that 
they should have to do, they should have to fill in during that 
process.
    Ms. Eshoo. Are you going to put that in front of the 
Commission?
    Mr. Martin. It is in front of the Commission, and it has 
been for quite some time, and I am anxious----
    Ms. Eshoo. But when do you plan to actually act on it?
    Mr. Martin. I am anxious for the other commissioners to. It 
has been on circulation, and they can vote at any time. If they 
don't end up voting, at some point I will put it before a 
meeting, but we do have some others that we have statutory 
deadlines on.
    Ms. Eshoo. That is good information. Commissioner Copps, do 
you want to comment on the quality of this yardstick by which 
public interest will be measured?
    Mr. Copps. Yes, I think before we can enforce public 
interest obligations, we need to understand what those public 
interest obligations are. Most of them have been frittered away 
since the 1980s, so there is precious little left for 
broadcasters to really get hold of and say this is what is 
expected of us and this is what we have to do if we are going 
to get a re-license from the Federal Communications Commission.
     So I want us to disclose our exceptions in addition to 
them disclosing, which I think is a great idea and I am for 
disclosing their activities. We have to disclose what our 
expectations are for their activities and that is where we have 
failed.
    Ms. Eshoo. Well, that is what I thought.
    Mr. Doyle. The gentlelady's time has expired.
    Ms. Eshoo. What my question was, what is the yardstick by 
which the broadcasters are measured by? If you don't have that, 
they can say anything that they want and I think this almost 
once-in-a-decade exercise is--the opportunity is lost. So thank 
you, Mr. Chairman.
    Mr. Doyle. Thank you. The Chair now recognizes the 
gentleman from New York, Mr. Fossella.
    Mr. Fossella. Thank you, Mr. Chairman. Chairman Martin, 
regardless of what happens with the revenue raised, I guess you 
can guarantee that--you all talked about the importance of 
public safety--that billion dollars or so with respect to the 
grant program will be guaranteed, the funding will be there 
guaranteed?
    Mr. Martin. Well, sure. I mean, we have said that the 22 
MHz, what I proposed nationwide, has to raise at least $4.6 
billion; that the overall auction has to raise at least $10 
billion. If it doesn't, it gets re-auctioned without those 
conditions, and the reserve prices will always be over a 
billion. So yes, I think that that will----
    Mr. Fossella. And if it were not to meet the reserve price, 
you would have sufficient time to re-auction, and the money 
would be there pursuant to congressional intent?
    Mr. Martin. Yes, we will be starting the auctions at the 
end of this year, the beginning of next year, so in December or 
January, and we are required to deposit the proceeds in the 
Federal Government about this time next year.
    Mr. Fossella. So regardless of what happens----
    Mr. Martin. I think we would be able to end up doing the 
re-auction and complete that.
    Mr. Fossella. It has been touched upon a little bit. I 
guess I will ask just a fundamental question regarding the 
conditions placed on the auction. To what degree are consumers 
taxpayers or taxpayers consumers? My understanding is that the 
fair market value of the spectrum is upwards of about $20 
billion. Is that a rough estimate or is that an accurate 
estimate of what the spectrum is left unencumbered?
    Mr. Martin. I am not sure I can say that that is an 
accurate estimate. CBO had scored it somewhere between $10 
billion and $15 billion. I believe CBO had already allocated 
$10.3 billion, and they had technically scored it at around 
$12\1/2\ billion. It was their best estimate. But you are 
right, some in the industry say it could go as high as $20 
billion, but I think that I would probably have to say that, at 
this point, the best estimates would probably be CBO's.
    Mr. Fossella. Again, I ask the question about consumers and 
taxpayers. Different people can approach it and say, what is 
going to be best for the consumer, whoever wins the auction and 
obtains the spectrum, and then they put it into the 
marketplace. It is in the eyes of the beholder. But to what 
degree and how do you--I am just curious as to the mindset. How 
do you balance foregoing a potential half a billion dollars or 
a billion dollars or $1\1/2\ billion that would--nor to the 
benefit of taxpayers, assuming that the auction was 
unencumbered as opposed to this is best for consumers, so we 
are going to leave that billion or billion and a half on the 
table?
    Mr. Martin. The Commission's primary responsibility is to 
manage the spectrum to make sure it is being efficiently 
utilized for the overall economic growth of the country, but we 
certainly want to make sure we get a fair return on it. But 
that doesn't mean we just simply maximize the amount of revenue 
an auction could obtain. For example, we have build-out 
requirements that say people have to use the spectrum we 
auction, because we know that when you put wireless services 
out, the overall economy benefits. And it would be a bad thing 
from a spectrum management standpoint if we sold it to people 
and they didn't use it. However, economists would argue and 
game theorists argue that actually incumbents would pay a 
premium to be able to buy spectrum and not use it, because that 
would prevent others from competing with them. So we have to 
balance consumer and taxpayer interest to get a fair return but 
not to purely maximize the return.
    We also try to take the spectrum and divide it into smaller 
pieces. Actually dividing the spectrum into smaller pieces 
results in lower overall auction revenues. Every auction we 
have had in the past, the companies are willing to pay a 
premium for larger geographic sizes and larger pieces of 
spectrum. But we intentionally divide it up into smaller 
pieces, because we also want to make sure that there are 
opportunities for others to be able to participate. So 
maximizing taxpayer revenue or auction returns can't be the 
only goal. And indeed, Congress told us that we should balance 
all of these goals.
    Mr. Fossella. Fair enough. You raised a point. Do you think 
incumbents would buy this and park it somewhere?
    Mr. Martin. Without any kind of requirements at all, yes, I 
would be worried about that, and indeed there have been 
auctions in the past where there has been some spectrum that 
hasn't been utilized throughout the whole geographic areas they 
bought, because we didn't have sufficient----
    Mr. Fossella. So again, getting back, and I understand your 
responsibilities under the law, but is there a way, has anybody 
done some internal analysis as to what that opportunity cost is 
to the Treasury, by imposing these conditions?
    Mr. Martin. I think it is difficult to estimate what the 
opportunity cost is on that. I can tell you that you also have 
to balance this compared to the other proposals and plans that 
the Commission had considered and the other commissioners had 
supported. And I would say that actually the most--our internal 
economists, based upon past auctions, say that the most 
significant thing that would have a negative impact on the 
amount of money that was being raised was actually to take this 
22 MHz and break it up into smaller blocks, that that would 
cost the taxpayers several billion dollars, based upon the 
returns on the AWS auction. So I think that you do have to 
balance this proposal with others and I think that the benefits 
of having 22 MHz together provide a significant financial 
incentive for companies to be able to bid on a larger 
geographic area and on large pieces of spectrum, that it would 
balance out some of the open access conditions. Some of the 
other proposals that don't have that also break the spectrum up 
into smaller blocks, and our economists do say that that will 
result in lower overall revenues, definitely.
    Mr. Fossella. But let me be clear. With respect to the 
conditions, there is no determination as to what that value 
lost is?
    Mr. Martin. No. And I don't know if there is any way to 
give you--to quantify for you that----
    Mr. Fossella. Is one way just to auction it unencumbered?
    Mr. Martin. Well, even then we wouldn't be able to quantify 
it, because we wouldn't be able to----
    Mr. Fossella. Let us compare it to what----
    Mr. Martin. There is no way to end up comparing----
    Mr. Fossella. Mr. Copps----
    Mr. Martin. We want to make sure and get, like I said, the 
fair return, and I think that, in the AWS auction, all of the 
winning bidders, if that was put on, this 62 MHz of spectrum 
that we are going to auction, it would result in raising about 
$10 billion, which we have guaranteed as a minimum threshold.
    Mr. Fossella. Mr. Copps, Commissioner Copps. I am sorry. 
You were shaking your head. Did you want to offer something?
    Mr. Copps. No, I am in agreement. I think it is hard to 
balance. You have to think about the long-term benefits too. 
The statute says encourage new services, encourage competition 
and efficient use of the spectrum. If those things really take 
off, you get new entrants and competition, and the gains to the 
economy would be significant.
    Mr. Fossella. I have some time left, but I know my 
colleagues would like to ask questions, so I will yield back. 
Thank you.
    Mr. Doyle. Thank you. The Chair now recognizes the 
gentlewoman from California, Ms. Harman.
    Ms. Harman. Thank you, Mr. Chairman. I apologize to the 
witnesses for stepping out, but as always around here, there 
are conflicts every hour of the day. I gather from staff that 
no one has really drilled down on this brilliant idea of the 
public/private partnership. We did just have a conversation, or 
you did with Mr. Fossella, about revenues and revenues lost. 
But first, I want to state a proposition and see if you agree 
with me, and my proposition is that it is not just about money. 
Money is part of what we are going to get out of this, no 
question, but I believe that no matter how many billions of 
dollars we spend and how big the grants are to each region or 
county for their special flavor of local interoperability, we 
will not get to national interoperability unless we have an 
architecture that pulls them all together. Does anyone disagree 
with that?
    Mr. Copps. Amen.
    Ms. Harman. Amen? Ah. Well, we are having a revival 
meeting, that is good, with Commissioner Copps. Right. 
Therefore it is critical, and whether the forcing mechanism is 
the public/private partnership or as I think someone on--I am 
not sure who suggested it, an all-public format or whatever it 
is, that we help these communities, who each have different 
ideas, get to national interoperability, somehow. Agreed?
    Mr. Martin. Agreed.
    Ms. Harman. Agreed. And that is where we get into this 
notion of specific protections or some list of requirements for 
the entity building out the public/private partnership, right?
    Mr. Martin. That is right.
    Ms. Harman. OK. So now my question is, if we go this route, 
and I favor this route, what enforcement mechanisms will there 
be, or should there be, to make certain that the private entity 
complies with the requirements? Will it be a condition of the 
license? Can you revoke the license? Will the conditions be 
written in the order? How will you do oversight? I know that 
Commissioner Copps said, I think it was Commissioner Copps, 
that there has to be ongoing oversight, and that is certainly 
something I would agree with, and I would think that everyone 
here would.
    Mr. Martin. There would be ongoing oversight of the 
process, but I think, most importantly, that we do have, for 
example, very strict build-out requirements to make sure that 
this is being built out to serve those public safety entities, 
this piece. We have explicitly written into the license a 
condition of forfeiture if they fail to meet those build-out 
requirements. And then, if they did have to forfeit the 
license, the public safety entities are provided the right to 
purchase those assets automatically. So that is one of the, for 
example, one of the safeguards we have put in to make sure that 
this is actually going to be built out to solve the 
interoperability problem and that the public safety interests 
are protected.
    Ms. Harman. How do we have confidence that the public 
safety entity, if there is this foreclosure, that is what it 
sounds like, will have the competence or the financial 
viability to be able to build out the network according to the 
specifications that are in the order?
    Mr. Martin. I would say that I can't guarantee that. What I 
would say is that what we are trying to do is find the best 
alternative of the ones that are within the Commission's 
authority to try to solve the interoperability problem. I think 
what Commissioner Copps referenced and what you referenced was 
that the Government could also provide the funding to build out 
an exclusive public safety network that would be run and owned 
by public safety entities. And if Congress chose to do that and 
if the Government chose to do that, obviously that would be 
something that would be in the public safety's interest, and 
they would have the expertise, and they would own those assets. 
But in the absence of that option, which doesn't appear to be 
materializing for public safety, what we have put forth is 
something that I think will do the best we can within our 
context. But we can't address all of the issues and we have got 
certain safeguards to try to protect it, but I can't say that 
it guarantees that they would have that local know how.
    Ms. Harman. Well, I hear you. I think Commissioner Copps 
wants to comment, too, and my time is running out, but I 
understand how you got to where you are, and I have been 
closely following this, as I said, with Mr. Pickering, who is 
going to make me into a conservative, by his terms, on this 
issue, and he did point out, to remind us all, that being 
conservative can also mean supporting open access, but this 
just has to work. And I know my time is over, Mr. Chairman, but 
could Commissioner Copps comment on what I have just said?
    Mr. Copps. I just think the public safety requirements have 
to be known by whoever is going to bid and win this 
partnership. They have to know what is going to be expected of 
them going in. And then, second, and I can't stress this too 
much, there is the important, critical, ongoing role of the FCC 
to make this happen and to have the power, when there is a 
standoff and the decision is not being made, to make the 
decision. Now that may entail a more proactive FCC than we have 
had in recent years, but this is not going to work without that 
kind of authority for us.
    Mr. Doyle. The gentlelady's time has expired.
    Ms. Harman. Thank you, Mr. Chairman.
    Mr. Doyle. The Chair now recognizes the gentleman from 
Georgia, Mr. Deal.
    Mr. Deal. Thank you. In light of the anticipated votes, I 
will be brief. Mr. Chairman, you had indicated that the lab 
would be on target to issue a report on the white spaces by the 
end of this month, which I believe is a week from today. In 
your estimation, are they on track to complete that deadline?
    Mr. Martin. Yes, they are. They will issue their report on 
the initial testing of all of those white spaces devices.
    Mr. Deal. And do you anticipate that their report will be 
thorough in terms of the feasibility of devices, so as not to 
cause interference?
    Mr. Martin. I think it will definitely be thorough. I think 
that when we release the report, I am sure that both 
broadcasters and the companies that put forth those devices 
will want to go confirm them for themselves and work with our 
engineers. But yes, I think it will be thorough.
    Mr. Deal. And will you try to make sure that the engineers 
are available to those companies?
    Mr. Martin. Oh, absolutely.
    Mr. Deal. And to our staffs, to answer any questions that 
may be left unresolved?
    Mr. Martin. Absolutely.
    Mr. Deal. And then I understand you are anticipating that 
you would implement rules or regulations by October to follow 
up on this report, is that correct?
    Mr. Martin. That is right.
    Mr. Deal. I yield back, Mr. Chairman. Thank you.
    Mr. Doyle. Thank you, Mr. Deal. The Chair now recognizes 
the gentleman from Michigan, Mr. Stupak.
    Mr. Stupak. Thank you, Mr. Chairman. I have got a number of 
concerns. Commissioner Adelstein, if I can start with you, if I 
may. On the 700 MHz auction, rural carriers are becoming 
increasingly concerned that the open access conditions on the 
upper band will make the lower band more attractive and 
possibly squeeze them out. Being from a rural area, I am 
concerned about that. Would you care to comment on that?
    Mr. Adelstein. Well, I think it is a real concern. I have 
always advocated a mix of licenses for rural companies, for 
small and midsize companies, and as a matter of fact, the 
priorities on this auction as it was originally proposed that 
there was no what are called EAs in the lower block, and we 
managed to get a paired EA in there that could be available for 
them. But in this case, what we have been presented with is the 
opportunity to do open access, but it has been tied to a large 
spectrum block, and in some senses that is somewhat 
frustrating. I certainly am concerned about this. We need to 
find a balance, and there are certainly tradeoffs when you talk 
about the need for a large 22 MHz block in the upper, to 
facilitate the entry of a national player, with the needs of 
the smaller and midsized companies.
    Mr. Stupak. Well, this open access issue would also affect 
new entrants and minority-owned businesses that Mr. Rush spoke 
of?
    Mr. Adelstein. The open access actually could be a very 
helpful provision for small and midsized companies. It would 
allow them, if there was a wholesale component to it, to be 
able to buy access to that spectrum on a wholesale basis and 
use that in a very limited region.
    Mr. Stupak. Commissioner Copps, you mentioned the 
transition to digital TV. In my district they just see it as a 
scheme to buy more televisions. They don't see it as really 
necessary. So we have a great education to do in this 
committee, and I think the FCC has to join with us in letting 
people know that you really have to do a digital transition, 
that it is technology, it is not just to get you to buy a new 
TV.
    Mr. Copps. Right.
    Mr. Stupak. But let me ask you this. You were the only 
joint board member to dissent on the USF cap. I have concerns 
about the cap proposal, in that it could freeze deployment of 
wireless areas in parts of the country that need it, like rural 
areas. Can you please explain why you dissented?
    Mr. Copps. Well, for a number of reasons. Number 1, I think 
the decision got us off the target of comprehensive Universal 
Service Fund reform, and I think, with the length of time that 
the referrals have been pending since 2002 and 2005, 
respectively, we should be dealing in comprehensive proposals 
right now. I think this particular cap would have had the maybe 
unintended but damaging effect of just getting everybody 
fighting with everybody else, between technologies, and we 
really didn't need to have that. We are supposed to be looking 
toward comprehensive reform. I am worried that some areas and 
some localities would be shut off new wireless possibilites, at 
the same time that we are sitting here talking about the 
importance of wireless and 700 MHz. So there were a number of 
concerns that I had.
    Mr. Stupak. Thank you. Chairman Martin, I want to ask you a 
little about local-into-local deployment. It is proven to be 
mutually beneficial to satellite operators and broadcasters, 
but according to the latest FCC filings, EchoStar has local-
into-local service in 170 television markets, while DirecTV has 
local-into-local service in 142, and there is a total of 210 
television markets. So that leaves at least 40 markets where 
satellite is not carrying the local broadcast channels. Several 
of these markets are in my district and are not carried. Do you 
think the DTV transition provides an opportunity for satellite 
companies to deploy local-into-local, nationwide, to all 
television markets? Broadcasters have a date certain that you 
have to switch to digital television. Do you support a date 
certain for local-into-local rollout? And one more, if I may. 
Do you support making deployment of local-into-local into all 
media markets a condition of the Liberty Media acquisition of 
DirecTV?
    Mr. Martin. I do think that it would be helpful, from a 
consumer perspective, for carrying the local broadcast signals 
by those platforms. So I have always thought that that was 
positive from a consumer perspective and a policy perspective. 
But Congress actually made the determination that it is opposed 
to a pure must-carry regime, like was imposed upon cable. They 
were going to impose a regime that allowed what was called a 
carry one, carry all provision, where if a satellite 
distributor decided to carry one, it had to carry them all. And 
that was in part because of the more limited bandwidth that 
satellite has. So while from a policy perspective I think that 
is a good thing, I think the Commission needs to respect 
Congress's balance of those interests, where they determined 
that we wouldn't require all local-into-local, but rather have 
a carry one, carry all provision on a market-by-market basis 
and that is why the Commission has tried to----
    Mr. Doyle. The gentleman's time has expired. The Chair now 
recognizes the gentleman from Mississippi, Mr. Pickering.
    Mr. Pickering. Thank you, Mr. Chairman. My first question, 
Mr. Chairman, deals with the public/private sector partnership. 
Specifically, if we expect a private sector company or entity 
to bid and then build a system, billions of dollars at stake, 
and with the public safety community to have the certainty that 
they will have a national network in a very timely way, when we 
have security, safety and lives at stake and as my other 
colleagues have mentioned, that we have not really resolved 
interoperability or made much progress since both 9/11 and 
Katrina. So timeliness and urgency of getting this built is 
very important, and what I see as an important component of 
that is an effective dispute resolution mechanism between the 
private and the public partner. How do you envision that 
dispute resolution working in a very timely and certain way, 
Mr. Chairman?
    Mr. Martin. One of the things that I think that the 
Commission has learned by watching some of the challenges with 
the re-banding processes that occurred in the 800 MHz 
frequencies is that the disputes between the public safety and 
the private entities, without an effective dispute resolution 
process, can actually drag on, that re-banding process. So 
unlike in that area where we actually send it off to a mediator 
to try to mediate those differences, what we are saying here is 
that there will be 6 months to negotiate between those public 
and private entities but that all of those unresolved issues 
will be decided affirmatively by the Commission and that the 
Commission must approve that public safety and private 
partnership and all of those unresolved issues, in order for 
them to get the license to end up being in this process. So 
that, I think, forces the Commission to act very promptly, 
after the 6 months, if there are any unresolved issues.
    Mr. Pickering. Do you have timetables on the Commission to 
resolve disputes?
    Mr. Martin. I mean, no, but if my other commissioners have 
some suggestions on what they would like, I will put something 
in there for a guarantee when we resolve it.
    Mr. Pickering. I think it is very important to have tight 
timetables so that there is certainty, both to the private 
partner and to the public safety. And whether it is an FCC or a 
binding arbitration process, there has to be certainty and 
there has to be a very tight timetable. The second question I 
have, Mr. Chairman, is that we want bidders and builders, not 
buyers and squatters, and this is just too valuable a spectrum 
to have speculation or warehousing. And so my question to you 
is your benchmark at 4\1/2\ years is 35 percent of the 
geographic area to be built out. What happens if a company does 
not meet that 4-year target? What is the enforcement mechanism 
at that point?
    Mr. Martin. Our enforcement mechanism is slightly different 
for the public/private partnership piece of spectrum than in 
the rest of the commercial spectrum.
    Mr. Pickering. And my particular question here is on the 
rest of the commercial spectrum.
    Mr. Martin. The rest of the commercial spectrum. On the 
rest of the commercial spectrum we do have a series of 
enforcement mechanisms and penalties for failing to meet those, 
so that, for example, the timeframe for your license and for 
the rest of your build-out is shortened, as one of the 
penalties, for example, to automatically keep saying if you 
fail to meet it. But we do have certain kinds of penalties, and 
I would just point out again that the build-out requirements in 
this, that we have proposed, or that I have proposed, are the 
strictest build-out requirements that the Commission has ever 
proposed in any auction.
    Mr. Pickering. I would just encourage the Commission to 
make sure that you have real teeth in your enforcement, so that 
somebody who buys with no intention of building cannot fail at 
4\1/2\ years and still hold the spectrum until 7 or 8 or 10 
years without ever building. So I do hope that you have a tough 
enforcement mechanism, whether it is a use or lose or some 
other mechanism, so that that spectrum can be put back out by 
somebody who will truly build out the broadband for all parts 
of the country. The next question concerns special access, Mr. 
Chairman. What is your timetable on addressing special access? 
When do you think that the analysis will be complete, and what 
time do you think the Commission will act upon that question?
    Mr. Martin. The Commission just put out the notice 
recently. The comments and reply comments aren't in yet, but we 
put on an extremely tight timeframe for comments or reply 
comments to come in. And as soon as those comments come in, I 
will. I circulated an options memo to the commissioners 
previously on this issue, which is how we ended up in a notice 
situation, and I will follow that up with another options memo 
for the commissioners to give input, and then I will instruct 
the Commission staff to do it as quickly as possible after 
that. I think September was the timeframe that Chairman Markey 
had encouraged us to try to act.
    Mr. Pickering. I want to commend you on publicly stating 
that the full Commission will vote on the forbearance. And 
then, finally, I would like to just express my concerns on the 
possibility of a USF cap on the wireless side. And these are my 
concerns: 700 MHz and broadband wireless build-out is tied to 
USF, and you should not see the policy as separate. Mr. 
Chairman, could I ask for 15 seconds? Fifteen seconds. So the 
build-out of the 700 is tied to USF. And so with aggressive 
build-out requirements, we need USF for rural areas to achieve 
those build-out requirements. And second, I am concerned that a 
temporary stop gap could become permanent and take away the 
incentive for comprehensive reform. And the wireless sector is 
the more efficient lower cost, and I just don't want to see 
them disadvantaged in the long term. And with that I yield 
back.
    Mr. Doyle. Thank you. The gentleman's time has expired. The 
gentleman from Texas, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. Again, I know it has 
been a long morning for our commissioners. Chairman Martin, you 
mentioned in your testimony a number of retailers that are not 
properly marketing analog television sets, and other companies 
have still been importing sets without a digital tuner. One, I 
am disappointed to hear this, and how widespread is this 
problem? And in addition to fines, has the Commission taken any 
other steps to respond to these problems?
    Mr. Martin. I would say that our investigation is that the 
importation of televisions that don't meet our tuner 
requirements has been somewhat limited. That has not been as 
widespread a problem. We have found that it has probably been 
more of a widespread problem that our recent orders requiring 
retailers to identify televisions that have more limited 
capability, that retailers were less aware of and less in 
compliance with that rule. But it has been significant, but it 
has been more. The number of televisions was significant, that 
were coming in, but the number of companies that were in 
violation was relatively few. So I am more optimistic that our 
significant fines in that area will address that issue, and we 
will hopefully try to deter anybody else from trying to bring 
in televisions without those tuners.
    Mr. Green. OK. So the few companies, they have been dealt 
with, and so we will no longer see, I guess, these televisions 
being imported that do not have the digital tuners?
    Mr. Martin. We imposed significant fines, and I am hopeful 
of that, but we will continue to try to investigate that and 
act on any other complaints that we get.
    Mr. Green. And I know you have heard it in other opening 
statements from members, on your outreach and how effective you 
believe the Commission is being in reaching our elderly, our 
low income and our non-English speaking households, and is 
there a plan by the Commission to actually target these groups 
to make sure they know that the digital will be required?
    Mr. Martin. I think that our outreach to individual groups 
directly has been more limited, as our congressional budgetary 
oversight committee is aware. We have asked for funding for 
that directly in the past. We had not gotten it in the past, 
but it is in our budget, and it has been approved this year, 
actually even more money than we asked for. That will allow us 
to do the kind of direct outreach you are talking about, to 
particular populations that are more likely to be unaware, like 
the elderly, and I am more hopeful that----
    Mr. Green. OK, thank you. Commissioner Copps, one of the 
problems we have in our Houston area that public safety has 
experienced involves not only interoperability but the current 
infrastructure is not reliable under extreme conditions. For 
example, handheld devices aren't able to penetrate smoke to 
communicate with one another during, for example, a refinery 
fire. Can you elaborate on your tests and what feedback you are 
getting from public safety on their needs from the 700 MHz 
network? Given the characteristics of the 700 MHz, do you think 
it could resolve some of these issues?
    Mr. Copps. Well, I think we are in the process of trying to 
gather data and information like that, and we put out a notice 
recently, asking for better input on the ability of wireless 
phones to operate in buildings and some other questions too. So 
I think we need to better understand not only the capacities 
and the capabilities but the limitations of this, and I look 
forward to the comments on that proceeding.
    Mr. Green. Two weeks ago the ITC ruled on a patent dispute 
between Broadcom and Qualcomm, essentially freezing the import 
of numerous handsets bound for the U.S. Verizon recently 
settled, agreeing to pay $6 for a handset. However, public 
safety is still not able to obtain these handsets. Have you 
looked into the matter, and do you perceive that the action 
threatens our public safety communications?
    Mr. Martin. Oh, I am sorry.
    Mr. Green. Yes.
    Mr. Martin. The Commission has looked into that matter. We 
weighed in at the ITC with our concerns that the kind of ban on 
the importation of any of these devices could actually have a 
negative impact on the public interest. We weighed in there, 
and we subsequently weighed in at the administration with the 
same facts, concerns and our concern with that ban.
    Mr. Green. OK, I appreciate it. Thank you, Mr. Chairman.
    Mr. Doyle. Thank you. Gentleman yields back. The Chair now 
recognizes the gentleman from California.
    Mr. Radanovich. Thank you, Mr. Chairman, and Commissioners, 
to the hearing. I do have a couple questions of Commissioner 
Tate. Commissioner Tate, advocates of the open access 
conditions on the spectrum say that there has been a market 
failure. In your opinion, has there been a market failure in 
the wireless industry, and if so, what is the evidence?
    Ms. Tate. I wasn't sure that the item drew that conclusion, 
that there was a market failure. I thought that the item 
specifically talked about the issue of device portability, and 
I am trying to be responsive, but I truly do have an open mind, 
and part of being here today was to hear from you all about 
what you do think. I have meetings all the rest of the week 
with commenters, since we have just received the item. So I 
wasn't aware that that conclusion was drawn.
    Mr. Radanovich. All right. In its April 700 MHz order, the 
FCC acknowledged that the congressionally mandated competitive 
bidding process ensures that spectrum licenses are assigned to 
those who place the highest value on the resource, will be 
suited to put the licenses to their most efficient use. But if 
the FCC opposes open access conditions, it would be 
substituting its own judgment for that of the market via the 
congressionally mandated competitive bidding process. Can you 
tell me if that is a good idea, and if so, why?
    Ms. Tate. Well, I think that as the chairman pointed out, 
that not only are we talking about the value of the spectrum 
and maximizing the value of the spectrum but whether or not 
value equals dollar signs. And so in some cases, it may be that 
we need to look at other public policy aspects, and that has to 
do with consumer choice and portability of the devices. But as 
I said, I am still open as to where I am at the conclusion of 
the day and how I am going to vote.
    Mr. Radanovich. Very good. All right, thank you to you and 
also to the panel of witnesses. Yield back, Mr. Chairman.
    Mr. Doyle. Thank you. Chair now recognizes the gentlelady 
from California, Ms. Capps.
    Mrs. Capps. And I want to complement the vice chair, my 
seat mate. Nice elevation. I have a question for the three 
Commissioners who serve on the Task Force on Media and 
Childhood Obesity. Chairman Martin, I believe it is, and 
Commissioner Copps and Commissioner Tate. The major concession 
so far has been an initiative announced by the Council of 
Better Business Bureaus. Among 11 companies that represent two-
thirds of food advertising targeted at children, these 
companies have committed to not advertise to children under 12 
unless the food products meet a nutritional standard.
    First of all, kudos to the industry for recognizing that 
this is a problem. My question, however, is the standard that 
is chosen by the companies, themselves, and whether or not this 
is sufficient. This is my question to each of you. Do you 
believe that a uniform standard would help, in this case, the 
children's health situation? So Commissioner Martin, Chairman 
Martin, to start. Brief, maybe. Brief answers from the three of 
you.
    Mr. Martin. Standards are always helpful in trying to 
evaluate it, but I think that this has been important that 
these companies have been willing to do this on a voluntary 
basis.
    Mrs. Capps. I agree.
    Mr. Martin. And I also have not heard yet from all of the 
advocacy groups about what they think about the standard that 
was drawn by these companies, so I would say I need to hear 
from them before I could give you a final answer on it.
    Mrs. Capps. That is good and I just want to say it is nice 
to give the industry first crack at it and now you are waiting, 
I hear, to hear back a little more from some of the advocacy 
groups and you are willing to entertain the possibility of 
standards? Depending on what they say?
    Mr. Martin. Yes, we have certain limitations on who the 
companies are. R30 is actually a media company which is 
actually much more limited with what they were willing to agree 
to. But yes, within the companies that are within our purview, 
yes.
    Mrs. Capps. How about you?
    Mr. Copps. Well, if you are going to have a uniform 
standard, I guess the first thing you have to be sure of is, is 
it a commitment that really reflects something meaningful. But 
I applaud the fact that the food companies are beginning to 
step up. I think it is becoming clear now that the media 
companies have some considerable work to do to match and 
hopefully even exceed that performance.
    Mrs. Capps. So you are not opposed to having some standard 
come from outside the industry and the media?
    Mr. Copps. I think that is something that we could look at 
depending upon the range of commitments that we get from both 
the food industry and the media industries.
    Mrs. Capps. OK, thank you. And Commissioner Tate.
    Ms. Tate. Yes, Congresswoman. I had the opportunity to go 
actually tour Kellogg and they have standards that deal with, 
for instance, the WIC Program or with HHS standards or 
standards for the food that goes into public schools. So there 
are multiple standards that they are dealing with, and I guess 
I would just want us to be careful that the entities, the 
Federal entities, that they already work with--in many cases, 
they are actually using Government food standards, and so I 
think that that is one thing that we ought to look at before we 
move forward on oh, let us develop another standard for the 
companies.
    Mrs. Capps. That is a good point. Another topic and a 
little bit of time. Chairman Martin, at the oversight hearing 
in March I asked you why the Commission hadn't completed a 
rulemaking to reinstate consumer protection, such as 
restrictions on slamming and the disclosure of private 
information, which was lost when the FCC reclassified broadband 
as an ``information service'' subject to title I rather than 
title II of the Telecommunications Act. At that time, the 
rulemaking had been languishing for about a year and a half, 
and now it has been about 2 years, so can you give us an update 
on the status of that rulemaking? And again, I want to follow 
up with a couple of other commissioners.
    Mr. Martin. We have taken several important steps to 
address many of the issues that were first identified in that 
rulemaking, so we have adopted, for example, just two meetings 
ago, we adopted some significant consumer protections for the 
disabled, which was one of the issues.
    Mrs. Capps. Yes.
    Mr. Martin. So instead of taking it as just one rulemaking, 
we have taken the disparate pieces and have been trying to work 
on each one of them, so we did that on public safety and 911, 
on disabilities, and I anticipate we have already taken some 
steps on privacy, to extend our privacy rules. I think we will 
continue doing that and will complete the comprehensive--
hopefully, we will be able to have had addressed all of those 
issues by the end of this year.
    Mrs. Capps. Excellent. Mr. Adelstein, do you want to 
comment?
    Mr. Adelstein. I certainly hope we would. It has been 2 
years since that has been pending, and we have already 
reclassified other services, so we are spending our time doing 
all these reclassifications without putting consumers first, 
and when we saw major privacy issues, we talked about privacy, 
as this committee has, and there hasn't been a comprehensive 
solution to the privacy issue. Truth in billing, slamming, 
cramming, access to persons with disabilities we have done, but 
we have universal service issues that also aren't dealt with. 
We just heard about a major discontinuance. We haven't dealt 
with that issue. We have got outage reporting, rate averaging, 
there are all these issues regarding how consumers are affected 
that we haven't dealt with, and I am pleased to hear the 
chairman say we are going to do that expeditiously.
    Mr. Doyle. The gentlelady's time has expired. As you see, 
we have votes on the floor, and we want to try to finish this 
hearing so we don't keep our commissioners here another hour.
    Mrs. Capps. Thank you.
    Mr. Doyle. The Chair now recognizes the gentleman from 
Florida.
    Mr. Stearns. Thank you, Mr. Chairman. Chairman Martin, the 
first question I have for you is a position that you had 
dealing with network neutrality and trying to bring that into 
your position on wireless broadband and infrastructure. At the 
last oversight hearing you said that you opposed network 
neutrality conditions in the wireline context because it 
deterred investment in broadband infrastructure,
    Mr. Martin. Yes.
    Mr. Stearns. But wireless broadband infrastructure is even 
less developed than wireline broadband infrastructure. I would 
think you would be more worried about chilling wireless 
investment with your proposed auction's conditions, which I 
mentioned in my opening statement earlier.
    Mr. Martin. I am concerned about imposing network 
neutrality requirements on wireline infrastructure, and I would 
also be equally concerned about network neutrality requirements 
on wireless infrastructure. That is why I haven't proposed 
network neutrality requirements on wireless. Indeed, on the 
wireline infrastructure today, you can plug in a phone that you 
buy from the phone company or you can plug in a phone that you 
buy from Radio Shack or one from Best Buy and all of them work. 
And that works today on the wireline infrastructure, and there 
is no network neutrality that applies to wireline 
infrastructure.
    Network neutrality deals with actually the selling of that 
capacity under a more restricted basis. What I am proposing to 
do on wireless is exactly what already occurs on wireline 
today, and that is why I agree with the statement that network 
neutrality should not apply to wireline, and that is why I am 
not proposing network neutrality applied to wireless. I 
couldn't be proposing network neutrality requirements on 
wireless, or those would be requirements that would be network 
neutrality on wireline and we have determined that they are 
not.
    Mr. Stearns. Are there any conditions that you foresee that 
would change dealing with wireless broadband infrastructure 
that might change your thought on this? I think what you are 
saying is that network neutrality that applied is not 
necessarily applicable in the same context.
    Mr. Martin. I don't think that what we have proposed, these 
kind of open Carterfone type rules are network neutrality at 
all.
    Mr. Stearns. OK.
    Mr. Martin. Indeed, they are not considered network 
neutrality in the wireline context, nor should they be 
considered network neutrality in the wireless.
    Mr. Stearns. OK, let me go on. I have a letter here. It has 
approximately 140 small and regional wireless carriers that say 
Chairman Martin's auction proposal will raise the spectrum 
costs for smaller providers. In fact, they think it, perhaps, 
would shut them out altogether. The reason is that larger 
providers will bid on the smaller licenses which don't have 
conditions. I ask unanimous consent that this letter be 
submitted into the record, Mr. Chairman.
    Mr. Stearns. And Commissioner Tate, you have built your 
career on rural issues. Do you support this proposal, knowing 
that it possibly could hurt small and rural wireless providers?
    Ms. Tate. Well, in looking at the spectrum as the plan 
presently before us in this item, it has the same or even a 
similar mix of licenses, both in terms of geographic areas and 
in the size of the licenses.
    Mr. Stearns. Do you support this proposal?
    Ms. Tate. I am sorry, I really am trying to be responsive.
    Mr. Stearns. OK.
    Ms. Tate. But I have not decided how I am going to vote.
    Mr. Stearns. This letter was sent to you on July 16, and it 
was addressed to yourself as well as all of them, and so my 
question is, I guess----
    Ms. Tate. No, sir. I don't want to do anything that would 
harm rural areas.
    Mr. Stearns. OK.
    Ms. Tate. I want broadband to go into rural areas.
    Mr. Stearns. I understand.
    Ms. Tate. Right now, the item that is proposed and the way 
that the band plan is lined out has a generous mix of different 
sizes of geographic----
    Mr. Stearns. Would you say you agree with this 50 percent 
of the time?
    Ms. Tate. I would be happy to read the letter and get back 
with you later today.
    Mr. Stearns. So you haven't read the letter?
    Ms. Tate. I have not.
    Mr. Stearns. Even though it was addressed to you July 16?
    Ms. Tate. I am sorry. I have not----
    Mr. Stearns. No, I understand. We have got a pig in a 
basket. Commissioner McDowell, what are your thoughts?
    Mr. McDowell. I share those concerns outlined in the 
letter. I have spoken with many small carriers from across the 
country, that they are concerned they might be shut out of this 
auction, so that is something I am carefully considering as we 
go forward.
    Mr. Stearns. OK. I guess the other two commissioners might 
want to comment on this, too? And I guess are you worried about 
the little guy, the 140 signatures on here or----
    Mr. Martin. Sure, I am worried about the little providers, 
but I think we need to have a mix of areas of spectrum, and 
what we are doing in this 700 MHz auction is distributing 
spectrum in geographic areas that is very similar to what we 
have done in the past with a mix of them for small areas for 
some small providers to compete; midsize areas and some larger 
areas.
    Mr. Stearns. Mr. Chairman, we are almost out. Can I just 
ask the other two commissioners if they agree with what is in 
this letter or not?
    Mr. Doyle. Yes, yes or nos.
    Mr. Stearns. Just yes or no. Commissioner Copps.
    Mr. Copps. I can't give you a yes or no. Do we have 
concerns about that? Am I going to be doing my dead-level best 
to make sure that this auction is good for rural consumers, 
rural companies and rural America? Yes.
    Mr. Stearns. I think that letter raises some real concerns 
we have to watch out for in this, but it is difficult. We are 
trying to get a good mix and balance of the different license 
sizes.
    Mr. Doyle. The gentleman's time has expired.
    Mr. Stearns. Thank you.
    Mr. Doyle. Without objection, the Chair recognizes the 
gentlewoman from Tennessee.
    Mrs. Blackburn. Thank you, Mr. Chairman, and I will be 
brief. I want to thank all of you for your time today, and I 
want to thank you for your willingness to have discussions with 
us as we have seen you and the issues that come out. And I am 
going to go right where Mr. Stearns was and follow on with 
this, with our small regional and rural carriers. This is 
terribly important to us, so let me ask the question this way, 
and then each of you give me a yes or no.
    Isn't spectrum from these carriers and the citizens they 
serve more important or as important to you than giving the 
open access experiment to Google? So is it as important to you 
to give rural carriers access, the small rural and regional, as 
it is to have this experiment with Google? So Commissioner 
Adelstein, you first.
    Mr. Adelstein. Well, I do think they are both important, 
and I think we need to find the right balance between the two 
in the final item.
    Mrs. Blackburn. OK.
    Mr. Copps. Yes, and I hope we have an auction that will 
accommodate both.
    Mrs. Blackburn. Chairman Martin?
    Mr. Martin. I don't agree with the premise that this is an 
experiment for Google, but what I will say is that rural 
consumers are just as important as the urban----
    Mrs. Blackburn. OK. Commissioner Tate?
    Mr. Martin. And all consumers being able to take devices 
with them is important.
    Mrs. Blackburn. OK. Commissioner Tate?
    Ms. Tate. I am very concerned about rural consumers.
    Mrs. Blackburn. OK.
    Ms. Tate. I do not know how I am going to end up voting.
    Mrs. Blackburn. OK. Commissioner McDowell?
    Mr. McDowell. Yes.
    Mrs. Blackburn. Thank you, sir. OK, Chairman Martin, you 
made a statement during your comment that you had to balance 
consumer interest and taxpayer interest, and sir, I would 
recommend or would offer to you that those are one and the 
same, and we have to be willing to say that our taxpayers 
deserve the maximum return from their investment in the Deficit 
Reduction Act. And we all know that we are looking at something 
that really smacks of corporate welfare for a company with a 
$170 billion market cap, if we are not very careful about how 
we approach this, and that is why I think the comments about an 
important experiment are of concern to many of us here.
    So as you look at this, I have been so curious about 
Google's offer to bid up to $4.6 billion in a reserve price for 
the 22 MHz. That is really curious to me, because I look at it, 
and I go back and I look at the 10 MHz of the 3G spectrum that 
was given to Nextel 3 years ago, and now we have 22 MHz on the 
block, and this is higher quality, and it is coming available 
nearly 4 years following the 3G auction, and you would think 
that it would be worth more. At the same time, we go in and we 
look at the discussions around the advanced wireless service 
auction and the rules that were set forth there in phase I of 
the 4G auction process. And I would like to ask you, are you 
aware of any proposal during the rulemaking process for AWS 
that sought open access for the spectrum?
    Mr. Martin. I am not aware of any proposal during that AWS. 
There might have been, but I am not aware of any.
    Mrs. Blackburn. OK. Well, thank you. I will tell you, that 
concerns us that we see now you are looking at having this 
experiment in the open access proposals that are there, because 
we know that what has changed during that period of time is 
probably not a lot except the expansion of the wireless market 
to additional industry players. You are seeing increased 
competition in the regional and local markets and lower prices 
and an increase of service for consumers.
    So our question becomes what makes the 700 MHz auction 
different from AWS, and why do potential bidders and 
competitors to the folks who bid on that spectrum deserve open 
access restrictions that are not standard industry practice 
today?
    Mr. Martin. I am interested in consumers being able and 
deserving of the ability to have more flexibility with the 
telephones that they are buying, and I am concerned about the 
industry practices, as you called them, today, just like I 
think the consumers, in the end, were deserving of being able 
to take their telephone number with them when they switched 
carriers. I think that they are deserving of being able to take 
the telephone that they have had to buy and pay for with them 
as well. And so I think that I am concerned about that practice 
as the industry practice today. Yes, I am.
    Mrs. Blackburn. OK, thank you very much. I will yield back, 
Mr. Chairman.
    Mr. Markey [presiding]. The gentlelady's time has expired. 
And unfortunately there are five roll calls that are now going 
to be conducted in order out on the House floor, so we will 
have to bring this hearing to a conclusion. Before I do, 
though, I ask Commissioners Tate and McDowell whether or not 
they would support applying Carterfone protections for consumer 
devices in this slice of the spectrum that the chairman wants 
to set aside. And I don't know if you have had time to think 
about it in the last 3 hours. You can firm up your views. Are 
you still undecided on that?
    Ms. Tate. Perhaps when we leave today, all the carriers 
will announce that they are opening all their devices and we 
will all be able to take them with us.
    Mr. Markey. Right after that non-caloric hot fudge sundae 
is announced as well, as the new solution to dieters. 
Commissioner McDowell?
    Mr. McDowell. Throughout this whole proceeding, Mr. 
Chairman, I am keeping an open mind. I am still responsive to 
all arguments, right now, leaning against the proposal, 
however, on that aspect of it.
    Mr. Markey. Well, let me just say this in conclusion. First 
of all, it was a great hearing, and we very much appreciate the 
commissioners when they come up here. You can see that there is 
an incredible amount of interest in everything that you do. I 
have been on this committee for 31 years. I remember back when 
I arrived here in 1976, that Carterfone was a huge issue. AT&T 
was still arguing how onerous a burden this would be upon them, 
as it was fully being implemented, that people could actually 
go to a phone store and buy a different color phone than black, 
that they could buy another kind of a device and actually plug 
it into the phone jack. And AT&T was making this incredible 
argument as to how actually potentially it could bring down the 
entire phone system of greater Boston or New York if the wrong 
kind of phone was purchased and put in any individual jack 
anywhere in America. And that actually was the key hearing for 
me that I actually announced that I was now in favor of 
breaking up AT&T, because it really doesn't do any good if you 
can win all of these Nobel prizes in basic research in Bell 
Labs but you can't figure out how to have some other company 
just plug in a phone into the same phone jack and be able to 
talk to their mother somewhere in the rest of the country.
    And so Carterfone, to me, was the big moment, as is kind of 
the application of those same principles here in the wireless 
marketplace. When people buy one of these $500, $600, and there 
is no question, it is going to wind up $700, $800 devices, that 
they ought to be able to take it with them. I found that, in 
the 8th grade at the Immaculate Conception Grammar School, they 
explained this concept of anthropomorphism, which is applying 
human qualities to inanimate objects. And as we all know, this 
new sophisticated iPhone is now a part of people's families. It 
is no longer just a device. It is every single human 
interaction that these people have is now programmed into these 
devices, and it is a very expensive device, and people should 
not be forced to swallow the cost of it.
    Similarly, back in 1993, when this committee was moving 
over 200 MHz of spectrum, in working with the FCC we were able 
to devise something that said that the first and second 
companies, the two incumbents, could not bid for the third, 
fourth, fifth and sixth license that we were creating across 
the country, unless they did not own a license in any one of 
those marketplaces. And in that way, we would have the extra 
competition, the third, fourth and fifth and sixth companies in 
every market, there would be a real pressure to innovate, a 
real pressure to lower prices, a real pressure to force the 
first two companies to move to digital from analog. They were 
both still analog in 1993. And guess what happened?
    Once the Federal Communications Commission adopted those 
policies, all of a sudden, by 1995, 1996, the first two 
companies were announcing their digital plans, their lower 
price plans. No longer 50 cents a minute; now 10 cents a minute 
or lower. And that was because a plan was put together that 
would benefit consumers, benefit innovation, benefit 
entrepreneurs who were ready to move and ready to make the 
changes. And I think you are at that same historic juncture as 
that Carterfone decision and that decision in 1993, 1994 to 
move to real competition out in the marketplace and a 
competition which unleashes all of this creativity that is pent 
up. We know it is. We know it is there. We know that what we 
are seeing in other countries in the world would happen here if 
we created the conditions for it. That is real competition.
    And so to you, I think the challenge, as it always is, is 
to create a paranoia-inducing Darwinian competition out in the 
marketplace for devices, for applications, for the American 
consumer but also for all of those entrepreneurs across the 
country. And I do hope, sincerely, that you respond to the 
historic challenge. It has been the FCC over the years that has 
led the charge in opening up to the American people and its 
entrepreneurs all of these opportunities.
    As former Chairman Barton said earlier, it is the sector 
which is leading the country right now, and we have a chance to 
make it lead the world as well. In these particular areas we 
are not right now, but with, I think, a little bit of 
flexibility on the part of the Commission and some recognition 
of the opportunities that would open up for entrepreneurs and 
for consumers across the country, then I think it would make a 
real difference.
    So I thank you for all of your attention to these issues. 
And without objection, a letter from Mr. Dingell and myself and 
the Commission's response will be entered into the hearing 
record regarding franchising issues, at this point in the 
record.
     Again, with thanks of the subcommittee and an invitation 
for you to return in the fall to discuss, in a follow-up 
hearing, all of these issues that we have been discussing today 
and especially to you, Mr. Chairman, given the circumstances 
under which you are testifying today. With the thanks of this 
committee, this hearing is adjourned. Thank you.
    [Whereupon, at 1:10 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

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