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



   H.R. ___, A DISCUSSION DRAFT ON WIRELESS CONSUMER PROTECTION AND 
                    COMMUNITY BROADBAND EMPOWERMENT

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

                                HEARING

                               BEFORE THE

          SUBCOMMITTEE ON TELECOMMUNICATIONS AND THE INTERNET

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                           February 27, 2008

                               __________

                           Serial No. 110-95


      Printed for the use of the Committee on Energy and Commerce
                        energycommerce.house.gov







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                    COMMITTEE ON ENERGY AND COMMERCE

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

                                  (ii)



          Subcommittee on Telecommunications and the Internet

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

                              ----------                              
                                                                   Page
Hon. Edward J. Markey, a Representative in Congress from the 
  Commonwealth of Massachusetts, opening statement...............     1
Hon. Cliff Stearns, a Representative in Congress from the State 
  of Florida, opening statement..................................    40
Hon. Mike Doyle, a Representative in Congress from the 
  Commonwealth of Pennsylvania...................................    44
Hon. Jane Harman, a Representative in Congress from the State of 
  California, opening statement..................................    45
Hon. Hilda Solis, a Representative in Congress from the State of 
  California, opening statement..................................    46
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................    46
Hon. Jay Inslee, a Representative in Congress from the State of 
  Washington, opening statement..................................    48
Hon. George Radanovich, a Representative in Congress from the 
  State of California, opening statement.........................    48
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, prepared statement................................   117
Hon. Eliot L. Engel, a Representative in Congress from the State 
  of New York, prepared statement................................   118
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, prepared statement..............................   119
Hon. Lois Capps, a Representative in Congress from the State of 
  California, prepared statement.................................   119

                               Witnesses

Joey Durel, Jr., city-parish president, City of Lafayette, 
  Louisiana......................................................    49
    Prepared statement...........................................    51
Steve Largent, president and CEO, CTIA, Washington, DC...........    53
    Prepared statement...........................................    56
    Answers to submitted questions...............................   120
Larry F. Darby, Ph.D., the American Consumer Institute, 
  Washington, DC.................................................    74
    Prepared statement...........................................    76
Chris Murray, senior counsel, Consumers Union, Washington, DC....    79
    Prepared statement...........................................    82

                           Submitted Material

Letter of February 27, 2008, from the National Association of 
  Regulatory Utility Commissioners, to Messrs. Markey and Stearns     2
H.R. ___, discussion draft.......................................    13
Letter of February 26, 2008, from the United States Telecom 
  Association, to Mr. Markey.....................................    41

 
   H.R. ___, A DISCUSSION DRAFT ON WIRELESS CONSUMER PROTECTION AND 
                    COMMUNITY BROADBAND EMPOWERMENT

                      WEDNESDAY, FEBRUARY 27, 2008

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:10 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Edward J. 
Markey (chairman) presiding.
    Members present: Representatives Markey, Doyle, Harman, 
Gonzalez, Inslee, Boucher, Stupak, Green, Solis, Stearns, 
Upton, Shimkus, Pickering, Fossella, Radanovich, Mack, Walden, 
Ferguson, Barton (ex officio), and Buyer.
    Staff present: Amy Levine, Tim Powderly, Colin Crowell, 
David Vogel, Neil Fried, Courtney Reinhard, and Garrett 
Golding.

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

    Mr. Markey. Good morning. Today the subcommittee is holding 
a legislative hearing on draft legislation addressing wireless 
issues and community broadband services. This legislation is 
currently in discussion draft form in order to facilitate input 
from consumers, from industry, and other interested parties for 
improvements and clarifications. At this point, I would like to 
enter into the record letters from the National Association of 
Regulatory Utility Commissioners, as well as a coalition of 
telephone trade associations.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Markey. The draft bill contains three sections. The 
first section seeks to create a policy framework for wireless 
services by providing for essential consumer protection rules 
at the national level, as well as by establishing an effective 
role for states in supplementing Federal Communications 
Commission enforcement efforts.
    The first section addresses wireless early termination 
penalties, wireless plan and contract disclosures, so-called 
truth-in-billing rules, and service quality reporting. It tasks 
the FCC with promulgating these rules to reflect a nationwide 
wireless marketplace, consistent consumer protection rules, and 
the bill preempts the states except in limited circumstances 
from creating their own differing rules for such issues. The 
draft bill also specifically authorizes states to enforce the 
national rules, which I believe is indispensable for purposes 
of ensuring meaningful consumer protection.
    The second bill, the second section of the bill clarifies 
that municipalities have the freedom to provide 
telecommunications services to their citizens. It reflects 
legislation introduced in this Congress by our colleagues Mr. 
Boucher and Mr. Upton and I commend them for their efforts. If 
a particular community is unhappy with the wireless broadband 
cable or phone services offered in its area, it should possess 
the clear freedom under the law to take action on its own to 
deploy and offer such services. The idea of municipal 
empowerment for broadband and other services is built upon 
provisions that are to make more with respect to municipal 
cable systems as part of the 1992 Cable Act.
    I believe that we should establish a national policy for 
wireless consumer protection and state enforcement in this 
draft. It is simultaneously important to establish that 
municipalities can take action to offer wireless service on 
their own or any other communications service for that matter. 
The final section of the bill seeks to make the government more 
efficient in its spectrum use and requires the National 
Telecommunications and Information Administration in the 
Department of Commerce to conduct a full assessment of 
government use of the spectrum. As part of this assessment, the 
NTIA is instructed to not only identify frequencies that may be 
made available to reallocate from the government to the FCC for 
subsequent use, but also to identify frequencies and government 
bands that could be made available for sharing with non-
governmental users.
    I look forward to working with the subcommittee ranking 
member, Mr. Stearns, and with Mr. Barton and of course Mr. 
Dingell, Mr. Boucher, Mr. Upton, and other colleagues who are 
interested in this legislation, and I also want to thank our 
expert panel for being here today. My time has expired. I am 
going to turn now and recognize the gentleman from Florida, the 
ranking member of the committee, Mr. Stearns.
    [The Bill follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

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

    Mr. Stearns. Good morning, and thank you, Mr. Chairman, for 
recognizing with your draft legislation the need to ensure a 
national regulatory framework for wireless. The industry's 
tremendous success is a direct result of the decision of 
Congress in 1993 to preempt state and local regulation of 
wireless rates and entry. Towards that end, Mr. Chairman, I ask 
unanimous consent to submit for the record the following letter 
from the U.S. Telecom Association and other telecom 
associations who wrote to me expressing their specific concerns 
with Title II of the draft legislation.
    Mr. Markey. Without objection, it will be included in the 
record.
    [The information follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Stearns. Thank you, Mr. Chairman. In 1993 the number of 
wireless subscribers was 11 million. Now it is 250 million. In 
1993 the average local monthly bill was $96.58. Adjusted for 
inflation now it is below $50. In 1993 the cost per minute was 
44 cents. Now it is 4 cents. And the average minutes of use has 
grown from 121 to 746, the most of any country. Today 98 
percent of Americans live in counties with 3 or more wireless 
providers. Ninety-four percent live in areas with 4 or more, 
and 59 percent live in areas with 5 or more. There are more 
than 150 wireless providers in the United States, ranging from 
nationwide to regional and local providers.
    Americans have a choice of over 600 handsets. They also 
have a growing array of options when it comes to plans, 
including single line, family, and prepaid hybrid plans. States 
can still regulate terms and conditions. However, despite all 
this competition a number had begun imposing a requirement 
governing what type of plan carriers can offer, the fees that 
they can charge, what type of service maps must be available, 
and the size of the font that must appear on each bill. 
Wireless carriers are quickly facing a patchwork of disparate 
regulations that will raise costs for consumers, hinder 
investments, and ultimately slow innovation.
    This state regulation is not only unnecessary, but also 
harmful given the level of competition that exists today in the 
market. While I think that the chairman's draft legislation has 
the right idea by creating nationwide consumer protection 
standards, and clearing the way for the wireless industry to 
continue on its current, vibrant trajectory, I am concerned 
that it replaces cumbersome state regulation with overly 
prescriptive regulation on the Federal level. The current draft 
also does not have workable preemption and enforcement 
provisions that would end once and for all a 50-state patchwork 
of different regulations.
    Our best approach would be to create moderate Federal 
guidelines that ensure carriers can cater their service to 
differing consumer needs while ensuring that consumers are well 
informed of all their options so they can find the best package 
that suits them and that they like. I look forward to working 
together with the chairman to chart such a course. I am also 
pleased that the chairman included in the draft a requirement 
that the NTIA develop a plan to make government users of 
spectrum more efficient and to identify the availability of 
spectrum that can be shared or reallocated for commercial use.
    This is an important first step to secure the additional 
spectrum that will be needed to fuel the next generation of 
advanced services. I am concerned with the inclusion of the 
``Community Broadband Empowerment Act'' which is in the draft. 
As local governments have learned the hard way through problems 
in Philadelphia; San Francisco; Chicago; Houston; Tempe, 
Arizona; Toledo; Marietta, Georgia; and Portland, Oregon, 
municipalities are poorly equipped to run ongoing viable 
broadband businesses. The ability of them to fund their program 
with tax revenues also makes them less vigilant in managing the 
costs, and as unfair, frankly, the private businesses are 
trying to do this and trying to compete with them.
    I would hope that we would at least limit these networks to 
areas where there are no current providers of service and where 
private industry is given the first right of refusal to serve 
that area to bring in competition, the free market, and 
ultimately choice to the consumer. With that, Mr. Chairman, I 
yield back.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Pittsburgh, Mr. Doyle.

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

    Mr. Doyle. Thank you, Mr. Chairman. Mr. Chairman, I tried 
to call you last night after the debate, but I couldn't get a 
hold of you, but I did get to speak to this really nice lady 
who told me if I wanted to page this person press 2 or that I 
could leave a message after the tone and after I finished that, 
I could hang up or I could press 5 for more options. Eddie, I 
got to tell you in the 50 years I have been using telephones, I 
really appreciate getting instructions on how to use a voice 
mail. And besides, I have got so many minutes on my phone, I 
don't mind using 3 of them to leave you a message, but I 
digress.
    I just want to say I really appreciate everyone being here 
today. Let me say I support the goal of today's draft bill. The 
reality is wireless is a national product. I get to carry one 
device. I get one phone number almost anywhere I go in the 
world. I grew up in a world where that stuff was right out of 
the Jetsons or Star Trek. To have it be real and to have it be 
an integral part of our life, I think is incredible. And those 
facts lead me to support the carriers' call for state 
preemption, but if we are going to replace state control, then 
I believe we have to create a national framework for consumer 
protection.
    I am sure some will wonder why we just don't preempt states 
rights and completely let the market and the carriers and the 
consumers do their things. I believe markets depend on 
information, accurate information, like the bill calls for 
carriers to provide consumers. I want to make sure consumers 
have the information they need to make an informed decision, 
that they know their options and that they know who to go to if 
they need help. One consumer posted a video where he called a 
carrier and spoke to 56 different representatives with 
questions about a data plan. From those 56 people, he received 
22 incorrect answers. Only one sales agent got the answer 
right, and 93 percent of them quoted the guy inaccurate 
information.
    I would hate to sign up for a 2-year contract thinking I 
was liable for 2 cents a megabyte, the quoted price, when I was 
really liable for $2.00 a megabyte while surfing the web on my 
phone. Some carriers have rolled out contracts with early 
termination fees that decrease over time getting ahead of the 
mandates in this draft bill. I applaud that smart pro-consumer 
move. Even better, other carriers have announced intentions to 
follow suit, but several of those who announced months ago that 
they were going to roll out prorated early termination fees 
still haven't. Interestingly enough, one of those carrier's 
sales agents provided mystery shoppers with inaccurate 
information \2/3\ of the time during a dozen inquiries 
according to Corey Boles at Dow Jones. Now even if those are 
fixed, and the bill goes a long way to doing that, there are 
always going to be consumers who complain that their service 
doesn't work well in a new home or a new neighborhood, and they 
can't switch because they are locked in for 2 years.
    I don't think that the carriers are actively trying to take 
advantage of their consumers, but there does need to be a way 
to effectively handle disputes and complaints. I say all this 
today because if they are going to preempt bills on these 
issues that are pending in states across the country, including 
bills that are pending in the Pennsylvania State Senate, then I 
believe we are going to have to come up with an alternative. 
So, Mr. Chairman, thank you and thank everyone for coming to 
the table. I hope we can hammer out a deal soon. I think that 
what you put down is a great first step towards creating a true 
win-win for consumers and for carriers, and I yield back.
    Mr. Markey. I thank the gentleman. The chair recognizes the 
gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. I think I will 
reserve my time for questions.
    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, and good morning to 
our witnesses. When he arrived this morning, Mr. Doyle 
preempted my seat, but now that I have heard his remarks, I 
support his preemption. My point is content matters. The 
content of the concept of preemption, as he said, is fine, but 
as a Californian whose state leads the nation at all times in 
regulation of light bulbs and the environment and consumer 
protection, preemption must offer something better than the 
regulations of my state. Last summer only hours after attending 
a telecom subcommittee hearing on the future of the wireless 
market, my brand new Blackberry abruptly stopped transmitting.
    After 2 weeks of tech support phone calls, two non-
functional Blackberry replacements, and a lot of frustration, 
my wireless carrier finally resolved the problem. Many wireless 
consumers are not so lucky. They do not have the support of the 
House telecom staff, and more importantly, they do not have my 
talent for striking fear into the hearts of customer service 
reps everywhere. Just ask my children. I am encouraged that 
many wireless carriers are already implementing some of the 
consumer protection measures in this draft bill, but millions 
of phone toting Americans still anguish at the prospect of 
resolving disputes with carriers and even understanding the 
terms and conditions of their wireless service.
    A national regulatory framework can work in consumers' 
favor provided it balances state preemption with strong 
consumer rights and protections. Measures that States like 
California now have on the books, such as the 30-day buyer's 
remorse period, should be a floor and not a ceiling for 
national regulation. States also are now playing a critical 
role in enforcement, and in 2006 California added 20 full-time 
staff to its Public Utility Commission's complaint bureau and 
established a 9-person telecom fraud unit. Effective 
enforcement must not be a casualty of national regulation. I 
look forward to working with Chairman Markey and Chairman 
Dingell to achieve bipartisan consensus on this bill. Some 
tough issues remain, as has been said, but it behooves us in 
the great tradition of this committee to work together to 
resolve them. I yield back.
    Mr. Markey. The gentlelady's time has expired. The chair 
recognizes the gentleman from Texas, Mr. Gonzalez.
    Mr. Gonzalez. Waive opening.
    Mr. Markey. The chair recognizes the gentlelady from 
California, Ms. Solis.

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

    Ms. Solis. Thank you, Mr. Chairman, and good morning. I 
would like to thank you and Ranking Member Upton for having 
this hearing today. And I would also think that this is a very 
important step toward consumer protection for wireless 
customers and in districts like mine where access is a very 
important word and something that sometimes we may forget here 
in the Capitol, but there are a lot of folks out there that 
rely very heavily especially in a community like mine where 
wireless service is very important to the Latino community. In 
fact, according to a recent poll report by the PEW Hispanic 
Center, a survey that they issued, 59 percent of all Latino 
adults in the U.S. considered the cell phone a necessity. They 
tend to have more cell phones than they do regular land lines 
in their homes.
    So it is rather a necessity than a luxury for many of those 
people that we represent. And while there is significant 
competition in the wireless marketplace, we must continue to 
monitor the need for increased consumer protection. Consumers 
are still sometimes confused about the billing practices, and I 
can say that in all honesty because I know we have dealt with 
that in my own household, reading the fine print and 
understanding what these contracts mean and in many cases 
having to pay additional costs for trying to change your 
server.
    I am interested in the title of the bill that we will be 
discussing that would allow municipal broadband networks around 
the country to be also involved. There is room for improvement 
there, and in California a prohibition on municipal broadband 
services was included in our statewide video franchising law 
that was enacted in 2006. I am interested to learn more about 
the municipal broadband options the draft bill would provide, 
since municipal broadband could provide a backstop to ensure 
that all our consumers have access. And I am also encouraged by 
the recent news that many of the major wireless carriers are 
prorating their early termination fees, which I think is a good 
step in the right direction, but we need to see more there. So 
I am looking forward to hearing from our witnesses and look 
forward to hearing from all of you. Thank you. I yield back.
    Mr. Markey. The gentlelady's time has expired. The chair 
recognizes the gentleman from Michigan.

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

    Mr. Upton. I thank the Chairman. I would have been on time 
as well, but I saw you on a different channel in my office, and 
I saw Mr. Stearns as well. I appreciate you having this hearing 
today on the Wireless Consumer Protection and Community 
Broadband Empowerment Act of '08. It should be noted that you 
have included in the draft legislation that I helped co-sponsor 
with Mr. Boucher on municipal broadband services. The U.S. 
wireless industry is the embodiment of competition. We have 
four national competitors, several large regional providers and 
nearly 150 terrestrial mobile providers in all.
    More than 95 percent of the U.S. population lives in areas 
with at least 3 mobile providers and more than half of the 
population lives in an area with at least 5 competing 
providers. These choices provide tremendous opportunities for 
consumers, and according to the FCC, U.S. consumers continue to 
reap significant benefits, including low prices, new 
technologies, improved service quality, and choice among 
providers from competition in the commercial mobile radio 
services marketplace. The FCC has recognized that service 
quality in particular has significantly improved. The average 
monthly bill has dropped dramatically from 1997, when it was 
almost $100; the average bill for AT&T now is less than $40 a 
month.
    To me, these declining rates, growing numbers of customers 
in a competitive marketplace resulting in new products and new 
services, suggest that there is no market failure requiring any 
new significant regulatory requirements. In this context of 
competition and innovation, including broadband services at low 
prices and with increasing better service quality, this 
subcommittee needs to ask whether the draft legislation before 
us is appropriate. I think there is plenty of room for 
improvement. I would certainly support preempting state 
regulation of wireless services. These services are 
increasingly interstate in nature, and consumers would not 
benefit from a patchwork of state regulations.
    However, the draft does not preempt state regulation, and 
any such regulation that is consistent with Federal regulations 
promulgated pursuant to this bill would be permitted. In 
addition, the bill goes too far, I think, in terms of requiring 
the FCC to micromanage the relationships between wireless 
carriers and their consumers. Competition has spurred wireless 
carriers to address the issues that would be the subject of FCC 
regulation under the bill. CTIA's consumer code covers most, if 
not all, of these issues, and the major carriers and many 
smaller ones are signatories of that very same code. We should 
let competition continue to increase innovation, lower prices, 
and enhance service quality.
    Finally, I would simply like to take particular note of the 
draft bill's second congressional finding that wireless service 
has become a replacement for traditional telephone service for 
millions of consumers in the U.S. This finding captures a 
significant change of circumstances that demonstrates how 
profoundly things have changed. With 250 million subscribers 
and a congressional finding that wireless has become a 
replacement for this service, I would say that the transition 
has long been complete. Let us tread very carefully as we look 
to the future. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Washington State, Mr. Inslee.

   OPENING STATEMENT OF HON. JAY INSLEE, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF WASHINGTON

    Mr. Inslee. Thank you. I look forward to working on this. 
Mr. Boucher and I and Ms. Blackburn a couple years ago were 
working--took a stab at this and couldn't get the thing through 
due to germaneness, so I am glad we are back here to work on 
it. I think that a national standard is probably--you can't 
think of a more appropriate place than a totally interstate 
commerce industry like this one, and I hope that we can come up 
with the national standard with strong consumer rules and 
strong enforcement. And I think this legislative package is a 
good place to start and look forward to working with you. Thank 
you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from California, Mr. Radanovich.

 OPENING STATEMENT OF HON. GEORGE RADANOVICH, A REPRESENTATIVE 
            IN CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Radanovich. Thank you, Mr. Chairman. I appreciate this 
hearing, and I do have a statement to read. If it takes too 
long, I will submit the rest for the record. But I did want to 
state the appreciation for the hearing but also mention that 
competition in the marketplace is what we should be constantly 
striving for to achieve, be it in telecommunications or in any 
other industry, because it is always far superior at meeting 
consumer needs than government regulation. Choice created 
through competition drives innovation. It lowers prices, 
increases quality of services, and makes things better for 
consumers. Competition helps consumers gain control of the 
marketplace and tailor products and services to their 
individual wants and needs.
    Nowhere are these benefits of competition more apparent 
than in the area of wireless communications. Cell phones and 
wireless e-mails and text have become a nearly ubiquitous 
component of our everyday lives. The wireless communication can 
do much more than that. As the representative for a fairly 
rural district, we have our share of communications 
difficulties. The digital divide is something that many of my 
areas have struggled to deal with while access to quick, 
reliable Internet service is almost a necessity to be 
successful in today's world. I believe that wireless broadband 
can be a real solution for areas like much of my district that 
are less populated to provide services if we continue to allow 
the industry to develop free of unnecessary and burdensome 
regulation.
    I want to see providers investing in delivery of broadband 
to rural areas, not dedicating resources to complying with 
potentially 50 different sets of rules. When Congress preempted 
the states on rates and entry it was a good start. We could all 
see how the industry has flourished with that national 
standard, but now it is time to finish the job and establish 
one national standard framework for regulation that recognizes 
the undeniably interstate nature of the industry. The current 
threat of state-by-state regulation is harmful to consumers. It 
prevents them from fully benefiting from the cost savings that 
should be realized from the efficiencies of national frameworks 
and marketing, customer care operations, and other back office 
support for one of those services.
    I believe we need one set of uniform rules that apply 
equally to all American consumers in at least the wireless 
industry from the disparate regulatory burdens, then we will 
really see how much our constituents can benefit from a 
competitive industry and a free marketplace. I commend the 
chairman for putting out this draft bill. It is a true 
acknowledgement of the need for a national framework. However, 
I am concerned that the national framework created by this 
draft does not go far enough to achieve that goal. I believe we 
need a simple standard that clearly establishes Federal 
authority in the area of wireless consumer protection, terms 
and conditions, and in order to be successful this framework 
must serve both as a floor and a ceiling, because to only 
create a baseline but allow the imposition of 50 different 
levels of onerous regulation even if they are technically 
consistent with the statutes will defeat the very purpose 
behind establishing a national standard.
    I think we have a good start before us, but there is still 
work to be done. I look forward to working with my colleagues 
on both sides of the aisle to achieve the result that is best 
for the wireless consumers. Thank you, sir, for the hearing.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Michigan, Mr. Stupak.
    Mr. Stupak. Mr. Chairman, I will waive and ask for extra 
time at questions.
    Mr. Markey. The chair recognizes the gentleman from 
Virginia, Mr. Boucher, whose legislation along with Mr. Upton's 
is included in our draft legislation, and I mentioned that in 
my opening statement. I now recognize the gentleman from 
Virginia, Mr. Boucher.
    Mr. Boucher. Thank you very much, Mr. Chairman. I would 
like to reserve my time.
    Mr. Markey. The gentleman's time is reserved. The chair 
recognizes the gentleman from Texas, Mr. Green.
    Mr. Green. Thank you, Mr. Chairman. I will ask that my full 
statement be placed in the record, but I want to thank you for 
the hearing today, and I appreciate your effort on this bill, 
and the legislation is a work in progress. I am looking forward 
to seeing how we can even improve it even better, but I am glad 
you started, you laid down this mark for us, and with that I 
will yield back my time.
    Mr. Markey. The gentleman's time will be reserved, and we 
now turn to our opening panel, and that is a very, very 
distinguished panel indeed, and we thank each of you for being 
here. The first witness is Mr. Joey Durel, Jr. He is the 
President of the Lafayette, Louisiana City Parish, and he is 
testifying on behalf of the American Public Power Association. 
Under his leadership, Lafayette has successfully deployed 
municipal broadband facilities. We welcome you sir. Whenever 
you are ready, you have 5 minutes to make an opening statement.

 STATEMENT OF JOEY DUREL, JR., CITY-PARISH PRESIDENT, CITY OF 
                      LAFAYETTE, LOUISIANA

    Mr. Durel. Thank you. Good morning, Chairman Markey, 
Ranking Member Stearns, and members of the Telecommunications 
Subcommittee. My name is Joey Durel, and I am the City-Parish 
President of Lafayette, Louisiana. I am testifying today on 
behalf of the American Public Power Association, of which 
Lafayette is a member, and I am also the current Vice-Chairman 
of APPA's Policy Council. The American Public Power Association 
is a nationwide service organization representing the interests 
of the nation's more than 2,000 state and community-owned 
electric utilities that collectively serve over 44 million 
Americans.
    And I am going to tell you a little bit about Lafayette's 
story and what we did. I ran for office for the first time in 
2003 and was elected at the end of 2003, and took office in 
2004, January. And when people ask me why, as I am sure many of 
you heard at some time in your political career, why in the 
world would you do this, why would you do this to your family, 
the first answer that came out of my mouth was I want my kids 
to stay home. We have migration in Louisiana of our greatest 
export, which of course is our kids. We educate them well for 
many of you, send them to your states. And one of the things 
that I said was we have to get out of the box.
    I hear politicians talk, that was one of my frustrations, I 
have heard politicians talk in Louisiana for a long time about 
getting things done, and they never did anything to correct 
this issue that I saw. And what I learned as we went through 
our little journey is that the reason people stay in the box is 
because getting out of the box can make many people very 
uncomfortable. One of the things that we were able to do in 
our--and, by the way, let me stress real quick. I know I heard 
a lot about wireless. What we are doing is fiber optics. We are 
deploying fiber optics throughout our community to our 120, 125 
residents and businesses. And one of the first things I was 
able to do, because I don't see this as a partisan issue, is we 
were able to get the Democratic party in Lafayette and the 
Republican party in Lafayette to stand hand in hand for 
something that they saw as being important to the citizens, and 
so that was--and, by the way, my going on there--I was the 
Republican mayor of Lafayette, so naturally the Democratic 
party would have been against it normally, and the Republicans 
would have been against it because of various mantra that we 
hear all the time.
    And Lafayette is also the ninth most conservative city in 
America according to a study at Berkeley. All the past 
presidents of our Chamber of Commerce----
    Mr. Markey. For Berkeley to pick you out, that is quite an 
honor.
    Mr. Durel. That is why I stressed that. All the past 
presidents of the Lafayette Chamber of Commerce of which I was 
a member, a past president, endorsed the project. Every single 
business organization in Lafayette endorsed the project, and 
ultimately we took it to a vote of the people, and we got a 62 
to 38 percent vote of that very conservative community in favor 
of it. One of the things that we did a little bit to sell the 
project was that we were going to provide much better service 
for 20 percent or so cheaper than what they could get. But that 
wasn't the motive for me. It was economic development. It was 
getting out of the box to try to keep our young people home.
    We are going to have something, and I think this is a 
strong statement, but we are going to have--you are not going 
to have in Washington 20, 25 years from now, in fact, probably 
90 percent of America won't have 20 or 25 years, and I think 
that is a sin for America. And the reason--and when I say that 
what I am stressing is not just the fiber optics, but we are 
going to have something initially that I hope some others will 
have in the not too distant future, but we hear a lot about 
megabits per second, and one of the things you hear is 1 
megabits per second. When we start ours up at the end of this 
year, and we are in the wholesale business right now so we have 
been doing this for a few years, but we are getting the retail 
television, telephone and Internet business, we are going to be 
able to provide our citizens peer-to-peer, customer-to-
customer, 100 megabits per second for free.
    We are currently sending a gigabyte, 1,000 megabits per 
second, to our school board, and 100 megabits to every school 
in Lafayette Parish. Since we started talking about it, we have 
a company from Canada called Newcom that is coming to Lafayette 
and providing 100 jobs. It is a technology kind of company, and 
I asked the owner, I said we don't even have it yet, why are 
you here? He said just the fact that you all are making 
technology such a priority is what drove us here from among 200 
cities that we were competing with around the world. The 
digital divide, I heard somebody mention the digital divide. We 
think we will be the first community in America to solve that 
issue. People that are on our system will be able to surf the 
Internet from their televisions with a wireless keypad and a 
wireless mouse.
    I am going to say this anyway even though I debated, and 
this is very tongue in cheek, but I hope 49 states outlaw doing 
what we are doing, and I say that in a way to make a point, 
because what I would tell those states is please send your 
technology companies to Lafayette, Louisiana, where we will 
welcome them with open arms and a gumbo. But the point is I 
think we have an opportunity in America just like we did in the 
1890s with electricity. We were told in 1896 or so that the 
private companies couldn't justify bringing the electricity to 
our little town, and so our message to our citizens over the 
last 3 or 4 years was a really good message and a really easy 
message, because we told them if we don't do it, we are not 
going to get it.
    And I want you to know I begged, I begged the private 
companies to do it so we wouldn't have to. I begged them in my 
office. I begged them publicly. I begged them to do it, because 
why would we want to do something like this? It turns out what 
we have is an opportunity to do something where a town in south 
Louisiana is leading America in something that we hope the rest 
of America will follow one day. So hopefully what you will do 
with this bill as it relates to what we are doing is remove any 
impediments from municipalities, even what I have heard talked 
about today is competition, because that is what has made 
America great. Thank you very much.
    [The prepared statement of Mr. Durel follows:]

                      Statement of Joey Durel, Jr.

    Good morning Chairman Markey, Ranking Member Stearns and 
members of the Telecommunications Subcommittee. My name is Joey 
Durel and I am the City-Parish President of Lafayette, 
Louisiana. I am testifying today on behalf of the American 
Public Power Association, of which Lafayette is a member. I am 
also the current Vice-Chairman of APPA's Policy Makers Council.
    The American Public Power Association (APPA) is the 
national service organization representing the interests of the 
nation's more than 2,000 state and community-owned electric 
utilities that collectively serve over 44 million Americans. 
These utilities include state public power agencies, municipal 
electric utilities, and special utility districts that provide 
electricity and other services to some of the nation's largest 
cities such as Los Angeles, Seattle, San Antonio, and 
Jacksonville, as well as some of its smallest towns. The vast 
majority of these public power systems serve small and medium-
sized communities, in 49 states, all but Hawaii. In fact, 75 
percent of publicly-owned electric utilities are located in 
communities with populations of 10,000 people or less.
    Many of these public power systems were established largely 
due to the failure of private utilities to provide electricity 
to smaller communities, which were then viewed as unprofitable. 
In these cases, communities formed public power systems to do 
for themselves what they viewed to be of vital importance to 
their quality of life and economic prosperity.
    This same development is occurring today in the area of 
advanced communications services just as it did in electricity 
over 100 years ago. Public power systems in some areas are 
meeting the new demands of their communities by providing 
broadband services where such services are unavailable, 
inadequate, or too expensive. These services, provided with 
high quality and at affordable prices, are crucial to the 
economic success of communities across the nation.
    Thus, Mr. Chairman, my testimony today will focus 
exclusively on Title II of the discussion draft regarding 
community broadband empowerment. APPA has not adopted policy 
positions on the subjects addressed in Titles I and III of the 
draft.
    Specifically, I am here today, to explain how Lafayette, 
Louisiana undertook its own efforts to provide reliable and 
affordable broadband services to its citizens. You've heard 
similar testimony before. Last October, Wes Rosenbalm of 
Bristol, Virginia, another APPA member, testified at your 
hearing on the Future of Telecommunications Competition 
regarding Bristol's successful deployment of a system that is 
benefiting their community. Bristol is a good example of what a 
successfully deployed system can bring to its region. Lafayette 
is another example of the hard fought road many communities 
have to take to be allowed to provide that service.
    Lafayette, Louisiana's story began in 1999 when our utility 
system, Lafayette Utilities System (LUS) needed to upgrade the 
communications to its electrical substations. After some 
research and with the urging of our Chamber of Commerce, it was 
decided that Fiber Optics would be the choice that gave 
Lafayette the best infrastructure for the future. Once in 
place, we had a 65 mile fiber loop installed around our city. 
This gave LUS the opportunity to provide wholesale broadband 
services to larger businesses in our area. So, when I took 
office in January of 2004, LUS was already successful in 
providing these wholesale services.
    But, we knew we could do more. One of my first acts in 
office was to authorize a feasibility study on taking the 
concept to the next level of public discussion. Having come 
from the private sector, my first thought was why we would want 
to compete with something the private sector was doing. 
However, as I educated myself, my thought was ``shame on us if 
we don't at least look into this.'' I told my staff that we 
would move forward until we ran into a hurdle we couldn't jump 
over. The feasibility study was made public around March of 
that year, the public discussions began and the hurdles began 
sprouting up; but none that stopped us. I was visited by our 
cable and phone companies. I asked, in fact begged them to do 
it so we wouldn't have to. But we received the same answer 
Lafayette received in 1896 when the private utility companies 
chose not to install that new infrastructure called 
electricity. ``It makes no sense in an area the size of 
Lafayette.'' We started informing our community and council. 
And they started misinforming. Ultimately, the message to our 
community was that if we didn't do it, we were not going to get 
it, just like in 1896.
    With America falling so quickly behind the rest of the 
world, we could either lead or we could wait for others to tell 
us when it was convenient for them. Lafayette chose to lead 
with a 62% to 38% vote of our citizens. We were dragged through 
court and ultimately ended up winning a unanimous decision at 
the Louisiana Supreme Court. This delayed us two years, and 
don't forget our citizens had voted overwhelmingly for it!
    When people ask me how we did it, my simple answer is that 
we told the truth. You see, what I learned was that we in local 
government are held to a different standard than the telecom 
giants. We have to tell the truth. Fortunately for Lafayette 
our citizens saw through good old boy tactics that don't work 
like they used to. Our citizens were much smarter than they 
were given credit for, and today, we are installing our fiber 
to the premise infrastructure and will begin serving our 
community by January of 2009. And, while we're at it, we are 
putting up wireless antennas for our emergency services, and we 
will eventually open it up to our citizens. Because they are 
all connected to our fiber, the consultants tell us we will 
have the most robust wireless system in America.
    And we will have things that no one else in America has, 
and in fact I would say that 80% to 90% of America won't have 
some of what we will have 25 years from now. That is unless we 
can remove these barriers to entry to prevent what we are 
doing. Our customers, when communicating with each other, will 
get not 1 or 2 mbps, but we will open up the pipe to them, and 
they will have 100 mbps at their disposal. Actually, I often 
say with tongue firmly planted in cheek that I hope that the 
other 49 states do outlaw what we are doing. Then I will ask 
them to send their technology companies to Lafayette, where we 
will welcome them with open arms and a big pot of gumbo.
    The language included in Title II of the discussion draft 
provides all communities the ability to provide these services, 
as we have in Lafayette, if they so desire. This language is 
virtually identical to H.R. 3281, the Community Broadband Act, 
introduced by Representatives Rick Boucher (D-VA) and Fred 
Upton (R-MI). It provides safeguards from potential conflicts, 
it requires public input on top of an already very open process 
of municipal government. This same language was vetted through 
both chambers back in the 109th Congress and was included in 
part of the large telecommunications package that passed the 
full House of Representatives and passed out of Senate Commerce 
Committee. Already this year, identical standalone language, S. 
1853 sponsored by Senators Frank Lautenberg (D-NJ) and Gordon 
Smith (R-OR), was passed by voice vote out of the Senate 
Commerce Committee.
    On behalf of APPA and my community of Lafayette, we urge 
the subcommittee to mark up and approve the provisions of Title 
II of the discussion draft as soon as possible.
    Thank you for allowing me to be here today. I look forward 
to your questions.
                              ----------                              

    Mr. Markey. Thank you, Mr. Durel. And I can tell you 
honestly that it was greatly upsetting to us when the rankings 
came out and we in Boston were number 2 to Berkeley on the list 
of most liberal communities. But on this question of 
competition, I am in violent agreement with Lafayette in terms 
of the need to put aside ideology to work on the issue of 
ensuring that we have the maximum broadband deployment. Let us 
now turn to one of our most distinguished, one of our greatest 
alumni from this committee, Steve Largent, who is the President 
and Chief Executive of CTIA, The Wireless Association. He is a 
former member of this committee and a frequent visitor. We 
welcome you back, Steve.

     STATEMENT OF STEVE LARGENT, PRESIDENT AND CEO, CTIA, 
                        WASHINGTON, D.C.

    Mr. Largent. Thank you, Chairman Markey. It is a pleasure 
to be here. I can't tell you how thrilled I am to be testifying 
before this subcommittee today. We have been working for a long 
time to get legislation introduced like you have here before us 
today. That doesn't mean to say that we think it is perfect. We 
think we can make some improvements on along the process, but 
we are thrilled that you have introduced this legislation and 
thrilled to be here today and want to thank you and your staff 
for the hard work that they have done to get this before this 
subcommittee.
    I want to say that the wireless industry continues to be 
one of the great consumer and economic success stories of the 
21st Century. It is happening in large part because in 1993 
this subcommittee gave the industry a green light in the form 
of the current national framework for entry and rate 
regulation. As a result, we have both regional and national 
competitors offering service with national regulation on rates 
and entry designed to ensure that a company's fortunes rise and 
fall based on one thing, whether it satisfies customers. But 
this success is now threatened because some states are 
exploiting the other terms and conditions clause of the Act to 
override national rules with rules of their own.
    If they are successful the result will be a patchwork of 
conflicting state-by-state regulations, and consumers are going 
to be left holding the bag. You simply can't regulate wireless 
in one state and have the effect of those regulations suddenly 
stop at the border of the next state. I can't emphasize this 
enough, inconsistent regulation by even a few states threatens 
the pro-consumer benefits that emerge once wireless stopped 
being local and started being national. The efforts of a few 
should not threaten a system that works so well for the many. 
Unless the subcommittee acts to protect the regime you set up 
in 1993, wireless companies will soon have to spend less time 
serving consumers and more time keeping up with the latest 
changes to multiple sets of rules, and we fail to see how that 
really helps consumers.
    Congress can put a stop to this by closing the other terms 
and conditions loophole and finishing what you started by 
extending the current national framework to consumer protection 
standards. In a relatively short time, wireless has gone from 
novelty to necessity. Americans pay less for service than 
consumers in other countries do, and as prices have fallen they 
talk more. CTIA member companies have come to serve more than 
250 million customers, carry more than 1 trillion minutes of 
traffic a year, and support more than 600 different kinds of 
wireless devices doing things that were to previous generations 
science fiction.
    The economic impact of all this is just as amazing. Since 
1993, wireless companies have invested more than a quarter of a 
trillion dollars in infrastructure and spectrum and created 
more than 4 million U.S. jobs, with an additional 2 million to 
3 million jobs and $450 billion in gross domestic product 
forecasted for the next decade, and we have achieved all of 
this despite the fact that the U.S. allocates far less spectrum 
per wireless user than our main economic competitors, even 
after the completion of the 700 megahertz auction.
    CTIA applauds the provisions in the staff draft that would 
move us towards additional allocations of spectrum for 
commercial usage. Consumers have done so well because Federal 
regulation promoted this kind of vigorous national competition. 
If one of CTIA's members doesn't satisfy the customers, their 
competitors will, so our members work very hard to give their 
customers what they want. In 2003, we introduced a 10-point, 
CTIA consumer code for wireless service to ensure fair 
marketing and transparent billing. We protect our customers' 
privacy by prosecuting pretexters and identity thieves. We 
secured injunctions against text message spammers. We have gone 
after telemarketers who mask their identities using spoofing. 
We created a national recycling program that keeps old phones 
and technology out of landfills and gives them to charity 
groups for distribution.
    We have launched a nationwide wireless Amber Alert program 
to help keep America's children safe. But we haven't stopped 
there. For example, many of CTIA's member companies have 
adopted extended trial periods upon hearing from consumers that 
this is important to them. Several carriers have also decided 
to prorate early termination fees, again in response to 
learning that consumers value this. And just last week multiple 
carriers announced flat rate all-you-can-talk plans. When 
consumers make a demand, wireless companies have no choice but 
to say OK.
    Wireless carriers live in a ``what have you done for me 
lately'' sort of world, and the companies that thrive 
understand that. Americans have come to rely on wireless phones 
first as safety devices, then for convenience, and now as an 
integral part of daily life. The system you created makes that 
possible, and it works very well. On behalf of wireless 
carriers serving all American consumers, we ask you to keep it 
working by closing the other terms and conditions loophole and 
to extend the national framework to consumer protection 
standards. I thank you, Mr. Chairman, and look forward to your 
questions.
    [The prepared statement of Mr. Largent follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Markey. Thank you, Steve, very much. Our members will 
have to go over and cast a vote on the House floor. There is 6 
minutes left to go on that roll call, so we will recess for 
about 15 minutes, and when we come back, Dr. Darby, we will 
recognize you.
    [Recess.]
    Mr. Markey. We thank you all for your patience. The hearing 
is ready to recommence, and we will just wait another 10 
seconds so that people can regain their seats. And at this 
point I will introduce our third witness, Dr. Larry Darby, who 
is a board member and Fellow of the American Consumer Institute 
of Consumer Research. He is also the former chief of the FCC's 
Common Carrier Bureau. Welcome, Dr. Darby. Whenever you are 
ready, please begin.

   STATEMENT OF LARRY F. DARBY, PH.D., THE AMERICAN CONSUMER 
                  INSTITUTE, WASHINGTON, D.C.

    Mr. Darby. Good morning, Chairman Markey and Ranking Member 
Stearns. I really appreciate the opportunity to come and share 
my views on this important bill. I should say just a little bit 
about the institute. We are a new 501(c)(3) non-profit, 
nonpartisan group. We were started in 2005, and our basic goal 
is to promote careful consumer welfare analysis applied to 
legislative and regulatory proposals, of which this qualifies. 
The staff discussion draft has enormous implications for 
consumers as users, as taxpayers, and as citizen stakeholders 
in the information economy. I don't have much time. I am going 
to go fast. I will have to address selectively. I am going to 
talk about 5 points.
    First, we urge that all proposed regulations, this 
included, be subjected to a rigorous consumer welfare analysis 
of the costs and benefits. Our experience is that such tests 
are simple in principal but they are very demanding to apply 
and too often ignored. Good intentions are important, but they 
do not substitute for benefits actually delivered and costs 
avoided. Accurate cost benefit analysis of markets and 
government action are absolutely critical in this instance, 
since the draft opens the door to government action to address 
presumed market imperfection. As others have pointed out, the 
facts of wireless market performance suggest that the current 
mix of regulation and markets is working pretty well. FCC and 
OECD data indicate U.S. consumers compared to those in the rest 
of the world enjoy more choices, more competition, high usage 
rates, low cost. Costs per minute are declining, average use is 
increasing, penetration is high and rising.
    J.D. Powers, the FCC, the Better Business Bureau data 
indicate steadily improving service quality, and importantly 
J.D. Powers reports that consumer satisfaction in the sector is 
at an all-time high. International comparisons are not always 
reliable, but by any reasonable assessment the U.S. wireless 
sector and its regulators have a remarkable success story to 
tell. For certain, and I concede this, performance is not 
perfect, and a lot of consumers register complaints, but the 
current government industry partnership is certainly not 
broken.
    Second, consumer welfare is served by full disclosure of 
terms and conditions associated with commitments by both 
parties and service contracts. We regard this as the central 
premise of the bill, and we support it strongly. Rational 
consumer choice and welfare depend on complete, accurate 
information about their options. Inadequate, imperfect, 
misleading, poor, bad information is a sign of market failure 
and a widely accepted basis for targeted government 
intervention. The CTIA consumer code appears to us to be quite 
responsive to consumer needs and in some ways appears to exceed 
the requirements in the draft.
    The Committee, I think, might usefully compare the staff 
requirements with those in the CTIA code. I point out that 
rivalry in wireless markets will continue to be marked by 
increasing quality of service improvements and service 
differentiation. Customer dissatisfaction that many of you have 
cited is a source of churn and the loss of market share. 
Service rivalry in the sector is very likely to accelerate in 
the future and add some substantial consumer value.
    Third, we commend the draft's intention to, 1, clarify 
consumer protection requirements, and 2, to nationalize fully 
and clearly their definition and enforcement. The national 
framework put in place in 1993 homogenized economic regulation 
of the sector across the country. It has worked well and should 
be credited for the substantial performance gains we enjoyed. 
That jurisdictional framework in our view should be replicated 
as needed to assure adequate consumer protection in this 
environment. Now, we recognize legitimate state interest in 
protecting consumers, but we also note that state regulation 
poses risk. First, well-meaning consumer protection rules we 
are concerned may morph in the direction of full scale rate and 
service regulation of the kind we have avoided for the last 15 
years.
    Second, consumers ultimately pay all the added cost of 
regulation. We should recognize that, and there are many. 
Third, since users are mobile and carriers are interstate in 
nature, we are concerned that the cost of individual state 
regulation will almost certainly leak and burden users 
nationwide and in other parts of the country. We emphasize 
again that economic cost benefit studies that we have seen of 
state and Federal consumer protection provide no consumer 
welfare basis for permitting to emerge a mosaic dappling of 
consumer protection issues or schemes.
    Fourth, we are very concerned that regulators, and this is 
a personal note for me as a former regulator, we are very 
concerned that regulators might find support in Federal 
legislation for rate service or consumer protection regulation 
based on cost of service. The recent history of service 
regulation in the wireline sector and my experience as chief of 
the Common Carrier Bureau is filled with a number of serious 
danger signs and very, very few successes. We have seen no 
credible evidence that cost-based consumer protection rules in 
the wireless sector would create consumer value.
    Finally, we are uneasy about the local government network 
competition with investor-owned operators. I certainly see the 
point of view. We as U.S. advisors have for many years lectured 
other governments on the need to privatize and the dangers of 
private capital formation for tax funded competition. I have 
more, but I thank you again for the opportunity, and I look 
forward to your questions.
    [The prepared statement of Mr. Darby follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Markey. Your time has expired. And now we are going to 
recognize Chris Murray. Mr. Murray is a Senior Counsel at the 
Consumers Union, and he testifies today on behalf of Consumers 
Union, the Consumer Federation of America, Free Press and 
Public Knowledge. Welcome back, Mr. Murray.

  STATEMENT OF CHRIS MURRAY, SENIOR COUNSEL, CONSUMERS UNION, 
                        WASHINGTON, D.C.

    Mr. Murray. Good morning, Mr. Chairman. Good morning, 
Ranking Member Stearns and members of the Committee. I 
appreciate you having me back again. First, I would like to 
thank staff for the hard work on a really excellent draft bill. 
Producing serious legislation in these times is often 
difficult, and I would like to commend staff for doing a good 
job here. We think the bill is a good bill. We don't think it 
is a perfect bill. But I will tell you a little bit this 
morning about what we see in the marketplace, what we like 
about the bill, and what we might like to see in the bill that 
is missing. As I mentioned to the committee before, wireless 
consumers are not as satisfied with wireless services they 
should be.
    Our magazine, Consumer Reports, does a survey of consumers 
every year, and we found that wireless is 18 out of the 20 
industries that we survey, just above computer makers' tech 
support and cable television service, digital cable television 
service. And we would like to see those marks improve. We see 
that U.S. consumers are spending more on wireless than 
consumers in other countries, an average of about $506 per 
year, versus Sweden where they are spending $246 on average per 
year and Germany where they are spending $371. There is a lot 
of happy talk from the industry about permanent pricing, but 
permanent pricing doesn't have much relevance to consumers if 
you are not getting permanent prices. You can't get a plan from 
the wireless companies that has no flat fees in those 7 to 8 
cents per minute fees that they are talking about, so it 
doesn't seem to me that it is a terrifically relevant measure 
of cost here.
    It is what consumers pay on average in the end that 
matters. We see that this is a high fixed cost industry with 
the unlimited plans that a lot of the carriers are unveiling, 
so again we don't know that permanent pricing is really a good 
metric here. We see some of the services that carriers are 
offering are extraordinarily expensive. Skydeck's CEO was 
before this committee and noted that ring tones from the 
carriers note per note are the most expensive form of music in 
history at $2 per 15 second jingle. We see that text messages, 
if you were to put a floppy disk worth of text messages across 
the network on a permanent basis, it would cost you more than 
$2,000 to send that, and it is a very small amount of data.
    Of course, there is a $20 plan that they would like to get 
you into and so again it is these high fixed costs that we see. 
Price aside, we are concerned with some of the competitive 
tactics that we see from the carriers, such as high early 
termination penalties even when consumers are getting those 
subsidies. We understand that there may be a justification for 
some of these early termination penalties if the subsidies are 
there, but it really is a head scratcher to me when a consumer 
buys a phone such as the iPhone. It has got no subsidy attached 
to it, yet they still get locked into that $175, 2-year 
contract. We see handset locking and application blocking, 
where innovation isn't reaching consumers where entrepreneurs 
aren't able to break into the market because they can't sign a 
deal with the big carriers.
    Blackberry, for instance, had an application that they want 
to offer consumers for free, a mapping program, but AT&T had 
one for $10 they wanted to offer consumers, so Blackberry's 
free application never saw the light of day. We see that U.S. 
consumers have fewer choices than European and Asian consumers 
in handset markets, because most of them are being sold through 
the carriers. So again we see some concerns in this 
marketplace, and we are glad to see a bill that is taking on 
the serious task of addressing those concerns. What we like 
about the bill is that it aims at clearer disclosure of the 
terms of cell phone service. It gives you better information on 
coverage maps, on call quality, and importantly, we think, aims 
for more transparency about these early termination penalty 
subsidies.
    If the subsidies are there and consumers are benefiting 
from them, great, let us just see some more information about 
what those subsidies really are. Our fear, as I said, is that 
the carriers are padding those early termination penalties not 
to reflect actual costs or damages but that it is a little bit 
of overage. We like that the bill aims to eliminate junk fees. 
There is no more padding bottom lines with these mystery 
regulatory charges that aren't authorized by any state, Federal 
or local authority. And we like that the bill preserves 
municipal authority to provide broadband service in a 
competitively neutral way. The bill also aims at more efficient 
spectrum usage. That would pave the way for innovative new 
technologies like smart radio. We think that is extraordinarily 
important to begin that conversation for consumers.
    What the bill needs, we think, perhaps most importantly is 
a strong provision against application blocking and handset 
locking. It is my hope that some forward-thinking member of 
this committee will make a stand for innovation and for 
independent entrepreneurs and do something to add a provision 
to the bill on handset locking and application blocking. We 
would also like to see it eliminate the FCC's common carrier 
exemption. One of our concerns if you are going to federalize 
wireless treatment, there may be Federal regulatory authorities 
that don't have full purview over this industry because all 
common carriers have an exemption from Federal Trade Commission 
oversight. So we think that it is important if we got the most 
important Federal body overseeing advertising practices that 
their hands not be tied if we federalize this.
    So the central question of the bill is what is the price of 
preemption? Will consumers have strong protections and good 
remedies available when harms emerge, or will they find that 
with the states out of the game there is nobody to answer their 
calls at the Federal government or that the wireless industry, 
as I mentioned, getting special protection so that some of the 
agencies they would otherwise be able to turn to have their 
hands tied? Wireless services will increasingly become the way 
that citizens connect to the Internet and connect to the 
economy of the 21st Century. We think that free markets and 
competition help solve a lot of these problems, but only when 
consumers are armed with good information, reliable 
information, and then they are unconstrained to vote with their 
feet and vote with their pocketbooks. Thank you for having me.
    [The prepared statement of Mr. Murray follows:]

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

    
    Mr. Markey. Thank you, Mr. Murray, very much. The chair 
will now recognize himself for a round of questions, and let me 
begin by asking you, Mr. Largent, the wireless industry 
stipulates that the early termination fee reflects in part the 
cost of a subsidized phone. Two questions. One, do you support 
telling consumers the amount of the subsidy they are getting?
    Mr. Largent. Yes.
    Mr. Markey. And, 2, if a consumer brings their own phone 
and thus it is not subsidized with the service, should their 
early termination fee be the same as for a consumer whose phone 
is subsidized?
    Mr. Largent. No, and I would like to explain why. Because 
the subsidization goes far beyond just the phone that you 
purchase. The subsidy, you talk about the cost for acquiring 
customers, the cost to service a customer, that all is part of 
the subsidy. It is not just the subsidy for the phone.
    Mr. Markey. Mr. Murray, your comments.
    Mr. Murray. There is the cost of doing business for every 
other business in America. You know, on your cereal box there 
are certainly other costs besides just producing the cereal. 
There are regulatory fees associated with that. But they bundle 
it all in, and they give you an all-in price at the end.
    Mr. Markey. So should they deduct the amount of the 
subsidized phone?
    Mr. Murray. I am not sure I understand the question.
    Mr. Markey. In terms of the charge to a consumer who is 
not----
    Mr. Murray. At minimum I think they should deduct the 
charge of the subsidized phone, but it also seems to me that if 
you are not getting the main bulk of the subsidy, maybe there 
are other subsidies in there, but I think most carriers would 
concede that the claim at least is that the phone is the bulk 
of the subsidy so removing the bulk of that subsidy what is 
left, and shouldn't consumers actually get a lower price on not 
just eliminating the early termination fee but on their monthly 
price of service, because if the recovery of the subsidy cost 
is built into the cost of the service and you are not 
recovering a subsidy, it seems to me there should be some 
consumer benefit pass through there.
    Mr. Markey. OK, great. Now again, Mr. Largent, what the 
draft bill seeks to do is to establish national consumer 
protection rules, yet while the bill seeks to preempt states 
from establishing differing standards, it authorizes states to 
enforce the national standards in addition to the Federal 
Communications Commission. Now many wireless carriers seem to 
oppose state enforcement. If we establish a single set of 
rules, what is wrong with a state cop on the beat to ensure 
effective enforcement?
    Mr. Largent. Well, the fear is that the rules change. When 
you have somebody enforcing a rule that maybe the way they 
interpret the rule changes in every state, and that is the 
fear.
    Mr. Markey. But you don't want all complaints going to the 
Federal Communications Commission, do you? It is an 
understaffed agency to begin with.
    Mr. Largent. I think there is a role for the states to 
play. It is just defining what that is I think is the real nut 
that we have to crack here, but I think that the interpretation 
of the rules is the thing that we hear the most is that every 
state begins to----
    Mr. Markey. So in theory you are not opposed to state 
enforcement?
    Mr. Largent. No.
    Mr. Markey. OK. Mr. Murray, can you comment on state 
enforcement?
    Mr. Murray. Well, I think you raise a good point, which is 
that we don't want to be putting more work on an already 
overworked and under-performing Federal Communications 
Commission. I think that the states have an important role in 
enforcing these standards.
    Mr. Markey. Mr. Durel, a group of associations representing 
the local exchange carriers recently sent the subcommittee a 
letter saying that municipal broadband legislation would chill 
investment by private providers and that any municipal 
broadband network should be confined to areas where there are 
no private providers. Do you have a response to those 
arguments?
    Mr. Durel. Well, I would think that our number 1 goal is 
not to chill the investment but to service the consumers, and 
if they are not servicing the consumers then I think it is 
pretty logical for the municipalities to step up.
    Mr. Markey. So you are saying if they are there they are 
not providing the level of service.
    Mr. Durel. Again, we had the great story of 1896. We have--
I think the APAA, I think initially there was about 3,500 or so 
communities that decided to bring electricity themselves 
because the private sector wouldn't do it. And in our town it 
took about 25 or 30 years for the private sector to show up 
with electricity. We can't wait for it to be convenient to 
them.
    Mr. Markey. So you are saying the companies might be there 
to provide you kind of dirt road service in terms of capacity, 
and you want to be able to bring in a super highway, because 
that is the only way you are able to remain competitive with 
the job creation.
    Mr. Durel. That is exactly right. We have what you have 
here in Washington already. We are not saying that we don't 
have broadband service, but we don't see where we are getting 
that super highway to prepare ourselves for the future, and 
this new technology, and it is not that new, but it is more 
proven, but we see this as the infrastructure of the 21st 
Century. And once again if we don't do it, we are not going to 
get it.
    Mr. Markey. Thank you. My time has expired. The chair 
recognizes the gentleman from Florida.
    Mr. Stearns. Thank you, Mr. Chairman. Mr. Durel, you had 
mentioned in your opening statement about how you are providing 
fiber optics to the home at 100 megabits. That is pretty 
impressive. But I think you said in your statement that you 
provide it for free to the consumers?
    Mr. Durel. I was trying to get a lot into 5 minutes, but 
that is not quite right.
    Mr. Stearns. I think the question I have is what are you 
charging the consumers, and moreover, you are subsidizing this 
effort of laying down the fiber optics and doing it through 
your electric company or how are you paying for this?
    Mr. Durel. Ratepayers. This is not taxpayer dollars. It is 
no risk to the community. It is like a private business, and we 
went to Wall Street, borrowed money based on the model that we 
had, bought insurance to cover any risk at all, and it is 
strictly paid by the ratepayers. And what we are going to 
charge our community for the 3 services is probably going to 
be--we have guaranteed 20 percent less than whatever they are 
getting already for more quality, so for $85 they will get 
telephone, television, and Internet as compared to about $110 
in Lafayette right now.
    Mr. Stearns. So you put that out in consumer information 
saying we will undercut any private company by 20 percent?
    Mr. Durel. We say we can provide it for 20 percent less, 
and we hope it will come down.
    Mr. Stearns. But there was no one out there to really 
challenge you, right?
    Mr. Durel. Sure. There are private companies out there that 
can challenge us.
    Mr. Stearns. OK.
    Mr. Durel. And they did.
    Mr. Stearns. So now are you the sole provider?
    Mr. Durel. No, no. We have AT&T and Cox Communications.
    Mr. Stearns. Now you understand that when you go to Wall 
Street you are getting a better deal than if I went to Wall 
Street or the average company goes to Wall Street because you 
are getting municipal bonds discounted.
    Mr. Durel. And they get tax benefits we will never get. 
They get tremendous tax benefits that we don't get.
    Mr. Stearns. So you think the tax benefits to the private 
sector offsets the advantage, since you don't have to pay any 
taxes?
    Mr. Durel. Well, we do pay taxes. It is just called in lieu 
of taxes, and we pay a lot more in Lafayette than they pay in 
Lafayette.
    Mr. Stearns. And what is in lieu of taxes, who does that go 
to?
    Mr. Durel. Because we are a publicly-owned utility, 
officially we can't pay taxes, so it something called in lieu 
of taxes, and we also in the negotiations that we did with our 
legislature is we have to price ourselves as if we are paying 
the same taxes that we are paying, which we offer to do because 
they pay so little in our state.
    Mr. Stearns. Mr. Darby, do you have any comments relative 
to what Mr. Durel said?
    Mr. Darby. The Committee faces a dilemma here, and our view 
is that we want consumers to have service. We want them then to 
have good service, and we want them to have a choice of 
service. And I will put on my former Wall Street hat for a 
minute and express the concern that as a practical matter any 
state or local government involvement in this sector signals to 
the private sector a competitive advantage in the form of lower 
cost to capital. Now I don't know the particular circumstances 
here. We would support if circumstances show that nobody else 
is going to be willing to offer the service that it doesn't 
make any sense to deny consumers that service.
    That said, we think the playing field ought to be level. We 
think that any government-affiliated or -owned provider should 
provide those services on a competitive basis and pay the same 
kinds of cost, the same kinds of taxes that the private folks 
would. The real problem here is that once you put in place a 
government-operated system, it is going to be difficult to 
justify to Wall Street why you should put in another one.
    Mr. Stearns. Mr. Largent, assuming this bill goes forward 
and in effect if the state attorney general or Public Utility 
Commission could adopt additional enforcement protections or 
punitive remedies in addition to what the FCC Communications 
Act provided, how do you feel about that?
    Mr. Largent. Well, as I mentioned to Mr. Markey, he talked 
about a role that the states can play, and we think that there 
is a role that the states can play to. We think the role that 
they play is best played through the state attorney general, 
who has a consumer protection responsibility, and so when I 
said that, that is what I was referring to. We would prefer not 
to see the PUCs and the state legislatures involved in trying 
to legislate or regulate the industry, and that is why we are 
here today to have a national framework for the other terms and 
conditions that don't operate under a national framework today.
    Mr. Stearns. My last question is that I think all of us 
have sons or daughters who complain about they have lost their 
cell phone or they want to cancel and get the newest and 
greatest, and then they get all these early termination fees, 
so they all come to us and complain and want us to pay for 
them. But I guess the question for you is has the industry 
responded to these consumers' complaints by full information to 
them at the front get-go so that they know, because I always 
say to my son, well, did you read the fine print? Do you think 
that your industry could perhaps be a little bit more 
transparent and explain this more carefully to them so it is 
not a feeling that they have been taken advantage of?
    Mr. Largent. Well, I am not going to make any excuses for 
any person working in the shopping mall that doesn't do a good 
job of explaining early termination fees to a customer. We 
certainly have those cases involved in our industry, and we try 
not to do that. That is not a standard practice or standard 
operating procedure. But in our consumer code we talk about 
being very forthright with the terms and conditions and early 
termination fees and the like when we sell customers a cell 
phone. But the fact is that our companies actually are moving 
to address early termination fees as we speak.
    Even as I was speaking at a NARUC meeting right here in 
D.C. 2 weeks ago in the process of--from the time I started my 
speech to the time I ended my speech another company actually 
addressed early termination fees and their reduction of early 
termination fees over the course of a contract. And so we are 
seeing movement already in response to consumer demand as our 
industry always does.
    Mr. Stearns. Thank you, Mr. Chairman.
    Mr. Doyle [presiding]. I thank the gentleman. So I am 
taking a look at this 700 megahertz result, and in particular 
the C block has met its reserve, and it looks like it is going 
to sell for around $5 billion. The likely winner, Verizon 
Wireless, has announced plans to hold a developer's conference 
that allows third parties to create devices and applications. 
And AT&T says that they are already open. They are going to let 
you take your own device and use whatever application they 
want. Mr. Largent, are you as excited as I am about that?
    Mr. Largent. I really am. I think that some of the remarks 
that Mr. Murray made are going to be addressed through this 
open access piece that is being auctioned today. Of course we 
have to be careful what we say about an auction that is ongoing 
today, but having open access and having it applied to the 
wireless industry, I think is going to be a tremendous 
innovation for our industry, and it is going to continue to 
grow and continue to get better and better. And so I am very 
positive about the open access piece, and I think you are going 
to see a lot of players. As you mentioned, there are a number 
of companies, national companies in the wireless industry, that 
are already moving in that direction.
    Mr. Doyle. What do you think about that applying to all 
carriers, not just Verizon and AT&T?
    Mr. Largent. That would move to open access?
    Mr. Doyle. Yeah.
    Mr. Largent. Well, not all the carriers are going to have 
access to 700 megahertz, and that particular piece of spectrum 
is particularly appropriate for accessing the Internet. But I 
think we are a competitive industry. You are going to have a 
number of companies move into this open access world, 
particularly the major wireless carriers, so I think the 
competitive forces are going to work to see that you will have 
more of our members a part of the open access alliance than not 
a part of that open access alliance.
    Mr. Doyle. Mr. Murray, are you excited about that, too?
    Mr. Murray. Sir, I am excited about the possibility that 
consumers will see some more openness. I am a little worried 
that perhaps the promises aren't quite going to match up with 
the reality. I know that initially Verizon was suing over the 
open access conditions. They withdrew that. CTIA is now the 
plaintiff in that suit, so again it seems like this is going to 
be challenged in some regard. You know, I would like to see 
these companies move towards openness, and we are going to work 
in earnest with them to try to make it so for consumers. But we 
have seen promises made that haven't been promises kept. We saw 
carriers saying we are going to reduce early termination 
penalties, and they haven't quite gotten those reductions in 
place yet.
    They announced it a day before a Senate hearing, and what 
we found is that they were actually telling consumers that they 
were reducing early termination penalties when in fact they 
were not, and this is not people in a mall, this is customer 
service representatives on a company's main call lines. So, you 
know, again we want to make sure promises comport with reality.
    Mr. Doyle. And I am curious about that, Mr. Largent. If two 
of your largest members, Verizon and AT&T, are moving towards 
open access, why is CTIA still suing the FCC to block that?
    Mr. Largent. Well, we are suing because of a statement that 
was put in the record about open access that claimed that there 
was a limited supply of handsets available to customers in the 
United States. That was something that was said as a part of 
the 700 megahertz auction, and we wanted to say--our protest 
didn't have anything to do with the open access piece. It has 
to do with the statement that was made in this filing by the 
FCC that said that customers in the United States did not have 
access to many handsets, and the facts are that customers in 
this country have access to over 600 different handsets. We 
think that is a lot, and so we felt like we needed to file this 
suit just simply to correct the statement that was made by the 
FCC.
    Mr. Doyle. I see. Mr. Murray, do you have any final 
comments about that?
    Mr. Murray. It seems like a bit of a big hammer to go after 
a misstatement in the record, but in any case I believe that we 
are going to see companies move towards openness over time 
because the market will eventually demand it, but in the 
meantime we still see carriers out there who I can't bring my 
own phone to Verizon, I can't take AT&T's iPhone to another 
network without breaking my agreement with the company, so we 
are concerned about the practices that we see.
    Mr. Doyle. OK. Thank you very much. The chair is going to 
now recognize my good friend Mr. Shimkus for 8 minutes.
    Mr. Shimkus. Mr. Chairman, I would like to because Mr. 
Upton has to leave, I would like to allow him to jump ahead of 
me if that is OK.
    Mr. Doyle. OK, no problem. The chair recognizes Mr. Upton 
for only 5 minutes.
    Mr. Upton. I appreciate my friend, Mr. Shimkus, letting me 
go next. I do have a couple questions. I appreciate your 
testimony, and I guess I want to go back to something that Mr. 
Murray said and just clarify it with you, Steve, and welcome 
back to the subcommittee. Is your sense with the new auction 
block that is there that in fact will get directly to the 
argument that Mr. Murray raised that we will have more services 
and less cost, the example that Mr. Murray used that Sweden is 
twice as expensive as ours in offers, and we offer fewer 
services will be resolved?
    Mr. Largent. Well, actually I think it is resolved today, 
because the fact of the matter is we have more services at less 
cost than any other country, particularly in Europe. If we do 
this price per minute, the U.S. is about 5 cents per minute, 4 
or 5 cents per minute. Sweden is 12 cents per minute. Spain is 
16 cents per minute. Germany is 30 cents per minute. So 
clearly, and you look at the number of handset choices that 
customers in the U.S. have versus, for example, just take for 
example Great Britain. Customers in Great Britain have about 
160 choices of handsets. In the U.S. we have 600 to 700 
choices, so clearly the market is working in the U.S. better 
than anywhere else in the world in my opinion.
    Mr. Upton. Let me follow up with you as well as it relates 
to the consumer code that is there. Now most carriers--
certainly I think the companies involved in CTIA----
    Mr. Largent. If you are a member of CTIA you have to adhere 
to the consumer code, which represents about over 95 percent of 
the customers in the U.S. today.
    Mr. Upton. And I too, as you indicated in your opening 
statement, you are delighted that this bill has been 
introduced. We need to move forward. There needs to be some 
corrections. Does the consumer code allow for many of the 
changes that part of this bill has introduced?
    Mr. Largent. This is actually a copy of our consumer code I 
brought with me, and it has 10 provisions in it. One is a 
disclosure of rates and terms of service to consumers, make 
available maps showing where service is generally available, 
provide contract terms to customers, and confirm changes in 
service, allow a trial period for new service, provide specific 
disclosures in advertising, separately identify carrier charges 
from taxes on billing statements, provide customers the right 
to terminate service on changes to contract terms, provide 
ready access to customer service, promptly respond to consumer 
inquiries and complaints received from government agencies, 
abide by policies for protection of customer privacy.
    These are all things that we think go beyond what the bill 
requires. These are things that are adhered to by our carriers 
today.
    Mr. Upton. Mr. Durel, as I indicated, I am a supporter of 
allowing municipalities to participate. To me it allows more 
choice and competition. Obviously, you subscribe, I think, to 
many of the same consumer codes that Mr. Largent just 
indicated, is that right? Do you have a consumer code that is 
fairly recognizable by the consumers there in Louisiana?
    Mr. Durel. I really can't----
    Mr. Upton. Do they know their rights?
    Mr. Durel. Sure. We talked about, I heard level playing 
field a couple of times, and I always got a kick out of that, 
because it will never be a level playing field. Both sides have 
advantages. In our case we debated and discussed our project 
with our competition sitting out in the audience. Nobody in the 
private sector would ever do anything that dumb. But we did 
because we believe in transparency, and it has to be 
transparent, and so I think the consumers, they can call the 
CEO of this company, which is me, and they can call the board 
of directors, which is the council, and they can come see them 
every Tuesday night, so we have plenty.
    Mr. Upton. Now my sense is that you probably for the 
competition that is there, you said AT&T, and there was one 
other cable----
    Mr. Durel. Cox.
    Mr. Upton. Cox. Do they offer these bundled services, 
broadband, telephone, and video? What type of franchise fee do 
they pay to the City of Lafayette? What is your agreement with 
them in terms of--do they pay per subscriber?
    Mr. Durel. We get a little bit from them. And, by the way, 
since you said Lafayette, I said a while ago we had 125 people. 
We have 125,000 people in the city, and Newcom brought 1,000 
jobs, not 100 jobs. But, yeah, we get a little bit. They help 
support our channel, the government channel, and they pay some 
attachment fees. Cox does. BellSouth doesn't pay anything, or 
AT&T.
    Mr. Upton. Thank you. Thank you, Mr. Chairman. Thank you, 
Mr. Shimkus, as well.
    Mr. Doyle. Thank the gentleman. The chair now recognizes my 
good friend from California, Ms. Harman.
    Ms. Harman. Thank you, Mr. Chairman. In my opening remarks, 
I talked about enforcement, and my impression that the states, 
at least my state, are doing very well in the enforcement area. 
It also occurs to me that whatever we do about preemption, we 
don't want to lose the ability for tough enforcement. So let me 
start with Mr. Murray and ask you about the role that state 
PUCs or other regulatory bodies and states' attorneys general 
are playing in the enforcement area, and whether you think this 
is a role that we would want to continue, and then ask others 
to comment.
    Mr. Murray. You have put your finger on a really important 
point, which is that most of the marketplace changes that we 
have seen to date have been driven by either lawsuits or 
states' attorneys general in states pursuing the wireless 
carriers, whether it was for inaccurate coverage maps, 
inaccurate disclosure on billing, and so it would be an 
unfortunate, unintended consequence if what happened here was 
in the process of trying to set federalized consumer protection 
standards for consumers, we end up preempting a bunch of suits 
that are either on the eve of trial or states who are ready to 
get in the game on simply just enforcing the standards that we 
have got out there already. I don't think the regulatory creep 
fear is a legitimate one if we got strong Federal standards.
    Ms. Harman. Let me ask others to comment. Anybody?
    Mr. Largent. Well, I would just say that the states' 
attorneys general, they already have responsibility for 
consumer protection, and we don't have a problem with them 
being included in this bill in that fashion. We get more 
concerned when it goes to other agencies or other departments 
in a state, and we want to have a long talk about that.
    Ms. Harman. Well, I appreciate that answer. I think we 
should have a long talk, but I don't think we want to cut 
states out of the consumer protection business, and I think 
that is what you just said, Steve, am I right?
    Mr. Largent. That is right, and as long as we are operating 
through--I mean we feel like the safest way to do that is 
through a state's attorney general.
    Ms. Harman. Well, let us talk then, as long as we are 
talking about consumer protection, about the future, and let me 
direct this question to you. What if new problems emerge, 
things we haven't thought of in this brilliant piece of 
legislation that we will eventually reach consensus on, new 
problems in the wireless market. For example, in the future 
cell phones become vehicles for identity theft, and they are 
already vehicles, but they become bigger vehicles, better 
vehicles, and there is text message spamming, which degrades 
service quality. Would you feel that the states would be free 
to act on new issues that aren't covered by our legislation? 
Let me ask all of you, how would you feel about that?
    Mr. Largent. Well, I would say that the companies 
themselves are doing a great job of addressing many of these 
issues that you have already raised, and I mentioned that in my 
opening statement that we are addressing those. So my feeling 
is this is a competitive marketplace, and there are going to be 
problems that we are going to face in the future. And I would 
tell you that there are problems that we faced in the past, and 
the way that we have dealt with them is the most expeditious 
way to do it, and that is why the company is taking steps to 
ensure that their customers are receiving the type of services 
that they expect.
    Ms. Harman. Well, I applaud the fact that the companies are 
taking steps, but we are all here today to see whether or not 
that is adequate, and some of the examples we all gave show 
that there is a lot of consumer frustration out there. So let 
me ask Mr. Murray, what if new issues arise in this general 
area, do you think we should preempt the states from regulating 
regardless of whether the companies are doing more, which of 
course we would expect?
    Mr. Murray. Well, surely the answer to what should we do in 
a forward looking way to protect consumers about novel issues 
that arise cannot be that the wireless industry association has 
a voluntary code of conduct that we should wave a hand and sort 
of say that consumers will be fine. Remember that code of 
conduct was created in response to California coming up with a 
telecommunications user's bill of rights, and I may be reading 
motive here which is not entirely fair, but in response to that 
the industry association came up with this voluntary code. I 
think it is a very good thing that they did this. We support 
that effort. We would like to work with them to tighten it up.
    But what is the enforcement? Are they going to kick a 
member out who is a dues paying member who is one of their 
largest dues paying members? That is a hard thing to imagine.
    Mr. Darby. I might just quickly address both those 
questions, Ms. Harman. We support Federal standards. We support 
enforcement of Federal standards, and if the industry code of 
ethics, code of conduct doesn't work, we support having in some 
measure that enforced at the state level. Our concern is for 
what I call regulatory creep or mission creep. As a part of the 
FCC I have seen it. I have seen it happen. It happens at the 
Federal level. It is a natural sort of tendency to expand one's 
regulatory domain. It doesn't make these bad people. They are 
quite capable, and we will support targeted enforcement 
constrained, not to be expanded into unintended areas by clear 
cut national guidelines.
    Ms. Harman. Thank you, Mr. Chairman.
    Mr. Markey. The gentlelady's time has expired. The chair 
recognizes the gentleman from Illinois, Mr. Shimkus.
    Mr. Shimkus. Thank you, Mr. Chairman. A couple points. It 
is good to have the panel here, and I represent 30 counties in 
southern Illinois, approximately from Springfield, which is 
about 100,000 folks, all the way down to Paducah, Kentucky, and 
the Indiana border and the Missouri border, so it is a wide 
rural area. I have worked on the cell issues for a long time, 
not just basic communications so the consumer can have a great 
gadget, but on the emergency services side. So this is an 
interesting debate from the perspective of competition and 
choices for rural consumers and cost, because we are going to 
talk about universal service funds some day and moving to cell 
tower buildout, being able to do intersection abilities to be 
able to do identification location on it, and emergency issues.
    And I always like just to highlight--I hate it when we 
compare the United States to my friends in Western Europe, 
because there is really no comparison on size. I took about 30 
members of different NATO countries out to McCord Air Force 
Base, a 5-hour flight, looking down at the frost covered 
plains, and I talked to one of my colleagues, and I said this 
really gives you an idea how big a country this is. He goes you 
guys don't live in a country, you live in a continent. So it is 
easy to provide cell coverage to my friends in Denmark. It is 
very difficult to do that in Creal Springs, Illinois, so in 
this whole debate about moving from Federal regulatory--I mean 
to a state regulatory framework to a national. And you can 
answer this if you want, but Steve, if you would start, and 
then we will just go on to Mr. Darby and Mr. Murray, do you 
think this will give us a greater ability to be able to have my 
consumers in parts of 30 counties of rural America more 
choices?
    Mr. Largent. Absolutely. And this industry is moving as 
quickly as they can to make that happen. I would cite the fact 
that we have built 100,000 towers in the last 10 years in this 
country, and we continue to build as quickly as possible. We 
are spending as an industry $20 billion a year for 
infrastructure buildout in this country, and it is a big 
country, as you mentioned. And, you know, I flinch when I talk 
to a member that is from a rural district like yours is, John, 
because our coverage is not as great as it could be and it will 
be. And it is not from a lack of effort, because we are making 
the effort, and it is just a matter of time. And I think things 
like the 700 megahertz auction are going to go a long way to 
help us to improve our service in rural districts like yours.
    Mr. Shimkus. Mr. Darby.
    Mr. Darby. I would really like to address that with just a 
quick story about how national networks get built, and the 
evidence is very clear from wireline networks, and the wireless 
sector is following it precisely. You start out by building the 
densest areas and the broadest pipes between the largest 
concentrations. The companies generate cash flow. They have 
people, very expert people, who ask themselves as capital 
budgeters the following question: where do I do better? Do I do 
better by extending into rural areas? Do I do better by 
building more cell towers, so I have fewer dropped calls in 
rural areas, or do I migrate from this generation to the next 
generation? And as a practical matter these businesses make 
those decisions. And over time, and it is clear it is happening 
in the wireless sector, over time these areas will be built 
out.
    Now you ask me how fast they are going to be built out. I 
don't know, because the companies are feeling pressure if you 
lose that cash in a variety of ways because there is not enough 
cash to do them all. That said, if you look at the lesson of 
the wireline sector, it took, what, it took us something like 
60 years to get up to 95 percent penetration. OK. Look at how 
fast we have gotten penetration in the wireless sector, and I 
suggest to you that competition is going to develop sort of 
much along those same accelerated lines to serve areas like 
yours and my hometown in Indiana.
    Mr. Shimkus. Thank you. Mr. Murray.
    Mr. Murray. I think that is exactly why a blend of 
solutions is important, and that is why the municipal broadband 
solution is important. We see a lot of rural members who are 
fed up with waiting for private enterprise to see that area and 
become profitable enough. It may be profitable, but they can't 
get quite the return that they would like, so we see 
municipalities that are taking charge and saying, look, we are 
fed up with waiting. We are going to provide this service to 
our citizens because it is not a luxury good. We are talking 
about basic communications, and that is why I think the 
provisions of the bill----
    Mr. Shimkus. And I agree, and I am supportive. My concern 
is just the market, because once government takes control then 
do you lose the next generation of excitement? But I think that 
is something we are going to be able to work out and be 
supportive of. The terminology used in some of the draft 
language that states can adopt requirements consistent with 
Federal regulations, do we see that as a problem? Does that 
revolcanize the process, Steve?
    Mr. Largent. I think it does, Congressman. It creates an 
unknown that I think will be resolved in courts as opposed to 
being resolved in Congress. I think Congress always wants to 
put their imprint on legislation and not allow it to go to the 
courts as the '96 Act eventually happened with it. So I think 
the more specific we can be about the roles that states will 
play and the more specific we can be about the roles that the 
Federal government is going to play the better.
    Mr. Shimkus. Anyone disagree?
    Mr. Darby. No, I agree with that, and I have lots of 
friends who are lawyers who would regard that as a substantial 
contribution to their retirement to be able to debate in 
Federal court what is meant by consistent with the Federal 
guidelines.
    Mr. Murray. It can necessarily be the case that Congress's 
judgment is far seeing enough to see all the problems that 
might come down the pike. What happens when we have got, let us 
say, a small group of rural consumers who are affected in a 
particular way? Maybe there is not quite enough impetus for a 
big national kind of action, but the state is able to focus on 
that problem, and again I think consistent with gets out a 
solution to the problem of 50 different models.
    Mr. Shimkus. And I think we as legislators understand why 
some things aren't transparent and other things are. It is 
amazing what we want to make transparent and what we want to 
keep from being transparent. So let me just talk about the 
transparency issue on what occurs at the multiple levels of 
government, and if we are going to be transparent on fees and 
charges, wouldn't transparency on taxes and the like be just as 
important for the consumer?
    Mr. Largent. I think it absolutely is important for the 
consumer to know exactly how much of his bill is going to taxes 
and fees versus how much is going for his actual service that 
he is paying for, and that is part of our consumer code that we 
ask our carriers--we demand that our carriers put that on their 
bill so that their customers can know how much they are paying.
    Mr. Shimkus. Anybody else? An indication, Mr. Murray, you 
would concur?
    Mr. Murray. I would concur with that. I think transparency 
is important. We have seen this in two sides. We have seen the 
different rates of taxation, which I think transparency there 
is good, and we have also seen it with these regulatory fees 
that sometimes you see these junk fees added to the bill where 
they call it a regulatory charge, but it is not quite a 
regulatory charge. It is more like bill padding.
    Mr. Shimkus. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Texas, Mr. Gonzalez.
    Mr. Gonzalez. Thank you very much, Mr. Chairman. And I am 
going to focus my attention on Title II, which is municipal 
broadband buildout so most of my questions will to go the 
mayor, and welcome, Mayor, and thank you for everything that 
you do in public service. You probably have the hardest job of 
any elected official. I know that Mr. Boucher and Mr. Upton 
have introduced a bill that will allow municipalities to do 
exactly what you did without any interference from the state 
that might prohibit those entities such as a municipal 
government. The question, though, is it applicable across the 
board? I mean what works in Lafayette doesn't necessarily work 
in San Antonio, where we probably have 1.3 million people now, 
and of course AT&T is headquartered there. That is part of the 
mix. But the question is, you have Cox that provides, I guess, 
coaxial television, right? Then you have--now who else, AT&T is 
obviously telephone service, copper, and then you have a 
Cadillac of all delivery systems, which obviously is fiber 
optic. They looked at it, and they said, and I think Dr. Darby 
has alluded to, they look at it as an investment. But wouldn't 
it be the fact that you were able to do it because it is not a 
level playing field?
    And I am not saying that Mr. Boucher and Mr. Upton's bill 
is not a good one. I haven't seen it. They are going to explain 
it to me. I am sure in certain circumstances it makes a lot of 
sense. It does not make sense obviously that then government 
would be competing with the private sector, because I think 
government always has an advantage. Now why did it make sense 
for Lafayette and didn't make sense to the private sector?
    Mr. Durel. Well, you know, of course the words we use at 
home is we answer to Main Street, they answer to Wall Street. 
Once again, we asked them to do it. Why didn't it make sense to 
them is because obviously they don't feel that they can make 
enough profit fast enough to justify their investment to Wall 
Street. We do have that advantage that we can bond things out 
for 20, 25 years, and we don't have to make a 40 percent profit 
to justify it. Our profit is how we service our community, and 
that is how we measure it.
    Mr. Gonzalez. And I understand, and I am not being critical 
of your effort, I commend it. However, I just don't think that 
the Lafayette experience necessarily has to be replicated in 
those areas that are not subject to the same conditions, and as 
you got copper, you got coaxial, and you want something a lot 
better, which then leads me to what services do you provide 
with your fiber optic system?
    Mr. Durel. What we are going to provide--right now we are 
in the wholesale end of it. We allow some of the larger 
businesses in Lafayette to get it through our wholesale 
companies. We are getting into the retail, television, 
telephone, and Internet.
    Mr. Gonzalez. That is exactly, I guess, my point. You will 
be getting everything that is available over what we refer to 
as Internet protocol, and that is voice, that is video, that is 
data, that is everything. So you are going to be in direct 
competition then with the telephone company and the cable 
company. Is there anything about that that is any concern to 
you as far as a governmental entity in direct competition with 
these other providers way beyond what initially was we want 
more capacity, we want broadband, and I think that probably it 
was advanced on the notion of data, but now you are in direct 
competition with voice, right, and television. Anything wrong 
with that?
    Mr. Durel. Our community didn't think so. Our citizens 
voted, 62 percent to 38 percent said it is OK. And as I pointed 
out earlier, it is a very conservative community. And once 
again had we not gone to the private sector and asked them to 
do it it may rub a little bit different.
    Mr. Gonzalez. And I understand that.
    Mr. Durel. I don't know what else to say. I mean they had 
the opportunity to do it. They choose not to. They chose not to 
bring electricity in the 1890s to a lot of communities in 
America. Had we not done it, we would not have gotten 
electricity for 25 or 30 years.
    Mr. Gonzalez. I am from Texas. You don't have to tell me 
about that, and I understand about co-ops and so on.
    Mr. Durel. I think what we are trying to do in Lafayette 
that I worry about not happening is I see us raising the bar. I 
think it is time for America to raise the bar and not try to--
--
    Mr. Gonzalez. Let me ask you some--there are many moving 
parts to what you have there. Who built your system? I mean you 
didn't. You didn't have your engineers----
    Mr. Durel. We had private contractors do it.
    Mr. Gonzalez. All right. And then who do you contract with 
to maintain it, run it?
    Mr. Durel. A lot of what we would be doing would be kind of 
a public-private partnership in that you may have somebody like 
Google running our----
    Mr. Gonzalez. That is going to be my point. You are going 
to have special contractual relationships with either content 
people, right?
    Mr. Durel. Right.
    Mr. Gonzalez. Applicators, all of that.
    Mr. Durel. Right.
    Mr. Gonzalez. So you have a governmental entity that 
establishes the network and then enters into special 
relationships with other private entities that may be in 
competition with networks?
    Mr. Durel. Right. That was a good answer. Thank you.
    Mr. Gonzalez. When I answer my own question it is always 
the best answer. Let me ask you this, because you are a 
municipality, and because you have these special relationships, 
and because maybe there may be some advantage that you enjoy as 
a governmental entity. I don't mind that in certain 
circumstances. However, as we expand this--now you are not 
going to be able to provide any service outside of Lafayette. 
You are restricted to your geographical area, are you not?
    Mr. Durel. In fact, right now we are. It is a city-owned 
utility, and we provide services only in the city, so yes.
    Mr. Gonzalez. Do you foresee expanding beyond, and would 
you be able to? Is that your intention?
    Mr. Durel. It is not our intention, but I can tell you 
this. If our state came to us and said, because quite frankly 
we do have the license to provide it to anybody in the state 
that wants it, and they can afford to do it.
    Mr. Gonzalez. OK. Well, let me go from there then. Let me 
ask you. Would you feel then obligated to follow the following 
principles: consumers are entitled to access the lawful 
Internet content of their choice; consumers are entitled to run 
applications and use services of their choice; consumers are 
entitled to connect their choice of legal devices that do not 
harm the network; and consumers are entitled to competition 
among network providers, application, service providers, and 
content providers? You are willing to--I think the conflict 
comes where competition among network providers when you have a 
governmental entity that has a leg up on the private sector. 
That is a very serious concern. I am going to talk to Mr. 
Boucher. I am going to talk to Mr. Upton. In limited 
circumstances. But I also believe that that which you establish 
within your geographical boundaries should be limited to that 
area, because the whole premise was that you were underserved. 
At this point, once you are no longer underserved and you 
expand beyond that, the advantage is tremendous.
    And I do believe that it is not a fair advantage. I 
understand the necessity of it. So I am concerned. Much of what 
we are talking about here actually is contrary to what we were 
trying to achieve with a Federal franchise regime, which 
obviously we did not succeed, but we knew we had problems with 
what the municipalities were doing with their franchises. That 
is states like the State of Texas were then coming and 
preempting. So I am not sure we don't have a cousin of that 
particular problem. I mean I do commend what you did, because 
you are your city's leader, and you saw a need and you are 
fulfilling it. I just don't like the idea of you going beyond 
the original plan and need. I yield back.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from California, Mr. Radanovich.
    Mr. Radanovich. Thank you, Mr. Chairman, and again thanks 
for holding this hearing. Mr. Largent, welcome back to 
Congress. I wish you were here and about 60 others of our 
friends that are not here anymore. But I do have a question 
that is relevant to my rural area of the district in 
California, my neighboring Sierras and Yosemite National Park, 
and they are pretty rural areas. My question is how would 
creating a uniform Federal standard or national framework for 
wireless consumer protection benefit my rural constituents in 
those areas who use their cell phones on a daily basis? Was it 
covered? I am sorry. I just came in late.
    Mr. Shimkus. I am just harassing you.
    Mr. Largent. Thank you for the question. I think the 
principal way that it benefits all customers is in keeping the 
prices so low. As I mentioned, wireless customers in this 
country are experiencing some of the lowest rates--they are 
experiencing the lowest rates in the first world, and I would 
say the lowest rates in the world. And it is because of this 
uniform set of rules that we have on the industry. And what we 
are trying to do is extend that uniform set of rules to cover 
all of our consumer issues that we are talking about here. So I 
would say that having the rules that we have been under since 
1993 has been positive. It has created the competition that we 
experience today. Competition has worked in a positive way for 
customers, and we are just trying to extend that to this one 
other terms and conditions of the '96 Act.
    Mr. Radanovich. Mr. Largent, on the issue too of siting 
towers, a lot of--I think there is quite a bit of public lands, 
BLM, national forest land where siting towers is important. You 
need more of them in rural areas. And environmental laws I 
think are laws that get in the way for us to be able to site 
some of those towers in rural parts of the United States. Do 
you find that--does it affect the carriers' ability to site 
towers as part of a consumer protection element in this thing, 
easier access into those areas and the ability to site those 
would benefit as well?
    Mr. Largent. Absolutely. I appreciate the question because 
it is something that has been a particular thorn in the side 
for the industry is the ability to site towers in specific 
areas. And I would tell you as one example the CEO of Verizon 
Wireless lives in a particular part of New Jersey where he has 
been trying for 12 years to get a tower sited in his community. 
It is not a rural community. So we have some issues like that 
that are very perplexing to us as an industry, and bringing 
some uniformity to how we can site towers and having a shot 
clock, for example, on how long we have to wait to site towers 
would be very helpful for this industry.
    It is not just rural districts like you represent, George. 
It is the entire country. New Jersey is--most of New Jersey is 
not rural, and it is certainly not rural where this gentleman 
lives, but we have issues with local municipalities on issues 
like that all the time.
    Mr. Radanovich. All right. I appreciate that, Mr. Largent. 
And I thank my ranking member, Mr. Shimkus, and the chairman. 
Thank you.
    Mr. Markey. Thank you. Often times you wind up with a 
paradox at the most beautiful bucolic communities who have the 
worst service, but they also then object to having a cell phone 
tower placed in those communities. It creates a paradox that 
has always been interesting to observers.
    Mr. Radanovich. If the gentleman would yield. I would 
encourage the industry to--they are making great strides in 
making them look like trees and maybe half dome and things like 
that, some of these towers.
    Mr. Markey. He is the CEO. Maybe they could put one in his 
backyard. It would be so beautiful. It would be a beautiful 
thing to have right there. So let me turn to recognize the 
gentleman from Michigan, Mr. Stupak.
    Mr. Stupak. Thank you, Mr. Markey. Why can't he put a tower 
up? I mean what is the--is it local----
    Mr. Largent. Right, it is getting the approval from the 
local municipalities. He can't build a tower. And he probably 
would put one in his back yard if he could.
    Mr. Stupak. Mr. Durel, let me ask you a question or two. I 
have a very, very rural district, probably one of the most 
rural in the United States, one of them. Michigan actually 
passed a law saying you cannot--municipalities cannot get into 
it unless no one will bid for services. Before you implemented 
your system, did you have representations by carriers that they 
would come in and build a system for you, or would they just 
ignore your area altogether?
    Mr. Durel. Oh, no, and like I pointed out earlier we have 
what everybody else has. We just wanted to have something, 
instead of a Cadillac, we wanted something supersonic. And we 
did ask the private sector to do it several times. We had 
meetings with them. I would be speaking at a Rotary Club, and 
they would be out in the audience, and I would say do it, we 
won't do it, so we gave them the opportunity for sure.
    Mr. Stupak. Just never presented the opportunity or they 
never came forth with a proposal or anything?
    Mr. Durel. They came forth with smoke and mirrors, you 
know, but they never presented us with anything that was 
significant.
    Mr. Stupak. That is one of the frustrations we have in 
Michigan with this law. They are making proposals, and they 
promise to do it, but it never happens, and the municipality 
can't get into it. You stated that by 2009, you will begin 
service of up to 100 megabits per second. How much will 
Lafayette be charging for this fiber to the home service? What 
would be your cost for the home customer?
    Mr. Durel. I am glad you asked that because I made a 
mistake a while ago again. We are going--our starting service 
will probably be somewhere in the neighborhood of 8 or 10 
megabitss per second going both ways.
    Mr. Stupak. OK.
    Mr. Durel. But we are going to give 100 megabits per second 
peer-to-peer, customer-to-customer for free, so an engineering 
firm working with one of our geologists can send lots of data 
very cheap and very fast. And so the 100 megabits per second 
peer-to-peer is free.
    Mr. Stupak. OK.
    Mr. Durel. But they have to be paying for some level of 
service first.
    Mr. Stupak. Right. Mr. Gonzalez asked you about all these 
other services you provide to homeowners. What is the 
anticipated cost of that per month?
    Mr. Durel. Oh, the basic service, what we would call 
expanded cable, telephone, and television would be about $85. 
And it is like I told my community, you will still have 
available to you less quality for more money.
    Mr. Stupak. OK.
    Mr. Durel. They will still have it.
    Mr. Stupak. And 62 to 38 they passed that?
    Mr. Durel. Yes.
    Mr. Stupak. OK. Why have some, in your opinion, municipal 
broadband proposals, failed to deliver what Lafayette is 
delivering?
    Mr. Durel. Well, that is another good question, because I 
want to make sure we are real clear that when we talk about 
municipal broadband that covers a whole range of things, 
wireless and fiber optics. And we heard a lot of that. That was 
some of the smoke and mirrors that was presented to our 
community, and we checked on every one that they held up as a 
failure and never could find one. I guess they would hold them 
to different standards and that sort of thing that they 
wouldn't hold the private sector to on a cash flow basis 
instead of--just kind of using accounting jargon. But from a 
fiber optics standpoint, we have never been able to find a 
community providing retail fiber optic services that has 
failed.
    Mr. Stupak. Did your community--and I am asking all these 
because based on a lot of these issues in my district--did they 
see it as wanting to take hold of this new technology, or was 
it driven by the business sector that if we didn't have this 
technology we would be left behind?
    Mr. Durel. I think it is a pretty progressive little town 
in Louisiana. In fact, we think we have the most progressive 
city in Louisiana.
    Mr. Stupak. How big is----
    Mr. Durel. The city is about 125,000 people. The parish is 
about 225,000.
    Mr. Stupak. My biggest city is 30,000.
    Mr. Durel. And so, yeah, it was a business community. I 
don't know if you were here earlier. We had----
    Mr. Stupak. I have been in and out.
    Mr. Durel. We had every living former chairman of the board 
of the Chamber of Commerce stand up at our council meetings 
supporting it. Every single business organization, realtors, 
home builders, every single business organization in Lafayette 
stood up in favor of this. We had the Democratic party, the 
Republican party standing up in favor of this. And it was all 
about getting Lafayette something to set it apart. It was all 
about us having something that we couldn't get otherwise, and 
we had enough people who recognized that what we were going to 
have was something that could bring us to a whole new level and 
that could lead America and that would give companies, as I 
pointed out earlier, this company called Newcom from Canada 
that located in Lafayette after looking at 200 cities. And when 
I talked to the president of the company, he said--I asked him, 
I said we don't even have it yet, why do you talk about it, and 
why are you here, and he said just because of the fact that 
Lafayette is holding technology as is an important issue. It 
tells us it is a place we want to be. So without even having it 
available on a retail basis, now he was able to get it on a 
wholesale basis, but anyway we have had many companies that 
have looked at us, and we have worldwide recognition about our 
battle, the legal fees that we paid to fight the battles that 
we had to fight.
    By the way, we went all the way to the state Supreme Court 
to finally get the ability after a 2-year fight, but those are 
probably the best marketing dollars we could have ever spent. 
It was great publicity for us.
    Mr. Stupak. In my district: 5 percent that has never been 
wired. There are parts of my district that don't have phone 
service. The upper peninsula of Michigan, which is part of my 
district, the upper peninsula of Michigan economic development 
and how it improved, they said things, transportation and 
faster broadband of 100 megabits per second, as you are saying. 
So it is very interesting what you did there. Thanks. A little 
bit of time left here.
    Mr. Markey. There are only 3\1/2\ minutes left to go on the 
House floor, just so you know.
    Mr. Stupak. OK. Mr. Murray, in your testimony you say 
Consumer Reports' annual customer satisfaction survey ranked 
cell phone service in 18th place out of 20. How was that data 
collected? Was Congress in there because they were 21?
    Mr. Murray. Consumer Reports is actually quite a robust 
statistical department. We have a full survey team, and the 
survey research that we are doing is accredited by some 
universities as valid social science, so nationally these are 
not--to be clear, these are Consumer Reports surveys that were 
done by the magazine side as opposed to----
    Mr. Stupak. You used surveys they did then?
    Mr. Murray. Right, as opposed to the D.C. office, if that 
is the question you are asking, sir.
    Mr. Stupak. It is the question I was asking. OK. Do you 
believe comparing FCC reports to the total number of 
subscribers gives an accurate description of complaints?
    Mr. Murray. Do FCC numbers giving----
    Mr. Stupak. Let me ask Mr. Largent this. Steve, in your 
testimony you indicate that 26 million Americans complain about 
wireless service, 1.3 million complain about the contracts, but 
it looked like you compared the numbers or the number of 
complaints, 26 million, and then 1.3 by FCC, complaints using 
FCC numbers, not your peers.
    Mr. Largent. I would just say very quickly that we are not 
resting on any laurels. We know that we have complaints. We are 
trying to address them. The more important statistic to me is 
the fact that 92 percent of the complaints that are lodged are 
resolved by the carriers themselves. We are fixing our own 
problem.
    Mr. Markey. The gentleman from Michigan's time has expired. 
We have less than 2 minutes to go over to the House floor to 
make these roll calls. We are fast. We are going to make--I am 
still recovering from my Achilles rupture, and I don't want to 
miss the role call. We will reassemble and immediately 
thereafter but since the Red Sox are on the White House lawn at 
3:00, we will adjourn before that time so everyone knows that. 
We are in a brief recess.
    [Recess.]
    Mr. Markey. The gentleman from Mississippi is recognized 
for a round of questions.
    Mr. Pickering. Thank you, Mr. Chairman. I commend you for 
this legislation as one further step to bringing about the 
Federal framework in communications policy that we have all 
worked toward over the last 10, 12 years. I guess about 10 
years ago we passed legislation to bring uniformity to cellular 
taxation in all local and state jurisdictions. This would do 
the same thing, and I think it is very wise and good 
legislation. Although I do have some concerns and want to see 
that we do give the clarity and the certainty to the industry 
and the consistency and the predictability for consumers of 
knowing what they will face, and I think it can be a win-win 
both for investment innovation and the companies that are 
trying to do national businesses, as well as for the consumer 
knowing that on early termination fees, on transparency, and on 
calling plans and modifications that we can get the right 
balance. So I look forward to working on those types of things.
    Mr. Durel, I had a question before we broke on the last 
break. I started thinking about it as we give municipalities 
the opportunities to do broadband. Let us say somebody comes in 
after the fact and wants to do a broadband wireless or wireline 
service but a municipality does not want to give them the 
siting. Couldn't that be like a barrier to entry or an anti-
competitive practice, and would it be wise for us in a balance 
if we want to promote municipalities having that option if no 
one shows up, no one will come in, also making sure that there 
is a shot clock or certainty of a fair process on siting, 
because we have very aggressive mandates of buildout in 700, 
which I think will be great for rural areas and underserved 
markets and cities like Lafayette, but if municipalities hold 
up siting we are not going to get those services in many 
places. Would you mind that type of balance where if we in this 
bill give that choice and at the same time have a siting 
process that would be fair and reasonable both to cities and 
localities, as well as to companies, so that we make sure that 
we don't have anti-competitive or barriers to entry?
    Mr. Durel. And I want to point out that municipalities 
already have the ability to do this. It is a question of having 
legislation that would prevent it from happening, and some 
states have already done that. But, yeah, I think that there 
should be something in there to prevent municipalities from 
saying now that we have done what we have done, that we don't 
want anybody else to come in here.
    Mr. Pickering. Mr. Murray, you have raised questions about 
the language in the legislation possibly not being able to 
predict future consumer needs or what the market is going to be 
or the protections. In the '96 Act we had the triennial review. 
If we put something in this legislation that would have say a 
5-year review for the FCC to look at what consumer protections 
may be needed 5 years from now, would that address your 
concern, and would that be a wise and reasonable way to address 
that, that we just have that type of review process built into 
what we do?
    Mr. Murray. Well, I don't think that that would be as 
responsive as having people who are closer to the ground, 
closer to the potential of fraud and abuse be able to address 
it in an immediately responsive way if the problem arises, and 
then we have a 5-year cycle before we can say, well, is the FCC 
doing enough here. You know, the FCC is a great agency, but 
boy, they have a lot on their plate already, and there are 250 
million cell phone subscribers out there. And I am not entirely 
sure that that is the right place for this to live in its 
entirety.
    Mr. Pickering. But if we built in some type of review 
process, would that be helpful?
    Mr. Murray. I think that if it was a shorter duration 
certainly then 5 years, maybe a bi-annual review, that would 
alleviate some of the concerns, but I don't think it addresses 
it completely.
    Mr. Pickering. Mr. Largent, as you look at the legislation 
what are the areas that cause--if you had to make 3 proposed 
changes to give the industry the certainty that it needs to 
make this investment that we can tighten up the language while 
maintaining the protections on a federal basis as far as our 
standards, what would you recommend?
    Mr. Largent. Well, that is a great question. I think that 
there are a couple of changes that we would recommend. One is 
on the enforcement piece, we think that the attorneys general 
today have the ability to enforce laws of general applicability 
as it applies to the wireless industry, and we would reinforce 
that to see that they could enforce those laws that generally 
apply to all consumers but particularly to consumers in the 
wireless industry. That would be one piece. Another piece is on 
Title III where it actually----
    Mr. Pickering. In the legislation do they give that 
enforcement to the state public service commissions?
    Mr. Largent. They allow the states to determine how they 
are going to do that is my understanding.
    Mr. Pickering. And it is done by the attorney general.
    Mr. Largent. That is right.
    Mr. Pickering. Which would lead to more of a court-legal 
process than a regulatory process.
    Mr. Largent. That is right, and I think that that is 
conducive to actually resolving the problem in the quickest way 
possible.
    Mr. Pickering. Mr. Chairman, again I would like to follow 
up and get some language, and if I could just have a few 
seconds to say later this afternoon I have to go down to the 
White House with Mr. Markey to celebrate the Red Sox and their 
great victory. Now you ask why would a Mississippi boy go to a 
Red Sox celebration? It is because it is a Mississippi pitcher, 
Papelbon, who is their closer, and if they had a Mississippi 
quarterback like the New York Giants, they would have won the 
World Series. Thank you, Mr. Chairman. With that, I yield back.
    Mr. Markey. Thank you. To be more specific, he is talking 
about Jonathan Papelbon and Eli Manning, both sons of 
Mississippi. So we are--I want to tell you, Mr. Durel, that 
your staff has notified us that you are on a 2:00 flight. It is 
now 1:00, and you are going to Washington National, so I think 
you can make it even if we do so after we recognize Mr. Boucher 
for his round of questions. So at the conclusion of that, you 
will be free to leave.
    Mr. Durel. As of now, I may not have a 2:00 flight. We are 
working on it.
    Mr. Markey. You will make it.
    Mr. Boucher. Well, thank you very much, Mr. Chairman, and 
Mr. Durel and other distinguished witnesses, welcome. Thank you 
for sharing your testimony with us today. I am going to try to 
be very brief. I just have a couple of points that I would like 
to make. First of all, I want to acknowledge, as others have, 
the presence in the draft legislation of the title that would 
empower municipalities across the country to offer broadband 
services, and I want to thank Chairman Markey for making that 
provision which I introduced in partnership with Mr. Upton a 
part of the draft legislation.
    Mr. Durel, I was very impressed with your testimony. I want 
to thank you for the way in which you prepared it and the power 
with which you delivered it. I can't resist taking this 
opportunity to respond briefly to the comments made by my 
friend and colleague from Texas, Mr. Gonzalez. He expressed 
concern about making sure that when municipal systems are in 
fact deployed that there is no discrimination by the 
municipality in favor of the municipal system to the 
disadvantage of a private sector competitor, and I would point 
to Section 202 of our draft that basically provides the 
following, that says that a public provider shall not grant any 
regulatory preference to itself or to any provider of advanced 
communications capability or service that it owns or with which 
it is affiliated.
    The second provision says that it shall not apply its 
ordinances, rules, and policies in a way that discriminates in 
favor of any provider of the service, itself included. I have 
the same concern that Mr. Gonzalez had at the time we drafted 
this provision, and so we put this section in in order to make 
sure that the playing ground in fact would be level. And I 
would assume, Mr. Durel, that your municipality has no problem 
in complying with these kinds of safeguards?
    Mr. Durel. Absolutely not.
    Mr. Boucher. That is very good. You can go get on your 
plane as far as I am concerned. Thank you very much for being 
with us today. Mr. Chairman, maybe with your permission, we 
could excuse him.
    Mr. Markey. You are excused, but let me note this if I may. 
Congressman, there is no such thing as a congressional expert. 
We are only experts compared to other congressmen on subjects, 
not compared to real experts on subjects. There is only one 
subject that we are really experts on, and that is getting re-
elected. And I might say this to you as a very conservative 
Republican, I think all of us are of the opinion that you are 
going to have no problems at getting re-elected in Lafayette, 
Louisiana. Thank you so much for your willingness to appear 
before us today.
    Mr. Boucher. Mr. Chairman, let me just comment briefly on 
that section of the legislation that relates to the regulation 
of wireless services. And I very much support the direction in 
which that title of the draft moves us. In fact, several years 
ago I joined with Mr. Inslee and also Ms. Blackburn in offering 
an amendment that had very similar content to the then pending 
legislation, which was a telecom bill addressing a different 
subject. And the ruling was that our amendment, whatever its 
merits, was not germane to the then pending bill, so we 
withdrew that with statements that we hoped the day would come 
in the near future when we could return to that subject and 
address it in a more complete way. And I am delighted that that 
day has now arrived, because I think it is hard to imagine a 
market that is better suited to complete Federal regulation and 
total preemption of state regulation than the inherently mobile 
wireless market, where you could have a person resident in one 
state with a telephone number that is in a zip code for another 
state traveling all across the country, and who is to say what 
state regulation would better suit that individual person.
    I can't imagine a situation better tailored to total 
Federal regulation and complete preemption of state regulations 
than this. So I am very pleased that the time has arrived where 
we can have a discussion about how to do that. I will just 
offer my view. I think the right formula is to say rigorous 
Federal standards so that they are meaningful and so that they 
offer the kinds of consumer protection and service quality 
standards that really are necessary. And it is hard for me to 
imagine a Federal standard too rigorous for me to say is 
appropriate, and so I think it needs to be very rigorous.
    But in return for that fully rigorous Federal standard, we 
need to have complete state preemption, and if I have a fault 
of this draft, it is that it leaves the door open for continued 
state regulation even when a rigorous Federal standard is put 
in place, and so I think as drafted it doesn't fully meet the 
purpose for which I would certainly like to see it applied. Now 
I also think that in return for rigorous Federal standards and 
complete state preemption there ought to be rigorous 
enforcement, and so I am not offended at all by the provision 
in the bill that says that state attorneys general, that state 
public service authorities ought to have the opportunity 
coincident with Federal enforcement to also enforce these 
Federal standards.
    And we have that as an aspect of federalism across a whole 
range of statutes, both regulatory and criminal. And so I don't 
have any problem with that dual level of state and Federal 
enforcement. So, Mr. Largent, let me just put my single 
question of the afternoon to you, and that is this. If we can 
achieve that balance where we have complete state preemption 
but we have a rigorous Federal standard and I know you would 
have some discussion about what ought to be in that Federal 
standard, but let us assume for purposes of this question that 
you are satisfied with what that federal standard is, and that 
remains to be discussed. In return for that and the complete 
state preemption that your industry would receive, would you be 
willing to accept the dual level of enforcement with the states 
being able to enforce through AGs and PUCs coincident with the 
Federal enforcement at the same time?
    Mr. Largent. I would say, Mr. Boucher, I was applauding you 
all the way up until the very end, but I would say this, that 
we would applaud your entire statement as long as the 
enforcement was uniform. We don't care who is enforcing it as 
long as what they are enforcing is uniform. The problem is when 
you start getting different layers of enforcement, so if we can 
say that we got one standard that we are adhering to, and if 
you don't meet that standard it is going to be enforced, and we 
don't care who enforces it, whether it is the FCC or PUC in a 
state, but we want the enforcement to be uniform.
    Mr. Boucher. I don't object to that qualification, but let 
me just make this point. The reason I think it is important 
that the states have some enforcement authority is that there 
are limited Federal resources that can be devoted to 
enforcement, whether that is at the Federal Trade Commission or 
at the FCC or at DOJ or somewhere else, and it is possible to 
imagine a broad range of consumer problems that could arise 
under a rigorous Federal standard, and when a complaint is 
filed at the FCC it takes 3 years to adjudicate it. That is not 
an avenue for relief for that particular consumer. So my view 
is there really is a role for state enforcement. Now I agree 
with you. It ought to be uniform to the extent that the state 
and the Federal authorities are enforcing the same standard. 
That would be a well enunciated Federal standard that is 
clearly defined, and everyone understands that it is, but as 
long as that is met, it just seems to me that the state role is 
important in this equation.
    Mr. Largent. I agree with you.
    Mr. Boucher. OK. Excellent. Thank you, Mr. Largent. Thank 
you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Oregon, Mr. Walden.
    Mr. Walden. You know, Mr. Chairman, if I could for the 
moment, I know Mr. Buyer needs to go over to the Senate side to 
speak to a group of veterans, and so I would like to pass at 
this point and yield--not yield to him but pass and then come 
back.
    Mr. Markey. We can do that. We will recognize the gentleman 
from Indiana.
    Mr. Buyer. I ask unanimous consent to participate in the 
questioning of the witnesses.
    Mr. Markey. Without objection, the gentleman is recognized.
    Mr. Buyer. I thank the gentleman. One, Mr. Largent, if you 
know, what percentage of wireless consumers actually ever pay 
early termination fees?
    Mr. Largent. I don't know the exact statistic, but it would 
be a fraction, 1 or 2 or 3 percent total.
    Mr. Buyer. All right. I am not officially back on the 
subcommittee but will be in the very near future, so I look 
forward to working with Mr. Markey. One thing that does concern 
me, I read your statement and embraced what you wrote on page 
11 of your statement when you talked about only 26 wireless 
consumers per million have complaints about their wireless 
service, and this is the most recent data that was released to 
the FCC. Now when I look at questions like this, I have to put 
it--if I am going to make judgments and it is based on 
principle-oriented decision making, I have to put it into a 
matrix that says, all right, if we are going to do some form of 
consumer protection, what will be its impact upon liberty, will 
we continue to be able to promote economic opportunity, are we 
going to be enhancing high standards while at the same time we 
have with regard to these devices, we have speech, we have--we 
have freedom of speech, freedom of expression, freedom of 
association?
    Yes, the courts have allowed legislatures and congresses to 
act on consumer protections, but in this case, I look and say 
how are industries doing policing themselves? And I look at 
this--now if you say here you have got 26 per million, I will 
go to my congressional district. If I have got now, the growth 
of my congressional district----
    Mr. Markey. How about this room?
    Mr. Buyer. If I have 750,000 in my congressional district, 
if I use the same ratio that means I have only got about 19 
people would be complaining about me. Boy, that is pretty 
sweet. That is a great correlation, but is it unrealistic? But 
as I look at that, I go, wow, that is an industry that is doing 
pretty well if you got 26 per million and your trend line is 
going down as your prices are going down and the cost per 
minutes are going down. And if the competition is there and 
increases, all it does is place more pressure on you to do your 
job well, otherwise, people are going to go somewhere else. And 
so I look at this and say I embrace Mr. Markey's sincerity. I 
have never judged it.
    But if there is ever a moment where we need to be cautious, 
it may be now and be very careful in what we do. Now in Indiana 
I advocated and worked with the governor, and we wiped out a 
lot of these regulations in Indiana, and we have done that so 
of all the states out there Indiana, my gosh, you can 
freelance. It is the wild west out there with regard to the 
technological renaissance. And if I am worried about the impact 
upon liberty, then I am deeply concerned about increased 
regulation at a time when the industry seems to be doing really 
well. And take, for example, we allow the press. Right? The 
press pleases itself. We don't get into the censorship.
    We say you have got your codes of ethics, and we can debate 
whether they actually enforce their codes of ethics or not. I 
would submit they don't do it very well, but if you have got 
your code and you place demands upon your members and your 
results are pretty strong, then one of my colleagues talked 
about all these complaints. Well, all these complaints, does 
that mean the 26 of all these complaints? So is there a boogey 
man in the closet? Are they under the bed? I don't know. My 
concern is that we better be walking cautiously here. That is 
just my impression. Mr. Largent, do you have any comment?
    Mr. Largent. And I share your concerns, but our problem is 
it is not the Federal regulation that we are feeling nipping at 
our heels today. It is the state regulation, and that is what 
this particular bill addresses is where there are 20 states 
right now that introduced over 400 bills to regulate the 
wireless industry on terms and conditions, and under just that 
nomenclature, the terms and conditions, the contract terms and 
conditions, we have 1.3 complaints per million subscribers.
    Mr. Buyer. I concur with all of that. When I say walk 
cautiously, we can say we are going to do Federal preemption, 
yet we are going to allow all these state AGs to go out and set 
their own standards and losses.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Oregon, Mr. Walden.
    Mr. Walden. Thank you very much, Mr. Chairman. I 
appreciated this hearing. Mr. Largent, I want to go through as 
I was reading through this section-by-section on this 
legislation just some of the issues that come up as they are 
described, and perhaps you can help me better understand what 
is being proposed here. I know in Section 101 it talks about 
disclosure of roaming charges, and I understand roaming 
charges. My question is, as mobile as people are, if I go into 
a cell provider how easy is it for them to disclose all the 
different roaming charges? Is that an issue that we need to 
have any concern about?
    Mr. Largent. No, it is not an issue. It is part of our 
consumer code already.
    Mr. Walden. Then in Section 103 it talks about the maps 
must factor in topographic and other variables and impact 
service availability and identify limitations in the 
reliability of the maps. Now I had several of my colleagues 
here talking about the size and scope of their districts. Mine 
is 70,000 square miles, which stretches from the Maryland 
shores to Ohio. I was just out traveling 1,124 miles in 8 
counties over 5 days. A lot of that area has no coverage. Some 
of it has coverage, but it depends upon the contours. Do you 
have any concerns that the maps that you are going to be 
required to produce here can accurately be done, or do they do 
a Longley-Rice standard? What standard will be used to look at 
shadowing and everything else?
    Mr. Largent. Well, the problem is that the maps are 
changing on a regular basis.
    Mr. Walden. Right.
    Mr. Largent. And the biggest problem that that presents is 
to our smaller carriers, to our mid-size and small carriers who 
don't have maps that are on the Internet, that have physical 
maps that they are having to replicate or redo on a regular 
basis as they build new towers. Our larger carriers all have 
their maps on the Internet. They are pretty adjustable for 
that.
    Mr. Walden. Right, but when this is put in statute and you 
are required to have them, does that open up for some sort of 
penalty phase? Is there a private right of action in here if I 
have a cell phone and determine while I am driving out in the 
mountainous country I don't get service and your map shows I 
would, but because I drop down into one valley and out, how 
specific do these maps have to be?
    Mr. Largent. Well, that would be subject to the 
legislation, and I am not sure what the specificity would be, 
but we have a code that we follow, the CTIA consumer code for 
wireless services that requires mapping. And my concern on this 
particular provision is requiring our carriers to put their 
maps on the Internet, and all of our companies are not big 
enough to have maps on the Internet because they are so small, 
and that would be one thing that I think would be an exception 
to this particular bill.
    Mr. Walden. OK. Let me go to Section 104, which deals with 
the charges that can or cannot be disclosed. And I have been 
reading through the summary of the section, and I am trying to 
figure out what we are really getting at here. Does that 
preclude you from listing specific charges?
    Mr. Largent. Yes, it would.
    Mr. Walden. And which charges would those be?
    Mr. Largent. It would be the charges are billed under 
regulatory fees, and that would be charges that carriers incur 
for having to deduct from their customer's bills for various 
regulations, so that state, local, as well as Federal 
regulations on E-911, CALEA, universal service----
    Mr. Walden. So I as a consumer wouldn't know what those 
charges are because you would be precluded from detailing those 
specifically on my bill?
    Mr. Largent. What I am talking about specifically is the 
charge that is incurred to the carrier to actually deal with 
all those fees.
    Mr. Walden. Right.
    Mr. Largent. So, in other words, I don't think there is 
anything in the bill that precludes a carrier from putting on 
the actual charge that you have to pay for universal service or 
E-911. You can put that on the bill. But what we are saying is 
there is actually a cost to the carrier to have to deal, juggle 
all those balls before he puts out a bill, and that is the 
charge that is often put on, 70 cents per month or whatever 
that is on a customer's billing. That would not be allowed.
    Mr. Walden. You couldn't charge that or you couldn't 
disclose that?
    Mr. Largent. You couldn't disclose that.
    Mr. Walden. I would still be paying it. I just wouldn't 
know why.
    Mr. Largent. That is exactly right.
    Mr. Murray. But the difference is you would have that 
number up front when you buy service rather than it being a 
charge that pads the bill. Let us be clear. E-911, cost of 
compliance for that, that can be explicitly on the bill.
    Mr. Walden. I have been in and out of different cell 
carriers, and I know this bill does some good things to say we 
are going to make this a lot clearer for consumers to 
understand, but once you have signed up you have long forgotten 
what was in that small print, but when I get that bill every 
month it is kind of nice to know the specifics. I am just 
trying to figure out why we would put in the law that they 
can't put something like that on their bill. What is the 
justification?
    Mr. Murray. So the idea is, number 1, any charge that is 
authorized by a government so E-911, that is on the bill, no 
problem. What we don't want to see on the bill is the 
administrative overhead for that, the bottom line padding, but 
what it allows----
    Mr. Walden. Why not? Why wouldn't you want to disclose 
that?
    Mr. Murray. Well, because what the carriers are doing is 
they advertise, for instance, you can get a product for $50 a 
month.
    Mr. Walden. All right.
    Mr. Murray. And then so you say, oh, I got $50 a month. At 
the end of the month the bill comes back and it looks more like 
$75, $80 because there are all these mystery fees that pop up.
    Mr. Walden. I see what you are saying.
    Mr. Murray. All I am saying is if there is going to be an 
all-in price that is going to include some overhead, some 
administrative overhead, let us just tell consumers up front, 
that is all.
    Mr. Markey. The gentleman's time has expired.
    Mr. Walden. Thank you, Mr. Chairman.
    Mr. Markey. All time for this hearing has expired. I 
apologize to all of you. I wanted to give you each time for a 
concluding statement, but this constant series of roll calls on 
the House floor will make that impossible. We are obviously 
interested in working with each of you and all other parties 
interested in this legislation. We thank you for your 
participation today. This hearing is adjourned.
    [Whereupon, at 1:26 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                   Statement of Hon. John D. Dingell

    Today the Subcommittee will receive testimony on a draft 
version of the Wireless Consumer Protection and Consumer 
Broadband Empowerment Act of 2008. I look forward to working 
with Chairman Markey, who developed this draft, and my 
colleagues on both sides of the aisle to seek consensus on its 
overarching goals.
    This draft legislation addresses three important topics. 
The first concerns consumer protection and the regulatory 
structure of the wireless industry. I am mindful that much has 
changed since 1993, when Congress established the current 
regulatory regime for wireless services. Since that time, and 
with increased competition, consumers have enthusiastically 
adopted wireless devices. According to the Washington Post, 
cell phones have spread across the globe faster than any 
technology in history. There are now 3 billion phones in use 
globally and about 243 million wireless devices in the United 
States.
    This impressive growth, however, has been accompanied by an 
increasing number of consumer complaints about confusing or 
unfair contract terms, an inability to change providers because 
of early termination fees, poor service coverage, and other 
failings. These complaints, in turn, have prompted some States 
to pass or seek to pass legislation to remedy these problems. 
The wireless industry is then faced with regulatory 
requirements that vary by State. Sometimes these State 
requirements even conflict with each other.
    The draft bill's solution is to establish a strong set of 
Federal consumer protections and to preempt State efforts to 
regulate the wireless industry. I am mindful that for Federal 
preemption in this instance to be meaningful, it must represent 
not only a floor, but also true preemption of inconsistent 
State regulation. Thus, a national framework must provide not 
only meaningful and enforceable consumer protections, but also 
preemption that is structured to give wireless carriers more 
certainty in their business.
    Striking the right balance between protecting consumers and 
providing the industry with a more manageable regulatory 
structure will not be easy. This Committee carefully 
established the current regulatory framework for the wireless 
industry, and precluding a State from protecting its citizens 
is never a simple matter. However, many wireless carriers 
operate national businesses, and it is possible that consumers 
could stand to gain from a more Federalized regime. This bill 
represents the starting point of this process. My focus as we 
move forward will be to ensure that consumers remain protected 
under any regime that we may develop.
    Second, the draft legislation addresses the abilities of 
towns and cities to build their own broadband networks. This 
piece of the draft legislation is a bill introduced by Mr. 
Boucher and Mr. Upton, and I commend Chairman Markey for 
including it here. Some States have passed legislation that 
prohibits a town or city from building networks, even when the 
residents of those towns or cities are not served by a single 
private broadband provider. The draft bill would preempt those 
State laws, thereby promoting broadband deployment. As I have 
said before, I believe that if cities or towns are not 
adequately served by private sector networks, they should not 
be hindered in their ability to build their own advanced 
networks. It makes little sense to me that we should keep 
broadband from those who need it most. So long as all broadband 
providers are treated fairly, I would hope to quickly reach 
consensus on this issue.
    Finally, the draft legislation seeks to make the Federal 
Government's use of spectrum more efficient by requiring the 
use of the latest technologies. This is a laudable objective 
that, if achieved, could provide Government users with the best 
available technologies and potentially make more spectrum 
available for commercial use. I look forward to hearing more 
about this aspect of the legislation.
    Tackling these difficult issues this year will require 
cooperation and consensus not only across the aisle, but also 
among wireless carriers, States, consumer groups, and others. I 
appreciate Chairman Markey's initiating discussion by 
circulating the staff discussion draft. Much work remains to be 
done, but I look forward to working with all interested parties 
to craft a solution that will enhance the protection of 
consumers while lending certainty to the wireless industry.
                              ----------                              


                     Statement of Hon. Eliot Engel

    Chairman Markey, Ranking Member Stearns--
    I would like to thank you for holding this hearing today. 
In my 19 years in Congress, I have been one of the biggest 
supporters of consumer rights, and I am glad to see this 
legislation come up today. Clarifying consumer rights in the 
wireless industry is something that consumers and providers can 
all support. And I thank CTIA as well as consumer groups for 
coming here today.
    The wireless industry is a remarkable success story. When I 
came to Congress in 1989, the idea that cell phones would be so 
ubiquitous was laughable. But now, I and just about everybody 
else in this building carries a cell phone and a blackberry 
everywhere we go.
    This success can not only be traced to the demand in the 
market. The Congress helped this process by not over-regulating 
the wireless industry. And this committee should get a lot of 
credit for that. A tremendous job was done by both parties of 
balancing the rights of consumers with the good of the 
marketplace. And while this is a good piece of legislation that 
we are discussing today, I want to ensure that we continue to 
walk that balance.
    Currently, the FCC can regulate pricing of wireless plans, 
while states can regulate the terms and conditions of the 
plans. And this means that one state can regulate what can be 
on a wireless bill, another can mandate the size and type of 
the font, and another can regulate the early termination fee. 
Unfortunately, this has the potential to quickly turn into a 
patchwork of 50 different sets of regulations. Mr. Chairman, I 
applaud you for bringing up this legislation. This legislation 
would work to end this patchwork and create one strong national 
standard that consumers and providers can appreciate.
    We should be careful, however. I think everybody here is 
interested in passing a consensus bill that all sides support. 
But if we allow a great deal of leeway in the legislation to 
allow states to continue to create many new rules and 
regulations, we risk losing the consensus that this bill has 
the potential to create.
    I also strongly support the municipal broadband provisions 
of this legislation. A number of municipalities have begun to 
roll out broadband internet access, only to be stymied by state 
legislation preventing the rollout.
    Universal broadband is an excellent target that this nation 
should shoot towards. Broadband can bring additional commerce 
to an area, it can bring better health care at lower cost, and 
it can bring multimedia presentations and new learning 
opportunities to students that currently lack them. We should 
not stand in the way of cities that want to provide broadband 
to their citizens. So I strongly support the provisions in this 
legislation to allow cities to propagate broadband access.
    Finally, I appreciate the goal of this legislation to 
streamline the spectrum to make room for new technologies and 
services. As we all know, the spectrum is simply running out of 
room. But with new smart radio technologies, we can more 
efficiently use the spectrum that is currently being utilized. 
By freeing up space on the spectrum, we can allocate more space 
for public safety or put it up for auction as we are currently 
doing with the 700 megahertz portion of the spectrum.
    Mr. Chairman, I again want to say that I appreciate this 
legislation, and I look forward to working with you to make it 
even stronger for all sides. I yield back the balance of my 
time.
                              ----------                              


                    Statement of Hon. Anna G. Eshoo

    Thank you Mr. Chairman, for holding today's hearing.
    While I believe that comprehensive consumer protections are 
necessary for wireless services, I'm concerned that 
comprehensive preemption could undermine current California 
law. California has led the nation in seeking to address the 
problems that plague many wireless customers, and our laws in 
this area continue to evolve. I think it would be a mistake for 
Congress to step in with a heavy hand and pull the plug on this 
process.
    The bill preempts state laws that are inconsistent with the 
bill and correctly places the burden on wireless carriers to 
demonstrate to the FCC that state laws are inconsistent with 
this bill. I'm concerned about the effect of this provision on 
current California law and the uncertainty it could create on 
how to determine which laws are consistent and which laws are 
not, which could lead to protracted litigation in Federal 
courts.
    It is clear that this Subcommittee should be reviewing 
wireless consumer protection legislation, considering that 
wireless service ranks near the bottom of Consumer Reports' 
annual consumer satisfaction survey. Consumers are concerned 
about rising prices for service, early termination fees, and 
poor service coverage. I will continue to review this 
legislation and look forward to working with the Subcommittee 
on it.
    Thank you Mr. Chairman for holding this hearing and 
drafting this legislation.
                              ----------                              


                      Statement of Hon. Lois Capps

    Mr. Chairman, thank you for holding this hearing. I have 
certainly heard from my constituents regarding their 
experiences as consumers of wireless products and look forward 
to the testimony here today.
    I would like to first say that I am encouraged by the 
collaboration on these issues between Congress, the wireless 
industry, and consumer groups.
    As technology continues to evolve at incredible speeds, we 
must rely on each other to further maximize consumer benefit of 
the public spectrum.
    The large shift in consumer reliance on wireless services 
has resulted in the need to reconsider what constitutes an 
adequate regulatory regime but also what constitutes adequate 
consumer protections.
    Moving forward, we must consider that consumer mobility 
performs an important function in promoting free market 
competition and that full and appropriate consumer disclosure 
is paramount to ensuring that that competition is fair.
    Like the Chairman, I believe that, working together, there 
are effective ways to address these concerns.
    I look forward to the testimony and to further discussion 
of this draft legislation.
    Thank you again to Chairman Markey and to our witnesses 
here today.



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