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



 
                ISSUES IN TELECOMMUNICATIONS COMPETITION
=======================================================================

                                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

                               __________

                             JULY 22, 2008

                               __________

                           Serial No. 110-138


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

                           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             CLIFF STEARNS, Florida
    Vice Chairman                        Ranking Member
JANE HARMAN, California              FRED UPTON, Michigan
CHARLES A. GONZALEZ, Texas           NATHAN DEAL, Georgia
JAY INSLEE, Washington               BARBARA CUBIN, Wyoming
BARON P. HILL, Indiana               JOHN SHIMKUS, Illinois
RICK BOUCHER, Virginia               HEATHER WILSON, New Mexico
EDOLPHUS TOWNS, New York             CHARLES W. ``CHIP'' PICKERING, 
FRANK PALLONE, Jr., New Jersey           Mississippi
BART GORDON, Tennessee               VITO FOSELLA, New York
BOBBY L. RUSH, Illinois              STEVE BUYER, Indiana
ANNA G. ESHOO, California            GEORGE RADANOVICH, California
BART STUPAK, Michigan                MARY BONO MACK, 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..................................     3
Hon. Charles W. ``Chip'' Pickering, a Representative in Congress 
  from the State of Mississippi, opening statement...............     4
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, opening statement....................................     5
Hon. John D. Dingell, a Representative in Congress from the State 
  of Michigan, prepared statement................................   101

                               Witnesses

Matthew Salmon, President, CompTel...............................     6
    Prepared statement...........................................     9
Larissa Herda, Chairman, President and Chief Executive Officer, 
  tw telecom, Inc................................................    16
    Prepared statement...........................................    18
Carl J. Grivner, Chief Executive Officer, XO Communications......    47
    Prepared statement...........................................    49
Catherine Avgiris, Senior Vice President and General Manager, 
  Voice Services, Comcast Cable..................................    66
    Prepared statement...........................................    68
Jonathan Banks, Senior Vice President, Law and Policy, United 
  States Telecom Association.....................................    75
    Prepared statement...........................................    77

                           Submitted Material

Edison Electric Institute, statement.............................   102


                ISSUES IN TELECOMMUNICATIONS COMPETITION

                              ----------                              


                         TUESDAY, JULY 22, 2008

              House of Representatives,    
         Subcommittee on Telecommunications
                                  and the Internet,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 2:10 p.m., in 
room 2123 of the Rayburn House Office Building, Hon. Edward J. 
Markey (chairman) presiding.
    Members present: Representatives Markey, Gonzalez, Stearns, 
Upton, Pickering, and Terry.
    Staff present: Amy Levine, Tim Powderly, Colin Crowell, 
David Vogel, Philip Murphy, Neil Fried, Ian Dillner, and 
Garrett Golding.

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

    Mr. Markey. I am going to now convene to order this 
Subcommittee on Telecommunications and the Internet hearing, 
and today's hearing is about several issues affecting 
telecommunications competition. This hearing comes several 
hearings after other hearings dealing with these issues 
including two last year that examined telecommunications 
competition in the United States as well as broadband lessons 
from abroad.
    Looking back, observers increasingly recognize that the 
United States started out on the right path by implementing 
provisions in the 1996 Telecommunications Act that were 
specifically intended to jump-start competition between and 
among technology platforms. When the Telecommunications Act was 
enacted in 1996, residential consumers did not have any 
broadband offerings in the marketplace. Nineteen ninety-six, no 
broadband offerings for any consumers. Yet soon after 
enactment, deployment by cable and competitive new entrants 
prompted the incumbent phone companies to finally deploy such 
services to residential consumers. By 2000, the United States 
was ranked first in the world, but subsequently regulators 
began the ill-considered action of taking the market opening 
rules off the books and the United States started to slide down 
in international broadband rankings. People may quibble with 
the methodology used in such rankings, but regardless of how 
you slice it--price, speed, percentage of subscribers--the 
United States is clearly no longer on top. Ironically, our 
foreign competitors are now enjoying broadband success stories 
by adopting and implementing many of the policies that were 
embodied in the Telecommunications Act but that the FCC has 
subsequently abandoned.
    Several pressing competition issues including pole 
attachment rates, interconnection issues, number of reporting 
time frames, copper wire retirement, and forbearance 
legislation are before the subcommittee today, and each of 
these issues, if resolved correctly, can help promote greater 
broadband deployment, speeds, and consumer choice. These issues 
also highlight the repercussions caused by the FCC's regulatory 
reclassification of services such as broadband access to the 
Internet. This semantic confusion and the ensuing regulatory 
uncertainty leave countless carriers and industry participants 
without clear direction as to their legal rights and 
obligations under the law. The fact that one incumbent 
provider, Vermont Telephone, felt that it was empowered to deny 
interconnection to another provider shows how far some in the 
industry as well as at the FCC have strayed from the intent of 
Congress in the Telecommunications Act of 1996.
    The continued invocation of intuited ancillary authority 
under Title I of the Telecommunications Act to alternatively 
modify, waive or plug statutory holes in our Nation's 
communications laws and regulations is untenable in the long 
term, in view. Congress should address these issues and others 
including broadband consumer protection issues comprehensively 
in the next Congress as part of overarching broadband policy 
legislation.
    Today's hearing is also a formal legislative hearing on 
H.R. 3914, a bill offered by Chairman John Dingell and myself 
addressing forbearance issues. This legislation fixes a glaring 
problem in the Telecommunications Act by removing the so-called 
``deem granted'' provision contained in section 10 of the 
Telecommunications Act. This provision currently permits 
automatic deregulation of duly enacted statutes if the 
Commission fails to act within the statutory time period. This 
can occur even if a tie vote demonstrates no clear majority 
supports such deregulation. With the Commission having 
permitted forbearance on a two-two tie previously and possibly 
having just four commissioners serving early next year, this 
concern is not purely theoretical. If there is a clear majority 
to support forbearance on specific obligations, then let us 
have the FCC act in timely fashion with written justification 
to approve such forbearance. But an agency's inability to act 
should not result in the removal of statutory duties that may 
have taken Congress years and a clear Congressional majority to 
enact.
    In addition, I continue to be concerned about the process 
by which the Commission considers forbearance petitions. In the 
past, industry petitioners have gained the proceeding by filing 
amendments to their petitions so late in the time period for 
consideration that effective parties and the public have no 
meaningful opportunity to consider and respond to the proposed 
amendments. The Commission has an open proceeding to reform 
this obvious abuse to the process, and I urge the Commission to 
act to protect the integrity of the proceedings and the public 
interest.
    I want to thank all of our distinguished witnesses for 
their willingness to participate here today.
    I now turn to recognize the ranking member of the 
Subcommittee on Telecommunications and the Internet, the 
distinguished gentleman from Florida, Mr. Stearns.

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

    Mr. Stearns. Good afternoon and thank you, Mr. Chairman, 
and I welcome all our witnesses this afternoon. The main focus 
of this hearing frankly is on Chairman Dingell's bill, which is 
H.R. 3914, to eliminate the deemed granted language from the 
Communications Act forbearance provision. And with this panel, 
I am sure we will get a balanced treatment on both sides, and 
Mr. Chairman, you brought out several points. I hear you 
continually mention how the United States is lagging in 
broadband. I am reminded that Dr. Ford, who testified at one of 
our hearings, who used to work for the FCC and now is with a 
think tank, he showed that the OECD ranking misrepresents the 
degree of broadband deployment in the United States. We have 
more broadband subscribers than any other nation. I don't know 
that I can let that go because I think there is some question 
about the United States lagging so much but I know we can 
certainly do better.
    We have more competition and better technology than ever 
before, my colleagues, and the market is evolving faster than 
either the FCC or Congress themselves can keep up with. 
Consumers clearly benefit from the accelerating convergence of 
technologies that allow for vibrant, cross-platform competition 
in voice, video and broadband. As Congress and the FCC evolve 
the regulatory environment, they should do so on a 
technologically neutral basis that creates parity among the 
different types of providers regardless of the platform.
    The deemed granted language was designed to ensure that the 
FCC would not let petitions for deregulation languish and so 
that Congress would not need to go through the time-consuming 
legislative process every time the market outpaced the law, 
which as we have seen over the last two decades is quite a 
common occurrence.
    Our posture prior to 1996 was regulating unless it could be 
proven that regulation was not necessary. This led to 
overregulation and stifled growth and innovation. With the 1996 
Act, as the chairman pointed out, flipped it and instead of 
regulating by default, the burden was switched to the FCC to 
defend regulation of telecommunications carriers. This change 
led to the elimination of many arcane and unnecessary 
regulations and is partly responsible for the tremendous growth 
and innovation we have seen in the past 12 years. In this 
market environment, the FCC should have the burden to 
demonstrate that its regulations are still necessary.
    The deemed granted provision is having the intended effect. 
Various segments of the industry including both incumbent and 
alternative providers have filed 91 petitions. Under the threat 
of petitions being deemed granted, the FCC has ruled on 96 
percent of them. Moreover, the FCC has not been granting 
petitions indiscriminately. Of the 87 petitions the FCC acted 
on, it denied a percent in whole or part and approved 23 
percent. So without the deemed granted language, the FCC is 
unlikely to have ruled in as timely a manner as they did, if at 
all. The result: we would still be stuck with many outdated and 
overly burdensome regulations that do not apply to the new 21st 
century technology. Perhaps much of the innovation we have seen 
would not have occurred.
    The deemed granted language should be retained because it 
is critical to ensuring the FCC acts in a timely way. My 
colleagues, nevertheless, some in industry have raised 
questions about the FCC's procedure for evaluating these 
petitions. We need to work to reform the process, not gut the 
language that makes the provision work. That is why last 
October I and a number of my colleagues authored a letter 
asking the FCC to improve and reform the process so that all 
parties and the FCC can evaluate all the factual evidence in 
support or opposition of a particular forbearance request. The 
letter expressed concern with the current forbearance 
proceedings and whether or not adequate procedures are in place 
to ensure that a rigorous analysis is conducted. Sometimes 
petitions are incomplete when they are filed and only at the 
last minute is all the information submitted. We should be 
focusing our attention on that kind of FCC process reform, not 
striking the deemed granted.
    Another issue that needs further examination is pole 
attachments. I do not know what the right answer is but the 
rules that govern attaching communications equipment to poles 
are a mess. The FCC needs to start to clear this up while 
keeping in mind that any rate increase could damage broadband 
penetration. I hope our witnesses today can help us better 
understand the issues here today and help us to move forward.
    So Mr. Chairman, I think this is a very timely hearing. 
While I do not necessarily support eliminating the statutory 
deemed granted provision, the FCC's forbearance process is in 
need of reform and I look forward to working with you and other 
committee members to get it conducted fairly and greater 
transparency in the forbearance process. Thank you, Mr. 
Chairman.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Texas, Mr. Gonzalez.
    Mr. Gonzalez. I waive opening.
    Mr. Markey. The gentleman's time will be reserved. The 
chair recognizes the gentleman from Mississippi, Mr. Pickering.

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

    Mr. Pickering. Mr. Chairman, I thank you for this hearing 
and want to commend you for the effort.
    Forbearance is a good and necessary thing as part of the 
1996 Act so that we can update and modify as markets change and 
evolve but there are possible problems with the deemed granted 
that if we could have a Commission with only four instead of 
having the full five and that could be a very real possibility 
coming the first of this year. We would not want to see a 
loophole created where a rash of petitions are filed and then 
the inability to really thoughtfully act on the forbearance 
petitions as has been done in large part so far to date.
    So I commend the chairman of the subcommittee for this 
effort. I think it closes a loophole. It gives certainty. It 
maintains deadlines and the forcing requirement that the FCC 
truly act on these petitions. I think it is a good balanced way 
with this bill that we can have a workable forbearance policy, 
certainty in the market and that the FCC is still required to 
act in a timely way, and so I commend you for this hearing and 
look forward to hearing the witnesses today on the panel, not 
only on forbearance but other issues that are affecting 
competition in the marketplace, and with that, I yield back, 
Mr. Chairman.
    Mr. Markey. Great. The gentleman's time has expired. The 
chair recognizes the gentleman from Michigan, Mr. Upton.

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

    Mr. Upton. Well, good afternoon, and it is nice to be back. 
I appreciate that we are having this hearing today and seeing 
our former colleague, Mr. Salmon, among us. So nice to have you 
here, Matt.
    I am interested in hearing from our witnesses regarding 
this legislation. The trend in the telecommunications sector is 
toward development of advanced technologies and increased 
competition. Deregulation has successfully promoted investment, 
innovation and more competition, benefiting consumers across 
the board. In my view, the addition of section 10, the deemed 
granted forbearance provision to the Communications Act, was 
indeed a very positive development. It is clear to me that as 
the level of competition in the market increases, the amount of 
government regulation should decrease, and I hope that we would 
all agree that markets do a better job of protecting consumers 
than regulators do, and in a competitive market we should 
permit market forces to work and not interpose government 
regulators between providers and consumers. All that does is 
impede the competition that we all want to see.
    The number of consumer choices and services available has 
significantly grown as we trend away from regulation. When 
competition is present, we must continue the course away from 
regulation, and as new services and technologies become 
available, we must avoid the lure of government red tape.
    Yet it seems that the FCC is sometimes reluctant to pull 
back and allow those market forces to work. It sometimes 
inserts itself between consumers and providers, frustrating the 
operation of market forces. I believe that it is important that 
FCC decisions should be made deliberately and that a written 
explanation of the Commission's rationale should be made 
available to the public. But the deregulatory process of 
section 10 helps to correct the regulatory bias of the 
Commission, and in my view, the deemed granted language should 
be retained. It is a pro-consumer provision that helps to keep 
the agency from interfering with the relationship between 
buyers and sellers and allows the consumers to benefit from the 
operation of market forces including both incumbent and 
alternative providers to make sure that they have run through 
the full process, and as my colleague from Florida, Mr. 
Stearns, indicated, the FCC has issued orders for 96 percent of 
the petitions. Without the deemed granted language, the FCC is 
unlikely to have ruled on the petitions in as timely a manner, 
if not at all. Only four petitions have been deemed granted. 
Only one was controversial of those, and of the other three, 
one was unopposed and two facilitated telephone relay services 
for people with disabilities.
    Some in the industry have questioned the FCC's procedures 
for evaluating petitions. The answer, I think, is to reform the 
FCC process and not gut the language that makes the statutory 
provision work, and I yield back the balance of my time.
    Mr. Markey. The gentleman's time has expired.
    All time for opening statements from members has expired.
    We are now going to turn to our very distinguished panel, 
and our first witness is the Hon. Matt Salmon, who is the 
President of Comptel, a trade association representing 
competition broadband providers. Mr. Salmon served in the U.S. 
House of Representatives from 1995 to 2001, and at the time was 
the only member of Congress in history to speak Mandarin 
Chinese, which is pretty close to the skill level you need to 
understand telecommunications regulations. So we welcome you, 
sir. Whenever you are ready, please begin.

        STATEMENT OF MATTHEW SALMON, PRESIDENT, COMPTEL

    Mr. Salmon. Thank you. I might as well give my speech in 
Mandarin, then nobody can argue with anything I say.
    Chairman Markey, Ranking Member Stearns, other members of 
the subcommittee, it is an honor to be here today. As Chairman 
Markey said, my name is Matt Salmon. I am the President of 
CompTel. As many of you know, Comptel is the face of the 
competitive telecommunications industry. Our members are 
telecommunications service providers and their supply partners 
and they offer a wide range of wireline, wireless, and VoIP 
services. Our industry expanded exponentially when passage of 
the 1996 Telecommunications Act made competitive entry into the 
local telecommunications market possible. I am proud to say 
that our members have competed and continue to compete 
vigorously and with innovative technology. Although DSL 
technology was sitting on the shelf collecting dust in the Bell 
world, the new entrants were the first to deploy that 
technology. Only after competitors took action to respond to 
what consumers wanted and needed, the Bell companies finally 
responded to deploy DSL. This is the hallmark of the 
competitive telecommunications industry. Our companies push for 
and deploy innovative technologies before the big phone 
companies deem those consumers worthy of such services. Other 
examples are triple play, Ethernet over copper, fixed wireless, 
nationwide high-speed services over advanced fiber networks, 
and the list can go on and on.
    I cannot overemphasize that the competitive industry has 
spent billions investing in broadband technologies and 
infrastructure. It is not just the phone and cable companies, 
as some would like Congress to believe, and the investment is 
not solely in just deploying new infrastructure. Our companies 
also maximize existing infrastructure including the legacy 
copper facilities that we lease from the Bells. For the 
telecommunications future of the United States, it is all about 
broadband, and without the competitive industry, this Nation 
will continue to drop in the broadband ratings. The policy and 
goal of giving all American consumers and businesses access to 
broadband options and services depends on numerous platforms 
competing, not just two.
    Mr. Chairman, I believe I have a unique perspective because 
before running for Congress I spent 13 years as a 
telecommunications executive for one of the Bells. I began my 
career with Mountain Bell, which after the breakup of the Bell 
system became U.S. West. As many of you know, they are the 
predecessor to Qwest Communications. And during the creation 
and passage of this Act that we are talking about today, they 
and the other Bell companies were all about competition. They 
wanted to compete in the very lucrative long-distance markets. 
As such, the deal for Qwest and other Bells to open their 
networks to competitive companies like ours seeking to enter 
into the local markets was struck.
    I am familiar with this deal as I was a member of Congress 
from the First Congressional District in Arizona, when we were 
lobbied intensely by Qwest and other Bells during the passage 
of that act. During my 6-year tenure in Congress, I remember 
few issues that were lobbied more intensely or where more 
promises were made by the Bell companies. In fact, it reminded 
me of an old poem my father used to recite to me: ``Just Before 
Christmas, I'm As Good As I Can Be.'' The ink was not even dry 
on the President's signature before the Bells challenged the 
constitutionality of the Act. Furthermore, a full decade of 
costly litigation ensued at the FCC on the rules the Commission 
crafted to implement the Act. These rules are the reason 
competition exists in a market where the majority of the lines 
to consumers and businesses are owned by a handful of large 
companies.
    While many aspects of the Act enabled and propelled 
competition, section 10 has been really troubling. This small 
section actually has the ability to undo all the good the rest 
of the Act seeks to accomplish. I commend Chairman Dingell for 
his introduction of H.R. 3914, which addresses one of the most 
troubling parts, and you have talked about that. I would just 
ask you on the whole deemed granted issue, imagine a committee 
or a subcommittee here in these hallowed halls in Congress 
where a tie vote is enough to pass the bill or where three 
bills are scheduled, only two are heard, and because of that, 
all three pass. We would all say that was ludicrous, and it 
would be, but essentially that is the type of process that we 
have to deal with at the FCC, and passage of 3914 would go a 
long way toward fixing this deemed granted provision, and we 
would all hope that action could also be taken to stop the 
revolving door of multiple filings of forbearance petitions on 
exactly the same issues. For example, less than 100 days after 
Verizon's forbearance requests were soundly defeated at the 
FCC, they filed again in two of those markets. Nothing really 
changed. Not only do these frivolous petitions diminish the 
Commission's time and capacity to focus on critical issues like 
USF reform, media ownership, digital transition, and other 
issues of high importance to Congress and the American people, 
they forced the competitive industry to use valuable capital 
fighting these frivolous petitions. We would rather use the 
millions upon millions of dollars that we spend advancing our 
issues and research and development in growing our companies 
and helping our customers.
    One final note on section 10 of the Act. I don't believe we 
ever envisioned when we passed the Telecom Act that we would 
have a provision that could unilaterally undo the very act 
itself. Essentially that is what is happening. What we need to 
do is focus on this fact: there is virtually only one wholesale 
provider that gives us access to the last mile, the Bell 
Company. Once reasonable access to the last mile is taken away, 
the marketplace is left with a full monopoly on access to 
business customers' services and a duopoly between cable and 
the Bells on residential services. How does that protect 
consumers and how is that in the public good, as Section 10 
purports to do?
    Mr. Chairman, our membership is diverse but our needs are 
very uniform. Whether it is dealing with special access, 
unbundled network elements, interconnection or pole 
attachments, all we are asking for is to continue to have 
access to the monopoly infrastructure at the cost-based rates, 
the very rights provided for our companies under the Act. Our 
members did not build out networks in a monopoly world, and 
under the old telecommunications welfare program where state 
commissions provided a guaranteed rate of return. Every penny 
invested in infrastructure by the Bells before the Act was met 
with a guaranteed rate of return. Unlike the Bell companies, we 
did not inherit a government-sponsored network. Our investors 
bore all the risk with starting our companies and building our 
networks. We are not asking for any handouts or giveaways, and 
heaven forbid, we are not asking for any earmarks. We do not 
come before Congress and ask for the rules to change before we 
invest in broadband. We come before Congress to say we are 
investing in broadband and we will continue to invest. Please 
don't change the competitive provisions and rules of the Act. 
The regulatory environment after years and decades of the Bell 
Company sponsored litigation is now relatively stable and we 
want it to remain that way so the competition can continue to 
thrive, technological innovations can continue and grow, and 
more and more Americans can have access to advanced 
technologies. As I said before, it is all about broadband, and 
whether all customers and businesses have the access and the 
range of choices that meets their needs, that will happen with 
the competitive industry.
    Thank you, Mr. Chairman. I appreciate this opportunity.
    [The prepared statement of Mr. Salmon follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Thank you, Mr. Salmon, very much.
    And our next witness is Ms. Larissa Herda, who is the 
Chairman, President, and Chief Executive Officer of tw telecom, 
a $2 billion competitive broadband provider. She also serves on 
the Economic Advisory Council of the Federal Reserve Board of 
Kansas City. We welcome you, Ms. Herda. Whenever you are ready, 
please begin.

   STATEMENT OF LARISSA HERDA, CHAIRMAN, PRESIDENT AND CHIEF 
              EXECUTIVE OFFICER, TW TELECOM, INC.

    Ms. Herda. Good afternoon, Chairman Markey, Ranking Member 
Stearns and distinguished members of the subcommittee. My name 
is Larissa Herda and I am Chairman, CEO, and President of tw 
telecom, formerly known as Time Warner Telecom. Thank you for 
the invitation to appear before you today.
    Encouraging broadband deployment is an important national 
policy objective. Deploying fiber networks in the communities 
where we do business if the heart of tw telecom's business 
plan. Although we have spent billions of dollars deploying 
broadband infrastructure, we still have no choice but to rely 
on services provided by third parties in certain situations. 
For example, we have no choice but to purchase special access 
and interconnection from the ILECs. As many of you know, the 
forbearance provision of the Telecommunications Act and the 
FCC's implementation threaten to eliminate our ability to 
obtain these vital services.
    I strongly support the legislation filed by Chairman 
Dingell and Chairman Markey and cosponsored by a bipartisan 
group of this committee. I appreciate the subcommittee's 
interest in reviewing the forbearance process, which is in 
drastic need of reform. In addition to passing legislation that 
removes the deemed granted language, please do what you can to 
convince the FCC that it is critical that they adopt procedural 
rules to govern the forbearance process.
    Today, however, I would like to focus my opening comments 
on our need to attach our fiber facilities to utility-owned 
poles. In order to deploy fiber and deliver broadband services 
to our customers, tw telecom must be able to obtain access to 
poles at non-discriminatory rates. Unfortunately, the current 
rules governing pole attachments are seriously flawed. Under 
the existing rules, pole owners charge two different regulated 
rates for pole attachments. One applies to telecom carriers and 
the other applies to cable companies. All of these entities 
provide broadband service to end-user customers and this is a 
very important point to emphasize. Both telecom carriers and 
cable operators provide these services. But pole attachment 
rates are determined based on which of the legacy regulatory 
classifications applies to the service provider, and the rates 
applied to a telecom carrier of broadband are two to three 
times higher than the rates applied to cable providers of 
broadband.
    These rate differences exist even though pole attachments 
providing telecom service do not cause the pole owner to incur 
higher costs or use more space than is the case with the cable 
attachment. This produces particularly egregious results and 
instances where a cable company leases a fiber facility to us. 
Even though we are using the exact same attachment, our use of 
the cable company's facility to provide telecom services causes 
the rate for pole attachments supporting that fiber to increase 
two to three times, even though no additional space on the pole 
is required.
    To the extent that tw telecom provides services like 
broadband Internet access in competition with cable operators, 
the different rates yielded by the pole attachment rules skew 
competition. They cause competitors to pay dramatically 
different rates for an identical input that they have no choice 
but to buy. In summary, I urge you to press the FCC to adopt a 
single rate that applies to all competitors that use pole 
attachments to provide service.
    In January the FCC adopted an NPRM in which it tentatively 
concluded that it should adopt a single rate. Since that time, 
all industries including many pole owners have commented on the 
FCC's proposed rulemaking and all agree that a single rate is 
appropriate. We would appreciate the subcommittee using its 
oversight role to ensure that the Commission adopts a single 
pole attachment rate for all providers of broadband services. 
This will encourage deployment of broadband networks critical 
to a vibrant economy.
    Thank you for your time and attention today.
    [The prepared statement of Ms. Herda follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Great. We thank you so much.
    And now our next witness, Mr. Carl Grivner, is the Chief 
Executive Officer of XO Communications, a competitive broadband 
provider with over 1 million miles of fiber deployed. Mr. 
Grivner has served in various positions with Ameritech Cable 
and Wireless and IBM.

   STATEMENT OF CARL J. GRIVNER, CHIEF EXECUTIVE OFFICER, XO 
                         COMMUNICATIONS

    Mr. Grivner. Good afternoon, Chairman Markey, Ranking 
Member Stearns and members of the subcommittee, and thank you 
for the opportunity to appear this afternoon. I also want to 
thank Chairman Dingell, who is not here, and Chairman Markey 
for introducing the bill, H.R. 3914. I think it addresses the 
problems of deemed granted forbearance petitions.
    Forbearance is part of the broader issue of competition and 
broadband availability. Broadband availability is one of the 
most important challenges in telecom. The United States does 
lag behind many nations and is falling further behind. Other 
countries use all of their resources to make broadband widely 
available, but in the United States, the ILECs constrain 
broadband by fighting competitive access to the legacy network, 
and as we all know, competition is one of the key drivers of 
broadband.
    XO is one of the key competitors in helping to accelerate 
broadband development in the United States established in 1996 
as part of the Telecom Act. We have invested over $7 billion in 
building advanced networks. We have over 140,000 business 
customers across the United States and we provide a variety of 
IP services to our customer.
    But one significant barrier to broadband deployment remains 
and that is the last mile access to those customers, and it is 
critical for competition. With the Act, Congress mandated 
access to the last mile because ratepayers financed legacy ILEC 
networks already in the ground. By putting capital into their 
networks, they were guaranteed a rate of return for basically 
100 years, and still today in over 90 percent of the business 
market, the ILEC loop facilities are the only route into the 
building, and XO pays for that route. We pay hundreds of 
millions of dollars each year for that last mile of 
connectivity. Now, we prefer not to rely on the ILECs to fill 
out networks but it would cost over $50 billion to build to the 
2.3 million buildings within reach of our network, and the FCC 
agrees that it is not cost-effective to duplicate existing 
facilities.
    Copper networks aren't dead. They are alive and doing very 
well. Copper services most businesses and 100 million 
households. Seventy-five percent of all telephone access lines 
are home run copper. Copper facilities are a broadband 
resource. Copper has evolved over the years beyond analog, 
voice, and dial-up. It is now a leading broadband 
infrastructure. Us, XO, others at this table offer Ethernet 
over copper at speeds up to 10 megabits per second and soon you 
will have 100 megabits per second over those little copper 
wires that have been existing in the network for almost 100 
years. Yet the Bells are leveraging their copper cartel to 
restrict access to that last mile. The ILECs control access to 
nearly all last mile facilities. They want to control the 
supply through copper removal. They want to control access and 
pricing through the use of the forbearance petition and they 
want to squeeze out broadband competition.
    So let us start with what is wrong with copper retirement. 
As ILECs deploy fiber, they disable the copper loop. It harms 
the public interest in at least three ways: it destroys an 
alternative broadband source, it threatens public safety--
copper supplies its own power--and it poses a danger to 
national security. It removes redundancy in the event of an 
emergency. The FCC should adopt a formal process for approval 
of copper retirement. ILECs must prove that copper retirement 
is in the public interest. Current rules give the ILECs free 
reign. ILECs simply file notice to retire the copper and that 
is the end of it. Consumers, which we are concerned about, have 
no recourse.
    If copper destruction is dire, forbearance is even more 
horrific. The 1996 Act included forbearance as a tool to 
eliminate obsolete policies. It worked until the ILECs hijacked 
forbearance to raise rates on the last mile and to take out 
competition. The most dangerous aspect is deemed granted. It is 
a decision through inaction: don't do anything and you will get 
what you want. It is a lack of an appealable order. The 
Committee has taken the right steps with H.R. 3914, which would 
eliminate forbearance deemed granted. But even with this 
legislation, there are still some problems with forbearance. 
Private parties can dictate the FCC's agenda and resources. 
Frivolous petitions are filed as placeholders to start the 
deemed granted clock. Supporting data is incomplete or filed 
months or even a year later, and just let us see what sticks. 
Petitions are filed at will. A rejected petition can be re-
filed the next day: that didn't work; let us try this. Every 
frivolous ILEC petition places a heavy burden on the resources 
of the FCC and the industry. The lack of rules encourages 
forbearance petitions.
    Last fall, XO and other competitors petitioned the FCC to 
create long-needed rules governing forbearance, and I want to 
thank the members for stressing the importance of having a 
deregulatory process based on rules and procedures. At a 
minimum, the rules should require a forbearance petition to be 
complete as filed, require the FCC to seek public comment on 
petitions, set guidelines for the treatment of confidential 
data, and forbid late filed data by petitioners.
    I want to conclude my remarks and look forward to your 
questions. Thank you.
    [The prepared statement of Mr. Grivner follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Thank you, Mr. Grivner, very much.
    Our next witness is Ms. Cathy Avgiris, who is Senior Vice 
President and General Manager for voice services for Comcast. 
In addition to being the Nation's largest broadband provider, 
Comcast is also the Nation's fourth largest residential phone 
provider. We welcome you. Whenever you are comfortable, please 
begin.

   STATEMENT OF CATHERINE AVGIRIS, SENIOR VICE PRESIDENT AND 
         GENERAL MANAGER, VOICE SERVICES, COMCAST CABLE

    Ms. Avgiris. Good afternoon, Mr. Chairman and members of 
the subcommittee. Thank you for the opportunity to testify 
today. My name is Catherine Avgiris and I am the Senior Vice 
President and General Manager of Voice Services for Comcast 
Corporation. I am currently responsible for overseeing all 
aspects of Comcast voice business. I last testified before the 
subcommittee on the E911 bill last year and I would like to 
congratulate this subcommittee and Congress for passing this 
important piece of legislation. It is good to be back with you 
today.
    I am pleased to report that since I last testified, 
Comcast's voice service continues its rapid growth, as the 
cable industry continues to provide consumers with their first 
real competitive choice to the incumbent telephone companies 
since Congress passed the Telecommunications Act of 1996. 
Today, Comcast's voice service alone reaches more than 44 
million homes nationwide. In just the last 3 years, more than 5 
million customers have chosen the great savings, reliability, 
and convenience that our competitive service provides, and as a 
result of this phenomenal consumer demand, we are now the 
largest facilities-based competitive provider of residential 
voice service in the United States.
    Facilities-based competition from all cable providers is 
delivering real savings for consumers and competition that has 
been delayed for nearly a decade by litigation and regulatory 
gamesmanship. Economic experts estimate that households will 
save $95 billion over the last 5 years and small businesses 
will save $16 billion as a result of this expanded competition 
in the voice business. That is a total of more than $111 
billion in savings. Our actions and our investments prove that 
we believe in competition and we would rather compete with the 
incumbent local telephone companies in the marketplace than 
engage in regulatory battles with the FCC or in the halls of 
Congress. But the incumbents are still dominant with an 88 
percent share of the market, and this gives them the ability 
and the incentive to frustrate innovation, choice, and 
competition, especially in those remaining areas where 
effective competition is dependent on mutual cooperation with 
competing providers.
    Let me give you three examples. First, cable providers such 
as Comcast have to rely on incumbent telephone companies to 
interconnect with our network in order to provide true 
competitive choice. Interconnection on terms that are not just, 
reasonable, and non-discriminatory is tantamount to stopping 
competition dead in its tracks. Unfortunately, the incumbents 
continue to use interconnection as a weapon for impeding 
competition. For example, we are currently in a dispute with an 
incumbent that is refusing to interconnect with us. Put simply, 
denial of interconnection means denial of competition and 
denial of consumer choice. Other local telephone companies use 
their own tactics to delay or frustrate our entry, and as more 
consumers choose Comcast, the incumbents become more creative 
in developing roadblocks to competition.
    Second, consumers find it critically important to keep 
their phone numbers when they switch providers. Incumbent 
telephone companies cannot be allowed to drag their feet to 
impede the number porting process. They must cooperate with 
their competitors to ensure that porting works smoothly. While 
wireless carriers have voluntarily agreed to allow their 
customers to switch their phone numbers to a new wireless 
provider in a few hours, the current industry standards for 
wireline providers allow the incumbents to take up to 4 
business days to switch a number. But the reality is that 
customers typically have to wait a week to port their wireline 
number to Comcast, even though this transaction requires no 
more than a few hours, at most, to complete. Customers expect 
and should be given wireline porting that is as convenient and 
hassle-free as wireless porting. To that end, the FCC has 
proposed cutting the standard interval in half and Comcast 
strongly supports that proposal. Unfortunately, most of the 
incumbents have opposed that initiative. We hope that Congress 
or the FCC will implement this pro-consumer proposal, and I 
remind the Committee that number porting is a mutual obligation 
on both incumbents and competitors. We are ready, willing and 
able to port numbers more quickly as well.
    Third, we know that one incumbent telephone company has 
attempted to undermine the number porting process through a 
practice known as retention marketing. Confidential information 
exchanged between carriers for the sole purpose of affecting 
the port is being used to keep existing customers from 
switching their voice service to a competitor. In response to a 
complaint, the FCC recently concluded that this practice is 
improper, and just last week the D.C. Circuit Court rejected 
Verizon's attempt to stay that important ruling. As these 
examples show, Congress and the FCC cannot assume that just 
because facility-based voice competition has emerged, all is 
well. The incumbents will continue to look for ways to stifle 
competition, even as they call for less regulation of their own 
voice business.
    In closing, we note our support of H.R. 3914 and believe 
that there should be no regulatory forbearance by default. 
Thank you again for the opportunity to testify today and I look 
forward to answering any questions.
    [The prepared statement of Ms. Avgiris follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Thank you very much.
    And our final witness is Mr. Jonathan Banks, who is Senior 
Vice President for Law and Policy at U.S. Telecom, a trade 
association consisting of the Nation's largest phone companies. 
Prior to joining U.S. Telecom, Mr. Banks held positions with 
Bell South and with the Federal Trade Commission. We welcome 
you, sir. Whenever you are ready, please begin.

  STATEMENT OF JONATHAN BANKS, SENIOR VICE PRESIDENT, LAW AND 
           POLICY, UNITED STATES TELECOM ASSOCIATION

    Mr. Banks. Thank you, Chairman Markey, Ranking Member 
Stearns and members of the subcommittee, and thank you for the 
opportunity to testify before you.
    Consumers today are clearly benefiting from an accelerating 
convergence of technologies that have created the sort of 
competition that we were all looking for in 1996. Today, 
Comcast has over 5 million voice customers, Verizon has over 1 
million video customers, and 16 percent of the households in 
this country have cut their wired connection to the telephone 
world. Telecoms are in the video business, cable is in the 
voice business, and telecom, cable and wireless are all in the 
broadband business. Our companies' investment in network 
upgrades and competitive video platforms is one example of how 
consumers are benefiting from lower prices and higher quality 
service today that we all would have envied in 1996. And let me 
say, there is nothing that is more important to our companies 
than winning new broadband subscriptions in the market and they 
are doing everything they can to sign up customers, as is 
Comcast, other cable companies, and wireless companies.
    This progress has created the urgent need for regulatory 
parity more broadly than just within the telephone industry but 
across all these platforms. The United States Telecom 
Association represents broadband service providers from the 
very largest to the very small companies, from urban providers 
to purely rural providers, and our members provide broadband on 
both a fixed basis and on a mobile basis. We have companies 
that are very small that are providing IP-based video services 
in competition with cable. We have companies that are small and 
large operating wireless broadband networks.
    So let me step back for a second and give you an overall 
perspective of how we see all of our industries contributing to 
the economy. The last several years have brought telecom, media 
and technology together into one ecosystem where each of our 
sectors depends on the other for innovation and for developing 
products to attract consumers. Telecom, media, and technology, 
or TMT, is now the fourth largest gross domestic product, and 
it is the leading contributor for growth and productivity 
across our entire economy. About half of our Nation's 
productivity growth comes from the TMT sector. The TMT sector 
also generates over 10 million jobs, many of which are high 
paying and in high-growth sectors of the economy. In fact, if 
you take the annual investment made by the U.S. government to 
put a man on the moon, add to it the annual investment to 
create the interstate highway system, you will find that that 
comes in today's dollars to less than half of what our private 
companies are investing in broadband networks, in software, and 
in technology, and it is that investment that is driving the 
economic growth in jobs that come from our sector. So when we 
look at policy issues, we look to see that this healthy 
investment trend will not be harmed by regulatory decisions, 
and a key ingredient to the continued success of the investment 
and the pro-consumer benefits are regulatory parity across the 
sectors so that the possibilities for innovation are as wide as 
possible.
    Our members support the goal of H.R. 3914 to improve the 
forbearance process. Congress created the process in 1996 in 
recognition of the fact that the communications industry was 
changing rapidly and that many FCC regulations were either 
obsolete in 1996 or would soon be obsolete. In fact, Congress 
viewed the importance of regular review of FCC rules to be so 
important that not only did they pass section 10 but they added 
section 11 to the Act, which required the FCC biannually to 
review its rules and regulations and get rid of the rules and 
regulations that were no longer necessary to the public 
interest. The FCC has effectively read section 11 out of the 
Act, leaving only section 10as a vehicle for updating 
telecommunications regulations.
    I think we have discussed some of the statistics here. 
Since 1996, there have been 87 petitions that the FCC has 
issued orders on, and the orders have roughly put a third of 
the petitions in the denied status, a third in granted, and 
roughly a third in partial grants or denials. So the FCC has 
acted judiciously on these petitions. We are certainly aware of 
the Verizon petition and the controversy that that has 
engendered, which I do think is in large part due to the 
absence of any accompanying written order making review 
difficult for Congress or the courts and difficult for anyone 
to ascertain the exact scope of the order. However, the FCC has 
taken some steps to improve this process. They have issued a 
notice of proposed rulemaking to improve the procedures for 
forbearance and this Congress is considering H.R. 3914, which 
to us does establish a read deadline for FCC action, and 
without a real deadline, FCC action can be delayed easily for 
years, putting the industry that labors under a lot of 
regulations at a distinct disadvantage.
    My written testimony discusses a number of the important 
issues that you have set out here for comment and that the 
other panelists have commented on, and I would be happy to 
discuss those with you. Thank you.
    [The prepared statement of Mr. Banks follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
    
    
    Mr. Markey. Thank you, Mr. Banks, very much. Now we will 
turn to questions from the subcommittee members.
    Ms. Avgiris, your testimony states that H.R. 3914, the 
legislation that Mr. Dingell and I have introduced, would 
prevent forbearance by default and force the Commission to 
expressly rule on a petition so that it is not automatically 
granted. Does Comcast support passage of H.R. 3914?
    Ms. Avgiris. Yes.
    Mr. Markey. Mr. Salmon, could you give us a yes or no on 
that?
    Mr. Salmon. Unequivocally yes.
    Mr. Markey. Ms. Herda?
    Ms. Herda. We agree as well.
    Mr. Markey. Mr. Grivner?
    Mr. Grivner. Yes.
    Mr. Markey. Mr. Banks?
    Mr. Banks. We would like to work with the Committee to 
ensure that there is some way that the FCC has a real deadline 
to act.
    Mr. Markey. Mr. Banks, your testimony indicates that you 
support the goal of H.R. 3914 to improve the forbearance 
process at the FCC, and I agree that the forbearance process 
does need reform. But H.R. 3914 does not address the FCC 
process but rather the deemed granted loophole. Do you support 
elimination of the deemed granted loophole or not?
    Mr. Banks. We are concerned that simply eliminating the 
deemed granted status without some other inducement to force 
the FCC to act would leave us with outdated regulations for 
years and years and years and no way to get out of them.
    Mr. Markey. So even with good congressional oversight, you 
don't think that we can keep the FCC accountable to our intent?
    Mr. Banks. I think congressional oversight helps but the 
FCC's past record suggests that things do sit for years after 
court remands, for example, without action.
    Mr. Markey. Mr. Banks, under section 10, do you agree that 
automatic forbearance from interconnection, for instance, could 
occur on a two-to-two tie?
    Mr. Banks. Yes.
    Mr. Markey. Don't you agree that such sweeping action is 
unfair on a tie vote or through agency inaction?
    Mr. Banks. There is clearly legitimate concern over agency 
inaction and tie votes, yes.
    Mr. Markey. If for 221 years the Supreme Court on a four-
to-four tie had to agree with the person who had brought the 
case and whoever brings a case can get it to four-to-four wins 
rather than forcing a five-to-three vote to change the laws of 
the United States, that that would be quite a different America 
that we would live in if you did not have to have a majority of 
the Supreme Court to change a law. Four-to-four would change 
it. And so that is kind of at the heart of what we are doing. 
On our committee here, if it is 27 to 27, you lose. If it is 
eight to eight, you lose. If it is four to four, you lose. You 
have to get a majority to change the status quo. So this 
standard I don't think should be any different for the FCC, do 
you think, Mr. Banks?
    Mr. Banks. I think you have a very fair point about the 
difference between the Supreme Court rules, for example, and 
the FCC rule on forbearance here.
    Mr. Markey. Now, Ms. Herda, you have heard proposals from 
others that pole attachment rates should be made uniform by 
making cable operators pay more and telecom companies a little 
less. What, in your view, are the implications for broadband 
deployment of such a plan?
    Ms. Herda. Well, I think that with regard to the pole 
attachment rates, I am not an expert in that area, but I 
understand that the FCC has gone through quite a process to 
establish the cable rate, and that various PUCs have also 
agreed that the cable rate is the appropriate rate and it has 
been held up in the federal courts, so we advocate the cable 
rate there. But I think at the end of the day there needs to be 
a process to determine if that rate is the correct rate and 
that a fair cost recovery is appropriate.
    Mr. Markey. Should we insist on a rate that is uniform and 
also promotes broadband deployment?
    Ms. Herda. Yes.
    Mr. Markey. You think we should?
    Ms. Herda. Yes.
    Mr. Markey. Mr. Grivner, what are the implications for your 
business and others if Verizon and others disable the copper 
loop facilities to the home or business?
    Mr. Grivner. Well, for our business, it removes our ability 
to provide broadband access to our customers, and the copper 
loop, as I said in my opening remarks, is alive and doing very 
well. There have been technologies developed in this country 
that have expanded the capabilities of copper loops from, as I 
said earlier, 10 megabit, now up to 100 megabits of capability 
out of simple copper that exists in the ground today. So I 
think it would be devastating certainly for our businesses but 
I think it is devastating--when we talk about broadband 
availability, I think it is. The availability is there, it is 
just a matter of using the technology that exists.
    Mr. Markey. But they don't allow the copper to be dug up in 
Japan or in Great Britain, but here in the United States where 
we are supposed to be the leader----
    Mr. Grivner. We got a notice in the mail that the copper 
has been removed and good luck.
    Mr. Markey. How much have you invested in your network 
already, Mr. Grivner?
    Mr. Grivner. We have invested over $7 billion and actually 
have increased our spending over the last 2 years. We have 
invested another $400 to $500 million over the last 2 years in 
IP technologies to bring broadband to our customers.
    Mr. Markey. Thank you. My time has expired. The chair 
recognizes the gentleman from Florida, Mr. Stearns.
    Mr. Stearns. Thank you, Mr. Chairman.
    You know, listening to both sides, and I think Ms. Avgiris 
makes some good points. I can empathize with both sides, but 
what we have here is, the question is, do we need to regulate? 
Affirmative action is needed to prove that we need to regulate 
here. Now, there is a possibility that we could have a 
compromise, so I think that is what myself and my staff are 
looking at here. Knowing the strong opinions of both sides 
here, but Mr. Banks, wasn't the whole point of the deemed 
granted language to make sure the FCC acts on forbearance 
petitions?
    Mr. Banks. Yes, sir.
    Mr. Stearns. So let me just go to each of you, a question 
for each person on the panel, and just give me your honest 
answer. I think it is critical that we need the deemed granted 
language but I agree that the FCC process needs to be reformed. 
I think, Mr. Chairman, there is a possibility we can get 
bipartisan legislation here, and here is what I would suggest. 
Short of eliminating the deemed granted language, the question 
would be for the panel, what kind of reforms would you suggest 
to make sure that the forbearance process with the FCC is more 
transparent and runs smoothly? That is, for example, when the 
process is nearing the end, no one can come back at the last 
minute and submit a whole new affirmative plan in which you 
don't know anything about it and then you have to answer, which 
goes on. So wouldn't things like deadlines for the filing of 
amendments and additional evidence address most of the concerns 
that have been expressed here and wouldn't that be the crux of 
what we could do as reform so that you folks, and I am talking 
to Ms. Avgiris, your folks would not be surprised. So I am 
offering here what I think might be a compromise language which 
is reform at the FCC.
    So why don't I start with Mr. Salmon and then I work on 
down, just what do you think of the suggestion I had?
    Mr. Salmon. Thank you, Mr. Chairman, Ranking Member 
Stearns. You pose some very, very provocative thoughts. We 
would love to see widespread reform of section 10 but we 
believe very, very strongly that Chairman Dingell's bill is a 
very, very good start. I think Chairman Markey probably put it 
as good as I can put it. It is a very undemocratic process to 
allow a two-two vote to constitute a victory or a majority. 
There is no other body ever in a democratic society that I know 
of where that kind of thought process goes on. It certainly 
never went on here. It doesn't go on in the Supreme Court. But 
additionally, Mr. Banks said that their goal is to get rid of 
antiquated rules and regulations. If all the forbearance 
process was used for was cleanup language we would probably be 
a little bit more comfortable with the process, but the whole 
forbearance process is used to completely undo the entire Act. 
It is used to completely obfuscate all the other rules and get 
rid of the----
    Mr. Stearns. You know I don't have much time, so I need for 
everybody else to have a chance, but I ask each of now, Ms. 
Herda, the compromise I suggest, do you think that would be 
something you could accept?
    Ms. Herda. I think obviously process improvements would 
certainly help but the problem that we have is that when the 
FCC fails to act, it is the competitors that get hurt in the 
process with the deemed granted, and we get punished for that. 
I am not sure that any process improvement is going to improve 
that situation.
    Mr. Stearns. So things like deadlines for the filing of 
amendments, real deadlines, and additional evidence, you think 
that would be an improvement?
    Ms. Herda. I think they should have deadlines. I think that 
is--
    Mr. Stearns. I mean real deadlines.
    Ms. Herda. But if they don't meet the deadlines, then to 
grant it after things aren't met is the problem.
    Mr. Stearns. Let me go to Mr. Banks because I think you are 
alone here. Mr. Banks, go ahead. I will give you an opportunity 
to speak.
    Mr. Banks. I think the FCC is an open docket in which they 
have gotten lots of suggestions for process improvements and we 
have to keep in mind that the people who use forbearance are 
some of the big telephone companies but many of the small- and 
medium-size companies who use it, right now there are 12 
forbearance petitions pending at the FCC.
    Mr. Stearns. No, take my suggestion. What about deadlines 
for the filing of amendments, real deadlines so that the CLECs 
could see this early on, know what is at stake and there is no 
further going on.
    Mr. Banks. So there are definitely some process 
improvements that I think----
    Mr. Stearns. Do you think the process improvements I talked 
about you could accept?
    Mr. Banks. Yes.
    Mr. Stearns. Do you think that is a compromise?
    Mr. Banks. Yes.
    Mr. Stearns. I hear from you that you are willing to work 
on the Dingell bill but you are not necessarily a supporter of 
it as are these folks, so I am offering you sort of compromise 
that you are saying you could accept?
    Mr. Banks. Yes.
    Mr. Stearns. OK. Mr. Grivner?
    Mr. Grivner. I think we need to fix this. I think we need 
to fix it all the way. What you are suggesting are certainly 
good suggestions relative to the process but deemed granted as 
has been mentioned, if it is still hanging out there, so you 
meet the rules but you are still going to get what you want, in 
the end is a flawed process.
    Mr. Stearns. OK. And----
    Ms. Avgiris. I also believe that having strict deadlines 
and providing evidence for the record on a sooner basis helps 
improve the process, but when you get down to it, if a default 
provision is granted of forbearance when you have a two-two 
tie, only the competitors are hurt that way.
    Mr. Stearns. 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 
commend the ranking member, Mr. Stearns, for coming up with a 
good idea. I don't believe it goes far enough. That should be 
in place regardless. To be honest with you, I don't know of a 
process where you can amend at any time and it especially lends 
itself to a great deal of mischief if someone wanted to play it 
that way and to game the system. Everybody knows how to 
complicate matters and almost assure because of the 
complication it extends time, consideration, and then if you 
have a deemed granted result, you can see where all this is 
going to lead us.
    Mr. Salmon, Mr. Banks, let me ask you, on the deemed 
granted, now, the FCC hears other petitions and disputes and 
requests, not just forbearance petitions, right? In those other 
settings, in those other conditions, do we have anything like a 
deemed granted provision?
    Mr. Salmon. I know of no other process where there is a 
deemed granted provision, and additionally, when a forbearance 
petition is filed, because of the deemed granted language, the 
Commission, if it is working on another project, whether it is 
USF or digital, any other number of things, they have to pool 
all their resources and put it out to the issue that has a gun 
to their head. That is why--it is just policy.
    Ms. Herda. What we have also found is that we have no 
recourse in the courts, as we have seen, that we have no right 
to appeal. In the case of the Verizon issue, it was determined 
that we couldn't even appeal it.
    Mr. Gonzalez. Mr. Banks, back to that question, do you know 
any other hearing, dispute, petition consideration, anything 
that also has a mechanism such as a deemed granted if it is not 
acted on timely?
    Mr. Banks. I think there are a number of procedures at the 
Commission involving enforcement actions and maybe some other 
things where the Bureau makes a decision, and unless the 
Commission rejects it, the decision becomes effectively a 
Commission order.
    Mr. Gonzalez. Somewhat a cousin to this, so I wouldn't say 
you have something is almost direct procedurally. I am just 
curious. But there are many aspects of this but it just seems 
that you could really do something with a system that 
automatically grants the relief just because the decisionmaker 
in this case doesn't act, and I don't think we have to go to 
the Supreme Court or the United States Congress. We can just 
look within the confines of the FCC and find that this may be 
very unique. But something of this importance, even if it is 
not, and we find something that may be similar, as Mr. Banks 
may have pointed out, we are talking about something that 
really, and I agree with Mr. Markey, I think could truly impact 
competition.
    Let me ask Mr. Grivner, I was surprised, and this is my own 
ignorance, I just look at the copper wire line as a thing of 
the past, but you are talking about speeds that basically would 
come under premium category classification by the FCC. Is that 
true?
    Mr. Grivner. Yes, absolutely. This copper technology, 
actually Mr. Banks worked at a company, Bell South, that also 
deployed it many years ago, and it has developed here in the 
good old United States by several companies. They have taken 
existing cop repairs. We are selling it to our customers. We 
sell--you would have to sell six or seven T1s at extraordinary 
pricing to be the equivalent of what we are able to get out of 
simple twisted cop repairs. It is just great technology and 
customers love it as well.
    Mr. Gonzalez. It is surprising when you indicated what was 
being offered and what was being explored, and I don't know if 
other members were surprised about the speed or the capacity 
and the ability of copper wire.
    Ms. Herda, in today's environment, who owns most of the 
utility poles? I mean, my assumption is in the old days you had 
the incumbents more----
    Ms. Herda. You have a combination of incumbent and utility 
providers.
    Mr. Gonzalez. And today is it utilities have more ownership 
of more poles or----
    Ms. Herda. I think that is what I understand. That is what 
I have heard. I think the incumbents have gotten rid of some of 
theirs, a bunch of theirs.
    Mr. Gonzalez. I come from San Antonio. Our utility company 
is actually by the municipality so I am thinking of other 
settings, which is difficult for me sometimes. But I am just 
thinking of the relationships that municipalities may have with 
utility companies and such, right away easement and so on, but 
in other aspects too, I am thinking in terms of, I know of 
partnerships with municipalities to build out, let us say, Wi-
Fi and maybe even WiMAX and such. I am just thinking in terms 
of giving an unfair edge to any particular provider, any 
particular technology, all using that same pole because of the 
relationships. Do you fear anything of that nature?
    Ms. Herda. Actually, as a matter of fact, we have services 
that sometimes compete with the providers who own the pole and 
so when we are asking them to actually do the work, they are in 
no rush because certainly it is to their advantage to delay our 
construction of our fiber networks. So there is, in addition to 
the rates associate with it, which we think everybody should be 
paying the same rates, we think that there should be terms and 
conditions that mandate behavioral conditions.
    Mr. Gonzalez. Thank you very much.
    And I want to pronounce the name right and I apologize 
because I met you right before the hearing. Is it Avgiris? Ms. 
Avgiris, regarding, you all called it the portability. I just 
call it transferring your phone number. And what you are 
telling me is that wireline or wireless can do it in a number 
of hours but not so in other circumstances, and that right now 
we are looking at 4 days.
    Ms. Avgiris. That is correct, 4 business days.
    Mr. Gonzalez. What do you suspect might be the reason for 
that? Because I am going to ask Mr. Banks obviously. And I have 
a minute and 40 seconds, but----
    Ms. Avgiris. So I will take a minute and 40 of that. 
Consumers want faster porting. They want it because they want 
to be able to purchase services at retail, self-install. Our 
service provides new feature functionality that is not what is 
available with basic telephone. And they have gotten accustomed 
to being able to make decisions on their own timeline, and the 
whole wireless industry and their porting within voluntary 
means to port within a number of hours means that that 
capability is there. Comcast as a provider is ready, willing, 
and able to port a customer's number away from Comcast if they 
want within the next day. I see no reason why everyone can't.
    Mr. Gonzalez. Mr. Banks, do you disagree?
    Mr. Banks. I think faster porting is good for consumers. 
Right now when our companies get ports from other customers, we 
don't get them in 4 days. When other companies ask us to port 
numbers to them, they don't ask us to port them in 4 days. So I 
think there is some reason to think we ought to get to the 4 
days first and then be careful how we put this requirement on 
smaller telephone and smaller cable companies that would have 
to mechanize their back offices and spend a lot of money to do 
things that aren't really how they do business in small 
companies.
    Ms. Avgiris. If I could just clarify?
    Mr. Gonzalez. You have 24 seconds in your response.
    Ms. Avgiris. The three largest providers, telecom 
companies, are all electronically bonded. Those are the 
companies that we believe should have a faster porting interval 
of 1 day. The smaller companies we can work with.
    Mr. Gonzalez. Thank you very much.
    Yield back, Mr. Chairman. Thank you, Mr. Chairman.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Mississippi, Mr. Pickering.
    Mr. Pickering. Thank you, Mr. Chairman.
    Mr. Banks, let us try to get to the compromise again but 
from a different direction. Earlier in your testimony, you had 
said that you could do away possibly with the deemed granted if 
you had strict timelines of certainty that the FCC had to act 
on a date certain. Is that something that you could accept?
    Mr. Banks. Yes. I mean, our whole--the whole function of 
the deemed granted is to force the Commission to act in a world 
that has changed.
    Mr. Pickering. So if you had appropriate forcing timetable 
shot clocks as part of reform, then you could support removing 
the language deemed granted?
    Mr. Banks. If it would serve to give that incentive, a real 
incentive to the FCC to act, yes.
    Mr. Pickering. Mr. Chairman, maybe that is the compromise, 
the right balance. I think everyone is concerned that in the 
first 3 months of next year while we have a new Administration, 
it is very likely that we could have four Commissioners for an 
indefinite period of time. You could actually have 
congressional inaction combined with FCC inaction that would 
create a deadlocked Commission, and I think during that period 
of time, you could have a lot of unintended consequences of 
gaming of the current process that is not what anyone who is 
involved in the 1996 Act intended. I do think that we want 
regulatory certainty, and to the degree that we can force the 
FCC to act within a certain time period, I think that that is 
in everyone's best interest, competitors and incumbents alike.
    Mr. Grivner, I was going to ask one other question, Mr. 
Banks. I saw you shaking your head when Ms. Avgiris said that 
the three largest can do electronic porting within 1 day. Is 
that something that you could support?
    Mr. Banks. I am not sure about the 1 day but it is true 
that the largest carriers are electronically bonded in a way 
that lets them do lots more things than the carriers that are 
smaller than that.
    Mr. Pickering. Right now, is it a 4-day?
    Mr. Banks. Right now, it is a 4-day for, right, ports 
involving wireline companies.
    Mr. Pickering. But for the largest and best for the 
consumers in competition, we could probably change that to 1 or 
2 days?
    Mr. Banks. I think the easiest thing to move down is the 
people that have the bonding rather than the mid-sized and 
smaller carriers--well, carriers and cable companies both have 
more troubles.
    Mr. Pickering. Thank you, Mr. Banks.
    Talking about regulatory certainty and timely action, I am 
going to come back to you, Mr. Grivner.
    Ms. Herda, pole attachments, one of my favorite subjects of 
all time.
    Ms. Herda. I am sure.
    Mr. Pickering. That is currently now pending before the 
FCC?
    Ms. Herda. I am sorry?
    Mr. Pickering. That proceeding on pole attachments is now 
in front of the FCC?
    Ms. Herda. Yes.
    Mr. Pickering. And how long has that been there?
    Ms. Herda. Since January.
    Mr. Pickering. Since January. Is there any announced time 
of action that they will take action?
    Ms. Herda. No.
    Mr. Pickering. But you want uniformity?
    Ms. Herda. Yes.
    Mr. Pickering. One rate?
    Ms. Herda. Everybody to have the same rate.
    Mr. Pickering. And then the certainty of FCC action?
    Ms. Herda. Right.
    Mr. Pickering. And what that rate is, you are somewhat 
flexible?
    Ms. Herda. Just the rate, to reimburse them for costs 
obviously. It shouldn't be a profit center for the pole owners 
but it should be fair and equitable.
    Mr. Pickering. And right now you have the utility rate, the 
telecom rate and the cable rate. Is that correct?
    Ms. Herda. Yes.
    Mr. Pickering. So somewhere in between?
    Ms. Herda. That is for the FCC to decide.
    Mr. Pickering. But they need to decide soon.
    Ms. Herda. Yes.
    Mr. Pickering. Mr. Grivner, talking about regulatory 
certainty, you have invested $7 billion, and this goes back to 
the forbearance and why this is so important. If we had a 
change in regulatory policy that basically wiped out $7 billion 
of investment--for example, you have to have loops in transport 
to do your business. The $7 billion that you have invested in 
facilities, one regulatory decision could wipe out billions of 
dollars of investment and wipe out competitive choices.
    Mr. Grivner. Well put. The $7 billion that we have invested 
leads you right up to that customer promise and it is all 
behind that so that last piece of connectivity is critical to 
that $7 billion of investment.
    Mr. Pickering. So decisions should be made correctly, 
thoughtfully, majority vote, and a certain process of 
transparency. I think that we can get there.
    Mr. Chairman, this panel has been very helpful. I look 
forward to working with you to get the right balance.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Michigan, Mr. Upton.
    Mr. Upton. Well, thank you, Mr. Chairman, and again, I 
appreciate the testimony from all of our witnesses and some of 
the questions here.
    I can remember when the 1996 Act was written and this 
provision was included, and I have to say as I listen to the 
testimony today--as Mr. Banks said to one of the responders, 
one of the questions, we all want a deadline. We are fed up 
when the deadlines pass us by. And I have to say, at least from 
my vantage point, I think it is worse today than it ever was in 
the 1990s. I can't tell you how many times I have seen some of 
the Commissioners or we have made a call or written a letter, 
talked to them about some deadline, you are assured that it is 
going to come by and it doesn't happen, and consequently, as 
you look at the different petitions that have been deemed 
granted, 91 petitions have been filed. Only four have been 
deemed granted, and as the staff has looked into those four, 
three of them were not controversial at all and the one that 
was, was this one that was on a two-two vote and that was 
before Commissioner McDowell had been on, so someone didn't 
recuse themselves so it was a two-to-two tie, and as I 
understand it, Mr. Copps and Adelstein had wanted to prevent 
the entire petition from being deemed granted. They probably, I 
am guessing, could have reached for a compromise at least in 
some part as it related to the denial in that part and I guess 
you could see a parallel between what happened when we had a 
two-two split over the AT&T/Bell South deal when of course 
McDowell did take himself out, recusal, which I remember that 
deadline went on forever as well. So when you know something 
like that is going to happen, but the question I have, if it 
ain't broke, why fix it if it is only really one. Is there only 
really one so far of this 91? Is the staff correct that it is 
only really one of 91 that are in rough water?
    Mr. Banks. Yes, your numbers are correct. There is only the 
Verizon petition that has caused any controversy, but the 
controversy has been among the FCC people. I don't know that 
there has been any controversy in the marketplace about the 
effect of that order. Verizon, as I understand it, has gone out 
and used the freedom to sign contracts with customers.
    Mr. Upton. But what this provision did was, it really put 
the gun to the FCC's head that they really had to live by the 
shot clock that they wanted, right?
    Mr. Banks. Yes, and to be fair, I think it is difficult to 
identify anything else that will really make the FCC act but 
that is the crux of the problem.
    Mr. Upton. We have tried. We have sent them brownies. We 
have done a bunch of different things. We have gone down to 
visit. Let me ask one other question, Mr. Banks, and this I 
think came up in a related question I think to Mr. Salmon. 
Isn't the deemed granted provision similar to the statutory 
sunset provision like program access except that it gives the 
added protection of giving the FCC the opportunity to prevent 
the sunset if they so desire?
    Mr. Banks. That is a very interesting point, and Congress 
put a number of sunset provisions in the 1996 Act including on 
some of the special extra long-distance safeguards and those 
expired after 3 years, the ones I can think of. So you are 
absolutely correct that is like the sunset provisions.
    Mr. Upton. That is a good note for me to end on. I yield 
back my time. Thank you.
    Mr. Markey. The gentleman's time has expired. The chair 
recognizes the gentleman from Nebraska, Mr. Terry.
    Mr. Terry. Thank you, Mr. Chairman, and I would agree with 
several of the comments made. I have empathy for everyone here. 
Mr. Grivner, I especially appreciate the level of investment. I 
came right after the passage of the 1996 Telecom Act but I 
engaged in the discussions that undoubtedly occurred during 
passage of what to do if the FCC doesn't act. I think that, as 
Mr. Upton pointed out, a very real concern as we develop 
policies and one of the policies in the 1996 Act was opening up 
the incumbents' networks, their infrastructure for competition 
because we wanted competition, and I still think we want 
competition today, especially as there is a convergence or 
merging within the incumbent industries. So working through 
this, though if there is some unnecessary or unfair regulation 
that is hindering the ability of the incumbent to compete, and 
I come from an area where there is good competition between 
capable and the incumbent. In fact, the incumbent is the 
minority carrier now. So I come from a different world or 
perspective. But I am just wondering as we work through some 
options here if a deadline really works. What are the 
consequences to the FCC if we say you have to do this by 90 
days of the filing of the petition, and then there is 
consequence. Then they still go to a year or 6 months or 
whatever, and I am sure that the deemed granted was to put in a 
consequence. So I am not sure we gain anything here if we just 
put in a date or shot clock without any consequence.
    So, Mr. Banks, I want you to get to that next question of 
what should be the consequence if the FCC misses the deadline 
that is set? What would be the world without the deemed granted 
if there are no consequences?
    Mr. Banks. I think without the deemed granted, we are 
likely to be in a world where the FCC would not have changed 
any of the rules for Omaha, even though the market had 
basically flipped head over heels. So without consequences, I 
think the fact that we have consequences here is why the FCC 
has ruled on essentially every forbearance petition that has 
come before it or along the lines of the numbers Mr. Stearns 
gave. So it has been effective and it has left us with the one 
Verizon issue out of the 89 petitions.
    Mr. Terry. I appreciate that.
    Mr. Grivner, during one of your answers to the questions to 
Mr. Stearns, when you were working through the possibilities of 
compromise, you mentioned that it is a flawed process, and what 
went through my mind when you said that is whether or not the 
incumbent should ever receive forbearance.
    Mr. Grivner. Should ever receive forbearance?
    Mr. Terry. Should receive forbearance. I guess what I am 
trying to ask you is, do they deserve it in any situation?
    Mr. Grivner. Well, I actually referred to it as forgiveness 
because really what forbearance has been is a peeling back of 
the 1996 Act piece by piece. So if we go back and look at the 
complete history--by the way, everybody you ask that was here 
in 1996 and you ask about forbearance, no one raises their hand 
as being the author of that, which I find interesting. But if 
you peel it back, there were certain conditions that had to be 
met on both sides to create a competitive landscape, and as the 
years have gone by, those kind of even-steven things have been 
pulled back from the competitive industry, and forbearance is 
just a very, very strange process where a two-two vote, whether 
it be the Supreme Court, and God forbid----
    Mr. Terry. But eliminating the two-two vote discussion 
here, because I think we all pretty much agree that needs 
remedied in some way but----
    Mr. Grivner. I think there has to be a reasonable and 
complete submission of data that has to be analyzed by the FCC 
staff. Let us make it a fight. Let us make it a game. Let us 
not make it a basketball game where two teams show up and only 
two referees show up and the other team says I win because only 
two showed up. Let us make it a real game and let us make it a 
fight, put your stuff on the floor.
    Mr. Terry. Thank you.
    Mr. Markey. Mr. Grivner, were you a basketball player at 
some point?
    Mr. Grivner. As I understand it, Mr. Chairman, you used to 
be one but a series of injuries have hobbled you.
    Mr. Markey. I am feeling your pain, Mr. Grivner.
    So we will go another round here, if we can, for maybe 3 
minutes a piece from the members if they have any additional 
questions, and I will just say, Mr. Terry, we have been trying 
actually for years to find out which Senator actually stuck in 
these words over in the Senate during this conference 
committee, but again, they had a code of omerta over there 
which protects each other on a bipartisan basis, but there is 
kind of a Rosemary's Baby quality to this one provision that 
everyone accepts the fact that it is an incredibly important 
storyline but no wants to take credit for the law of unintended 
consequences taken to the pluperfect form that it has resulted 
in. But that is the way the Senate operates.
    Let me turn to you, Ms. Avgiris. Recently Vermont 
Telecommunications Company denied interconnection on the basis 
that it only had to do so for telecom carriers. So here is 
Comcast, the fourth largest telephone provider in America, 
being told you are not a telecommunications company, and as a 
result, they can deny you interconnection. Can you talk about 
the implications of the Federal Communications Commission 
determining that Comcast is not a telecommunications company 
for the purposes of interconnection in terms of what that 
represents for competition in Vermont and in other States?
    Ms. Avgiris. Well, regardless of regulatory classification, 
interconnection is the fundamental ability of our company to 
serve our customers and exchange traffic with other people so 
everyone can call everyone else. Specifically in the Vermont 
telephone company case, it is not the affiliate, and every 
company has affiliates. We have a retail affiliate that 
provides an information service which is called Comcast Digital 
Voice that provides features and functionality that is much 
different than what basic telephone is. They are not the ones 
that asked for interconnection. There is another affiliate of 
Comcast that is a certificated telecommunications carrier in 
each of the 38 States that it provides telecommunications 
services to its clients. That is the entity that asked for it. 
It meets all the obligations of being a telecommunications 
carrier, supports the State 911 universal service fund, 
interconnection, local number porting, and that is where the 
rub comes because it is--they are a certificated CLEC and have 
the rights and responsibilities to interconnect with everyone.
    Mr. Markey. I think it is a perfect example of how 
something has gone terribly awry when the people of Vermont are 
denied this competitive opportunity that would give them 
alternative service and potentially lower prices and higher 
quality of service. It just is perverse to me that a very 
narrow interpretation of what is a qualifying company should be 
able to affect consumers so negatively.
    Let me turn to you, Mr. Banks. When we get to this question 
of whether or not your telephone number is portable, if 
somebody wants to switch from one cell phone company to another 
cell phone company, it takes 2 hours to switch the number, and 
the cell phone companies, that is the large telephone companies 
that you are here representing, although you are not here 
representing them in that form, but they are able to do it in 2 
hours. So the question I have for you Mr. Banks is why do the 
same companies take 4 days if the same consumer wants to move 
their wireline service over to another company? Why should it 
take so long? What is the technological problem at these 
companies?
    Mr. Banks. I think it revolves around companies' operating 
systems. The wireless carriers are essentially the envy of 
everyone in terms of the newness of their networks and the 
newness of their----
    Mr. Markey. But they are the same companies in terms of 
their CEO, their executive vice president, their chief 
technology officers. They are all the same people. Why can't 
they figure out how to cut it down from 4 days down to 2 hours 
the way their cell phone wing does in ensuring that consumers 
keep their same cell phone number as they switch companies?
    Mr. Banks. Well, you are right that they are owned by the 
same people but they grew up in different worlds and built 
themselves different systems and are in different places in 
terms of their capital and who can invest in upgrading systems 
and which part of the company is a growth part. So there are 
systems issues. But it is true that the largest carriers have 
better systems and the medium-sized and smaller carriers----
    Mr. Markey. But how hard can it be just to e-mail to 
someone else inside of the telephone company and say this 
customer wants to switch companies? How long does that take 
inside of Verizon or AT&T? Is that a 4-day process to e-mail?
    Mr. Banks. No. Verizon and AT&T do this process generally 
in under 4 days and report the data on that to every State as 
part of their 271 filing.
    Mr. Markey. Do they ever have meetings, I am wondering, at 
Verizon or AT&T where they bring the cell phone executives over 
to talk to the wireline executives about how they do it? Do 
they ever have meetings like that?
    Mr. Banks. Well, the North American Numbering Council has 
meetings all the time.
    Mr. Markey. I am talking about inside the company. Do any 
of these executives ever meet and talk and they can explain the 
new modern system that the cell phone wing uses in order to do 
number portability?
    Mr. Banks. Yes, and I think at those meetings the wireless 
people say that 16 percent of your customers have dropped you 
and come to us, so ha ha.
    Mr. Markey. But it takes 4 days. Aha, they say back. That 
is our revenge. We don't allow it to happen overnight. But I 
bet you it doesn't take 4 days inside a company.
    Mr. Grivner?
    Mr. Grivner. Same question?
    Mr. Markey. No, I am fine. I thought you had your hand up.
    Mr. Grivner. No, no.
    Mr. Markey. My time has expired. Let me turn and recognize 
the gentleman from Florida.
    Mr. Stearns. Thank you, Mr. Chairman.
    This is a question for the entire panel again and it is 
dealing with pole attachment rates. I think a lot of us agree 
there is no rhyme or reason towards the pole attachment rates 
that are currently being applied, and I guess the question for 
each of you is, shouldn't the FCC create a uniform pole 
attachment regime and perhaps what would that regime look like? 
Mr. Banks, I will start with you and then I will go down.
    Mr. Banks. So I am in complete agreement with Time Warner 
Telecom that that the system needs to be rationalized, that 
people that are attaching to a pole to provide a broadband 
service with the same attachment ought to pay the same price, 
and that is just a matter of rationalizing the prices and 
applying them uniformly to everyone. I think that would 
certainly help our companies that pay an awful lot more than 
others with our broadband deployment.
    Mr. Stearns. Ms. Avgiris?
    Ms. Avgiris. It is well established both at the FCC and in 
the Supreme Court that the cable rates that have been 
established for pole attachments are more than compensatory, so 
while we absolutely support a uniform rate and it has to be 
fair and cost-based for the same attachment, we believe it 
should be the cable rate. Otherwise all you are doing is 
adversely impacting cable broadband customers.
    Mr. Stearns. You just raised another question with me. 
Would you support amending the forbearance provision so it 
grants cable companies deregulatory relief as well?
    Ms. Avgiris. As it relates to forbearance, the video space 
is much more competitive. In the voice space, which is what I 
am here to talk about, there are a lot of complex provisions, 
and we believe that the safeguards that are there to protect 
certain rules need careful analysis and so I think the same 
rules apply.
    Mr. Stearns. Mr. Grivner, going back to the original 
question dealing with the pole attachment rates.
    Mr. Grivner. Uniform pricing and also uniform service level 
agreements as well.
    Mr. Stearns. Ms. Herda?
    Ms. Herda. Same thing, uniform pricing, uniform service 
agreements, and we agree with Ms. Avgiris with regard to the 
cable rates.
    Mr. Stearns. Matt?
    Mr. Salmon. Same thing, and on the whole idea of the shot 
clock, we would like a shot clock for that. We would also like 
a shot clock for special access where we are paying exorbitant 
rates and they haven't fixed that problem, a shot clock for USF 
reform. I could go on and on and on, but what is fit for the 
goose is fit for the gander.
    Mr. Stearns. Do you think that should be deemed granted?
    Mr. Salmon. I am sorry?
    Mr. Stearns. Do you think it should be deemed granted?
    Mr. Salmon. No, I just don't think that is good policy, and 
on the whole deemed granted, let me just take a second because 
Congressman Upton pointed out that there are very few instances 
where deemed granted has actually kicked in. That is only part 
of the problem. The bigger part of the problem with the whole 
deemed granted language is that it encourages companies to file 
incomplete petitions because it is one of the only things that 
has a shot clock and a deemed granted provision. So they filed 
these frivolous petitions that are incomplete and then at the 
very last minute they throw a bunch of stuff, and like Chairman 
Markey pointed out, pray that something sticks. That is the 
bigger part of the problem that it just runs the whole process 
askew.
    Mr. Stearns. Thank you, Mr. Chairman. As Mr. Salmon just 
pointed out, I think what I talked about earlier about a 
legitimate compromise here, just making the deadlines for 
filing amendments and additional evidence just stark and these 
deadlines are real deadlines and they cannot be amended or 
changed, and by then you would know everything and you wouldn't 
be concerned about what the final outlook was because during 
the comment period everybody knows, so I hope, Mr. Chairman, 
that perhaps the suggestion I make would be part of the process 
here. Thank you.
    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.
    Ms. Herda, I am going to ask a basic question and everybody 
in the audience probably knows the answer but I am trying to 
figure it out. I want to switch service, I come to you, and so 
there has to be an effective termination date communicated to 
my old carrier and an effective start date with you, right?
    Ms. Herda. Right.
    Mr. Gonzalez. How then does this portability timeframe play 
into that equation?
    Ms. Herda. It is different for our services since we sell 
business services and they are complex telephone services, so I 
think it is a bit different from what Comcast is looking for. 
It is more likely that we would need more time to be able to 
port those services.
    Mr. Gonzalez. I guess the curiosity is just one starts at a 
certain time, and the calculation. I guess maybe I am missing 
the whole concept about the portability of numbers, the way you 
identified it, in other words, so that people will continue the 
same business and so on. I mean, that is the whole convenience 
part of it. I am just saying that it has to end at a certain 
time with the old carrier and then the new service has to then 
assume that that new number is fully operable. Is there some 
caveat out there to the customer, hey, listen before all that 
can be accomplished, it is going to take X amount of time?
    Ms. Herda. Yes. When we communicate with our customers----
    Mr. Gonzalez. So that would mean then I would be carried 
with my old service for a longer period of time because there 
is this 4-day interval?
    Ms. Herda. Generally with our services, since we focus on 
selling to just business customers, we also have a facility 
that is going into that customer that takes some time to 
construct, so we set timeframes for intervals for service which 
are generally longer than few hours. It is very different from 
the wireless business or maybe the very small business 
customers that Comcast services.
    Mr. Gonzalez. Does anybody else wish to comment just on the 
observation that time plays to the advantage of someone in that 
particular scenario and maybe even a bottom line?
    Ms. Avgiris. The local number interval does present a 
beginning and an end date and the beginning date is when the 
competing carrier requests the number to be exchanged from the 
incumbent carrier, and they set a firm order commitment for a 
particular date and it is a question of what is the process 
internally to complete that transaction, share that information 
between the carriers and expedite the port request of the 
consumer to change service because the whole point behind local 
number portability is to enable competition and to enable 
choice.
    Mr. Gonzalez. The longer it takes to complete the 
transaction to get the number ported or whatever it is, 
obviously then I am being carried by my old service----
    Ms. Avgiris. And I may not get the savings that I could 
otherwise get.
    Mr. Gonzalez. Thank you very much. Yield back.
    Mr. Markey. The chair recognizes the gentleman from 
Mississippi, Mr. Pickering.
    Mr. Pickering. Mr. Chairman, thank you, and just for 
historical context, I believe it was Senator Dole and Senator 
Pressler who came up with the forbearance provision, and I 
happen to think that the forbearance process is actually a 
healthy way to keep the Act alive, dynamic, organic, as things 
change, it can evolve, but it needs to be done right and your 
bill addresses how to do it right.
    And to Mr. Banks and Congressman Gonzalez, I think the 
bottom line on the portability----
    Mr. Markey. By the way, if I may, if the gentleman would 
yield, the gentleman from Mississippi was on Senator Lott's 
staff at the time and he would have access to meetings that I 
as a Democrat would not have had access to. So we thank him for 
clarifying the historical reference.
    Mr. Pickering. Just for history.
    Mr. Banks and to Congressman Gonzalez, I think the real 
issue here is--you said something interesting--you said the 
difference between wireless and wireline, they grew up 
differently, different cultures, but wireless is the growth 
part of their business, and the more they port, the more they 
grow. The faster they port, the faster they grow, and what 
Verizon and AT&T have found out, once they get down to number 
portability on wireless is that they benefited from that. They 
are growing because more people are switching to them. Now, on 
the other hand, on their wireline side, as cable enters, they 
are losing customers so that is the losing side of their 
business, and this gets to their bottom line. They want to slow 
down what they lose and they want to speed up what they gain, 
and I think the fair thing to do is to have some uniformity of 
wireline and wireless porting. If this was not technologically 
feasible to do one issue but this is fairness, level playing 
field, pro-competitive, pro-consumer, pro-choice for everybody 
and I think that we ought to get a portability policy that is 
same whether it is wireless or wireline or something comparable 
that is reasonable with some differences between small 
companies and large companies. That was more of a comment than 
a question.
    Let me go back to pole attachments. Ms. Herda, Mr. Grivner, 
Ms. Avgiris, I think you are all on record of supporting the 
current cable rate. Is that correct?
    Ms. Herda. Yes.
    Mr. Pickering. And that does have something to do with 
competition. The more you pay in pole attachments, the less you 
can build out, deploy and compete in other areas, and I think 
that that would be the same for you, Mr. Salmon. So you all 
would support the current cable. Mr. Banks, you would support 
some uniform compromise. Is that correct?
    Mr. Banks. Yes. I do think that it is important that we 
also remember that this money goes to support facilities, 
utility poles that we need and it is important to ensure that 
pole owners, which are principally utilities, get enough money 
that we do have poles when we need them.
    Mr. Pickering. I see that my time is running out. The last 
thing that I would encourage, I do hope that we can get an 
interconnection policy, Mr. Chairman, if not this Congress, 
then the next Congress. It is a basic fundamental. It makes the 
market function. Without interconnection policy, we really 
ought to go home and pack it up. It is just a simple, fair way 
to make all consumers be able to complete a call on one network 
to another and it ensures a functioning marketplace. With that, 
I yield back, Mr. Chairman.
    Mr. Markey. I thank the gentleman, and I know the gentleman 
is going home and packing it up, but it all depends on what 
kind of going home and packing it up you are talking about. If 
the Federal Communications Commission is going home and packing 
it up without actually providing interconnection, that is not a 
good thing.
    So we are going to finish up by asking each one of you to 
give us a 1-minute summation of what it is that you want us to 
remember out of this hearing. We will start with you, Mr. 
Salmon, if you could give us your 1-minute summation.
    Mr. Salmon. We have been asked what our druthers are, and I 
think our druthers are, we would like to see section 10 
scrapped altogether, but this is a good first step and one that 
we support. I think that all of us understand that the most 
important thing that we want in public policy is to make sure 
that America continues to prosper and continues to grow with 
technological advancements in the telecommunications realm. We 
would like to be first in the world. That is only going to 
happen with a very, very competitive, robust telecommunications 
sector, and we are proud to be part of that and we would like 
to move forward in tandem with the ILECs as friends singing 
Kumbaya. Unfortunately, that doesn't happen all the time.
    Mr. Markey. Thank you, Mr. Salmon.
    Ms. Herda.
    Ms. Herda. Yes, I would agree with Mr. Salmon in that I 
believe that forbearance basically gives the FCC authority to 
rewrite the Act and I think that is Congress's job. I am 
uncomfortable delegating that rewriting the Act to the FCC. 
With regard to pole attachments, we are just looking for a 
unitary rate for everybody to be on a level playing field so 
that when we all compete, we are coming from the same set of 
cost base, and that is it.
    Mr. Markey. Thank you.
    Mr. Grivner.
    Mr. Grivner. Move 3914 forward. Copper is not dead and 
electronic bonding is possible for all companies whether they 
are wireless or wireline. Thank you.
    Mr. Markey. That is a Kumbaya moment, electronic bonding.
    Ms. Avgiris.
    Ms. Avgiris. Comcast is all about pro-competition, pro-
consumer choice. All of our positions on local number porting 
are about more choice for consumers. Interconnection provides 
us the ability to complete, and without that we really would be 
waving away the $111 billion that consumers can save.
    Mr. Markey. And Mr. Banks, you have the final word.
    Mr. Banks. The presumption in 1996 was that regulation 
shouldn't stay through inertia and that is why we have section 
10 and that is why we have section 11. The world has changed 
now when Comcast is the number 4 phone company. So there is no 
reason to keep regulations through inertia. Of the 91 
forbearance petitions filed, most are narrow. They deal with 
discreet sub-issues of telecom regulation, and the Commission 
has successfully come out with orders in all but one of those 
and that is the Verizon thing. I think the process is working 
and it is getting orders out of the FCC. I point you to the 
court remand that took three years of the FCC reporting every 
month to the district court before a court hearing and an order 
so we do something to make the FCC work.
    Mr. Markey. Thank you, Mr. Banks, very much. We thank all 
of you. We do have a looming problem because we could have a 
two-to-two vote at the FCC by the end of this year. In fact, it 
is very likely that that is going to be the case and that would 
be absolutely historically unacceptable, and it is important 
for us to get this policy right because, as you said, Mr. 
Banks, in your testimony, 50 percent of the growth in the 
American economy comes in this telecommunications and 
technology sector. It is not widely understood that 50 percent 
of the growth comes there but it does and it makes all of these 
decisions central to whether or not we are going to continue to 
see the job growth here and the lowering of the cost of 
communications to all industries.
    With that, we thank this panel and this hearing is 
adjourned.
    [Whereupon, at 3:52 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

               Prepared statement of Hon. John D. Dingell

    Today we examine the state of competition in the 
telecommunications marketplace. Sound telecommunications policy 
should spur competition between providers, bringing lower 
prices, more innovative services, and better service quality to 
consumers. But ill-conceived or poorly executed policy 
represents a lost opportunity for such consumer gains.
    Section 10 of the Communications Act, which we will discuss 
today, was added by Congress to ensure that the statute kept 
pace with changes in technology and in the marketplace. It 
permits providers to request that the Federal Communications 
Commission (FCC) forbear from enforcing certain laws or 
regulations, when such laws or regulations are no longer 
necessary to protect the consumer. It further provides that if 
the FCC does not act on a forbearance petition by a date 
certain, then the provider's request that the FCC not enforce a 
particular law or regulation is automatically granted.
    This provision is dangerous and bad policy because it 
allows agency action to take effect without any formal vote or 
supporting record. Consumers and companies then have no right 
or recourse when the lack of enforcement harms consumers.
    We are familiar with the episode in 2006 when a four-member 
Commission was evenly divided on the merits of a forbearance 
petition and was therefore unable to act. Because the deadline 
passed with no Commission action, the petition was deemed 
granted and a host of regulations were tossed aside. Making 
matters worse, the Commission failed to issue an Order 
explaining the scope of relief granted, which prevented 
Congress from conducting appropriate oversight and precluded 
meaningful judicial review.
    This must not happen again. At any time we could find 
ourselves with just four commissioners having to address 
forbearance petitions under the ``deemed granted'' regime.
    In an effort to remedy this problem, Chairman Markey and I 
introduced H.R. 3914, the ``Protecting Consumers through Proper 
Forbearance Procedures Act.'' Our bill simply removes the 
``deemed granted'' language from the statute to ensure that 
agency decisions are fully transparent and that affected 
parties--including consumers--have full legal recourse.
    I am also concerned with the Commission's process for 
reviewing forbearance petitions. The Commission must ensure 
that the forbearance process is fair, open, and transparent. 
Too often, industry petitioners have rigged the process, by 
filing amended petitions late so that opposing parties have no 
meaningful opportunity to respond. I applaud the Commission for 
opening a proceeding to reform the process, and I urge that it 
be concluded in a manner that serves the public interest and 
protects consumers.
    We will also consider several other issues today, and I am 
disappointed that some of the companies most interested in 
these issues declined our invitations to testify. For example, 
Verizon has spent considerable time discussing the issue of 
retention marketing, and Verizon and AT&T have lobbied the 
Commission about pole attachments. I am disappointed that we 
will not benefit from their expertise as we consider these 
important issues.
    Furthermore, this is a legislative hearing on H.R. 3914, 
which I understand these two companies do not support. I am 
saddened they are not here to more fully explain their views 
and to answer polite questions I intended to ask them.
    I thank the Chairman once again for considering these 
important matters. I hope that the panel will assist us in 
building a sound record so that we may thoughtfully move 
forward with carefully crafted legislation.
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