[Senate Hearing 110-1105]
[From the U.S. Government Publishing Office]



                                                       S. Hrg. 110-1105
 
     ASSESSING THE COMMUNICATIONS MARKETPLACE: A VIEW FROM THE FCC

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

                                HEARING

                               before the

                         COMMITTEE ON COMMERCE,
                      SCIENCE, AND TRANSPORTATION
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                            FEBRUARY 1, 2007

                               __________

    Printed for the use of the Committee on Commerce, Science, and 
                             Transportation




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       SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                   DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West         TED STEVENS, Alaska, Vice Chairman
    Virginia                         JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts         TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota        KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California            OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida                 GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington           JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey      JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas                 JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware           DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri           JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
   Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
              Margaret Spring, Democratic General Counsel
             Lisa J. Sutherland, Republican Staff Director
          Christine D. Kurth, Republican Deputy Staff Director
             Kenneth R. Nahigian, Republican Chief Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on February 1, 2007.................................     1
Statement of Senator Boxer.......................................    47
Statement of Senator Cantwell....................................    59
Statement of Senator Dorgan......................................    44
Statement of Senator Inouye......................................     1
Statement of Senator Klobuchar...................................     3
Statement of Senator Lautenberg..................................     3
Statement of Senator McCaskill...................................     3
Statement of Senator Pryor.......................................    57
Statement of Senator Rockefeller.................................    53
Statement of Senator Smith.......................................    50
Statement of Senator Stevens.....................................     2
    Prepared statement...........................................     2
Statement of Senator Sununu......................................     3
Statement of Senator Thune.......................................     3
    Prepared statement...........................................     3

                               Witnesses

Adelstein, Hon. Jonathan S., Commissioner, Federal Communications 
  Commission.....................................................    21
    Prepared statement...........................................    23
Copps, Hon. Michael J., Commissioner, Federal Communications 
  Commission.....................................................    18
    Prepared statement...........................................    20
Martin, Hon. Kevin J., Chairman, Federal Communications 
  Commission.....................................................     4
    Prepared statement...........................................    13
McDowell, Hon. Robert M., Commissioner, Federal Communications 
  Commission.....................................................    28
    Prepared statement...........................................    30
Tate, Hon. Deborah Taylor, Commissioner, Federal Communications 
  Commission.....................................................    24
    Prepared statement...........................................    26

                                Appendix

Kerry, Hon. John F., U.S. Senator from Massachusetts, prepared 
  statement......................................................    61
Response to written questions submitted to Hon. Kevin J. Martin 
  by:
    Hon. Maria Cantwell..........................................    92
    Hon. Jim DeMint..............................................   116
    Hon. Byron L. Dorgan.........................................    85
    Hon. Daniel K. Inouye........................................    61
    Hon. John F. Kerry...........................................    79
    Hon. Amy Klobuchar...........................................    98
    Hon. Frank R. Lautenberg.....................................    94
    Hon. Mark L. Pryor...........................................    95
    Hon. Gordon H. Smith.........................................   107
    Hon. Olympia J. Snowe........................................   104
    Hon. Ted Stevens.............................................   101
    Hon. John Thune..............................................   112
    Hon. David Vitter............................................   117
Response to written questions submitted to Hon. Michael J. Copps 
  by:
    Hon. Maria Cantwell..........................................   125
    Hon. Jim DeMint..............................................   137
    Hon. Byron L. Dorgan.........................................   121
    Hon. Daniel K. Inouye........................................   118
    Hon. Amy Klobuchar...........................................   129
    Hon. Frank R. Lautenberg.....................................   126
    Hon. Mark L. Pryor...........................................   127
    Hon. Gordon H. Smith.........................................   133
    Hon. Olympia J. Snowe........................................   132
    Hon. Ted Stevens.............................................   130
    Hon. John Thune..............................................   135
    Hon. David Vitter............................................   138
Response to written questions submitted to Hon. Jonathan S. 
  Adelstein by:
    Hon. Maria Cantwell..........................................   149
    Hon. Jim DeMint..............................................   167
    Hon. Byron L. Dorgan.........................................   145
    Hon. Daniel K. Inouye........................................   138
    Hon. Amy Klobuchar...........................................   156
    Hon. Frank R. Lautenberg.....................................   151
    Hon. Mark L. Pryor...........................................   153
    Hon. Gordon H. Smith.........................................   163
    Hon. Olympia J. Snowe........................................   160
    Hon. Ted Stevens.............................................   159
    Hon. John Thune..............................................   165
    Hon. David Vitter............................................   168
Response to written questions submitted to Hon. Deborah Taylor 
  Tate by:
    Hon. Maria Cantwell..........................................   175
    Hon. Byron L. Dorgan.........................................   172
    Hon. Daniel K. Inouye........................................   169
    Hon. Amy Klobuchar...........................................   178
    Hon. Frank R. Lautenberg.....................................   176
    Hon. Mark L. Pryor...........................................   177
    Hon. Gordon H. Smith.........................................   183
    Hon. Olympia J. Snowe........................................   181
    Hon. Ted Stevens.............................................   180
    Hon. John Thune..............................................   183
    Hon. David Vitter............................................   184
Response to written questions submitted to Hon. Robert M. 
  McDowell by:
    Hon. Byron L. Dorgan.........................................   189
    Hon. Daniel K. Inouye........................................   185
    Hon. Amy Klobuchar...........................................   197
    Hon. Frank R. Lautenberg.....................................   194
    Hon. Mark L. Pryor...........................................   194
    Hon. Gordon H. Smith.........................................   203
    Hon. Olympia J. Snowe........................................   201
    Hon. Ted Stevens.............................................   199
    Hon. John Thune..............................................   204
    Hon. David Vitter............................................   205


     ASSESSING THE COMMUNICATIONS MARKETPLACE: A VIEW FROM THE FCC

                              ----------                              


                       THURSDAY, FEBRUARY 1, 2007

                                       U.S. Senate,
        Committee on Commerce, Science, and Transportation,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10:05 a.m. in 
Room SR-253, Russell Senate Office Building. Hon. Daniel K. 
Inouye, presiding.

          OPENING STATEMENT OF HON. DANIEL K. INOUYE, 
                    U.S. SENATOR FROM HAWAII

    The Chairman. Chairman Martin and members of the 
Commission, I believe it is appropriate that we hear from all 
five members of the Federal Communications Commission today, on 
the eve of Superbowl Sunday, since it was the 2004 Superbowl 
with that extraordinary halftime program that brought us 
together here the last time.
    A lot has happened since that hearing, and the Committee 
appreciates the willingness of the Commission to speak with us 
today about the state of the industry and what we must do, as a 
Nation, to ensure that the benefits of the new communications 
technologies are shared by all Americans regardless of income 
or geography.
    The Commission is charged with acting in the ``public 
interest.'' It is an important mandate, and we look forward to 
participating in discussions with the Commission as to how we 
can advance such goals.
    In 3 years, we have seen the mergers of the two largest 
Bell companies, with the two largest long-distance companies. 
This was immediately followed by AT&T's acquisition of 
BellSouth. Meanwhile, technology has fueled change, and simple-
purpose networks have given way to new multi-purpose platforms 
that can support all measures of applications and services, 
including voice, video, and email services.
    But the communications revolution does not come without 
risk. As public servants, both here in Congress and on the 
Commission, we must be vigilant in our oversight to ensure that 
the communications industry evolves in a manner that does not 
harm consumers.
    Consumers must have confidence that dialing 9-1-1 means 
getting emergency help, whether that call is made over a 
traditional phone line, a wireless phone, or a Voice-over-
Internet-Protocol service. They must be confident that their 
private, personal information will be protected from abuse. 
Further, consumers must be assured of evenhandedness from 
network operators so that consumers reap the full benefits of 
competition.
    We must encourage continued innovation in the industry. I 
am troubled that other countries are leapfrogging the United 
States in the deployment of broadband access. As policymakers, 
we must ask ourselves whether companies have the right 
incentives to invest in this technology, and what we can do to 
keep the United States competitive with the rest of the world.
    While private industry has brought to the marketplace many 
wonderful innovations that improve our lives at work and at 
home, I want to be certain that the FCC has the tools it needs 
to carry out its mission of protecting the public interest and 
consumers.
    And now it is my privilege to call upon the Vice Chairman, 
Senator Stevens.

                STATEMENT OF HON. TED STEVENS, 
                    U.S. SENATOR FROM ALASKA

    Senator Stevens. Thank you very much, Mr. Chairman. In view 
of the timeframe today, we have several votes starting right 
before noon, I would defer my statement until the time for 
questioning.
    I appreciate very much your having this hearing, and 
obviously there's a great interest in the community concerning 
issues pertaining to the FCC. Thank you.
    The Chairman. Your statement will be made part of the 
record.
    [The prepared statement of Senator Stevens follows:]

                Prepared Statement of Hon. Ted Stevens, 
                        U.S. Senator from Alaska

    It has been ten months since all five of you last appeared together 
before the Committee. There have been a number of regulatory proposals 
that have drawn national attention. Some of those issues have been 
resolved, but other issues important to consumers remain.
    As February 17, 2009, approaches, much remains to be done to assure 
a smooth digital television transition. Plans are in place to achieve 
the goal, but coordination, outreach and execution is needed on the 
local level to make sure that all consumers are informed. What 
broadcast TV means to parts of Alaska is different from what it means 
to Manhattan. How to get a converter box to remote Alaska villages is 
also different. Because of unique needs rural America should be a top 
priority for the digital transition.
    The 700 MHz spectrum auction for the DTV transition takes place 
next year. This spectrum represents great opportunities to bring new 
consumer services, including additional broadband. And the auction will 
fund a number of public safety programs that have already been put into 
place.
    Deployment of broadband also is an important priority. The 
Commission has indicated that steps to provide a more accurate picture 
of the marketplace will be taken, and it is my hope that these actions 
will be taken soon. Universal service is the most important element for 
the communications infrastructure our country needs in rural areas. I 
was glad to see that the Joint Board has outlined proposals for 
comprehensive reform. While Alaska is unique, it is not alone in 
needing universal service programs to deliver the benefits of 
broadband, telemedicine and distance learning. Universal service has a 
central role in the continued development of this country's resources 
in rural America and any reform efforts should reflect this important 
role.

    The Chairman. Senator Sununu?

               STATEMENT OF HON. JOHN E. SUNUNU, 
                U.S. SENATOR FROM NEW HAMPSHIRE

    Senator Sununu. I'm certainly not going to speak any longer 
than my Ranking Member. I look forward to the testimony of all 
of the Commission.
    The Chairman. Senator Klobuchar?

               STATEMENT OF HON. AMY KLOBUCHAR, 
                  U.S. SENATOR FROM MINNESOTA

    Senator Klobuchar. Thank you very much, Chairman, and I'd 
like to hear the testimony as well. I have some questions, and 
will speak a little after they are done with their comments.
    The Chairman. Ms. McCaskill?

              STATEMENT OF HON. CLAIRE MCCASKILL, 
                   U.S. SENATOR FROM MISSOURI

    Senator McCaskill. I'll forego giving a statement, Mr. 
Chairman. I look forward to questioning. Thank you.
    The Chairman. Thank you very much.
    Senator Thune?

                 STATEMENT OF HON. JOHN THUNE, 
                 U.S. SENATOR FROM SOUTH DAKOTA

    Senator Thune. Thank you, Mr. Chairman.
    I, too, want to welcome the Commissioners before us this 
morning. I look forward to hearing from them.
    I will apologize in advance, for we have General Casey in 
front of the Armed Services Committee today, so I'll probably 
be going back and forth, but I look forward to getting a chance 
to question our panels today.
    Thank you.
    The Chairman. Thank you very much.
    [The prepared statement of Senator Thune follows:]

                Prepared Statement of Hon. John Thune, 
                     U.S. Senator from South Dakota
    Mr. Chairman, Vice Chairman Stevens, thank you for holding this 
hearing today. Conducting oversight of our Nation's regulatory agencies 
is an important duty of Congress. We must ensure that agencies, such as 
the FCC, are implementing the law and being responsive as they can to 
the needs of consumers and other stakeholders.
    It is my hope that this hearing proves constructive and that the 
needs of telecommunications consumers, who also happen to be our 
constituents, are the focus of today's questions and answers. Thank you 
to the Commission for coming before the Committee today.

    The Chairman. Senator Lautenberg?

            STATEMENT OF HON. FRANK R. LAUTENBERG, 
                  U.S. SENATOR FROM NEW JERSEY

    Senator Lautenberg. Mr. Chairman, I will refrain from 
reading my interesting statement.
    [Laughter.]
    The Chairman. And now it's my privilege to call upon the 
Chairman of the Commission, the Honorable Kevin J. Martin.

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

    Mr. Martin. Thank you.
    Good morning, Chairman Inouye, Vice Chairman Stevens, and 
members of the Committee. Thank you for the opportunity to be 
here today to discuss the state of the telecommunications 
industry.
    I have a brief opening statement, and then I look forward 
to answering any questions that you may have.
    I have had the privilege of serving at the Federal 
Communications Commission for over 5 years, including almost 2 
years as the agency's Chairman. During this period, my 
colleagues and I, following guidance from this Committee and 
Congress, have overseen a telecommunications industry 
undergoing rapid and unprecedented change.
    These changes have seen the telecommunications industry 
transition from a period of sharp decline to one of significant 
growth. Companies and consumers alike have finally found the 
promised land of convergence. Telephone calls are now being 
made using the Internet and cable systems. Television programs 
are increasingly available on the Internet and are watched when 
and where we want them.
    Cell phones are mini-computers. They take pictures, play 
songs and games, send e-mail, and hopefully soon will send and 
receive emergency messages.
    Teens ignore the television and stereo, downloading songs 
to their MP3 players and posting videos on YouTube. The 
Internet has become an invaluable tool for educating our 
children, treating patients, and giving a voice and creative 
outlet to individuals from all walks of life.
    Faced with such fast-paced technological change, the 
Commission has tried to make decisions based on the fundamental 
belief that a robust, competitive marketplace--not regulation--
is ultimately the greatest protector of the public interest. 
Competition is the best method of delivering the benefits of 
choice, innovation, and affordability to American consumers. 
Competition drives prices down and spurs providers to improve 
service and create new products.
    Government, however, still has an important role to play. 
The Commission has worked to create a regulatory environment 
that promotes investment and competition. We must also set the 
rules of the road so that players can compete on a level 
playing field.
    For instance, shortly after I became Chairman, we removed 
legacy regulations like tariffs and price controls that 
discourage providers from investing in broadband networks. 
Since then, broadband penetration has increased while the 
prices of DSL and cable modem service have decreased.
    Government also must act when necessary to achieve broader 
social goals. Thus, while I support eliminating many economic 
regulations, I recognize there are issues that the marketplace 
alone might not fully address.
    For instance, the government should ensure that the 
communication needs of the public safety community are met and 
that new and improved services are available to all Americans.
    The title of this hearing is Assessing the Communications 
Marketplace, A View from the FCC. I am pleased to report that 
the state of the communications industry today is strong.
    When I first came to the Commission, the communications 
sector was in decline. In 2006, the communications industry 
experienced record growth. Last year, the S&P 500 
telecommunications sector was the strongest performing sector. 
As displayed here in the first chart, TIA reported the U.S. 
telecom revenue rose to $923 billion last year, which is the 
most growth in a single year since 2000.
    [The information referred to follows:]

    
    
    Americans are reaping the rewards of this growth. As you 
can see in this slide, in almost all cases, vigorous 
competition--resulting from free market deregulatory policies--
has provided the consumer with more, better and cheaper 
services to choose from. By 2005, the price for long distance 
service was two-thirds of what it was in 2000, wireless phone 
service was half of what it was in 2000, and the price for 
placing an international call was a quarter of what it was 
then.
    Almost all of today's innovation is enabled by broadband 
deployment. Broadband deployment has been our top priority at 
the Commission. And we have begun to see some success as a 
result of our efforts.
    [The information referred to follows:]

    
    
    In 2005, the Commission created a deregulatory environment 
that helped fuel private-sector investment. Since then, 
companies have begun racing to lay fiber to our homes. From 
March of 2005 to the end of last year, the number of homes 
passed by fiber increased from 1.6 million to 6.1 million.
    [The information referred to follows:]

    
    
    Just as significant for consumers, the average price of 
broadband has dropped in the past 2 years. The Pew Internet and 
American Life Project found that, from February of 2004 to 
December of 2005, the average price for home broadband access 
fell from $39 per month to $36 per month. And for DSL, the 
monthly bills fell from $38 to $32, almost a 20 percent 
decrease.
    [The information referred to follows:]

    
    
    The decline in price was accompanied by an increase in the 
number of Americans subscribing to high-speed connections to 
the Internet. Such connections have grown by nearly 600 percent 
since 2001. And according to the Commission's most recent data, 
high-speed connections increased by 26 percent in just the 
first half of 2006 and by 52 percent for the full year ending 
June 30, 2006.
    The independent Pew study also confirmed this trend, 
finding that from March of 2005 to March of 2006, overall 
broadband adoption increased by 40 percent--from 60 to 84 
million--twice the growth rate of the year before. The study 
found that, although overall penetration rates in rural areas 
still lags behind urban areas, broadband adoption in rural 
America also grew at approximately the same rate (39 percent).
    Perhaps most importantly, the Pew study found that the 
significant increase in broadband adoption was widespread and 
cut across every demographic. According to their independent 
research: broadband adoption grew by almost 70 percent among 
middle-income households, it grew by more than 120 percent 
among African Americans, by 70 percent among those with less 
than a high school education, and by 60 percent among senior 
citizens.
    Today, wireless service is becoming as increasingly 
important as another platform to compete with cable and DSL as 
a provider of broadband. The demand for wireless service 
continues to grow at a rapid rate.
    In 1986, there were only 500,000 wireless subscribers. 
Today there are 219 million subscribers generating $60 billion 
in revenue. Moreover, wireless rates have continued to 
decrease, falling 82 percent since 1996 and 14 percent just 
last year.
    [The information referred to follows:]

    
    
    The Commission is making available as much spectrum as 
possible to put the next generation of advanced wireless 
devices into the hands and homes of consumers. In September the 
Commission closed its largest and most successful spectrum 
auction, raising almost $14 billion. The spectrum offered was 
the largest amount of spectrum suitable for deploying wireless 
broadband ever made available in a single Commission auction.
    And we are currently preparing to auction 60 MHz in the 700 
MHz band. This spectrum is also particularly well-suited for 
the provision of data and wireless broadband services.
    In sum, the United States is the largest broadband market 
in the world with over 56 million broadband subscribers, 
according to the OECD. I am proud of the progress we have made 
in broadband deployment by creating an environment that better 
facilitates infrastructure investment. I also hear, however the 
voice of my colleague Dr. Copps spurring us on, reminding us we 
can do better. And I agree.
    [The information referred to follows:]

    
    
    This Committee explicitly asked how the United States 
compares with other industrialized nations. The OECD currently 
ranks the United States as 12th in the world in terms of 
broadband penetration, behind Korea, the United Kingdom, and 
even Belgium.
    It is important to note, however, that the OECD does not 
adjust for factors including density, which puts a country as 
large as ours with sizable rural areas at a significant 
disadvantage.
    For instance, New Jersey has a similar population density 
as Korea, which is ranked fourth in the OECD rankings. Yet, New 
Jersey has a higher penetration rate, with 30 subscribers per 
100 residents, versus just 26 for Korea.
    And Vice Chairman Stevens, you will be proud to know that 
Alaska, with one person per square mile, still has a higher 
broadband penetration rate than France.
    Given the geographic diversity of our nation, the United 
States is doing well. Nevertheless, we all agree that our 
current standing of 12th is not good enough. We must continue 
to build on our efforts to encourage competition, speed 
broadband deployment and lower prices for consumers.
    As is the case with the telecommunications sector, 
consumers and companies are benefiting from technological 
developments and innovation in media. DVRs, video-on-demand, 
and HD programming offer more programming to watch at any time, 
than ever before. Thanks largely to new services like these, 
cable operators' total revenue grew from $65 billion to 
approximately $73 billion last year.
    While consumers have enormous choice among channels, they 
have little control over how many channels they are able to 
buy. For those who want to receive 100 channels or more, 
today's most popular cable packages may be a good value. 
According to Neilson, however, most viewers watch fewer than 
two dozen channels. And for them, the deal isn't as good.
    The cost of basic cable service has gone up at a 
disproportionate rate--38 percent between 2000 and 2005 when 
compared against other communications sectors. The average 
price of the expanded basic cable package, the standard cable 
package today, almost doubled between 1995 and 2005, increasing 
by 93 percent.
    [The information referred to follows:]

    
    
    The increase in cable prices appears even more dramatic 
when viewed relative to the prices for a number of other 
communications services: prices for telephone, long distance, 
international, and wireless telephone service have all 
decreased dramatically during this same time frame.
    Ten years ago, the satellite industry was nascent. Today, 
Direct Broadcast Satellite (DBS) provides consumers an 
important competitive choice. And satellite offerings are 
sometimes the only multi-channel video option for rural 
Americans.
    But as you can see, the Commission and the GAO have found 
that only in areas where there is a second cable operator did 
average prices decline.
    [The information referred to follows:]

    
    
    Between 2000 and 2006, DBS subscribership grew 100 percent 
and average revenue per user grew 32 percent. And like DBS, 
satellite radio also has experienced significant growth, with 
subscriptions increasing from 1.6 million in 2003, to 13.6 in 
2006.
    The transition from analog to digital technology poses both 
opportunities and challenges for the broadcast sector. New and 
better services that digital technology enables are good for 
consumers, who will have access to more news, information and 
entertainment. With digital technology, television broadcasters 
can offer high-definition programming, multiple programming 
streams, data services, and even video over mobile devices.
    However, many broadcasters' business plans are in their 
infancy. Their revenue streams are uncertain while the costs of 
the transition are large and immediate.
    While we have made significant progress in creating an 
environment that facilitates investment and ensures the 
American people realize the full benefits of our world-class 
communications system, there is more to be done. I see four 
areas that deserve particular attention.
    First, we must continue to increase access to 
communications services. I will continue to make broadband 
deployment the Commission's top priority and we will continue 
to encourage deployment of broadband from all providers using a 
variety of technologies.
    For example, the Commission is currently considering an 
order that would classify wireless broadband Internet access 
service as an information service. This action would eliminate 
unnecessary regulatory barriers for wireless service providers 
and is particularly important with the upcoming spectrum 
auctions.
    It is critical that all Americans stay connected to state-
of-the-art communications services. The Universal Service Fund 
is the lifeblood of this goal. Changes in technology and 
increases in the number of carriers who are receiving Universal 
Service support have placed significant pressure on the 
stability of the fund. We need to move to a contribution system 
that is technologically neutral and a distribution system that 
is more efficient.
    Second, we must continue to promote real choice for 
consumers in all of the sectors we regulate. We need to build 
on our efforts to create a regulatory environment that 
encourages entry into the video market and more choice for 
consumers. This includes making sure that competitive providers 
have access to ``must-have'' programming and ensuring that 
consumers living in apartment buildings are not denied a choice 
of cable operators.
    Additionally, we need to continue to ensure that new 
entrants are able to compete with incumbents for 
telecommunications services. New telephone entrants need access 
to local telephone numbers and the ability to interconnect with 
incumbents to deliver those local calls to them.
    We also need to ensure that existing service providers are 
not standing in the way of the innovations currently occurring 
in the consumer electronics space. Consumers want to be able to 
walk into a store, buy a new television or a TiVo, take it 
home, and plug it in as easily as they do today with a 
telephone.
    Third, we must continue to protect consumers. The 
Commission intends to strengthen its privacy rules for the 
handling of call records by requiring providers to adopt 
additional safeguards to protect this information from 
unauthorized access and disclosure. And we must make sure that 
consumers have the benefits of a competitive and diverse media 
marketplace.
    Fourth and finally, we must enhance public safety. Public 
safety has been and will continue to be one of the Commission's 
and my top priorities. We must make sure that the public has 
the tools necessary to know when an emergency is coming and to 
contact first responders. And we must enable first responders 
to communicate with each other.
    As Chairman Inouye and cosponsors Senators Stevens, Kerry, 
Smith, and Snowe of S. 385, obviously recognize, one of the 
most pressing public safety problems is the need for 
interoperability within and among public safety systems. I 
thank the Chairman for his efforts in this regard, and look 
forward to any guidance that the Congress may provide.
    As you can see, on the whole, the state of the 
communications industry is strong, and growing stronger. 
Innovation in all sectors, is back, and competition has enabled 
consumers to get newer and more innovative technologies and 
communications services at declining prices.
    Sadly though, one service has gone the way of the dinosaur 
this past year. 2006 marked the end of an era, when Western 
Union discontinued its telegram delivery service, which it 
began in 1856.
    Thank you, for your time and attention. I appreciate the 
opportunity to share with you some of the recent progress the 
Commission has made. With that, I would be happy to answer any 
questions you may have.
    [The prepared statement of Mr. Martin follows:]

         Prepared Statement of Hon. Kevin J. Martin, Chairman, 
                   Federal Communications Commission

    Good morning Chairman Inouye, Vice Chairman Stevens, Members of the 
Committee. Thank you for the opportunity to be here with you today to 
discuss the state of the telecommunications industry. I have a brief 
opening statement and then I look forward to answering any questions 
you may have.
    I have had the privilege of serving at the Federal Communications 
Commission for over 5 years, including almost 2 years as the agency's 
Chairman. During this period, my colleagues and I, following guidance 
from this Committee and Congress, have overseen a telecommunications 
industry undergoing rapid and unprecedented change.
    These changes have seen the telecommunications industry transition 
from a period of sharp decline to a time of significant growth. 
Companies and consumers alike have finally found the promised land of 
convergence, ushered in by the broadband revolution. Telephone calls 
are now being made using the Internet and cable systems. Television 
programs are watched when and where we want them, and they are 
increasingly available on the Internet. Cell phones are mini-computers. 
They take pictures, play songs and games, send e-mail, and hopefully 
soon will send and receive emergency messages in times of disaster. 
Teens talk to one another over IM, SMS and MySpace, not the telephone. 
They ignore the TV and stereo, downloading songs onto MP3 players and 
watching and posting videos on YouTube instead. The Internet has become 
an invaluable tool for educating our children, treating patients, and 
giving a voice and creative outlet to individuals from all walks of 
life. As Time Magazine recognized, 2006 was the year of the individual, 
thanks in large part to how communications technologies and innovations 
have empowered us all.
    Faced with such fast-paced technological change, the Commission has 
tried to make decisions based on a fundamental belief that a robust, 
competitive marketplace, not regulation, is ultimately the greatest 
protector of the public interest. Competition is the best method of 
delivering the benefits of choice, innovation, and affordability to 
American consumers. Competition drives prices down and spurs providers 
to improve service and create new products.
    Government, however, still has an important role to play. The 
Commission has worked to create a regulatory environment that promotes 
investment and competition, setting the rules of the road so that 
players can compete on a level playing-field. For instance, shortly 
after I became Chairman, we removed legacy regulations, like tariffs 
and price controls which discouraged providers from investing in 
broadband networks. Since then, broadband penetration has increased 
while the prices of DSL and cable modem services have decreased.
    Government also must act when necessary to achieve broader social 
goals. Thus, while I support eliminating economic regulations, I 
recognize that there are issues that the marketplace alone might not 
fully address. For instance, government should ensure that the 
communications needs of the public safety community are met and that 
new and improved services are available to all Americans, including 
people with disabilities, those living in rural areas and on tribal 
lands, and schools, libraries, and hospitals. For example, we expanded 
the ability of the deaf and hard of hearing to communicate with their 
family, friends and business associates by requiring Video Relay 
Services (the preferred method of communication) to be offered 24 hours 
a day, 7 days a week, and by recognizing IP Captioned phone service as 
a form of Telecommunications Relay Service.
    Against this backdrop of unprecedented change, I will give a short 
overview of the industry and briefly discuss my priorities for the next 
few years.
State of the Industry
    I am pleased to report that the state of the communications 
industry is strong. As you no doubt remember, in the year 2000, the 
communications industry began a precipitous and far-reaching decline. 
Capital spending by companies followed this market decline, innovation 
disappeared and companies went out of business taking jobs with them.
    What a difference 6 years make. In 2006, the communications 
industry experienced record growth and, by most measures, almost all 
sectors have rebounded remarkably. In 2006, the S&P 500 
telecommunications sector was the strongest performing sector, up 32 
percent over the previous year. Consumers and businesses--big and 
small--are reaping the rewards of these positive developments. 
According to the Telecommunications Industry Association's latest 
report, U.S. telecom revenue rose to $923 billion in 2006, representing 
a 9.3 percent increase since 2005--the most growth since 2000. TIA 
attributes the growth to the demand for broadband services, which has 
spurred providers to invest in fiber, IP technology and wireless 
infrastructure.
    Americans are reaping the rewards of this revolution. Markets and 
companies are investing again, job creation in the industry is high, 
and in almost all cases, vigorous competition--resulting from free-
market deregulatory policies--has provided the consumer with more, 
better and cheaper services to choose from. Consumers are certainly 
paying less for more. In 2005, the price for long distance service was 
two-thirds of what it was in 2000, wireless phone service was half its 
2000 level, and the price for placing an international call was a 
quarter of what it was in 2000.
Telecommunications
    Almost all of today's innovation is enabled by broadband 
deployment. Broadband technology is a key driver of economic growth. 
The ability to share increasing amounts of information, at greater and 
greater speeds, increases productivity, facilitates interstate 
commerce, and helps drive innovation. But perhaps most important, 
broadband has the potential to affect almost every aspect of our lives. 
It is changing how we communicate with each other, how and where we 
work, how we educate our children, and how we entertain ourselves. 
Broadband deployment has been our top priority at the Commission, and 
we have begun to see some success as a result of our efforts.
    In 2005, the Commission created a deregulatory environment that 
fueled private sector investment. Since then, companies have begun 
racing to lay fiber to our homes. From March of 2005 to the end of 
September 2006, the number of homes passed by fiber increased from 1.6 
million to 6.1 million.
    Just as significant for consumers, the average price of broadband 
has dropped in the past 2 years. The Pew Internet and American Life 
Project (Pew) found that, from February 2004 to December 2005, the 
average price for home broadband access fell from $39 per month to $36 
per month. For DSL, monthly bills fell from $38 to $32 (almost 20 
percent), while cable modem users reported no change from $41 during 
the same period.
    The decline in price was accompanied by an increase in the number 
of Americans subscribing to high-speed connections to the Internet. 
Such connections have grown by nearly 600 percent since 2001. And 
according to the Commission's most recent data, high-speed connections 
increased by 26 percent in the first half of 2006 and by 52 percent for 
the full year ending June 30, 2006.
    The independent Pew study confirmed this trend, finding that from 
March 2005 to March 2006, overall broadband adoption increased by 40 
percent--from 60 to 84 million--twice the growth rate of the year 
before. The study found that, although overall penetration rates in 
rural areas still lags behind urban areas, broadband adoption in rural 
America also grew at approximately the same rate (39 percent).
    Perhaps most importantly, the Pew study found that the significant 
increase in broadband adoption was widespread and cut across all 
demographics. According to their independent research:

   broadband adoption grew by almost 70 percent among middle-
        income households (those with incomes between $40,000 and 
        $50,000 per year);

   broadband adoption grew by more than 120 percent among 
        African Americans;

   broadband adoption grew by 70 percent among those with less 
        than a high school education; and

   broadband adoption grew by 60 percent among senior citizens.

    Wireless service is becoming increasingly important as another 
platform to compete with cable and DSL as a provider of broadband. The 
demand for wireless services continues to grow at a rapid rate. In 
1986, there were only 500,000 wireless subscribers generating only $670 
million in revenue. Today there are 219 million subscribers generating 
$118 billion. Moreover, wireless rate have continued to decrease, 
falling 82 percent since 1996 and 14 percent from 2005 to 2006.
    The Commission is making available as much spectrum as possible to 
put the next generation of advanced wireless devices into the hands and 
homes of consumers. In September the FCC closed its largest and most 
successful spectrum auction, raising almost $14 billion. The spectrum 
offered was the largest amount of spectrum suitable for deploying 
wireless broadband ever made available in a single FCC auction. And we 
are currently preparing to auction 60 MHz in the 700 MHz band, spectrum 
that is also well-suited for the provision of wireless broadband.
    Moreover, the number of consumers who receive their broadband 
connection through satellite or wireless will continue to increase, as 
new satellite services are launched, rural wireless Internet service 
providers continue to grow, and Wi-Fi hotspots continue to sprout up 
across the country. Indeed, there are nearly 50,000 Wi-Fi hotspots 
throughout the United States, more than three times the number of any 
other country.
    Another potentially innovative means of providing high-speed data 
communications is Broadband over Powerline (BPL), which uses existing 
electrical infrastructure to provide broadband services. BPL is a 
potentially significant player due to power lines' ubiquitous reach, 
allowing it to more easily provide broadband to rural areas. The United 
Power Council reports that there currently are at least 38 trial 
deployments and 7 commercial trials.
    In sum, the United States is the largest broadband market in the 
world with over 56 million broadband subscribers according to the 
Organization for Economic Co-operation and Development (OECD). I am 
proud of the progress we have made in broadband deployment by creating 
an environment that better facilitates infrastructure investment. I 
also, however, hear the voice of my colleague Dr. Copps spurring us on 
to do better. I agree.
    This Committee explicitly asks how the U.S. compares with other 
industrialized nations. The OECD currently ranks the U.S. as 12th in 
the world in terms of broadband penetration, behind Korea, the United 
Kingdom, and even Belgium. It is important to note that the OECD does 
not adjust for factors including density, which puts a country as large 
as ours with sizable rural areas at a significant disadvantage. For 
instance, New Jersey has a similar population density as Korea, ranked 
4th, yet has a higher penetration rate (30 subscribers per 100 
residents, versus 26 for Korea). Nevertheless, we all agree that our 
current standing of 12th is not good enough. We must continue to build 
on our efforts to encourage competition, speed broadband deployment and 
lower prices for consumers.
Media
    As is the case with the telecom sector, consumers and companies are 
benefiting from technological developments and innovation in media. 
DVR's, VOD and HD programming offer them more programming to watch at 
any given time then ever before. Thanks largely to new services like 
these, cable operators' total revenue grew from $65.7 billion to 
approximately $73 billion last year.
    While consumers have enormous choice among channels, they have 
little control over how many channels they are able to buy. For those 
who want to receive 100 channels or more, today's most popular cable 
packages may be a good value. But according to Nielson, most viewers 
watch fewer then two dozen channels. For them, the deal isn't as good.
    The cost of basic cable services have gone up at a disproportionate 
rate--38 percent between 2000 and 2005--when compared against other 
communications sectors. The average price of the expanded basic cable 
package, the standard cable package, almost doubled between 1995 and 
2005, increasing by 93 percent. The increase in cable prices appears 
even more dramatic when viewed relative to the prices for a number of 
other communications services: prices for long distance, international, 
and wireless telephone service have all decreased dramatically during 
this same timeframe.
    Ten years ago the satellite industry was nascent. Today, Direct 
Broadcast Satellite (DBS) provides consumers an important competitive 
choice. And satellite offerings are sometimes the only multi-channel 
video option for rural Americans. Between 2000 and 2006, DBS 
subscribership grew 100 percent and average revenue per user grew 32 
percent. Like DBS, satellite radio also has experienced significant 
growth. Subscriptions have increased from 1.6 million in 2003 to 13.6 
million subscribers in 2006.
    The transition from analog to digital technology poses both 
opportunities and challenges for the broadcast sector. The new and 
better services that digital technology enables are great for 
consumers, who will have access to more free news, information and 
entertainment. With digital technology, television broadcasters can 
offer high-definition programming, multiple programming streams, data 
services, and video over mobile devices. Radio broadcasters can offer 
crystal clear sound (even on the AM band), as well as data such as 
local traffic and weather, stock updates and news, and artist 
identification. But many of these business plans are in their infancy, 
with revenue streams uncertain, while the costs of the transition are 
large and immediate. And those costs come at a time of increased 
competition for advertisers from other media--many of which, unlike 
broadcasters, have a subscription revenue stream in addition to 
advertising revenue.

Looking Forward
    While we have made significant progress in creating an environment 
that facilitates investment and ensures the American people realize the 
full benefits of our world-class communications system, there is more 
to be done. I see four areas that deserve particular attention.
    First, we must continue to increase access to communications 
services.
    I will continue to make broadband deployment the Commission's top 
priority. As I previously touched upon, the ability to share increasing 
amounts of information--at greater and greater speeds--increases 
productivity, facilitates interstate commerce, and encourages 
innovation.
    We will continue to encourage deployment of broadband from all 
providers using a variety of technologies. As wireless technologies 
become an increasingly important platform for broadband access, it is 
critical to ensure that there is adequate spectrum available for 
providing broadband service. Spectrum auctions will continue to be an 
important part of our strategy for facilitating the build-out of mobile 
broadband networks. We are working to ensure that our upcoming auction 
of the 700 MHz spectrum meets the needs of both large and small rural 
companies and proceeds in an efficient, effective and timely manner.
    The Commission is also considering an order that would classify 
wireless broadband Internet access service as an information service. 
This action would eliminate unnecessary regulatory barriers for service 
providers. This classification also would clarify any regulatory 
uncertainty and establish a consistent regulatory framework across 
broadband platforms, as we have already declared high-speed Internet 
access service provided via cable modem service, DSL and BPL to be 
information services. This action is particularly timely in light of 
the recently auctioned AWS-1 spectrum for wireless broadband and our 
upcoming 700 MHz auction.
    The United States and the Commission have a long history and 
tradition of making sure that rural areas of the country are connected 
and have the same opportunities for communications as urban areas. In 
the 1996 Act, Congress explicitly required that the Commission ensure 
that consumers in all regions of the Nation have access to services 
that ``. . . are reasonably comparable to those services provided in 
urban areas.'' Specifically Congress required the Commission to 
establish Universal Service Fund mechanisms that are ``. . . specific, 
predictable and sufficient . . . to preserve and advance universal 
service.''
    It is critical that all Americans stay connected to state-of-the 
art communications services. The Universal Service Fund is the 
lifeblood of this goal. Without this source of funding we cannot 
continue to meet these commitments. But this system is in need of 
reform. Changes in technology and increases in the number of carriers 
who are receiving universal service support have placed significant 
pressure on the stability of the fund. We should improve the way the 
Commission administers the fund and reform the collection and 
disbursement systems. We need to move to a contribution system that is 
technologically neutral and a distribution system that is more 
efficient.
    The Commission will also do its part to ensure that all Americans, 
including those who live in the most remote areas of the country, 
receive first-rate medical care. We recently took action, through our 
adoption of a Rural Healthcare Pilot Program, to support the 
construction of state and regional networks dedicated to health care. 
In the first half of 2007, the Commission will be selecting 
participants for the pilot program, and in 2007 and 2008, the 
Commission will oversee the program. The deployment of such a network 
will create numerous opportunities for delivering telehealth services, 
including telemedicine applications that have the potential to 
revolutionize the current healthcare system throughout the Nation. This 
is particularly true in rural and underserved areas, where distance 
often separates patients from the medical care they need. Under the 
pilot program we adopted, patients anywhere on the network will have 
greater access to critically needed specialists in a variety of 
specialties.
    Second, we must continue to promote real choice for consumers.
    In December of last year, we took steps to implement Section 621 of 
the Communications Act, which prohibits local authorities from 
unreasonably refusing to award a competitive franchise. We will 
continue to take steps to remove regulatory impediments to the entry of 
new service providers into the video market by, for instance, ensuring 
that consumers living in apartment buildings are not denied a choice of 
cable operators.
    Competition and choice in the video services market will benefit 
the consumer by resulting in lower prices, higher quality of services, 
and generally enhancing the consumers' experience by giving them 
greater control over the purchased video programming. We need to 
continue our efforts to create a regulatory environment that encourages 
entry into this market and more choice for consumers. This includes 
making sure that competitive providers have access to ``must-have'' 
programming that is vertically integrated with a cable operator.
    Promoting competition and choice must be our priority in the voice 
arena, as well. We need to continue to ensure that new entrants are 
able to compete with incumbents for telecommunications services. For 
example, new telephone entrants need access to local telephone numbers 
and the ability to interconnect with incumbents to deliver local calls 
to them.
    We also need to ensure that existing service providers are not 
standing in the way of the innovations currently occurring in the 
consumer electronics space. Consumers want to be able to walk into a 
store, buy a new television set or TiVo, take it home, and plug it in 
as easily as they do with a telephone.
    Third, we must continue to protect consumers.
    We must always be on alert for companies intentionally or 
unintentionally harming consumers. Among the issues the Commission must 
turn its attention to is the ability of unauthorized users to gain 
access to callers' phone records, or pretexting. The Commission intends 
to strengthen its privacy rules by requiring providers to adopt 
additional safeguards to protect customers' phone record information 
from unauthorized access and disclosure. Specifically, the Commission 
would prohibit providers from releasing call detail information to 
customers except when the customer provides a password. Similarly, we 
propose to modify our current rules to require providers to obtain 
customer consent before disclosing any of that customer's phone record 
information to a provider's joint venture partner or independent 
contractor for marketing purposes.
    Recently, concerns about preserving consumers' access to the 
content of their choice on the Internet have been voiced at the 
Commission and Congress. In its Internet Policy Statement, the 
Commission stated clearly that access to Internet content is critical 
and the blocking or restricting consumers' access to the content of 
their choice would not be tolerated. Although we are not aware of 
current blocking situations, the Commission remains vigilant and stands 
ready to step in to protect consumers' access to content on the 
Internet. Moreover, to better assess how the marketplace is functioning 
and address any potential harm to consumers, I have proposed the 
Commission examine this issue more fully in a formal Notice of Inquiry 
which is presently pending before my colleagues.
    Perhaps no other issue before the Commission garners more public 
interest then our quadrennial review of our media ownership rules. This 
attention is understandable given that the media touches almost every 
aspect of our lives. We are dependent upon it for our news, our 
information and our entertainment. Indeed, the opportunity to express 
diverse viewpoints lies at the heart of our democracy. We must make 
sure that consumers have the benefit of a competitive and diverse media 
marketplace. At our public hearings, the Commission has heard a 
consistent concern that there are too few local and diverse voices in 
the community. Certainly, we need to protect localism and diversity in 
the media. We must balance concerns about too much consolidation and 
too little choice, however, with appropriate consideration of the 
changes and innovation that are taking place in the media marketplace.
    Critical to our review of our media ownership rules is the 
collection of objective facts and an open dialog with the public. We 
have commissioned multiple economic studies and are engaging in 
hearings across the country in a range of markets. The goal of these 
hearings is to fully and directly involve the American people in this 
process. We held our first hearing in Los Angeles, where we focused on 
the ability of independent television producers to gain access to 
distribution. We also held a hearing in Nashville, in which we focused 
on the concerns of the music industry. The Commission's efforts to 
collect a full public record will continue in the months ahead, with 
five more hearings, including one specifically focused on localism.
    Fourth and finally, we must enhance public safety.
    The events of September 11, 2001 and the 2005 hurricane season 
underscored America's reliance on an effective national 
telecommunications infrastructure. Thus, public safety has been and 
will continue to be one of the Commission's and my top priorities. We 
must make sure that the public has the tools necessary to know when an 
emergency is coming and to contact first responders. And we must enable 
first responders to communicate with each other and to rescue the 
endangered or injured. And the public and private sectors must work 
together so that our communications system can be repaired quickly in 
the wake of a disaster so that affected people can reach out to locate 
or reassure one another. We recently created a Public Safety and 
Homeland Security Bureau to focus exclusively on this important need.
    As Chairman Inouye and co-sponsors Senators Stevens, Kerry, Smith, 
and Snowe of S. 385 obviously recognize, one of the most pressing 
public safety problems is the need for interoperability within and 
among public safety systems. I thank the Chairman for his efforts in 
this regard, and look forward to any guidance the Congress may provide.
    The Commission recently asked for comments on creating a 
nationwide, interoperable broadband network for public safety officials 
in the 700 MHz band. In the meantime, technology is available now that 
could provide a temporary solution to the need for more 
interoperability. By adding IP-based technologies to existing public 
safety network equipment (a so-called ``IP patch'') and deploying 
portable IP-based network equipment where necessary, public safety 
officials would achieve functional, if not full, interoperability. If 
Congress made sufficient funds available now, such functional 
interoperability for public safety communications systems could be 
available in selected areas in the near term and throughout most of the 
Nation within 4 years.

Conclusion
    As you can see, on the whole, the state of the communications 
industry is strong, and growing stronger. Innovation, in all sectors, 
is back, and competition has enabled consumers to get newer and more 
innovative technologies and communications services at ever-declining 
prices.
    Sadly though, one service has gone the way of the dinosaur. 2006 
marked the end of an era, when Western Union discontinued its telegram 
delivery service, which it began in 1856.
    Thank you for your time and attention today. I appreciate the 
opportunity to share with you some of the recent progress the 
Commission has made. With that, I would be happy to answer any 
questions you may have.

    The Chairman. Thank you very much, Mr. Chairman.
    And now, may I call upon Commissioner Copps?

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

    Mr. Copps. Thank you, Mr. Chairman, Mr. Vice Chairman, 
Members of the Committee, I welcome the opportunity, always, to 
return to the Senate which was home to me for so many years. It 
was actually almost 37 years ago when I first started walking 
the halls of the Russell Senate Office Building. I welcome the 
chance to share some thoughts with you over the state of our 
communications industry, which is such an important part of our 
economy, and an even more important part of our society, and of 
our culture.
    I think we have some serious work to do to ensure that 
these industries are making their maximum contribution to our 
Nation. We have a media environment that, while impressive in 
many ways, is not fully serving American democracy, or the 
American public. We have a telecommunications marketplace that, 
without some serious thought, will never extend the wonders of 
the Internet to millions of Americans. And despite the lessons 
of 9/11 and Katrina, we still are not ready for the next man-
made, or natural, disaster. Perhaps our Nation's unreadiness on 
9/11 can be explained by ignorance. If we're not prepared next 
time, that will be dereliction.
    Let me begin with the issue which you know is closest to my 
heart, the broadcast media. I know that many local broadcasters 
strive mightily to serve the public interest. But, 
increasingly, the public-spirited part of the profession is 
being squeezed out. Too much of TV and radio today is 
homogenized, often gratuitously, violent programming. Even 
worse is what we don't see enough of--the community and civic 
affairs coverage that is democracy's lifeblood. I've traveled 
all over the country, to a dozen media hearings just in the 
last year, and I have seen people's impatience with the status 
quo. It is time for the FCC to focus not only on avoiding bad 
new rules, but to revisit the bad old rules that got us into 
this mess in the first place. I am very pleased that Chairman 
Martin has committed to complete our long-dormant localism 
proceeding before moving forward on media ownership. Going 
beyond that, we need to find a way to bring public interest 
standards back to broadcasting and the spirit of public 
interest to other media, too.
    Turning to telecommunications, I think the FCC's, and the 
nation's, greatest challenge is to bring the wonders of modern 
technology to all our people; to the inner city and to our 
distant farms and ranches, to tribal lands, to our disabled and 
challenged fellow citizens, to our poorest citizens and to our 
oldest citizens. We simply cannot afford to leave anyone behind 
without leaving America behind. Right now, your country and 
mine is 21st in the world when it comes to broadband digital 
opportunity and that's according to the International 
Telecommunications Union. How can we expect a generation of 
students to enter the digital classroom at dial-up speed? How 
will they compete as individuals? But wait a minute, we're 
paying a business, and a competitive cost here, too. Fewer 
Americans with broadband means a smaller Internet marketplace 
and a glass ceiling over the productivity of small businesses 
especially and entrepreneurs in too much of our great land. 
But, then again, what did we expect without having a real 
broadband strategy?
    I hope this Congress will push the FCC to be a more 
proactive participant in developing a strategy and developing 
solutions. Have us gather better statistics about our country's 
woeful broadband situation. Set our nation's talented engineers 
and policy gurus to work writing reports and teeing up options 
for you to consider about how we can inject life back into our 
nation's stagnant broadband market. Keep our feet to the fire 
to encourage innovation, competition and the provision of 
advanced telecommunications to all of our people. The present 
situation is far too grave to let the great technological 
resources of the FCC be anything less than 100 percent engaged 
in their project.
    The FCC also faces a daunting challenge in improving our 
disaster readiness. I believe that in the aftermath of 9/11, 
this agency, which employs the greatest concentration of 
telecommunications experts in the Nation and has statutory 
responsibility to secure non-military communications in time of 
emergency, allowed its expertise and authority to be 
marginalized. Chairman Martin has moved to make public safety 
and homeland security a higher and top priority, even creating 
a separate bureau this year. But the job is still far from done 
and our role is still not what it should be. One initiative we 
have adopted, and I think it is of particular importance, is 
using the FCC as a clearinghouse for public safety and homeland 
security ideas. Small businesses, charities, hospitals, and 
other entities that lack the resources to develop complex 
emergency plans should have someone they can contact. I suggest 
the FCC and learn what has worked for others and what hasn't. 
It will take money, staff time, and serious dedication to get 
us there, but the safety of the people is always the first 
obligation of the public servant and the agency is capable of 
doing more to keep America safe. Rightly done, this initiative 
can save the nation time, money, and possibly even save it 
lives.
    Turning to one of those smaller issues that doesn't usually 
get much attention, let me make one minor, but I think 
important suggestion: modify the closed meeting rule so that we 
can talk to each other at the FCC. I can't think of any recent 
proceeding that wouldn't have benefited from a full and frank 
exchange of ideas among the principal decisionmakers. Every 
other institution encourages discussion among its members, 
whether it's Congress, the courts, or the College of Cardinals. 
You know, if it's good enough for Holy Mother Church, of which 
I am a member, it ought to be good enough for the FCC.
    I want to finish by stating my firm conviction that the 
issues the FCC faces in the next 2 years are far too important 
and complex to be reduced to simple debates between regulation 
and deregulation or pro-business and anti-business. Our job is 
to make sure the people's business gets done. We need to find 
ways for stakeholders to work together, to combine the genius 
of our great enterprise system with the things people expect 
government to do. Partnership is how we built this great 
country of ours. Working together, building together, 
recognizing our interdependence one upon the other, those have 
been the best moments in our Nation's passage to greatness, and 
therein is the key to our future.
    Mr. Chairman and Members, thank you and I look forward to 
our conversation this morning.
    [The prepared statement of Mr. Copps follows:]

      Prepared Statement of Hon. Michael J. Copps, Commissioner, 
                   Federal Communications Commission

    I welcome this opportunity to return to the Senate--which was 
``home'' to me for so many years--and to share some thoughts with you 
over the state of our communications industries which are so important 
a part of our economy and an even more important component of our 
society and culture. I think as a nation we have some serious work to 
do to ensure that these industries are making their maximum 
contribution to our Nation. We have a media environment that is not 
fully serving American democracy or the American public. We have a 
telecommunications marketplace that, without significant reform, will 
never extend the wonders of the Internet to millions of Americans. And 
despite the searing lessons of 9/11 and Katrina, we still are not ready 
for the next man-made or natural disaster.
    Let me begin with the issue which you know is closest to my heart: 
the broadcast media. I know that many local broadcasters strive 
mightily to serve the public interest. But increasingly the public-
spirited part of the profession is being squeezed out. Too much of TV 
and radio today is homogenized, often gratuitously violent programming. 
Even worse is what we don't see enough of--the community and civic 
affairs coverage that is democracy's lifeblood. I've traveled all 
across the country--to a dozen media hearings just in the last year--
and I've seen people's impatience with the status quo. It is time for 
the FCC to focus not only on avoiding bad new rules, but to revisit the 
bad old rules that got us here in the first place. I am very pleased 
the Chairman has committed to complete our long-dormant localism 
proceeding before moving forward on media ownership. Going beyond that, 
we need to find a way to bring basic public interest standards back to 
broadcasting and the spirit of public interest to other media, too.
    Turning to telecommunications, I think the FCC's--and the 
nation's--greatest challenge is to bring the wonders of modern 
technology to all our people: to the inner city and to our distant 
farms and ranches, to tribal lands, to our disabled and challenged 
fellow citizens, to our poorest citizens and our oldest citizens. We 
simply cannot afford to leave anyone behind without leaving America 
behind. Right now, your country and mine is 21st in the world when it 
comes to broadband digital opportunity and that's according to the 
International Telecommunications Union. How can we expect a generation 
of students to enter the digital classroom at dial-up speed? How will 
they compete as individuals? But wait a minute--we're paying a 
business, competitive cost, too. Fewer Americans with broadband means a 
smaller Internet marketplace and a glass ceiling over the productivity 
of small businesses and entrepreneurs in too much of our great land. 
But, then again, what did we expect without having a real broadband 
strategy?
    I hope this Congress will push the FCC to be a more proactive 
participant in developing a strategy and developing solutions. Have us 
gather better statistics about our country's woeful broadband 
situation. Set our agency's talented engineers and policy gurus to work 
writing reports and teeing up options for you to consider about how we 
can inject life back into our Nation's stagnant broadband market. Keep 
our feet to the fire to encourage innovation, competition and the 
provision of advanced telecommunications to all our people. The present 
situation is far too grave to let the great technological resources of 
the FCC go untapped.
    The FCC also faces a daunting challenge in improving our disaster 
readiness. I believe that in the aftermath of 9/11, this agency--which 
employs the greatest concentration of telecommunications experts in the 
Nation and has statutory responsibility to secure non-military 
communications in time of emergency--allowed its expertise and 
authority to be marginalized. Chairman Martin has moved to make public 
safety and homeland security a top priority, even creating a separate 
Bureau this year. But the job is still far from done and our role is 
still not what it should be. One initiative we have adopted, and I 
think it is of particular importance, is using the FCC as a 
clearinghouse for public safety and homeland security ideas. Small 
businesses, charities, hospitals, and other entities that lack the 
resources to develop complete emergency plans should be able to contact 
the FCC and learn what has worked for others and what hasn't. It will 
take money, staff time, and serious dedication to get us there, but the 
safety of the people is always the first obligation of the public 
servant--and the agency is capable of doing more to keep America safe. 
Rightly done, this initiative can save the Nation time, money and 
possibly even lives.
    Turning to one of those smaller issues that doesn't usually get 
much attention, let me make one minor but I think important suggestion: 
Modify the closed meeting rule so that we can talk to each other at the 
Commission. I can't think of any recent proceeding that wouldn't have 
benefited from a full and frank exchange of ideas among the principal 
decision-makers. Every other institution encourages discussion among 
its members--whether it's Congress, the courts, or the College of 
Cardinals. You know, if it's good enough for Holy Mother Church, of 
which I am a member, it ought to be good enough for the FCC.
    I want to finish by stating my firm conviction that the issues the 
FCC faces in the next 2 years are far too important and complex to be 
reduced to simple distinctions between regulation and deregulation or 
pro-business and anti-business. Our job is to make sure the people's 
business gets done. We need to find ways for stakeholders to work 
together, to combine the genius of our great enterprise system with the 
things people expect government to do. Partnership is how we built 
America. Working together, building together, recognizing our inter-
dependence one upon the other--those have been the best moments in our 
Nation's passage to greatness--and therein is the key to our future.
    Mr. Chairmen and Members, thank you and I look forward to our 
conversation this morning.

    The Chairman. Thank you very much, Mr. Copps.
    We now call upon Mr. Jonathan Adelstein.

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

    Mr. Adelstein. Thank you, Mr. Chairman, Mr. Vice Chairman, 
Members of the Committee.
    As we're in the middle of what passes for deep winter here 
in Washington, I'm reminded of what I learned growing up as a 
fourth-generation South Dakotan. My great-grandmother 
homesteaded near the Badlands, a very rugged area that Senator 
Thune knows very well. What she learned was that--along with so 
many other pioneers that were scattered over the long and wide 
distances there--you really made it by staying connected with 
each other, and by pulling together. And today, we have the 
opportunity, through technology, to connect this country in 
ways that are more profound than my great-grandmother ever 
could have imagined.
    We need that same spirit, through telecommunications to 
provide for all of our neighbors, including those in rural and 
insular areas, other high-cost areas, Native Americans, 
residents of our inner-cities, minorities, those with 
disabilities, non-English speakers, and low-income consumers. 
We should upgrade the telecommunications infrastructure in 
every corner of this country, and make new technologies more 
widely available and affordable to everyone. All of our 
citizens should have access, no matter where they live, or what 
challenges they face.
    To better serve everyone in this country, we should focus 
on improving access to broadband, modernizing Universal 
Service, and promoting the public interest in our media.
    As a Commissioner, I've traveled to a lot of unique parts 
of our country, such as Alaska and Hawaii. I'll never forget my 
visit to the Gulf Coast of Mississippi shortly after the 
devastation of Hurricane Katrina. Enormous damage there reminds 
us of the needs of our public safety community and our national 
security communities. We have to keep those foremost in our 
minds and in our efforts.
    One of our central national priorities is promoting the 
widespread deployment of broadband. Even though we've made 
strides, we're not keeping pace with our global competitors. 
This is more than a public relations problem. Citizens of other 
countries are simply getting more megabits for less money. 
That's a productivity problem, and our citizens deserve better. 
We must restore our place as the undisputed world leader in 
telecom. It warrants a comprehensive national strategy.
    And as has been mentioned, the ITU found that digital 
opportunity afforded to our citizens is 21st in the world. It's 
not enough of a national strategy just to fight our way back to 
20th; we have to fight our way back to the top.
    We should start by improving our data collection so that we 
can better ascertain our current problems, and develop better 
responses. We must increase incentives for investment and 
promote competition. We've got to make broadband truly 
accessible to everyone--even if that means communities tapping 
their own resources to build broadband systems.
    We must also work--as many members of this committee, 
including Senator Dorgan and Senator Snowe have done to 
preserve the open and neutral character of the Internet that 
has always been its hallmark.
    Some have argued that our low broadband ranking is due to 
our rural population. Well, if that's the case, then we'd 
better redouble our efforts to make sure that we get rural 
broadband every bit as efficiently deployed as it is anywhere 
else in the country. We can't afford to leave any part of our 
country behind.
    In that sense, it is vital to keep our Universal Service 
programs on sound footing. As voice becomes just one 
application over broadband networks, we should ensure that 
Universal Service evolves to promote advanced services, a 
priority that this committee, in particular, made a real 
priority in the 1996 Act.
    And we've got to do more to stay on top of the latest 
spectrum developments. Recent years have seen an explosion of 
new wireless opportunities for consumers, but we have to take 
creative approaches--technical, regulatory and economic--to get 
spectrum into the hands of all types of operators, particularly 
as we prepare for the critically important 700 MHz auction that 
you all made possible.
    As for media, let's never forget that the airwaves belong 
to the American people. With our ownership rules, we should 
take far greater care than in the past before allowing any 
further concentration. We need to open our airwaves to 
community-based and minority voices. And we need to establish 
public interest obligations for broadcasters as they enter the 
digital age.
    Finally, we're charged by Congress to perform as a law 
enforcement agency. We should be rigorous in enforcing all of 
the laws under our jurisdiction. We have a lot of complaints 
before us, including those regarding the Do-Not-Call Registry, 
the junk fax rules, indecency, payola, video news releases, and 
our sponsorship identification rules. We should address all of 
them, and enforce all of the laws vigorously.
    Mr. Chairman, I will carry out Congress's charge to keep 
the American public well-connected and well-protected. I thank 
you for this opportunity to testify, and look forward to 
addressing any concerns or questions you may have.
    [The prepared statement of Mr. Adelstein follows:]

    Prepared Statement of Hon. Jonathan S. Adelstein, Commissioner, 
                   Federal Communications Commission

    Mr. Chairman, Mr. Vice-Chairman, and Members of the Committee, as 
we are in the middle of what passes for deep winter in Washington, I am 
reminded of what I learned growing up as a fourth-generation South 
Dakotan. My great-grandmother homesteaded near the Badlands, and 
thrived, along with so many other pioneers who were scattered over 
large distances, by staying connected and pulling for each other.
    Today, through vast technological progress, we have the opportunity 
to connect this country in ways more profound than my great-grandmother 
could have ever imagined. It will take the same American spirit to 
provide for all of our neighbors, not just those in rural, insular and 
other high-cost areas, but Native Americans, residents of our inner 
cities, minorities, those with disabilities, non-English speakers, and 
low-income consumers.
    We must upgrade our communications infrastructure in every corner 
of this country. And we must do a better job of making innovative 
communications technologies more widely available and affordable to 
everyone. All of our citizens should have the opportunity to maximize 
their potential through communications, no matter where they live or 
what challenges they face. To promote the communications needs of 
everyone in this country, we should focus on improving access to 
broadband services, modernizing universal service, and protecting 
diversity, competition, and localism in our media.
    Understanding the many facets of the communications landscape 
requires us to take account of the rapidly-changing marketplace and to 
reach out to diverse communities. As a Commissioner, I have traveled to 
many unique parts of the United States, including Alaska and Hawaii, 
and I have learned of the distinctive challenges each state faces. I 
visited the Gulf Coast of Mississippi shortly after the devastation of 
Hurricane Katrina. The enormous damage to the entire region was 
unforgettable and remains a painful reminder that the communications 
needs of our public safety and national security communities must 
remain at the forefront.
    One of our central challenges is promoting the widespread 
deployment of broadband facilities to carry these innovative services. 
This must be a national priority. Even though we have made strides, I 
am concerned that the U.S. is not keeping pace with our global 
competitors. Each year we slip further down the regular rankings of 
broadband penetration. This is more than a public relations problem. 
Citizens of other countries are simply getting more megabits for less 
money. That's a productivity problem, and our citizens deserve better.
    We must engage in a concerted and coordinated effort to restore our 
place as the undisputed world leader in telecommunications. An issue of 
this importance warrants a comprehensive national strategy to ensure 
that affordable broadband is available for all Americans. According to 
the ITU, the digital opportunity afforded to U.S. citizens is not even 
near the top, it's 21st in the world. So, it is not a national strategy 
just to overtake Estonia. It will mean taking a hard look at our 
successes and failures, and improving our data collection so that we 
can better ascertain our current problems and develop responsive 
solutions. We must re-double our efforts to encourage broadband 
development by increasing incentives for investment and promoting 
competition. We must also work to preserve the open and neutral 
character that has been the hallmark of the Internet, maximizing its 
potential as a tool for economic opportunity, innovation, and so many 
forms of civic, democratic, and social participation.
    It will also mean being creative and flexible in our approaches. 
Some have argued that the reason we have fallen so far in the 
international broadband rankings is that we are a more rural country 
than many of those ahead of us. If that is the case, we should 
strengthen our efforts to address any rural challenges head-on. We have 
got to make broadband truly affordable and accessible to everyone, even 
if that means communities tapping their own resources to build 
broadband systems.
    The Commission also must do more to stay on top of the latest 
developments in spectrum technology and policy. Spectrum is the 
lifeblood for much of this new communications landscape. The past 
several years have seen an explosion of new opportunities for 
consumers, like Wi-Fi, and more advanced mobile services. But, we have 
to be more creative with a term I have coined ``spectrum 
facilitation.'' That means looking at all types of approaches--
technical, economic or regulatory--to get spectrum into the hands of 
operators ready to serving consumers at the most local levels. Wireless 
broadband has been a top priority for me while at the Commission. And I 
truly believe that our preparation for the upcoming 700 MHz auction is 
one of the most important undertakings the Commission will conduct in 
all of the time I have served.
    Universal service continues to play a vital role in meeting our 
commitment to connectivity. I have worked hard to preserve and advance 
the universal service programs as Congress intended. It is vital to 
keep them on solid footing. Increasingly, voice, video, and data will 
flow to homes and businesses over broadband platforms. In this new 
world, as voice becomes just one application over broadband networks, 
we must ensure that universal service evolves to promote advanced 
services, which is a priority that Congress, and this Committee in 
particular, made clear.
    As for the media, we should never forget that the airwaves belong 
to the American people. It is critical to preserve their access to what 
the Supreme Court has called the ``uninhibited marketplace of ideas.'' 
First, with our ownership rules, we should do no harm; we should take 
far greater care than we have in the past before proposing any changes 
in our media ownership rules. Further, to make the media landscape look 
and sound like America, we need to open our airwaves to community-based 
and minority voices. And we need to establish public interest 
obligations on broadcasters as they enter the digital age.
    Finally, we are charged by Congress to perform as a law enforcement 
agency, and we should be rigorous in enforcing all of the laws under 
our jurisdiction. We have numerous issues before us regarding consumer 
complaints about the Do-Not-Call directory and our Junk Fax rules, 
indecency, payola, video news releases and our sponsorship 
identification rules. All of these laws are important, and all 
allegations of wrongdoing demand our resolute attention.
    Congress has charged the Commission with ensuring that the American 
public stays well-connected and well-protected. I will do everything in 
my power to carry out the law to promote these goals. Thank you for the 
opportunity to testify.

    The Chairman. All right, thank you very much, Mr. 
Adelstein.
    Now, may I call upon Commissioner Deborah Tate, Ms. Tate?

   STATEMENT OF THE HON. DEBORAH TAYLOR TATE, COMMISSIONER, 
               FEDERAL COMMUNICATIONS COMMISSION

    Ms. Tate. Good morning, Mr. Chairman, Mr. Vice Chairman and 
honored Members of the Committee. And, welcome to the new 
members, I look forward to working with you all in the future.
    We are, indeed, implementing many of the Acts that you 
passed, the WARN Act, and the Call Home Act, and I look forward 
to working on other issues with you in the coming year.
    I'd like to first commend Kevin Martin for his effective 
and strong leadership as Chairman of the FCC and do appreciate 
all of my fellow commissioners this past year as we've tried to 
work cooperatively to build consensus on complicated and 
challenging issues. And I agree with Commissioner Copps that it 
would make it a lot easier if all five of us could work and 
meet together.
    This is the first opportunity that I have had to appear 
before the Committee since my confirmation, and as you've 
already heard--what a year it has been.
    Incredibly advanced technologies, new consumer products, 
services, and bundles that we read about on the front page 
almost daily, as the Internet and the digital age affect all of 
us. The foundations of the old order are challenged, not only 
for the industry, but for government, policymakers, and 
consumers alike.
    Converging technologies are blurring platforms. Such 
dynamic technological changes create both opportunities and 
challenges, not only for the industry, but also for us. And 
while my philosophy is to encourage commercial negotiations and 
a light regulatory touch so that we can provide more incentives 
to continued investment and growth, while encouraging 
extraordinary innovations at the same time, we do need to be 
careful of social policies, and especially public safety 
concerns, which are paramount to protecting consumers, and 
indeed, our entire nation.
    One significant challenge that the other commissioners have 
noted is our review of the remanded broadcast ownership rules. 
As you know, we've held two of the six hearings that we've 
committed to. One was appropriately, I think, in my hometown of 
Nashville, Tennessee. Given the important role that the 
broadcast media plays in our society's marketplace, I am 
committed to ensuring the touchstone goals of competition, 
localism and diversity.
    As we review the rules, however, we do have to be mindful 
of the ongoing, dramatic changes in the way that we receive our 
news and information, and entertainment, taking into 
consideration the explosion of new sources. Especially, for 
instance, the way that my children receive their information--
``generation-i'' as I call them--the ones that were raised with 
the Internet where they access all types of information and 
content over the Internet.
    As many of you know, most of my professional life has been 
spent working on issues of significance to children and 
families, and that didn't change when I came to the FCC. 
Although most of the visibility does surround our enforcement 
of Congressional restrictions on the broadcast of indecent 
programming, I'm also pleased that we're taking a leadership 
role in addressing the national epidemic of childhood obesity, 
the effect of increasingly violent programming through our 
study, soon to be released, and the manner in which children's 
programming rules will be applied as we move to the new 
digital, multi-cast world.
    I join you also, and all of my colleagues, in working to 
ensure that broadband is, indeed, available to all Americans. 
The exciting news is that we're seeing continued increased take 
rates, over 50 percent from a year ago.
    My work, both as a state commissioner, and also now as 
Chairman of the Federal-State Joint Board on Universal Service 
Fund has made it clear that the growth has become untenable. We 
must begin to take action to reform the fund, in order to save 
it. And, therefore, we have begun to look at reforms on both 
the contribution and the distribution side. Next month, we will 
have an en banc hearing with many of our state colleagues, and 
of course, I welcome your input--at that time or at any time--
to discuss any ideas that you may have about ways to reform 
universal service.
    Like you, I've witnessed first-hand how incredible the 
possibilities and the innovations from the E-Rate fund are. 
Tennessee was the first state to connect all of its schools and 
libraries. And then, of course, on my visit to Alaska, I saw 
how important it is to connect to health care back on the 
mainland. It's essential, though, that we utilize technology-
neutral, fair, and understandable systems, to both sustain and 
stabilize the Universal Service Fund.
    The Commission, like Congress, has also been active in 
helping to increase the protection of confidential and delicate 
consumer information. Thank you for your pretexting 
legislation, and we will be acting shortly to guard against 
unauthorized access to customer phone and call-detail 
information.
    Last, but of course, most important, I'd like to touch on 
and also say that we were pleased to launch the Homeland 
Security Bureau at the FCC. And, like my colleagues, after 
attending our Katrina hearings in Mississippi, heard first-hand 
how important the words redundancy and interoperability are 
during disasters. I continue to want to work with you all as we 
move forward on those issues.
    Again, I appreciate the invitation to be here, and will be 
glad to take questions. Thank you, Mr. Chairman.
    [The prepared statement of Ms. Tate follows:]

     Prepared Statement of Hon. Deborah Taylor Tate, Commissioner, 
                   Federal Communications Commission

    Good morning, Chairman Inouye, Vice Chairman Stevens, and 
distinguished Members of the Committee. As I begin, I especially want 
to thank you, Chairman Inouye and Vice Chairman Stevens, for your 
leadership on these critical communications issues that affect our 
economy, our safety, and our ability to stay in touch with those we 
love. I am particularly glad that we have begun implementing the Call 
Home Act of 2006, reducing phone rates for our military families 
stationed around the world.
    I appreciate your invitation to participate in this hearing. As a 
commissioner at the Federal Communications Commission (``FCC'' or 
``Commission''), it is my role to implement the laws passed by 
Congress, and I welcome the opportunity to hear directly from you 
regarding issues facing the FCC, the industries we impact and, indeed, 
all Americans.
    First, I would like to commend Kevin Martin for his strong and 
effective leadership as Chairman of the FCC. Commissioner Copps, 
Commissioner Adelstein, and Commissioner McDowell also deserve praise 
for their commitment to building consensus, and working cooperatively 
as we balance competing interests to shape our communications policies.
    The communications marketplace continues to evolve daily, as 
convergence shakes the foundations of the old order for industry, for 
government, and for consumers alike. Converging technologies are 
blurring the lines between traditional communications platforms: we 
make telephone calls through our cable system, watch television on 
IPTV, and get Internet access from our electric company. Who would have 
imagined that wireless connections would have surpassed landlines or 
provide unbanked citizens access to capital or even enhance the gross 
national product of developing nations. While this convergence creates 
real benefits for consumers through the introduction of new services 
and increased competition among service providers, it also challenges 
us to adapt our regulations to these market changes. In doing so, 
whenever possible, I believe we must maintain a light regulatory touch 
in order to provide incentives to investment and encourage innovation.
    One current challenge of this new digital age involves our review 
of the Commission's broadcast ownership rules. Given the important role 
that the broadcast media play in our democratic society's marketplace 
of ideas, I am committed to working with my FCC colleagues and members 
of this Committee to ensure that our actions further the touchstone 
goals of competition, localism, and diversity. Currently, we are in the 
process of hearing from the public and have held two of our planned six 
hearings across the country; one of which was in my hometown of 
Nashville, Tennessee. As we review our rules, however, we must be 
mindful of the ongoing, dramatic changes in the ways we--especially 
``generation-i,'' those raised with the Internet--receive our news, 
information, and entertainment, anytime, anywhere. For example, 
increases in broadband penetration have transformed the Internet into a 
viable platform for streaming full-length video programming, with more 
content moving online daily at sites like YouTube; XM and Sirius have 
signed up millions of satellite radio subscribers, and iPods and other 
digital music players are used by millions more, including one in five 
people under the age of 30; and our mobile phones now provide us with 
stock quotes and e-mail updates from sources across the globe. We must 
make sure that we account for these effects of the digital age, 
because, from a regulatory standpoint, the media marketplace of 
tomorrow is being shaped by our actions today.
    Most of my professional life has been spent addressing issues of 
significant impact to children and families and certainly that did not 
stop when I arrived at the FCC. Although most visibility surrounds our 
enforcement of congressional restrictions on the broadcast of obscene, 
indecent, and profane programming, other issues that we are addressing 
include the national epidemic of childhood obesity, the effect of 
violent programming and advertising on children as well as how our 
children's programming rules will be applied to the new, digital 
multicast world. These are important issues, and I am pleased that the 
FCC is taking a leadership role in addressing them.
    Of course, the issues we must address as the result of convergence 
and the developments of the digital age are not limited to the media. 
One structural change evident in the local communications marketplace 
is the proliferation of bundled service packages: ``all-in-one'' triple 
or quadruple play, including wireline and wireless voice, video, and 
Internet access for a single price. However, we will see whether this 
business model ultimately prevails in the marketplace--its test will be 
whether it provides what consumers want and need.
    Whether in the merger context or in response to a forbearance 
petition, we have recently reviewed the competition in several specific 
telecommunications markets. For example, responding to a petition for 
forbearance from network sharing obligations, we recently analyzed the 
state of competition in Anchorage, Alaska, carefully applying the 
competition, consumer impact, and public interest standards in the 
Communications Act to find that calibrated regulatory relief was 
warranted. Looking ahead this year, the Commission faces a number of 
other forbearance petitions and we will continue to apply a rigorous 
analysis to the cases presented.
    Broadband deployment is essential for the future of our country, 
not only for the communications industry but also for every business in 
America and for our place as a global leader. It is extremely important 
that the Commission continue to promote the deployment of advanced 
networks capable of providing broadband and video services. Broadband 
promises unprecedented business, educational, and healthcare 
opportunities for all of us, no matter where we choose to live. The 
convergence of services and platforms--from cable modem and DSL to 
fiber-optics, satellite, and wireless--will only help to further drive 
the need for better and more ubiquitous broadband throughout the 
country. Over 50 million users had broadband connections in 2005, 
rising over 33 percent, and with rural Americans doubling their 
broadband connections since 2003. While the United States has over 31 
percent of all broadband connections in the Organisation for Economic 
Co-operation and Development, we still have more to do. I am committed 
to working with my FCC colleagues and Members of this Committee to 
encourage the further deployment of new and innovative services and to 
foster competition. Participation in the digital age requires 
broadband, and it is essential that we create an environment that 
maximizes its deployment. In addition, I also note that I support the 
Commission's Internet Policy Statement, and believe it is important, 
among other things, that ``consumers are entitled to access the lawful 
Internet content of their choice.''
    While I believe the marketplace can best address many of the 
economic issues we face at the FCC, I am pleased that we continue to 
ensure that the critical needs of consumers are addressed. My work as a 
state commissioner as well as the Chair of the Federal-State Joint 
Board on Universal Service has made it clear to me that the Universal 
Service Fund is a critical program for ensuring access for consumers in 
rural and high-cost areas, and for promoting access to advanced 
services for schools, libraries, and rural heath care providers. I have 
witnessed first-hand the benefits of the E-Rate program--in fact, 
Tennessee was the first state to connect every school and library--and 
how connecting healthcare facilities by broadband makes a vital 
difference in peoples' lives in some of the most remote areas of 
Alaska. The FCC recently announced a rural healthcare broadband pilot 
program which will explore the utility of connecting health facilities 
in a state or region, linking rural health facilities with university 
and research hospitals. I support the entire universal service program, 
and I remain committed to promoting the availability of quality, 
affordable telecommunications services to the people of the United 
States. It is essential that as the converging communications landscape 
changes, we recognize how technological changes are putting strains on 
the mechanics of our distribution system and must be addressed by 
technology-neutral policies that avoid subjecting the program to 
unsustainable growth.
    The FCC also continues to improve access to communications services 
for persons with disabilities by requiring interoperability among 
competing video relay service providers, and approving innovative new 
services like IP-captioned telephone that improve access to 
communications for many Americans. Of course, more work lies ahead to 
ensure that we responsibly manage our obligations to achieve functional 
equivalence for all Americans.
    Along with Congress, the Commission has also been active in helping 
protect the privacy of confidential and delicate consumer information. 
Last year, we opened a rulemaking to address the abhorrent practice of 
pre-texting to obtain consumer's private phone records, and we are now 
poised to issue final rules designed to ensure the privacy of consumer 
information maintained by telecommunications carriers. And, I am 
grateful that the Congress passed legislation last year making the 
practice of pre-texting illegal and giving our law enforcement agencies 
the resources necessary to enforce the prohibition.
    Last, but possibly most important, I would like to touch on the 
issue of public safety and homeland security. While we continue to 
mourn the innocent lives lost and honor the brave and selfless acts of 
the first responders on September 11, 2001 and during the Hurricane 
Katrina and Rita disasters, we must also learn from our experience and 
equip the Nation and our citizens to be able to communicate more 
effectively in such times. In March 2006, at the second meeting of the 
FCC Independent Panel Reviewing the Impact of Hurricane Katrina on 
Communications Networks in Mississippi, I heard personal accounts of 
the devastation. The one clear message I heard was the need for 
redundancy in communications networks. I applaud the collaborative 
efforts and contributions of the communications and public safety 
industries, which have worked hard to address the policy goals and 
technical issues that make these necessary improvements possible.
    My colleagues and I are keenly aware of how critical reliable 
communications technologies are when public safety or homeland security 
concerns become paramount and, therefore, launched our new Public 
Safety and Homeland Security Bureau. This action underscores the fact 
that the dissemination of vital information and interoperable 
communications at every level are the backbone of our defense against 
natural disasters, attacks on our homeland, and even the possibility of 
a pandemic, health-related, or environmental attack. I am confident 
that the Commission will continue to do all it can to strengthen and 
protect our Nation's communications infrastructure and I am eager to 
work with this new Bureau and all Members of Congress as we continue to 
address policies that will help improve our public safety and homeland 
security.
    Again, I appreciate your invitation to be here with you today. I 
look forward to hearing from you, and I will be pleased to answer any 
questions.

    The Chairman. Thank you very much, Commissioner Tate.
    And now may I call upon Commissioner Robert McDowell?

 STATEMENT OF THE HON. ROBERT McDOWELL, COMMISSIONER, FEDERAL 
                   COMMUNICATIONS COMMISSION

    Mr. McDowell. Thank you, Mr. Chairman, Senator Stevens and 
distinguished members of the Committee. Thank you so much for 
having us here this morning.
    Eight months ago today, I was sworn in as an FCC 
Commissioner. My short tenure here has exceeded all of my 
expectations. It has been a great honor to serve the American 
people in this way. I am also immensely fortunate to work under 
Chairman Martin's leadership, and with such a talented team of 
commissioners.
    This is an exciting time to be at the FCC. Revolutionary 
technological developments are yielding new opportunities for 
consumers to improve the quality of their lives and for 
businesses to improve their efficiency. This dynamic disruption 
transcends traditional regulatory boundaries.
    The issues addressed by the FCC touch the lives of every 
American: from broadband availability, to the incredible 
proliferation of wireless technologies; from Universal Service, 
to localism and diversity in broadcasting; from wireless 
medical devices that improve thousands of lives each day, to 
the greatest entrepreneurial explosion in history known as the 
Internet. I endeavor to approach each issue with a consistent 
regulatory philosophy; one that has served our Nation well 
since its inception; one that trusts competitive free 
enterprise to serve consumers best. I trust free people acting 
within free markets to make better decisions for themselves 
than those of us in government. As we commemorate the 400th 
anniversary of the founding of the Jamestown settlement in 
Virginia this year, we should remind ourselves that free 
markets and free ideas are the essence of our free society, and 
promoting freedom is the FCC's core mission.
    The Commission is adopting policies to encourage increased 
broadband deployment for all Americans. While America's rate of 
broadband deployment has more than doubled during the Martin 
Chairmanship (from 20 percent growth and penetration per year 
to over 40 percent growth), no one at the Commission is resting 
on those laurels. In fact, we are making it easier for 
entrepreneurs to construct new delivery platforms more quickly. 
The resulting new surge in capital investment will stimulate 
our economy, and will give American consumers new tools to 
strengthen their freedom by enhancing their ability to choose. 
All of us will benefit as a result.
    Among the highlights of my first 8 months was our Advanced 
Wireless Services auction last summer. It was phenomenally 
successful and brought in nearly $14 billion to the U.S. 
Treasury. New uses in this spectrum will yield untold benefits. 
Our Video Franchising Order adopted in December will enhance 
video competition, and accelerate broadband deployment. And 
much more lies ahead, including the 700 MHz auction, white 
spaces management, adoption of the digital audio broadcast 
standard for HD radio, Universal Service reform, and much, much 
more.
    In sum, from my new perspective at the FCC, America's 
future has never looked more promising. Consumers have never 
been more empowered--or more savvy. The marketplace is teeming 
with more brilliant entrepreneurial ideas than ever before. And 
the FCC is working hard to create an environment where private 
enterprise can meet an ever more-sophisticated consumer demand 
as quickly as possible, thus promoting more freedom.
    I look forward to meeting these challenges in partnership 
with Chairman Martin and my colleagues on the Commission, and I 
look forward to your continued direction and to your questions 
this morning.
    Thank you very much.
    [The prepared statement of Mr. McDowell follows:]

     Prepared Statement of Hon. Robert M. McDowell, Commissioner, 
                   Federal Communications Commission

    Good morning, Mr. Chairman, Senator Stevens, and distinguished 
Members of the Committee. Thank you for providing us with this 
opportunity to appear before you this morning. Eight months ago today, 
I was sworn in as an FCC Commissioner. My short tenure here has 
exceeded all of my expectations. It has been a great honor to serve the 
American people in this way. I am also immensely fortunate to work 
under Chairman Martin's leadership and with such a talented team of 
Commissioners.
    This is an exciting time to be at the FCC. Revolutionary 
technological developments are yielding new opportunities for consumers 
to improve the quality of their lives and for businesses to improve 
their competitiveness and efficiency. This dynamic disruption 
transcends traditional regulatory boundaries. I cannot imagine a more 
interesting time to be here.
Regulatory Philosophy
    The issues addressed by the FCC touch the lives of every American: 
from broadband availability, to the incredible proliferation of 
wireless technologies; from universal service, to localism and 
diversity in broadcasting; from wireless medical devices that improve 
thousands of lives each day, to the greatest entrepreneurial explosion 
in history known as the Internet. This diverse array of issues, and 
many more, are within the FCC's purview. While advances in technology 
and competitiveness defy labeling under the regulatory stove pipes of 
old, I endeavor to approach each issue with a consistent regulatory 
philosophy; one that has served our Nation well since its inception; 
one that trusts competitive free enterprise to serve consumers the 
best.
    This year, in Virginia, we are celebrating the 400th Anniversary of 
the founding of the Jamestown Settlement. That event sparked a chain of 
events that led to the creation of the freest nation in the history of 
the world. Free markets and free ideas are the twin cornerstones upon 
which we built America. My approach to each issue that comes before the 
Commission is to focus on my belief that the fundamental mission of the 
FCC is to promote freedom. I want consumers to have the freedom to have 
their demands satisfied. And I want entrepreneurs to have the freedom 
to innovate and bring their products and services to market so they can 
satisfy those consumers' demands. I trust free people acting within 
free markets to make better decisions for themselves than those of us 
in government. Government should not adversely interfere with the 
relationships between consumers and entrepreneurs. Rather, government 
should try to remove barriers to entry and allow competition to 
flourish. There are circumstances, however, when the government should 
address market failure so new entrepreneurial ideas have a chance to 
compete in the marketplace, and succeed or fail on their own merits--
and their own merits alone. Any remedies applied to market failure 
should be narrowly-tailored, and sunsetted, to maximize freedom for all 
market players.
    Today, disruptive new technologies pose challenges to existing 
providers of products and services--and to regulators and legislators. 
One of the most exciting aspects of the job of an FCC Commissioner is 
to help open windows to provide entrepreneurs new opportunities for 
these technologies to compete in the marketplace. Given this 
disruption, the FCC has to adapt and make a transition from legacy 
regulations that govern individual industries, to more nimble rules 
that ensure fair opportunities for all competitors. As regulators, we 
must be careful to avoid inhibiting innovation and technological 
advances. The FCC must continue to tear down barriers to entry and 
clear out unnecessary regulatory underbrush. The marketplace, rather 
than the Commission, should pick the winners.
    As the Commission analyzes these regulatory questions, we of course 
are mindful that we operate within the parameters that you, Congress, 
have established for us. On every issue, I first look to the relevant 
statute to determine whether the Commission has the authority to take 
the action proposed or implement a new policy.

A Record of Accomplishments
    The Commission is adopting policies to encourage increased 
broadband deployment for all of America's businesses and citizens. 
While America's rate of broadband deployment has doubled during the 
Martin chairmanship (from 20 percent growth in penetration per year to 
over 40 percent), no one at the Commission is resting on those laurels. 
Accordingly, we are making it easier for entrepreneurs to construct new 
delivery platforms more quickly. Additionally, our policies are paving 
the way for the owners of existing platforms to upgrade their 
facilities. The resulting new surge in capital investment will 
stimulate our economy and will give American consumers new tools to 
strengthen their freedom by enhancing their ability to choose. All of 
us benefit as a result.
    In my 8 month tenure, the Commission has taken important steps to 
promote competition in a number of areas. I believe that our actions 
will foster the ability of American consumers and businesses--whether 
located in urban or rural areas--to have access to new, advanced 
delivery platforms.
    Last summer, the Commission completed an auction for spectrum for 
Advanced Wireless Services in the 1710-1755 and 2110-2155 MHz bands, 
which are ideal for the delivery of bandwidth-intensive wireless 
applications. One hundred four entities placed winning bids, and over 
one-half of those were small businesses. In fact, forty winning bidders 
identified themselves as rural telephone companies. Wireless growth is 
rising rapidly due to robust competition and technological innovation. 
What was unimaginable just 10 years ago is now part of the daily 
routine of tens of millions of Americans. Innovative broadband services 
using advanced technologies allow customers to use new multimedia 
phones to watch TV, download songs, receive information and access 
content, such as sports, news and weather, at broadband speeds. In 
recognition of the importance of the wireless industry to America's 
continued economic competitiveness across the globe, the Commission is 
quickly granting applications, and releasing this spectrum to the 
winning bidders. In fact, in November, we granted 550 licenses won in 
the AWS auctions. In December, we granted another 357 licenses. This 
means that we have already granted 907 of the 1,087 licenses, and have 
brought in $13.1 of the $13.7 billion in total net high bids. All of 
this activity should be put in the context of an already competitive 
wireless marketplace.
    Over the last 13 years, since the Commission issued its first 
Wireless Competition Report, wireless subscriber growth has grown 
exponentially and competition among numerous providers has flourished. 
The overall wireless penetration rate in our country is now at 71 
percent--and our most recent report, released in September, notes that 
an overwhelming majority of consumers between the ages of 20 and 49 has 
a wireless phone. At the same time, prices are decreasing. Our report 
estimates that revenue per minute (RPM) declined 22 percent last year 
alone. RPM currently stands at $0.07, as compared with $0.47 in 
December 1994--a decline of 86 percent. (That $0.47 in 1994 equates to 
$0.60 today.) This is great news for American consumers.
    The Video Franchising Order the Commission adopted in December 
advances the pro-consumer goals of enhancing video competition and 
accelerating broadband deployment. The Order strikes a careful balance 
between establishing a deregulatory national framework to hasten 
deployment of advanced services while preserving local control over 
local issues. It guards against localities making unreasonable demands 
of new entrants, while still allowing those same localities to protect 
important local interests through meaningful negotiations with aspiring 
video service providers.
    While I would have liked to have provided the deregulatory benefits 
granted to new entrants to all video providers, be they incumbent cable 
providers, over-builders or others, the record in this proceeding did 
not allow us to create a regulatory parity framework just yet. I am 
pleased that the Commission has committed to release an order 
addressing parity for all cable competitors no later than 6 months from 
the release date of the Video Franchising Order. Resolving these 
important questions soon will give much-needed regulatory certainty to 
all market players, spark investment, speed competition on its way, and 
make America a stronger player in the global economy.
    While we have worked hard to help foster the rollout of new 
delivery platforms, we have also endeavored to continue to make 
available to all Americans affordable telecommunications services. The 
Universal Service system has been instrumental in keeping Americans 
connected and improving their quality of life. This system is in dire 
need of comprehensive reform, however. In June 2006, we adopted interim 
changes to the Universal Service contribution methodology that were 
designed to help bridge the gap between the deteriorating status quo 
and a more sustainable Universal Service system of the future. The 
changes raised the interim wireless safe harbor and required VoIP 
providers to contribute to the Fund. By setting appropriate safe 
harbors and allowing wireless carriers and VoIP providers, in 
determining their USF contribution, the option of either using the safe 
harbor, utilizing traffic studies, or reporting actual interstate 
revenues, we provide the right balance of administrative ease and 
incentive to contribute based on actual interstate and international 
revenues. These interim measures also ensure that the Fund remains 
solvent for the near term and serve as an important first step toward 
broadening the Fund's contribution base to ensure equitable and 
nondiscriminatory support of the Fund in an increasingly digital world. 
In October, we also instituted a 2-year rural health care pilot program 
to determine the extent of the need for advanced services to meet the 
rural health care objective, pursuant to Section 254(h)(2)(A) of the 
Communications Act, and how we can tailor the rural health care support 
mechanism toward that end.
    Universal Service is intertwined with intercarrier compensation. We 
have to reform the current access regime; otherwise, it won't survive. 
I believe that all carriers should be compensated for the costs of 
carrying others' traffic on their networks. Today is the deadline for 
submitting reply comments to the Commission on the Missoula Plan that 
was submitted by a NARUC Task Force last June. I look forward to 
reviewing those comments. There are a lot of stakeholders and no one 
plan is going to make everyone happy. We need to step back and see how 
competition and technology are changing the marketplace and examine 
where the current regime is in need of reform. We also need to promote 
efficiency, competition and technological innovation. It will be a 
long, cooperative process, but I look forward to working with everyone 
on this challenge.

Future Challenges
    Looking ahead, this year in particular we have our work cut out for 
us. We are currently in the process of analyzing the record and 
finalizing the rules for the commercial portion of the 700 MHz spectrum 
band. Our work is especially time-sensitive given Congress's recent 
mandate that we commence auctioning this spectrum no later than January 
28, 2008, less than 1 year away. I am hopeful that we will complete our 
work and release these rules early this spring.
    We are also moving forward to create the opportunity for additional 
unlicensed operation in the white spaces of the TV broadcast bands. I 
am hopeful that our actions will foster a chain of events that will 
lead to an explosion of entrepreneurial brilliance toward creative uses 
for these bands. Mindful of our obligation to protect all users from 
harmful interference, our Office of Engineering & Technology is already 
working hard to analyze and test new devices and associated standards. 
I am pleased that our timetable aims to ensure that new consumer 
equipment for these bands will be market-ready as soon as possible.
    This year, we are also advancing our comprehensive review of the 
Commission's broadcast ownership rules and are busy building a record. 
As you know, these rules must strike a difficult balance. They must 
take into account the dramatic changes that have occurred in the media 
landscape in recent years and at the same time, continue to promote our 
long-standing values of diversity, localism and competition. We must 
also carefully address the issues presented to us by the Third Circuit 
in the Prometheus decision. I hope we can develop a reasoned approach 
that resolves the regulatory uncertainty that followed the appeal of 
the order the Commission issued in June 2003.
    I look forward to continuing our review of competition and the 
effects of consolidation among traditional media companies, as well as 
the emergence of new competing services. I also am eager to attend more 
field hearings around the country to learn more about competition, 
diversity and localism from the perspective of people with first-hand 
knowledge of the realities of their local market--be they consumers, 
broadcasters, programmers, artists, economists or academics. With 
respect to diversity, I am particularly concerned about the decline in 
female and minority owners of broadcast properties. I anticipate 
learning about the causes of this situation, especially as compared 
with other industries requiring similar amounts of capital investment.

Conclusion
    In sum, from my new perspective at the FCC, America's future has 
never looked more promising. Consumers have never been more empowered 
or savvy. The marketplace is teeming with more brilliant 
entrepreneurial ideas than ever before. And the FCC is working hard to 
create an environment where private enterprise can meet ever-more-
sophisticated consumer demand as quickly as possible, thus promoting 
more freedom.
    I look forward to meeting these challenges in partnership with 
Chairman Martin and my colleagues on the Commission and I look forward 
to your continued direction. Thank you.

    The Chairman. All right. Thank you very much, Commissioner 
McDowell.
    Because of the time limitation imposed on us by the 
impending votes, we'll have to insist that we follow the 5-
minute rule.
    I will be submitting my questions for the record, but I 
have one question.
    Mr. Chairman, late last year, after considerable 
negotiation, the Commission reached an agreement on the AT&T/
BellSouth merger. At that time, Chairman Martin, you and 
Commissioner Tate both stated that if, had the decision been 
yours to make, you might not have adopted some of the 
conditions.
    I understand that independent commissioners have 
independent views, that is to be understood. But, what I find 
difficult to understand is you also included language in your 
separate statement, and you said that you do not intend to 
stand by the deal that was reached. If you felt so strongly 
about this condition, do you think you had an obligation to 
withhold your vote and continue further negotiations?
    Mr. Martin. Thank you for the question, and the opportunity 
to clarify our positions.
    I don't believe that either Commissioner Tate or I said 
that we wouldn't stand by the deal, so to speak. What we 
actually indicated was that the company had voluntarily agreed 
to certain kinds of commitments, and that the Commission would 
enforce their commitments. But those commitments couldn't 
change Commission policy, or Commission rules or regulations.
    So, for example, AT&T had voluntarily agreed to abide by 
certain net-neutrality requirements that they were going to 
impose upon themselves. And since they volunteered to do that, 
we would enforce that. But that did not mean we were changing 
our policies, and we were going to enforce those same kind of 
net-neutrality requirements on others.
    In addition, the company had agreed that they would offer 
to lower some of their special access prices, but only to some 
companies. The Commission has had a long-standing practice in 
this area, you're not allowed to discriminate among the 
different companies in terms of to whom you're going to offer 
discounted prices. And what I said at the time, and what, I 
believe Commissioner Tate said--what we said in our joint 
statement--was that the Commission wasn't altering the law 
here. And that if the policies that they were going to try to 
implement would be invalid, the Commission wouldn't approve 
them, to the extent that they required subsequent Commission 
approval.
    We made that clear at the time. So I don't think that we 
were saying we wouldn't stand by the deal. The company would 
have to continue to offer the services that they said that they 
would in their voluntary conditions.
    But to the extent any of those conditions required 
subsequent government action, where the Commission was going to 
have to affirmatively take action to enforce those on someone 
else, we said, ``No.'' We would have hesitation doing that, 
because we weren't changing our underlying policies or rules.
    The Chairman. Thank you very much, Chairman Martin.
    But, Commissioner Copps and Commissioner Adelstein, the 
record shows that you both fought very hard for this condition. 
Why was this condition necessary, and consistent with the law?
    Mr. Copps. I think this whole special access area has been 
identified as very problematic, I think it has been identified 
as an area where a few companies have tremendous market power 
over this whole range of services.
    We recently had a GAO report which pointed out the high 
cost of these services, we also had a report saying that 
competition was virtually non-existent, most of the businesses 
in this country get their special access from a couple of 
firms, and AT&T, of course, is a huge provider of that.
    So, there was a problem, and I think the commitment that 
AT&T made was, indeed, one that was much to be desired, in the 
interest of small business, in the interest of consumers, in 
the interest of the country, generally, dealing with a serious 
problem.
    I think the approach we took was, indeed, a legal approach. 
Section 202 prohibits any unreasonable discrimination in 
prices, I think our case law and the courts and all kinds of 
authoritative legal treatises over the years make clear that 
202 permits different prices for similarly situated consumers, 
if there's a good reason for the distinction.
    Is it really unreasonable to say to Verizon that, for 
example, to get this they must use price caps in their own 
territory? The choice is theirs, it's a choice that they can 
make. It's parity. Is it really unreasonable to differentiate 
here, when CLECS are not under price caps, it's a differently 
regulated classification, entirely. And I think, we have long-
noted at the Federal Communications Commission differences 
between dominant incumbents and new entrants. So, I'm 
comfortable with the commitment that the company made here. 
This was all part of a larger package, we can talk later about 
the larger package, and I think it was a modest victory, on 
balance, for American consumers, it's not something that I 
would have leaped at to support in the first instance, and 
certainly not as it came to us, as a condition of this merger, 
with no Department of Justice conditions, no conditions at all 
in the order that we were first given. But, I think the end-
result is a modest victory for consumers, a modest victory for 
those of us who believe in the freedom of the Internet, and net 
neutrality, and I think there were several other benefits from 
it, too.
    But, I think with regard to your question on special 
access, I think it was necessary, I think it dealt with a 
specific problem that was costing businesses--especially small 
businesses, too much, and I think the outcome was generally 
positive.
    The Chairman. Thank you very much, Commissioner. I'm sorry 
my time is up, I wanted to hear Mr. Adelstein. Do you have any 
views?
    Mr. Adelstein. Well, in response to your initial question, 
I swore to this Commission when I was confirmed that I would 
always try to uphold the law. I have never voted and will never 
vote for any item that I consider to be unlawful.
    There are a lot of concerns that were raised about 
competition and the loss of it due to the size of the new 
merged entity. The GAO, even before the merger, indicated that 
special access was not a particularly competitive market. We 
tried to tailor all of the special access conditions to 
particular concern raised by GAO.
    There have been concerns raised about the legality of the 
reciprocal discounts provision, a provision that was suggested 
by AT&T. I think that it's perfectly lawful, as Commissioner 
Copps laid out, AT&T's lawyers have agreed as well with its 
legality. We have done our own review of the provision, and 
believe that it is reasonable, and that there is sufficient 
case law to support that position.
    Certainly, if there are concerns that are raised--though, I 
didn't hear about any concerns until after I had voted the 
item, which is disappointing--I think they're very easy to 
resolve. There are a number of ways that we can easily address 
any legal concerns with the provision. Even if I don't 
necessarily agree with the concerns, I would be happy to work 
with the Chairman and my colleagues to adjust the item to 
address their concerns.
    The Chairman. Thank you, Commissioner.
    Vice Chairman Stevens?
    Senator Stevens. Thank you very much, I'll have some 
questions that I'd like to submit for the record, also. Time is 
limited, so I'd hope that you'd be very short in your 
responses.
    We've introduced a new Universal Service bill this year, 
but it seems to me that there's more that the Commission can do 
to protect the universal service concept, despite some of the 
limitations in the law that prohibit you from dealing with some 
of the communications entities, as far as universal service is 
concerned. What can you do without further legislation?
    Mr. Martin?
    Mr. Martin. Well, I think that we've taken several steps to 
try to help stabilize the Fund within our current authority, 
and I think that we can continue to try to look at issues--in 
ways that potentially try to assess carriers on a more 
technology-neutral basis, such as telephone numbers today. But, 
as I understand it, the bill that you've introduced would give 
the Commission some additional tools, so that we could look at 
some other options, as well. For example, intrastate authority, 
or clarifying that we have the authority to impose some other 
kinds of contribution mechanisms. So I think it would give the 
Commission additional tools, but I think the Commission can 
take some steps today, with its current authority.
    Senator Stevens. Mr. Copps, you mentioned a strategy for 
broadband, does that strategy envision any change in Universal 
Service?
    Mr. Copps. Yes, sir, it does. I think that we have to make 
crystal clear that broadband is integral to the system of 
Universal Service. This is the great infrastructure challenge 
of our time, I think, to get this technology, to get these 
services out to all of our people. And it's very difficult to 
get them out to some places, as in your states of Alaska and 
Hawaii and in many of the other states represented by Senators 
in this room today.
    So, reasonably comparable services at comparable prices are 
the mantra of Universal Service for all of our citizens. 
Broadband is going to be the driver of so much of our economy 
in the next few years, we've got to make sure that everybody 
understands it's part of Universal Service.
    Senator Stevens. We all speak of telecommunications, but 
what we're dealing with is the whole concept of communications, 
and I worry that some of the impediments of existing 
legislation will prevent you from going forward and having a 
level playing field, and having equal treatment for all of the 
communications providers.
    One of the things I've come across recently is Internet2 
which we thought was just going to be for the universities and 
a tool for education. Now it seems to be expanding throughout 
the economy. What are you going to do about Internet2? Mr. 
Martin?
    Mr. Martin. We have tried to develop a pilot program on the 
rural health care side, where we've allowed for some of the 
companies to come forward and apply for some additional funds 
to develop state-wide networks to deliver healthcare services, 
and connect, explicitly, into Internet2 and some of the other 
advanced backbones that are developing. So, that's the one step 
that most directly changes our current Universal Service 
program to try to take advantage of Internet2.
    Senator Stevens. Well, it seems that Internet2 will not be 
equally available to all Americans, is that your feeling?
    Mr. Martin. I think that we're constantly struggling to try 
to make sure that all of the services that are available to 
consumers in urban areas are going to be available to those in 
rural areas. And, I think the current Telecommunications Act 
gives us the authority to do that. But I think that our problem 
is how we will make sure we have sufficient funds to pay for 
the kind of support that Commissioner Copps is referencing. 
Expanding the Universal Service Fund to pay for broadband 
connections would be a significant increase, and we already 
have a very large Universal Service Fund.
    Senator Stevens. That's the other thing about this right 
now, and I don't want to go into it too much, but we have not 
revised the schedule for the fees and payments that should be 
made by end of--elements of the communications industries that 
do utilize the majority of your services. Have you looked at 
the quality of charges and fees that are out there? Until this 
committee got involved, we had no income at all from new 
spectrum. We used to have a lottery system, as everyone knows. 
Now we have this bid system for new spectrum that's available. 
But, are there other areas where we should look to change the 
fee schedule? Should more payment be due to the Commission for 
those activities that take so much of your time?
    Mr. Martin. Well, I would say first that the money that the 
Commission raises through its spectrum auctions actually goes 
directly the Treasury. It doesn't go to any of our Universal 
Service Funds. But, the Commission does periodically adjust its 
fees that are paid to the Commission.
    As far as Universal Service payments, we have looked at 
trying to stabilize the fund in terms of reaching out and 
broadening it to try to make sure that everyone who is 
utilizing the underlying telecommunications network is paying 
into it. I continue to believe that trying to move to a system, 
something like a numbers or connections-based system, would 
broaden the pool of supporters, and it would allow for that to 
be done on a technology-neutral basis, as opposed to only the 
interstate services that contribute today.
    So, I think there are some steps that we can take to try to 
both broaden the contribution to the system and make it more 
fair, so to speak.
    Senator Stevens. I have only got a minute left here, but 
let me ask this--do any of the Commissioners disagree with our 
Universal Service Fund bill that we introduced last year and 
reintroduced this year? I understood that the Commission 
generally supported it. Is there any opposition from the 
Commission to the Universal Service bill that the Chairman and 
I introduced this year?
    [No response.]
    Senator Stevens. Thank you very much, Mr. Chairman.
    The Chairman. Thank you.
    Senator Sununu?
    Senator Sununu. Can we go to the other side? Do we want to 
go to Senator Dorgan first; or whoever the next person is on 
the Democratic side?
    The Chairman. No, no. We're just going by who came in 
first.
    Senator Sununu. Once again, I feel like I've been put in an 
odd position. Most of the people here don't realize, I was 
asked to speak before Senator Inouye at an event recently, and 
I was quick to point out that that was highly inappropriate, so 
I apologize to my Democratic colleagues if they think that I'm 
cutting into line.
    I want to apologize to the Commissioners in that my staff 
and I have drawn up a list of highly confrontational questions, 
but I misplaced them this morning.
    [Laughter.]
    Senator Sununu. So, if you or your staff feel somehow 
short-changed by the wonkish or technical nature of the 
inquiries I have, I promise I'll make it up to you the next 
time, or invite you into my office for an argument, whatever 
you might find to be most entertaining.
    I want to begin with white spaces. In the bill we had last 
year, there were some provisions to deal with the white space 
issue, to better use spectrum that has already been issued, 
licensed or somehow already being used, but is under-utilized 
in certain places of the country. One of the charts that 
Chairman Martin distributed showed the enormous growth in 
broadband access through wireless, and of course, white space 
spectrum that has been discussed would be extremely useful for 
continuing that growth.
    I've introduced legislation on this, and worked with 
Senator Allen and others last year, in crafting our proposal. 
The question I have deals with the issuance of white space 
spectrum. One, you could just make it available for unlicensed 
use, but we could also, certainly auction off some of that. And 
my question is, what values or tradeoffs might we unlock, or 
have to deal with, depending on whether we choose to issue it 
as unlicensed spectrum or through an auction? Why don't we 
start with the Chairman, and if you want to keep your answers 
reasonably brief, I'd like to, at least, hear from a couple of 
the other commissioners as well.
    Chairman Martin?
    Mr. Martin. Well, generally trying to use the white spaces 
is trying to use, as you said, the underutilized spectrum in 
between other license holders. While the Commission could try 
to identify exactly the full extent of those white spaces and 
license it, most of the focus has actually been trying to 
develop an unlicensed approach to the use of this spectrum. In 
large part, because many of the uses would be secondary to the 
primary users there. And it would be more difficult. 
Potentially, it could actually, delay a little bit, the full 
utilization of the white spaces, to try to license the white 
spaces, because it would first require us, from a technical 
standpoint, to identify exactly where all the white space is. 
Whereas, if we could adopt general rules which said, ``We think 
you can operate under these parameters without causing 
interference,'' then you could do so, as long as you're not 
causing interference. This would more easily enable the 
technological innovations that are occurring and allow 
unlicensed devices to more fully utilize that spectrum.
    Senator Sununu. Commissioner Copps?
    Mr. Copps. I think there really is amazing potential here. 
We have a proceeding on this matter to try to balance some of 
those questions you just asked, and I really think it is a 
matter of balance between the licensed and the unlicensed. And 
licensed is obviously important. We have just done a lot of 
licensing in the AWS band, we've had licenses in the 3G band, 
and we'll have a 700 MHz license auction, too. Should we have a 
presumption in favor of unlicensed? I think that strikes me as 
not a bad idea. But we certainly need to look carefully at the 
suggestion being made for how much licensing we should do in 
this particular band.
    Senator Sununu. Let me move to a second question, which 
deals with Universal Service and one of the proposals that was 
put out for discussion and comment by Chairman Martin, and that 
is the concept of a reverse auction. I'm pleased to hear people 
talk about the need for reform on distribution as well as 
revenue collection. I have spoken time and again about the 
importance that the program be focused on rural areas, and 
those in an economic disadvantage. That's what the program is 
for, that's where we should spend all of our time, ensuring 
better performance.
    Chairman Martin, could you talk about how a reverse auction 
might improve, in your opinion, the program's operation and 
efficiency, especially where those two goals are concerned?
    Mr. Martin. Well, one of the concerns that I have is that 
we've seen extraordinary growth in other companies coming into 
rural areas and trying to provide what we might call 
competitive-eligible communications services. When I arrived at 
the Commission, these other companies were receiving about a 
million dollars worth of Universal Service support. This past 
year, they will receive just under a billion dollars of 
Universal Service support. That is in addition to the $2.25 
billion Universal Service support that is already going out to 
the schools and libraries, the rural health care program, and 
the incumbent wire line carriers.
    The problem is that I don't think that kind of continued 
growth is sustainable. Instead, what we need to do is identify 
rural areas that are high-cost, and then try to move forward 
with a mechanism where we say, ``Who wants to provide that 
service?'' And ``how little Universal Service subsidy can you 
do that for?'' (As opposed to, ``how much can you do that 
for?'') And allow for multiple kinds of technologies to come 
forward and say, ``I think I can provide service in this rural 
area more efficiently with wireless technology, for example, 
than wireline.'' This would allow for us to decrease our 
Universal Service Fund, instead of continuing to increase it at 
the current rate.
    As I said, I'm very concerned that the current rate of 
growth won't be sustainable for very much longer. And so, I 
think that we've got to find some other, more efficient, means 
of distributing that Universal Service money.
    Senator Sununu. I know my time is up--would any one of the 
other commissioners like to comment on this?
    Mr. Copps. I'd like to make a brief comment, if I could. 
This is something that the Universal Service Joint Board that 
Commissioner Tate chairs, and that I'm a member of, is looking 
at. We'll be having an en banc hearing, as she mentioned, soon.
    I always worry a little bit about the law of unintended 
consequences, and what might be involved in this. I think it's 
an interesting idea, I agree with what the Chairman says, we 
have to look at the sustainability of the Fund. It's also true 
that the Commission looked at this back in the 1990s, and 
rejected it.
    I think some people maybe see it too much as a ``silver 
bullet'' approach, thinking this is going to solve all 
problems. Some of the comments that have come in already seem 
to indicate that there are some real concerns here. You might 
have to have a very active FCC to administer this program. 
Then, what are the standards going to be? What happens to 
carrier of last resort obligations, if the person who wins the 
auction is no longer there?
    So, we're going to be looking at all of those things, I 
know Commissioner Tate wants to look at all of those things. 
Meanwhile, though, I think our Joint Board has lots of other 
items that it needs to report back on, also.
    The Chairman. Thank you very much.
    Senator Klobuchar?
    Senator Klobuchar. Thank you, Chairman.
    Thank you for being here today, Commissioners.
    It's a little known fact is, that before I was elected 
prosecutor, I spent 13 years practicing in the 
telecommunications area. I mostly represented competitive 
carriers getting into the market, and for the most part, we 
were on the side of consumer groups, and attorney general's 
offices, and I was proud of the results with the rates going 
down for consumers in the long-distance and local market. But 
it also gave me a sense of the need of strong government 
regulation, to foster that competition, and to make sure that 
the interests of consumers were always paramount.
    And, along those lines, I wanted to ask about the ``digital 
divide'' and the need to make sure that we have broadband 
service throughout our country.
    You know, I always believe that kids that grow up in rural 
America, should be able to live in rural America. Yet, in 
recent reports, we've seen in May of 2006 the GAO reported that 
70 percent more suburban and urban homes than rural homes have 
broadband, roughly 25 percent of rural Minnesota households 
report connecting to the Internet.
    Franklin Deleanor Roosevelt brought us rural 
electrification, Eisenhower brought us the interstate highway 
system, and I believe it's now our job to help deliver fast and 
fair access to the information highway to every American home.
    And, I do have some concern with the efforts so far. As you 
know, in September 2004, the FCC released its fourth report on 
the deployment of telecommunications capability. Like the 
previous three reports, this report stated that broadband 
deployment was ``reasonable and timely.'' Two of you--
Commissioner Copps, and Adelstein--dissented from the 
conclusion that broadband deployment is going well. You two 
have talked about the low global ranking of the U.S. in this 
regard, as you mentioned today, as well as problems with 
defining and measuring broadband service. It's my 
understanding, if there is one customer with broadband in a 
certain zip code, say, in a zip code, in say Kandiyohi County, 
Minnesota, that's one customer, it's counted as that zip code 
has broadband.
    And so many questions are along the lines of what Congress 
and the FCC can do, if anything, I guess, starting with the two 
of you, to help bridge the digital divide, and to make sure 
that all Americans--including those in our rural areas--get 
this service as soon as possible?
    Mr. Adelstein. Senator, I couldn't agree with you more. I'm 
from next door in South Dakota, and I really think we need to 
take a more aggressive approach to broadband since other 
countries are leapfrogging us. Customers in these countries get 
more megabits for fewer dollars. In the U.S., we have rural 
areas that are left behind. We use our rural markets as an 
excuse, but it's not acceptable to make that excuse any more. 
We need to undertake a multi-pronged approach to make sure that 
we get broadband deployed everywhere.
    The first step is to acquire better data. The FCC conducts 
as you mentioned, just a terrible report that says if one 
person in a zip code has broadband, then everybody in the zip 
code has it. Some States have done a much better job. For 
example, Kentucky has shown that, through a more thorough 
study, far fewer people have broadband than our data would 
indicate.
    I think that we need to have a national broadband strategy 
with benchmarks, deployment timetables, and measurable 
thresholds. The private sector, of course, is going to be the 
primary engine of deployment, but I think we need to create 
incentives for investment, and create healthier competition.
    As you know, there's nothing like competition to drive 
broadband. One of the best ways to do so is through wireless 
deployment. We are making more spectrum available through our 
upcoming 700 MHz auction. We need to make sure that the license 
blocks for that auction are made available in such a way that 
real competition can result. We want small and local community-
based providers to get access to that spectrum. We also need to 
commit to broadband connectivity through the Universal Service 
Fund. It is clear to me that Congress envisioned that Universal 
Service would be an evolving standard. Section 254 of the Act 
actually mentions ``advanced services'' five times. The FCC has 
the authority now to move towards a broadband system, and use 
the existing Universal Service system to really build a 
nationwide broadband network.
    Senator Klobuchar. Mr. Copps?
    Mr. Copps. I'm so happy that you brought the subject of the 
``digital divide'' up, because it doesn't get as much 
discussion as it formerly did.
    I am really worried that we could go into the 21st century 
and have a bigger digital divide in this country, between urban 
and rural America, between rich and poor America, even with all 
of these wonderful technology services, than we had back in the 
days of plain old telephone service in the 20th Century.
    We cannot allow that to happen, and this just isn't about 
feel-good liberal theory, or something like that. We're talking 
about the competitiveness of the United States of America. If 
we don't get that broadband out everywhere, yes, it's the young 
kid out there, maybe he has no access to broadband or dial-up--
I wouldn't want my kids competing against the kid in the city, 
or the kid in Japan or Western Europe who really has advanced 
speed--but it's got a business application, too. Suppose you're 
trying to start a small business out in Missouri or Minnesota, 
or South Dakota--anywhere in rural America. And you don't have 
access to high-speed service, and all of your competitors do. 
This is costing our country billions and billions of dollars, 
right now. I'm absolutely convinced of that.
    And just to put this in perspective? Somebody told me 
something the other day--if you want to download a movie on the 
Internet in Japan where 50 megabits is common and you can 
download that movie in 4 minutes. Four minutes. If you want to 
download that movie in the United States at what we call 
broadband, 200 kilobits, up and down, do you know how long it 
would take? Seventeen and a half hours. So, this has real-world 
application.
    Senator Klobuchar. Well, thank you, I think my time is up. 
Hopefully, in the future we can talk again. Despite my newness 
to the Committee, I might be able to match you with knowing 
telecommunications acronyms. Thank you.
    Senator Stevens. Mr. Chairman, can I interrupt? I've got to 
go to another meeting, but I do want to indicate that we, the 
Chairman and I, will introduce that sunshine bill again. I do 
think we should have greater dialogue between those on this 
committee and the full FCC, as we try to go into this new era. 
There are lots of things we could do to foul up your system if 
we're not careful. I think there needs to be greater 
communications between you and between us.
    Thank you, Mr. Chairman.
    The Chairman. Senator Lautenberg?
    Senator Lautenberg. Mr. Martin, one of the things that 
troubles us in my state of New Jersey, is that we have one 
commercial VHF station, it's WWOR, Channel 9. It calls itself, 
``My Nine New York.'' And in September, you told me that as we 
reviewed WWOR's renewal application, we will review its service 
obligations to northern New Jersey.
    Now, in terms of staffing and local news coverage, what can 
you tell me about how the FCC will analyze the problems for New 
Jersey?
    Mr. Martin. Well, as you know, WWOR has some special 
obligations, because of the concern that people in New Jersey 
have raised. So the Commission has placed some unique 
obligations on that station saying they've got to demonstrate 
that they are actually serving the interests of northern New 
Jersey.
    Senator Lautenberg. How do you measure that?
    Mr. Martin. Well, we will measure that in the license 
renewal process. Their application for renewal is due today. 
We'll have to see how much service they have provided, 
specifically to northern New Jersey about northern New Jersey 
issues, separate and apart from providing service in general. 
That's one of their unique obligations. Unlike other 
broadcasters, where they have this particular obligation to 
demonstrate that they are covering the issues of concern to 
people in that area. They'll have to demonstrate that they are 
doing that.
    Senator Lautenberg. Forgive me, but in order to move the 
process.
    Mr. Martin. Sure.
    Senator Lautenberg. Can the FCC make these provisions 
explicit to the license renewal in New Jersey?
    Mr. Martin. Yes, and actually, we've said that in the past, 
both in my letters back and forth with you, and Chairman Powell 
also indicated that's exactly the framework that we would use 
in reviewing their license renewal.
    Senator Lautenberg. Then FCC Chairman Powell said it would 
be useful and began a review of localism to advise the 
Commission on steps it can take, and if warranted, make 
legislative recommendations to Congress, which strengthen 
localism in broadcast. Now, what kind of regulatory and 
legislative changes might the FCC consider in order to 
accomplish this broader exposure to local needs?
    Mr. Martin. To local news?
    Senator Lautenberg. Localism.
    Mr. Martin. Oh, localism. Well, you know, the Commission 
hasn't finished undergoing its localism review, that's what 
we're going to be doing. The Commission did not complete that, 
as you said, Chairman Powell----
    Senator Lautenberg. But, it started in 2003.
    Mr. Martin. It started it. It started and then that 
localism review was dropped and not completed. Indeed the final 
hearings were never held. I've committed that the Commission 
will go back and finish. We've got two localism hearings that 
we need to complete, one of which we've committed to do in 
Maine, and we've been working on trying to complete it along 
with the other media ownership hearings that we've committed to 
hold. And after those hearings are done, then we will put forth 
a report that says what we've found, including concerns that 
were raised and any recommendations that we could make on 
improving----
    Senator Lautenberg. I know the intent is there, but since 
2003 the pledge was made to do that. What do we have to do now 
to give us a date certain that this will be done? Is there a 
specific timetable for this?
    Mr. Martin. We started the ownership hearings last fall. We 
had two last fall, and frankly since I've become Chairman, I 
think I've worked hard, to make sure we attend all of the 
hearings----
    Senator Lautenberg. I hear you've started, it's the finish 
I'm interested in.
    Mr. Martin. I think that we should be trying to do hearings 
on a timeframe of about one every other month. I think that 
we've got about six hearings that we need to try to do this 
year, when you include the four remaining media ownership 
hearings, and the two on localism. And I think that means that 
we've got to be doing one about every other month this year. 
And so we want to complete those hearings this year, which 
would put us in the position to be making reports to Congress 
on localism----
    Senator Lautenberg. Mr. Copps, you look like you're anxious 
to answer.
    Mr. Copps. I am, I appreciate that. I'll try to be brief, 
but I think there's three areas. Number one, we have to really 
tackle this consolidation issue, and it's not just about 
beating back harmful new rules, but it's revisiting some of the 
old rules that have got us in this mess in the first place.
    Specifically, you talked about the explicit expectations, 
localism. We don't have a viable license renewal procedure at 
the Federal Communications Commission anymore. It used to be, 
back in the sixties and the seventies, a broadcaster had to 
come in every 3 years, and we had a list of 12 or 14 rather 
explicit guidelines, and we would make the determination if 
they were going to get their license renewed, that they were 
actually doing it. Were they going out and talking to members 
of the community? This was one question. We used to require 
that when the broadcaster lived in the town that he served. 
When he went to the barbershop and the church and the bakery. 
Now, he may live 3,000 miles away. Do we still require that? 
No, we don't require that.
    And then, other than getting a good license renewal where 
the Commission affirmatively responds--not once every 8 years 
to a postcard--but once every 3 years or 5 years, and based on 
some specific obligations. And then we have to really get 
serious about determining what those public interest 
obligations are going to be. We're going into the digital age 
now, we're giving broadcasters the right to use that spectrum 
to broadcast six--or if you have a duopoly--twelve program 
streams in a community. And we've done good on the mechanics of 
that, but the big question is, what do the American people have 
the right to expect from that? Can't they get more community 
affairs? Local affairs? And the things you're talking about?
    Senator Lautenberg. Mr. Chairman, can we revert back to a 
more thorough system in terms of these license applications and 
the obligations they have for service for the community?
    Mr. Martin. Well I'm hesitant to actually put specific 
requirements on the type of programming that broadcasters have 
to put on. There have been several proposals that have been put 
forth, for example, that we should require individual 
broadcasters to provide free air time, make a specific amount 
of free airtime available to political candidates. There have 
been those that have come forward repeatedly, in the context of 
the digital transition, saying we should make television 
broadcasters provide free air time to political candidates. I'm 
hesitant to say that we should require broadcasters to provide 
free air time.
    I do think that we can do more in gathering information 
though. I actually have been supportive of saying that we 
should increase the reporting requirements----
    Senator Lautenberg. Chairman, forgive me, I don't want to 
extend my time too far.
    But, we have a problem here, obviously. And I would simply 
ask--do you have the people and the resources to do these 
things, if we get more thorough and more detailed about this? 
Yes or no?
    Mr. Martin. Yes.
    Senator Lautenberg. Then, let's do it.
    Thank you very much, Mr. Chairman.
    The Chairman. Thank you.
    Senator Dorgan?

              STATEMENT OF HON. BYRON L. DORGAN, 
                 U.S. SENATOR FROM NORTH DAKOTA

    Senator Dorgan. Mr. Chairman, this is one of the most 
important hearings we will have, and there's barely time to 
scratch the surface in 5 minutes. And I understand your point, 
we have three votes starting soon.
    But, I want to simply mention three things, and then ask a 
question. Number one, I heard a lot about free markets. I love 
the free market, but the fact is more concentration means less 
competition, and then these markets are less free than they 
should be. And this Commission is about regulation, regulators. 
I always worry a little when I hear regulators shy away from 
regulation talk. The market, from time to time, needs a 
referee--it's the job of the FCC, in my judgment.
    Second, spectacular failure on the last opportunity to do 
media ownership rules, a spectacular failure. The Commission 
decided that in the largest cities in the country it was okay 
to have one owner own eight radio stations, three television 
stations, the dominant newspaper, and the cable system. That 
was a spectacular failure. And Senator Lott and I led the fight 
in the Senate, and we did a rule veto by the majority of the 
Senate. And I don't see how you can do ownership issues again 
before you finish localism. You shouldn't even start ownership 
issues until you've finished the localism proceeding, that's 
the second part.
    Third part--in a city with six radio stations all owned by 
the same company, when owned by local folks, having at least 
three news men and women gathering news for that community, and 
then when purchased by one company, thousands of miles away, 
they go from three news people to one newsperson, I'm wondering 
how that relates to the issue of localism and public interest? 
And, I'm wondering whether there's any attention to those 
issues at the Federal Communications Commission?
    Now, having said all of those things, let me ask you about 
the issue of public interest standards. It seems to me the 
public interest standards have been nearly completely 
emasculated, and I'm hoping that you will start a notice of 
proposed rulemaking on public interest standards. I would ask, 
Mr. Chairman, would you intend to do that? And I would ask 
others--I can't have all five of you answer--Mr. Chairman, 
would you be interested, and would you be willing to start a 
notice of proposed rulemaking on public interest standards? And 
do you think it's necessary?
    Mr. Martin. I'm never afraid of starting any kind of a 
proceeding, so that if people want to end up have a notice of 
proposed rulemaking on public interest standards, and they 
think that's important, I'm never opposed to starting any kind 
of proceeding.
    Senator Dorgan. Do you think there's a need for additional 
public interest standards?
    Mr. Martin. I'm not convinced, yet, that we need to have 
the kind of requirements that some people put forth when they 
say that. Some people have urged us to adopt specific 
requirements about explicit kinds of programming that we should 
be expecting of our programmers--that they would have an 
obligation to put on certain kinds of programming. I'm 
hesitant.
    I do think it's important, and I have been supportive, of 
adopting more explicit reporting requirements. Because the 
broadcasters are claiming that they are already doing a lot of 
these kinds of public interest programming, and I've said, if 
they are, then they shouldn't be opposed to reporting it. 
Which, I think, is different from mandating it. So I'm 
supportive of--and have been--of reporting requirements.
    Senator Dorgan. You're talking about programming, I hate to 
interrupt--you're talking about programming. Let me ask you 
about the six stations that go from three news people to one, 
because one owner bought all six of them. Is that in the public 
interest?
    Mr. Martin. I wasn't just talking about programming, I was 
talking about the reporting requirements on what kind of--what 
are they doing on these localism issues, including on the local 
news that they're providing. I'm willing to do that reporting, 
but I'm hesitant about adopting explicit requirements on what 
programming they should put on.
    Senator Dorgan. Let me say that I think it is urgent that 
this Commission sink their teeth into the issue of pubic 
interest standards sooner rather than later, and I hope you 
will do that.
    Let--I will ask someone else to comment in a moment, but 
let me also get to net neutrality, or what I call Internet 
freedom and the issue of non-discrimination.
    If the description of the Federal Communications Commission 
is to decide that the Internet issue does not related to non-
discrimination rules because of the common carrier judgment 
that's been made--if you eliminate the non-discrimination 
requirement, does that mean you favor discrimination? And if 
not, then how do you make certain that there is no 
discrimination, by eliminating the standard?
    Mr. Chairman Martin, would you answer that? Then I'm going 
to ask Mr. Copps to answer it.
    Mr. Martin. Sure. I think that there's been a lot of 
emphasis placed upon a non-discrimination requirement, and I 
think it's important to talk about what we mean by ``non-
discrimination.'' Traditionally, by non-discrimination the 
Commission has meant that if you offer a service to one, you 
have to offer that same service to all. So that if I am a 
carrier and I offer a deal to Dr. Copps, then I have to offer 
the same deal on the same terms and conditions to Jonathan 
Adelstein. And I think that there's some benefit in that 
approach and I've talked about how that that kind of an 
approach might be important. And I actually proposed that that 
is how we address non-discrimination in the context of the 
recent mergers.
    What others have put forth is a requirement that prohibits 
any carrier that owns an underlying infrastructure from 
charging any content provider. That's what they mean by non-
discrimination. And I've said that I'm concerned about that 
approach because it could actually deter some investment in 
underlying infrastructure.
    So, when you say, am I in favor of a non-discrimination 
requirement, it depends on exactly what non-discrimination 
means.
    Senator Dorgan. Might I ask Mr. Copps and Mr. Adelstein to 
comment on the issue of a notice of proposed rulemaking on the 
public interest standards, and also non-discrimination?
    Mr. Copps. I share your sense of urgency on the public 
interest standards. We ought to--for example--be looking at 
licensing. We ought to put that out for comment, and let's get 
serious on re-licensing. We ought to complete the proceedings 
that have already begun. We have had, since 1999, a pending 
proceeding on the public interest obligations of DTV 
broadcasters. And, we've done the children's programming out of 
that, but all of the other things are lying fallow. So, we 
really need to tee that up and get done with it.
    So, I absolutely share your sense of urgency. There is no 
higher priority, I think, that the Commission has.
    Mr. Adelstein. I agree with Commissioner Copps with respect 
to our open proceeding. The proceeding has been pending since 
1999, and we still have not adopted a Notice of Proposed 
Rulemaking. On radio, we have an item pending before us in 
which we are trying to get a Notice of Proposed Rulemaking just 
to ask the question on applying any additional public interest 
obligations to broadcasters as they get additional spectrum to 
broadcast on the radio. We want to know if, with additional 
spectrum, and the opportunity to take one channel and turn it 
into three or four channels, are there any public interest 
obligations that should be proposed? So far, we don't have a 
majority to support a Notice of Proposed Rulemaking, even to 
ask the question: ``Should we do a rule?''
    So, I think it's urgent. With regard to non-discrimination 
on the Internet, I'm not aware of any current FCC rule that 
prevents discrimination of Internet content, services or 
applications. In fact, the FCC has ruled that the longstanding 
non-discrimination safeguards under Title II, no longer apply 
to broadband services, which I think, underscores the need for 
us to address this issue.
    Senator Dorgan. Mr. Chairman, telecommunications is such a 
significant part of our challenge in this Congress, and because 
we are really only scratching the surface and being able to 
superficially question here, and we have three votes, I 
understand all that.
    I'm wondering if, at least, we could have a discussion at 
some point of finding another venue or another time or some 
other circumstance in which we can continue this discussion. I 
think it would be helpful for the Commission, I know it would 
be enormously helpful for this Congress, and----
    The Chairman. I can assure you, it's now under progress.
    Senator Dorgan. Thank you, Mr. Chairman.
    The Chairman. Senator Boxer?

               STATEMENT OF HON. BARBARA BOXER, 
                  U.S. SENATOR FROM CALIFORNIA

    Senator Boxer. Thank you so much, Mr. Chairman. I would 
like to associate myself with the comments of Senator Dorgan. 
You know, the sense of urgency that he brings, I share.
    I don't know if I could be as articulate as he's been, but 
I'm going to focus in on the issue of localism.
    It's been almost 2 years since we last had the full panel 
of commissioners here to discuss the FCC's work in regulating 
interstate communications and implementing the laws Congress 
has passed, so I want to welcome you all back.
    And I just want to say this as straight from the heart as I 
can, because I see your responsibility as protecting the public 
interest, period. Period. That's what you're supposed to do. 
And I hope that before you make any decisions, that that's what 
runs through your mind. It's certainly what I try to do every 
time an issue comes before me, because that's why I was 
elected.
    And so, when a big business comes to me with an issue--they 
often do--I always say to them, ``I understand your position 
from your pocketbook, but how does that serve the public 
interest?'' And if they convince me it does, I'm willing to 
listen.
    Now, I think communication companies sometimes forget 
they're not the owners of the spectrum, that they have 
obligations to the public. And it's your duty to ensure that 
the public is protected.
    Senator Boxer. I thank you very much.
    And, I want to talk to you, Chairman Martin, and then ask 
others--it was only 4 months ago that you sat before the 
Committee during your confirmation hearing, although it seems 
like longer--as I'm sure you remember, I presented you with a 
copy of a news media localism study prepared by the FCC staff 
at taxpayer expense, that was shoved in a drawer, because its 
conclusions apparently ran counter to some interests who want 
to allow more media consolidation, and who believe that such 
consolidation leads to more--not less--local news, at least 
that's what they say.
    I was further troubled when I learned of the suppression of 
a second FCC study--this one related to radio stations--only 
days later. You and I talked about it, publicly, privately. And 
as a result of this, I--along with Senators Dorgan and Wyden--
called for the Inspector General to investigate the suppression 
of these studies. And I'm anxiously awaiting this report that's 
due in the spring.
    Now, I had hoped that the revelation of these suppressed 
studies would have led to greater transparency and openness at 
the FCC. Unfortunately, published news reports, and even 
comments by some of the commissioners here today indicate that 
a culture of secrecy is still pervasive at the FCC.
    It is sadly ironic, that an agency dedicated to promoting 
free and open communications would operate in the dark.
    For example, the Associated Press recently published a 
story about the investigation of the suppressed media ownership 
studies. According to the AP report, the Inspector General has 
not interviewed two key witnesses, and I trust he will do so 
before he completes his report, and I really think this is 
important.
    Also, it's reported that during a Bar Association dinner 
recently, Chairman Martin, you joked that the ``KGB-like 
atmosphere over at the FCC grows on the staff.'' This is your 
words, ``the KGB-like atmosphere.'' Now, I do believe that many 
times truth is often said in jest. So, Chairman Martin, for the 
sake of the staff and the public, I hope we're going to see 
some changes that are long overdue.
    Now, Chairman Martin, I know you can't comment on the 
ongoing Inspector General investigation. But when these two 
reports came to light you told me, and I quote, ``I want to 
assure you that I, too, am concerned about what happened to 
these two draft reports.'' So, I'm asking you--after learning 
of the suppressed studies--did you perform your own internal 
investigation to determine why these studies were not 
disclosed? Why they were shoved in the drawer? Who shoved them 
in the drawer? Did you do anything internally?
    Mr. Martin. Yes.
    Senator Boxer. What did you do?
    Mr. Martin. First, I just wanted to clarify one thing you 
said that I said recently, the statement about the ``KGB-like 
atmosphere,'' that was actually over 18 months ago. But I did 
joke about that at the FCBA dinner.
    Senator Boxer. Well, let it stand, that you did say that, 
``the KGB-like atmosphere'' and everybody knows what the ``KGB-
like atmosphere'' is, if you want to go into it, you know?
    Mr. Martin. I did, at the FCC Chairman's dinner.
    Senator Boxer. It's kind of a sick thing to say, but that's 
your choice of joke.
    Mr. Martin. It was in jest in talking about the 
Complaints--about the fact--that I had been too, actually, 
hands-on and controlling of the Commission's policies, versus 
the staff. But, I don't think it was meant in terms of 
suppressing the study.
    And the reason I wanted to clarify when, is because it was 
done prior to any of the issues that you raised.
    Senator Boxer. I know, but it gets to an atmosphere. An 
atmosphere over there, I'm trying to get to that.
    But, if you could just tell me, what exactly did you do?
    Mr. Martin. I know, sure.
    Senator Boxer. After we spoke, and you said, ``I'm going to 
get to the bottom of this.'' What have you done? Because I 
haven't heard of anything that you've done. Tell me.
    Mr. Martin. I'm sorry, but the very first thing that we did 
is--and I promised you that I would--was make sure that I 
uncovered any other studies that anybody had claimed they had 
done but that had not been released to the public. So, I had 
every bureau chief in the agency go forward and say to all of 
the staff members who had worked on anything related to media 
ownership or localism to provide copies of anything they had 
done that they thought was a study that had not been provided. 
We then made copies of all of that, I shared that with all of 
the commissioners. Our general counsel's office had gone 
through them and identified that there were a few that were 
emails, that weren't even studies, and we provided copies of 
all of those to Congress, to the committees, including the ones 
that the General Counsel's office didn't want to be released to 
the public, because they were emails, and then we released all 
of that to the public and put it----
    Senator Boxer. Well, I have just one more question, and Mr. 
Chairman, my time is up, but I want to follow up--it's my 
understanding that, in fact, you did look back, that the FCC 
has withheld 1400 pages. Why have these pages been withheld? 
And I would like to ask, after you answer, Commissioner 
Adelstein and Copps to respond.
    Mr. Martin. In relation to the request that I made, after 
your inquiry at my confirmation hearing, that everything 
anybody had ever done in relation to any studies that had been 
produced relating to media ownership (or any concerns they had) 
to provide them, we've provided all of them to Congress 
already.
    There was a separate FOIA request----
    Senator Boxer. Right.
    Mr. Martin. That was made by some outside groups that asked 
for things that were much beyond the other studies, including 
other, all, any information, anything the Commission had on 
ownership. This involved emails, documents, draft documents 
that hadn't been produced. That was handled by the General 
Counsel's office, as all FOIAs are, where they say that there's 
deliberative privileges that the Commission has about internal 
documents and internal drafts before they're released.
    But, anything that anybody has produced that was any kind 
of study----
    Senator Boxer. OK, OK, OK. I want to get to this 1,400 
pages, though.
    Mr. Martin. The 1,400 pages, many documents were produced 
in that FOIA production, but it was a standard FOIA production 
that the Commission always----
    Senator Boxer. OK, I just want to ask the commissioners if 
they agree, Commissioners Copps and Adelstein, if they know 
about the 1,400 pages? And if you agree with that, because it's 
important to me. If you do, that would be one thing, if you 
don't, it would be another.
    Mr. Copps. I have heard about the 1,400 pages, I have not 
seen the 1,400 pages, and I don't know what they contain. I 
think Chairman Martin is correct in what he just said about his 
sharing the information and trying to uncover additional 
studies.
    The final comment I would make is that research that took 
place under the previous regime--not only what was suppressed, 
but the studies that were done which weren't very good--really 
puts the onus on us now, to make sure that our new studies are 
done really well. That they're peer-reviewed, and that they're 
put out for public comment at the end of the day. Because this 
is terribly important decision-making that we're dealing with, 
it's the whole future of our media, and before we vote next 
time, I want to make sure that we have the benefit of a lot 
better----
    Senator Boxer. Right. Well, I appreciate your--but you 
haven't seen the 1,400--the reason I raise it is, I'm a 
believer in openness. And when an outside group--they're paying 
the taxes that pay all of our salaries. It think, unless it's 
national security, they have a right to see it. I just 
wondered--Commissioner Adelstein, if you had anything to add? 
Do you know anything more about the 1,400 pages?
    Mr. Adelstein. Well, I agree that we should always err on 
the side of disclosure. Openness is preferred, particularly in 
an area of such concern to the public. I have been concerned 
with the way that the studies were commissioned. I did not have 
any input into how they were structured, or who was selected to 
do the studies. I think it is very important now that the 
studies be done correctly, and that there be adequate peer 
review. Going forward we really need to have an open process 
and a process that tries to get to the truth.
    Senator Boxer. Thank you.
    The Chairman. Senator Smith?

              STATEMENT OF HON. GORDON H. SMITH, 
                    U.S. SENATOR FROM OREGON

    Senator Smith. Chairman Martin and Commissioner Copps, as I 
try to understand this emerging public interest standard that 
we may be working on and that you may be working on, I want to 
ask you two, briefly, does that mean content or does that mean 
ownership, or both?
    Mr. Martin. I think when you're talking about the public 
interest standards that apply in the context of the public 
interest broadcasting, we've tried to look at trying to foster 
both competition and diversity. And in the context of having 
diversity, we would mean viewpoint, which would involve 
content. But, we've tried to make sure that there's an emphasis 
on both competition and diversity, so I think in that sense, 
it's ownership and content.
    Senator Smith. Mr. Copps?
    Mr. Copps. I would agree that it's ownership and it's 
content. And obviously, when you say content, that's kind of a 
charged term, because it's not our business to regulate 
content, but is it really regulating content if--at re-license 
time--you say, ``Have you teed up programs that are of interest 
to minority communities here?'' or, ``Have you afforded an 
opportunity for the clash of antagonistic opinions on public 
issues?'' So, we're not regulating what's said, or what the 
specific content is, but you're making sure the kind of content 
the American people need to see and hear is coming on the 
American people's airwaves.
    Senator Smith. I regularly listen to talk radio when I 
drive to and from work. And I hear my colleagues regularly 
excoriated on them from the right and the left. Just a 
hypothetical, I recently--for a Republican--took an unusual 
position on the war in Iraq. I was driving home and I heard a 
conservative commentator taking my hide off, and I thought, 
``Well, I'll switch to a liberal station and see what they 
say,'' and they just said, ``He's just doing that for 
politics.'' I don't think either of those views are in the 
public interest, but they have the right to say that. So, I'm 
really troubled as we get into this, you know, one was owned by 
a conservative man or corporation, and one was owned by a very 
liberal organization. And I just want to say, that as you get 
into content, it really does trouble me, because they have the 
right to say what they say, as I have the right to say what I 
say, and let the public decide.
    Mr. Copps. But maybe the answer there was let a thousand 
flowers blossom, and let's have diversity of ownership and 
let's have a number of people who have various viewpoints that 
would reflect what you're talking about more accurately.
    Senator Smith. Well, you know, and one of the concerns that 
I have, living in a very rural part of Oregon, is that media 
outlets struggle to make any money, or to survive, and they 
often get gobbled up by bigger companies, just as a matter of 
pure economics. Does that enter into this decision of the 
public interest?
    Mr. Martin. Sure. I think it's critical that we make sure 
that as the technologies are changing and there's increasing 
competition and pressure from an economic standpoint, we want 
to make sure that some of the smaller ones are able to survive 
as well. And that's one of the balances that we try to find in 
how our ownership rules should work. And we have also been 
trying to move forward in making sure that our rules don't 
inadvertently suppress the opportunity to put forth different 
viewpoints as well. That was one of the justifications 
previously when the Commission eliminated, for example, its 
Fairness Doctrine--when it used to say, if you put one 
particular view out, you had to put the other out. The 
Commission eliminated that rule, in part, to try to foster an 
environment in which people were being more willing to put out 
their views, on radio, for example.
    Senator Smith. Well, I'm glad to hear you say that 
economics is a factor in the public interest. Because if a 
rural area has all of their media go broke because they don't 
have any advertising to sell, it doesn't much serve the public 
interest. And sometimes they don't have a choice.
    But my other question--and I apologize--this is the third 
committee meeting I've had to be to this morning, according to 
my staff, this is a particularly important one, and I grant 
that, I know people have been waiting a long time to be in here 
for this.
    But Chairman Martin, one of the concerns that I have as a 
rural Oregonian and some of my other colleagues have spoken to 
this in rural states, is simply broadband deployment. I know 
you've probably already plowed this field, but for my sake, I 
wonder if you can speak to really specific things that you're 
doing, or specific examples of how we could help you to 
increase broadband penetration, increase broadband speeds, to 
lower consumer pricing for broadband, and to promote deployment 
in rural areas. Because, I think as I heard Commissioner Copps 
say when I came in, you know, we're losing a lot of money 
because it isn't deployed. What specific things can we do, that 
we can get through this Congress. This committee operates on a 
fairly bipartisan basis--at least on most issues, not net 
neutrality, apparently, but on many issues we do. What can you 
tell me to be for in this Congress to make progress on 
deployment? Because, according to the OECD, we're 12th among 
nations, right in the middle.
    Mr. Martin. Well, I think there are some things the 
Commission has done, but there are some things that Congress 
could end up doing to further help with broadband deployment. 
The Commission has certainly tried to remove regulatory 
barriers and encourage competition among companies. That's the 
most important thing that we can try to do to foster further 
broadband deployment. And, we've also tried to remove barriers 
to getting into the video services, for additional video 
competition. One of the things that is important to remember is 
that as this broadband infrastructure is deployed, one 
important avenue to recoup the significant financial resources 
would be to offer video services as well. That's the reason why 
trying to lower the barriers to providing video alternatives 
was critical--not only for increasing video competition, but 
for broadband deployment.
    Congress last year had legislation that lowered those 
barriers to allow other companies to provide video service, and 
I think that would be important for broadband. What Congress 
can do in this area is more, is beyond what the Commission can 
do. We have limitations on our current authority for 
franchising reform. I think we've done what we can, but I think 
that Congress could do more in that regard.
    The Commission also needs to make sure that, in terms of 
wireless services, we are auctioning off smaller wireless 
areas, to make sure that rural areas are getting the kind of 
attention they deserve. And we need to have stronger build-out 
requirements on the wireless side. I think that will help on 
the wireless front. And on the wire line front, I think we can 
try to facilitate further video deployment. That would be 
important.
    Senator Smith. Anybody else have a comment?
    Mr. Adelstein. Well, in terms of competition, I am not so 
sure there is a lot of it in rural areas. I am not sure there 
are a lot of these big companies that are itching to deploy 
video services or put something like FIOS into Bend, Oregon.
    Senator Smith. That's why maybe the free market--as good as 
it is--may not help rural folks.
    Mr. Adelstein. Right, that's why this Committee has been so 
effective over the years in implementing Universal Service and 
directing the FCC to make sure that Universal Service has an 
evolving definition, which evolves to cover advanced services 
at the appropriate time. I think it's not a question of if it 
evolves to advanced services, but when. That is likely to 
happen very, very soon.
    We need to think about how we evolve our Universal Service 
Program as voice becomes just one application over a broadband 
network. We need to find the will to have Universal Service 
broadly supported through all of the different connections that 
feed into the system, and we need to make sure that the program 
is as ubiquitous as possible, particularly in rural areas. I 
think broadband deployment in rural America is critical to 
future economic development, and to the ability of people to 
stay and learn and thrive in rural parts of Oregon, and around 
the country.
    Senator Smith. Well, thank you, gentlemen.
    Mr. Chairman, I think my time is up, but let me just say, I 
would love at some point in the near future to visit with you 
all. One of the issues I've struggled mightily over is net 
neutrality as it affects this issue. And how it affects 
deployment. And I would love to get your views. I have a 
feeling that maybe the fears on both sides of that issue may be 
overstated, and I keep looking for some common sense ground 
that we can find some way to understand the values that are in 
competition here.
    The Chairman. I can assure you that we will have those 
meetings.
    Senator Rockefeller?

           STATEMENT OF HON. JOHN D. ROCKEFELLER IV, 
                U.S. SENATOR FROM WEST VIRGINIA

    Senator Rockefeller. Thank you, Mr. Chairman. I want to 
pick up on a previous point, and that is the public interest 
test. Because it's my view that the FCC over the years has kind 
of wandered away from concern about that, and particularly 
cable and satellite television really can have anything they 
want, FCC has been really friendly to them. And I find that 
regrettable. I think television is in the worst state that I've 
ever seen it--commercial television is in the worst state that 
I've ever seen it. I barely watch it, I hope my children don't. 
They couldn't when they were growing up. You know about my 
indecency and my violence bill, you may or may not like it, I 
like it, and I've introduced it and we'll have more to talk 
about.
    But on this business of public interest, I mean, they--
commercial broadcasters do, after all, use what belongs to the 
American people, for free. So, we used to have a test when the 
renewal came up, and 14 different points, which I won't go 
into, were asked. They were very, very pertinent. As 
Commissioner Copps has said, now it's very different, and the 
process of renewal is so pro forma that it's known as 
``postcard renewal'' that's the term of art. It just sort of, 
boom, you have it.
    So broadcasters are given, commercial, that is, access to 
the public airwaves, it's for free, and in return, I think, I 
have a very strong feeling that they have to live up to their 
obligations. And I think that's going to be the change of this 
last election, there's gong to be a lot more attention on the 
Federal Communications Commission and what they are and are not 
doing about critical areas in broadcasting.
    I don't really believe, as I've said, that the FCC is 
conducting appropriate oversight of the public interest 
obligations of commercial broadcasters. Again, in an effort to 
minimize government regulation, the FCC has so reduced the 
commercial broadcast renewal license that I believe the agency 
has, in effect, abandoned its core responsibility to the public 
interest. That's a pretty strong thing to say, and I say it 
without any hesitation whatsoever.
    We live in such complicated times, people have to know 
what's going on. Nobody watches news anymore because there 
really isn't any news. Cable is just, who can kill who quicker, 
verbally. Junk, sex, scandals--it's just totally different than 
when I grew up, so is America.
    Can I allow for that? No, I don't have to on something 
which is publicly owned, and call broadcasting.
    And I also want to point out, and I won't cite the 
statistics, you all know them, but they--and some people 
criticize this group, but I don't, because nobody's challenged 
their statistics--Parents Television Council--167 percent 
increase in violence since 1998, prime time slots. ABC, a 309 
percent in violent content overall, since 1998. For each hour 
of prime time, CBS has the highest percentage of deaths 
depicted at various levels, and that's gone up by 68 percent.
    Now, the commercial broadcasters love to talk about their 
voluntary efforts, they raise money--actually they didn't raise 
money, they just took a little less advertising--and said, 
``Well, we'll get people to do this voluntarily.'' Chairman 
Martin, can you honestly say to me that you think that is 
working, or could work?
    Mr. Martin. Their self-regulation implementation they're 
proposing, you're talking about?
    Senator Rockefeller. Correct.
    Mr. Martin. No. I've continued to say that I think that 
there's a lot of problems with the content that's on not only 
on broadcast, but on cable television as well. And I think that 
a lot of these education efforts that they've funded have been 
insufficient to fully address those issues.
    Senator Rockefeller. Mr. Copps?
    Mr. Copps. I think any voluntary codes that survive in this 
day and age are a pale and shallow representation of what the 
industry used to have.
    You know, from the 1920s to the 1980s for radio, and from 
the fifties to the eighties for television, we had voluntary 
codes of broadcaster conduct, and broadcasters subscribed to 
them. It may not have been a golden age, but it was a serious 
effort at self-discipline. And I've been begging them to get 
back to meaningful, voluntary codes, and it seems to me that 
would be the best way for them to go, if they wanted to avoid 
some of the more stringent actions you are talking about. So, 
that's my reaction on that.
    On the previous subject, how did we get away from these 
public interest obligations? You're right, your statement was 
strong, but I agree with it. We had a Chairman of the FCC one 
time that made a strong statement. His wasn't right, it was 
wrong. He said, ``television is a toaster with pictures.'' And 
that's how we started treating the people's airwaves and the 
television. And then we sit around and wonder what happened to 
the public interest obligations that began to disappear in the 
eighties, and that process hasn't abated.
    Senator Rockefeller. I have four more questions to ask, 
I'll submit them by writing, because I don't want to get in the 
way of Claire McCaskill.
    The Chairman. Thank you very much.
    Senator McCaskill.
    Senator McCaskill. Thank you, thank you, Mr. Chairman.
    First, a simple question for Chairman Martin. Will you 
issue new media ownership rules without seeking comment on 
regulatory language?
    Mr. Martin. I'm sorry, what was that?
    Senator McCaskill. Your new media ownership rules, that 
you've announced. That you've announced that you're going to be 
changing.
    Mr. Martin. Yes.
    Senator McCaskill. Will you issue those without seeking 
comment on the regulatory language?
    Mr. Martin. Well, we haven't announced any of the new 
rules, what we've started is the proceeding.
    Senator McCaskill. Right.
    Mr. Martin. And we've actually already sought comment on 
the proceeding. So, we've begun the----
    Senator McCaskill. But what----
    Mr. Martin. We've begun the process of saying, ``Should we 
make any changes to the rules?'' And indeed, the courts have 
actually instructed us that we have to make some changes to the 
rules.
    Senator McCaskill. Correct. But, my question is, as this 
process goes along, will you be seeking comment on the 
regulatory language that you may propose?
    Mr. Martin. We already are, seeking comment on how we 
should be reforming those rules. The Commission doesn't 
always--and some have proposed--that we should actually seek, 
again, comment on the specific rule before we adopt it, somehow 
release it to the public so that people can see what that is.
    Senator McCaskill. That's my question.
    Mr. Martin. Right. And since we've just begun the process, 
I don't even know what we would change. I don't think I can 
commit to how we will undergo that process. And I don't think--
and until we get further along, I'll know if we're going to 
make any changes. I'm not sure that I can comment on what we're 
going to do going forward.
    Senator McCaskill. Commissioner Copps?
    Mr. Copps. You can count me as one of those who so propose, 
and I understand that in all cases, we don't put out the final 
proposed rule for public comment, but this is so profound, and 
so important, and involves the whole future of our radio, and 
our television, and our media, that I think it's absolutely 
imperative that we put it out before the final vote is called.
    Senator McCaskill. I agree with you--yes, Commissioner 
Adelstein?
    Mr. Adelstein. I also agree. I think the public has the 
right to see the rules before they are finalized. All the 
Commission has released to date is a broad, general statement 
of: ``What do you think of our media ownership rules?'' But the 
public has no idea what we are actually going to do. If we 
decide to make changes, I think the public has a right to see 
them before we finalize them, not after we do so.
    Senator McCaskill. I agree. I think this is incredibly 
important. What you're embarking upon, as it relates to the 
future of broadcasting, and I think it's incredibly important, 
that before any rules are adopted that there is public comment 
on the rules that are being proposed. And I wanted to speak to 
that first.
    I also wanted to ask, I was interested in the process of 
the merger decisions, and I know that you all were stalled at a 
2-2 tie, and Commissioner McDowell, you had recused yourself 
because of potential appearance of conflict because of your 
previous job.
    And then, when it got to a stalemate, there was actually an 
opinion by your counsel, that at that point, had you wanted to 
weigh in on the decision, you could have. That the counsel said 
you weren't barred. I found that ironic that you would have 
been originally recused, and then, when it was really close and 
tied, we're going to say that you can come on back in now and 
make a decision.
    I appreciate the decision you made, in terms of not 
participating because you did not have enough confidence in the 
opinion, that it was clear. I guess my question to the panel 
is, do you need an Act, a law, to clarify the situation in 
those instances, so that there aren't future commissioners that 
are faced with the difficult decision, and the pressure-filled 
decision that you faced, Commissioner McDowell?
    Mr. McDowell. Thank you, Senator. And obviously, that was a 
difficult time for everyone involved.
    Actually, the system worked in that regard. The way the 
system works, there are a number of layers of ethical 
protection, if you will, one of which was my Ethics Agreement 
with the Office of Government Ethics, that was filed with this 
committee, on February 14 of last year. There's the Code of 
Federal Regulations. There are, of course, the ethics rules 
under my home state bar, the Virginia State Bar, and many other 
levels of protection there.
    The Chairman, I think, exercised his prerogative to ask the 
General Counsel of the FCC for his legal opinion, given that 
there may have been a compelling governmental interest. The 
system, I think, actually worked. At the end of the day, it 
became my decision, which is what Mr. Feder's memo said--this 
is my decision to make. He surveyed the landscape, he wrote a 
thorough memo, for the most part, and at the end of the day, I 
disagreed that in an ethical close call, or an ethical coin 
toss--as I called it at the time--that I should venture into 
the gray area, that I should stay on the white side of gray. 
But, I don't think we need additional legislation.
    Senator McCaskill. But, do you understand my concern? I 
mean, if you had decided to not stay on that side of the 
ethical grayness of the situation, we would have had a 
situation where there could have, potentially, there was going 
to be a 3-2 vote where the deciding vote was cast by someone 
who had originally recused themselves? And that's my concern, 
if this were to happen again, I think we're going to see 
potentially more situations, because the people who join your 
Commission have background in the field, and I--if any of you 
have, my time is up and I don't want to go over, but if any of 
you have specific ideas about that, I would appreciate you 
directing them to my office, so that I could look at it.
    And finally, I just want to make one comment, with the 
permission of the Chairman. I--there's a lot of talk about 
public participation in our democracy by the airwaves, and in 
my state, broadcast media and cable received over $20 million 
in political advertising, between the months of August and 
November. An incredible amount of money was spent. I think we 
had maybe 3 hours of debate that was aired on those same--they 
got a great deal, they made a lot of money, and there wasn't a 
lot--now, there was a lot of news coverage, in fairness, there 
was a lot of news coverage in the race. But, for the person who 
challenges me, and I'm sure there will be someone--I want to 
make sure they have a fair shot. I want to make sure that the 
system is not so overloaded toward my benefit that someone 
can't effectively challenge me. And I would ask you all to look 
at the requirements of airing debates and political campaigns 
during prime time on broadcast media. If you all did a chart of 
the income that has gone to broadcast media from political 
advertising over the last two cycles, it would be jaw-dropping. 
And, I think that in light of that, it's really important that 
we continue to put pressure on broadcast media, and cable, to 
air political debates.
    Thank you very much.
    The Chairman. Thank you, Senator Pryor?

               STATEMENT OF HON. MARK L. PRYOR, 
                   U.S. SENATOR FROM ARKANSAS

    Senator Pryor. Thank you Mr. Chairman. We're about mid-way 
through a roll-call vote on the floor, so I will try to be 
quick with my questions, and I'd appreciate quick responses, 
because at some point we're going to have to run over there and 
vote.
    Mr. Chairman, let me ask you, Chairman Martin, let me ask 
you about the 700 MHz auction. A couple of basic questions, is 
the geographical size of the blocks that are being auctioned--I 
guess you call them blocks, I don't know what you call them--
but the geographical areas that are being auctioned, and the 
timing of the auctions, exactly when they will take place. So, 
on the geographical size, as I understand it, they're fairly 
large geographical areas, is there any consideration, is the 
FCC considering shrinking those, making those smaller? My 
concern there would be if they're smaller, more companies would 
be able to make bids, especially smaller and local phone 
companies.
    Mr. Martin. There is. We do have a proposal to make them 
significantly smaller in the upcoming auction compared to what 
we've done in the past. In the past, the Commission had 
actually had very large geographic areas. We made them somewhat 
smaller, in the auction we just completed this past fall, and 
we have proposals to make the geographic areas even smaller. In 
large part, to try to help smaller companies be able to get in, 
and also because if you make the geographic area smaller, it's 
more likely that people will be able to focus on providing 
rural service in smaller rural areas. People that are really 
interested in providing that service, as opposed to just buying 
a larger block that has rural areas encompassed in it, will be 
able to do so. So, that's actually one of the things that I 
will propose the Commission do.
    Senator Pryor. Bingo, that's one of the things--did you 
have a comment on that?
    Mr. Adelstein. I agree with the Chairman. I think it is 
very important that we offer different sizes of auction areas, 
so that large and small companies can get engaged, particularly 
those companies that want to serve on the local level. So, as 
we look at the band plan--it's not a free market, we establish 
what the market is--it is critical that we design the plan so 
that there can be new opportunities for small companies, and 
designated entities, new businesses, and large businesses.
    Senator Pryor. And, Mr. Chairman, I guess this is best for 
you--what's your timeframe on making a decision on how large 
these markets will be?
    Mr. Martin. Well, we need to do that fairly soon. We have 
an obligation to conduct the auction by the beginning of next 
year, and we have to turn over the proceeds in the middle of 
next year. We need to conduct auctions sometime this fall. So, 
we need to get those rules in place sometime this spring.
    Senator Pryor. So, your plan is to conduct the auction 
sometime this fall. Another concern I might have is if you make 
it too near in time to the auction that we just had, for 
capital reasons, et cetera--I was just wondering if you could 
put that off a few months, or if that matters, or--?
    Mr. Martin. We have to have it started by the beginning of 
next year. And we have to actually deliver the proceeds to the 
Treasury by the middle of next year. So, our staff would like 
to be able to start it sometime in late fall to make sure that 
we have enough time to complete it and meet those statutory 
requirements. We're required by law to meet certain deadlines.
    Senator Pryor. OK, great. Let me change direction 
completely here--the V-Chip? In the law that passed back in 
1996, Section 551, the V-Chip law, which basically directs the 
Commission to take action on alternative blocking technology, 
as it is developed. Do you have any ongoing matters now where 
you're looking at alternatives for a next generation V-Chip?
    Mr. Martin. Not anything in particular right now. There 
have been advances in some of the blocking technologies like 
the V-Chip, but part of the difficulties we've determined is 
the effectiveness of the ratings that are required for the 
content of the programs. For the V-Chip, or any blocking 
technology to be effective, you have to have very effective 
rating systems. And we've found that's been somewhat 
problematic.
    Senator Pryor. Well, I would encourage the Commission to 
consider putting something on the agenda, because you do have 
Section 551 which basically says you need to continually look 
at new technology, next-generation V-Chip.
    Also, with regard to adult domains, I know that ICANN has 
been looking at a .XXX domain, just very brief question for the 
Chairman on this--are you all taking a position on adult 
domains? Or trying to have a porn-free Internet?
    Mr. Martin. NTIA is the agency that ends up having the 
responsibility over ICANN, so they've been the ones that have 
been more involved in that issue.
    Senator Pryor. And, last, and this may be a sore subject 
with some, and I know our time is very limited, we have to run 
over and vote, so maybe I may get you to submit at least a 
longer answer for the record, but I know during the AT&T/
BellSouth merger, we all know there were a lot of events 
throughout that merger as it related to the Commission, but one 
thing I'm concerned about is after the conditions were put on 
and the, you know, merger was approved by the FCC, apparently 
Mr. Chairman, you--I believe it was Ms. Tate, Commissioner 
Tate--you all basically indicated that you may not enforce some 
of the provisions of what was just done. And, the question that 
I would have, fundamentally, is what is your legal authority as 
Chairman or as the Commission to not enforce something that you 
just did?
    Mr. Martin. It's not that we wouldn't enforce, we actually 
would enforce the conditions that were proposed. One of those 
conditions was that AT&T would have to put forth a tariff to be 
subsequently approved by the Commission. And that tariff 
actually had some components that I believe are actually 
illegal under the Commission precedent. And I said, at the 
time, they can file it, but I'm not committing to approving 
something that would be in violation of our precedent. And, 
indeed, several companies have already gone to court and said 
that condition is illegal for the very reason I identified.
    Our tariffing rules require AT&T to provide, when they file 
a tariff, to allow anybody to take from that tariff. And the 
condition that was imposed actually restricted several 
companies from being able to participate in that option, and we 
don't allow for that kind of discrimination.
    Senator Pryor. Does anybody else have any comment on that?
    Mr. Adelstein. I would just say that the Order was adopted 
unanimously. It was a 4-0 vote, so it's hard for me to 
understand why we can't implement an Order that was adopted 
unanimously. If some of us did not consider the Order legal, I 
don't understand why there wasn't dissent and negotiation to 
deal with that issue before adoption.
    Personally, I think the item is completely legal. I do not 
see any problem with it. The AT&T lawyers feel that way, as 
well as a number of other commenters. But if there is a legal 
concern with the Order, it's very easy to address.
    Now, no concerns were raised to my attention before the 
Order was adopted. But I'm willing, nevertheless, to address 
these concerns and ensure that the provision at issue is 
satisfactory to everyone. I think we should be able to work 
that out before we finalize the Order, and should get that done 
in short order.
    The Chairman. Thank you very much.
    Senator Cantwell?

               STATEMENT OF HON. MARIA CANTWELL, 
                  U.S. SENATOR FROM WASHINGTON

    Senator Cantwell. Thank you, Mr. Chairman. I will be quick 
because we are out of time, and if I could just get yes or no 
answers or something as succinct as that--on the cross-
ownership analysis and the work that's being done by the 
contractor, and the context, should that complete study be 
subject to public comment so that we're not caught off guard?
    I should preface by thanking you for coming to Seattle for 
the second time, I'm sure you get an earful every time you 
visit our state. Should this information be subject to public 
comment?
    Mr. Copps. Yes.
    Mr. Martin. We've already committed to saying all of the 
studies that we put out should be for public comment.
    Senator Cantwell. And second, on the 900 MHz rules, you 
know, we're having discussions here in the U.S. Congress about 
energy security and dealing with global warming. There are a 
lot of devices that will be part of our energy-efficiency 
strategy that use that 900 MHz. So can we get some consultation 
with this committee, or are we going to precipitously see those 
rules come out without dialogue?
    Mr. Martin. I'd be happy to, and always will consult with 
the Committee.
    Senator Cantwell. Great, thank you.
    And then the last question, I know we had some comments on 
white space but when can we expect a decision as it relates to 
portable devices?
    Mr. Martin. On the white space?
    Senator Cantwell. Yes.
    Mr. Martin. We actually have equipment that is being tested 
already in our labs that we could end up approving. The 
remaining issue that we have to determine is whether it should 
be unlicensed or licensed, and that should be a decision that 
we need to make, sometime in this spring and early summer, so 
that the devices that are being tested could be put out in the 
marketplace.
    Senator Cantwell. OK, again, very important decision. But 
thank you.
    Thank you, Mr. Chairman.
    The Chairman. Thank you very much.
    The record will remain open for 1 week for submission of 
questions, and I hope the commissioners will be able to respond 
within 2 weeks of receipt.
    The Chairman. And, I'd like to announce that the next 
hearing is on Wednesday, February 7 at 10:00 a.m., and the 
subject will be climate change research and scientific 
integrity. The hearing is adjourned.
    [Whereupon, at 12:104 p.m., the hearing was adjourned.]


                            A P P E N D I X

               Prepared Statement of Hon. John F. Kerry, 
                    U.S. Senator from Massachusetts

    Mr. Chairman, I thank you for holding this hearing. There is such a 
large variety of issues that impact our communications market--mergers 
that are almost incomprehensible in scope; a vastly changing media 
market; technological changes that lead to stunning new consumer 
services.
    It is too much to handle in 1 day. But I'd like to focus on a 
couple of key priorities.
    First is broadband deployment. The Chairman will produce statistics 
today that paint a portrait of rapid progress in broadband deployment. 
Yet it remains the case that many people either do not have access to 
broadband Internet service or simply cannot afford it.
    It is still too expensive and still too slow for advanced 
applications. Despite President Bush's promise of ubiquitous broadband 
by 2007--we remain well short of that goal. I don't see much of an 
Administration strategy at all. And I am concerned about it.
    Senator Smith and I have introduced a bill to make new spectrum 
available and encourage greater deployment. Our legislation will enable 
entrepreneurs to provide affordable, competitive high-speed wireless 
broadband services in areas that otherwise have no connectivity. There 
is a proceeding pending at the FCC, and I am not satisfied with the 
pace of this measure. I will seek an explanation from the Chairman.
    I remain concerned about emergency communications. I am pleased to 
join the Chairman and Senators Stevens, Smith and Snowe on a $1 billion 
grant proposal that will enhance our communications. I thank you for 
your leadership Mr. Chairman and with your guidance I know we can 
address this critical need.
    Lastly, I am concerned about access to television programming. I 
find disheartening the increasing phenomenon of exclusive carriage 
deals and vertical integration in the media industry that have one 
result--the business firms get wealthy and consumers have fewer 
choices--and fewer sports fans having access to their favorite teams.
    I understand Major League Baseball will soon cut an exclusive deal 
with DIRECTV that will eliminate out-of-market baseball packages for 
Dish and Cable subscribers. I hope I am wrong, because this is 
audacious move. It will mean that out-of-market baseball fans that pay 
for a premium package to see their team will lose access to those 
games.
    That is wrong. Major League Baseball and DIRECTV need a reality 
check--more eyeballs, not fewer, on your games enhances your sport, 
strengthens fan loyalty and serves the public. I am interested in the 
Chairman's views about this. I want to look at this entire picture--
there are other practices in the industry that are equally disturbing. 
We need to take a look at the carriage system to ensure consumers are 
protected and independent programming is supported. Thank you Mr. 
Chairman.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                          Hon. Kevin J. Martin

    Question 1. In March, 2005, the FCC allowed a Verizon forbearance 
petition to become effective by operation of law. Because there was a 
vacancy on the Commission at that time and a 2-2 split among 
Commissioners, Verizon was able to gain regulatory relief through 
Commission inaction.

   Does the current process regarding the disposition of 
        forbearance petitions in the absence of a Commission majority 
        essentially allow petitioners to write the terms of their 
        relief?

   Is it fair in such situations to allow petitioners to amend 
        the scope of their requested relief after the period for 
        comment on the original petition has concluded?

   Should forbearance petitions be denied in the absence of an 
        order approved by a majority of Commissioners?

   What effect will government recusal rules have on the 
        ability of Commissioner McDowell to participate in other 
        pending or future forbearance proceedings in which his former 
        employer, Comptel, is a party or otherwise participates?

    Answer. Section 10 of the Act sets forth the standard by which the 
Commission is directed to evaluate petitions for forbearance. Section 
10 also establishes a process by which petitions under this section 
``shall be deemed granted if the Commission does not deny the 
petition'' within a maximum of 15 months. I believe that it is 
preferable for the Commission to reach a majority view on any 
forbearance petition and issue a decision affirmatively granting or 
denying it, in whole or in part. Such official action should be in the 
form of a written decision issued by a majority of Commissioners.
    Since I became Chairman, the Commission has resolved seven 
forbearance petitions by unanimous Commission action. Although the 
Commission generally has been able to reach majority decisions on 
orders disposing of forbearance petitions, my colleagues and I were 
unable to do so with regard to the petition that Verizon had filed. The 
statutory deadline on that petition was March 19, 2006. More than 3 
weeks prior to the deadline, I shared with my fellow Commissioners a 
draft order that would have granted in part and denied in part 
Verizon's Forbearance Petition. The Commission was engaged on this 
issue but, by a recorded 2-2 vote, did not adopt the draft order. 
Without a majority of the Commission agreeing to an order disposing of 
Verizon's Forbearance Petition, the petition was ``deemed granted'' on 
March 19 because the Commission had not taken any action on that 
petition. On March 20, the Commission issued a News Release 
memorializing the effect of its inability to agree to an order 
disposing of the petition. At that time, all of the Commissioners took 
the opportunity to issue statements explaining their reasoning.
    In the absence of an order disposing of a forbearance petition 
approved by a majority of Commissioners, a petition is deemed granted 
pursuant to section 10(c) of the Act. The forbearance petition defines 
the outer scope of the relief that a petitioner may receive through a 
grant that is deemed to occur through operation of law. A petitioner 
may narrow its request for relief through its subsequent submissions.
    The grant of Verizon's petition by operation of law is currently on 
appeal before the United States Court of Appeals for the District of 
Columbia Circuit. Subject to the outcome of that appeal, the Commission 
will apply the statutory forbearance criteria as written.
    The 2-2 vote in the Verizon Forbearance Proceeding occurred before 
Commissioner McDowell joined the Commission, so the government recusal 
rules had no bearing on the outcome there.

    Question 2. One of the biggest challenges we face over the next 2 
years is moving our Nation from analog to digital television with 
minimal consumer disruption. I understand that the FCC is currently 
receiving comment on its Proposed Final Table of DTV allotments, 
proposing final digital channels for TV broadcast stations. However, 
even after that is final, additional actions will be needed to complete 
the transition.

   Given the enormity of the task before us, what action is the 
        Commission taking and what action should it take to ensure that 
        our country is ready in February 2009?

   Would you be willing to provide the Committee with quarterly 
        reports on actions taken by the FCC to prepare for the digital 
        transition?

    Answer. One of the most important things the Commission can do to 
prepare for the digital transition is to ensure that all cable 
subscribers are able to view the signals of broadcast stations after 
the transition.
    The Commission has completed several important steps to accomplish 
the digital television (``DTV'') transition, and we are continuing to 
take actions to help ensure that Congress's deadline of February 18, 
2009 is achieved with minimal consumer disruption. First, the 
Commission established deadlines by which all television stations must 
build their digital broadcasting facilities. As of February 2007, 93 
percent of full-power television stations are on the air with a digital 
signal. Second, the Commission established channel election procedures 
by which stations determine their post-transition channels. Third, the 
Commission mandated that, as of March 1, 2007, all television receivers 
manufactured in the United States or shipped in interstate commerce 
must have an integrated digital tuner.
    As you note, the Commission's next objective is to adopt the final 
DTV Table of Allotments, which will provide all eligible stations with 
channels for DTV operations after the transition. This rulemaking 
proceeding is underway, and reply comments were filed on February 26, 
2007. We also are initiating the final steps for full power stations to 
complete construction of their digital facilities in preparation for 
the termination of analog service on February 17, 2009. In addition, 
Commission staff continues to support NTIA in its implementation of the 
digital-to-analog converter box coupon program.
    The Commission also recognizes the importance of helping inform the 
American public regarding the DTV transition. To that end, the 
Commission has undertaken consumer education efforts and worked with 
broadcasters, manufacturers, retailers, consumer organizations, and 
state and local governments to encourage their voluntary efforts to 
inform consumers about the DTV transition. We have a website dedicated 
to the digital transition (http://www.dtv.gov) which provides 
information about the transition, equipment needed, and programming 
available, and also serves as a clearinghouse with links to broadcast, 
cable, satellite, consumer electronics manufacturing and retail. Our 
consumer education activities also include publications, participation 
in public exhibits and community and consumer-oriented events. The 
Commission also has developed an ``Outreach Toolkit,'' available on our 
website, for consumer and community organizations to use in conducting 
their own local DTV consumer education programs. Our publications 
provide a range of information, from a booklet with general background 
information, DTV: What Every Consumer Should Know, to a brief Shopper's 
Guide and Tip Sheet. Most of our DTV consumer information also is 
available in Spanish. The Commission staff also has participated in 
exhibits and presentations to a number of groups including AARP, the 
National Council of La Raza, the NAACP, educational institutions, and 
others.
    We would be happy to provide quarterly reports to the Committee on 
the Commission's actions and efforts to prepare for the digital 
transition.

    Question 3. A recent study conducted by Free Press entitled, Out of 
the Picture: Minority & Female TV Station Ownership in the United 
States, contained some sobering statistics.

        Women comprise 51 percent of the entire U.S. population, but 
        own a total of only 67 stations, or 4.97 percent of all 
        stations.

        Minorities comprise 33 percent of the entire U.S. population, 
        but own a total of only 44 stations, or 3.26 percent of all 
        stations.

        Latinos comprise 14 percent of the entire U.S. population, but 
        own a total of only 15 stations, or 1.11 percent of all 
        stations.

        African Americans comprise 13 percent of the entire U.S. 
        population but only own 18 stations, or 1.3 percent of all 
        stations.

        Asians comprise 4 percent of the entire U.S. population but 
        only own a total of 6 stations or 0.44 percent of all stations.

    Do these facts trouble you as they do me, and what action should 
the Commission take to promote greater diversity of ownership?
    Answer. These are troubling statistics. One of the three core goals 
that the Commission's media ownership rules are intended to further is 
diversity. We need to try to find more opportunities for diverse 
viewpoints to be heard.
    Part of the problem is the limited number of channels available on 
broadcast television and radio and the high start-up cost of building 
your own station. The Commission has taken some important steps to 
provide more opportunity in radio with the advent of the Low Power FM 
(LPFM) service. LPFM provides a lower cost opportunity for more new 
voices to get into the local radio market.
    Another idea for helping small and independently owned businesses 
overcome financial and resource constraints is to allow them to enter 
the broadcast industry by leasing some of an existing broadcaster's 
spectrum to distribute their own programming. Conversion to digital 
operations enables broadcasters to fit a single channel of analog 
programming into a smaller amount of spectrum. Often, there is 
additional spectrum left over that can be used to air other channels of 
programming. Small and independently owned businesses could take 
advantage of this capacity and use a portion of the existing 
broadcasters' digital spectrum to operate their own broadcast channel. 
This new programming station would then obtain all the accompanying 
rights and obligations of other broadcast stations, such as public 
interest obligations and carriage rights.
    The Commission has before it for consideration a Notice of Proposed 
Rulemaking that would allow small and independently owned businesses 
and licensees of digital television stations to enter into agreements 
by which the stations share some of their digital capacity with these 
entities. The entities would be treated the same as operators of other 
television broadcast stations and would provide their own over-the-air 
programming to viewers as a new television station in the market. An 
example of this type of arrangement is the deal reached by Latino 
Alternative TV (LATV) and Post-Newsweek that provides for carriage of 
LATV programming on the multicast channels of Post-Newsweek stations in 
Miami, Orlando, Houston, and San Antonio.
    I also look forward to continuing to work with the re-chartered 
Federal Advisory Committee on Diversity in the Digital Age to further 
enhance the ability of all Americans, including minorities and women, 
to participate in the communications industry.

    Question 4. On November 22, 2006, the day before Thanksgiving, the 
FCC released a list of economic studies to be performed in the media 
ownership proceedings. How did the Commission choose the economic 
studies to be preformed in the media ownership proceedings? Who at the 
Commission or elsewhere was consulted for input on the topics chosen?
    Answer. In its media ownership Further Notice of Proposed 
Rulemaking, the Commission committed to initiate comprehensive studies 
on a variety of topics including: how the public gets it news and 
information, competition across media platforms, marketplace changes 
since we last reviewed our ownership rules, localism, minority 
participation in today's media environment, independent and diverse 
programming and the production of children's and family-friendly 
programming.
    Shortly after release of the Further Notice, I invited each of my 
fellow Commissioners to give me his or her thoughts on possible media 
ownership studies to be performed. I received some feedback from 
several Commissioners at that time which was then incorporated into a 
written proposal. I provided a copy of this proposal to every 
Commissioner's office. I again solicited their feedback and comments. I 
again received no written feedback but did receive additional comments 
from several Commissioners, which I attempted to incorporate and 
address. For example, at the suggestion of a fellow Commissioner, I 
ensured that the study on how people get news and information would 
include specific questions about local news. In response to other 
suggestions from my colleagues, I also added separate studies on the 
issues of vertical integration and minority ownership, and ensured that 
the impact of ownership structure on religious, indecent and violent 
programming would be separately examined and studied.

    Question 4a. How were parties selected for the studies done outside 
the Commission, and what is the cost of these contracts?
    Answer. The studies are primarily empirical in nature and require a 
specific skill set, including a strong understanding of Industrial 
Organization. A majority of the individuals who were selected to 
perform the studies are economists with a specialty in Industrial 
Organization and/or Econometrics. The economists (Gregory Crawford, 
Tasneem Chipty, Jeffrey Milyo, Arie Bersteanu, Paul Ellickson, and 
Austan Goolsbee) were chosen based on academic reputation and expertise 
either on a particular topic or literature or with specific econometric 
techniques. The only non-economists selected (Allen Hammond, Barbara 
O'Conner, and Tracy Westen) were suggested by my colleagues.
    The Commission has contracted for Study 1 (How People Get News and 
Information) to be performed for $58,000, Study 3 (Ownership Effect of 
Ownership Structure and Robustness on the Quantity and Quality of TV 
Programming) to be performed for $25,000, Study 5 (Station Ownership 
and Programming in Radio) to be performed for $60,000, Study 6 (News 
Coverage of Cross-Owned Newspapers and Television Stations) to be 
performed for $54,500, Study 7 (Minority Ownership) to be performed for 
$10,000, Study 8 (Minority Ownership) proposed to be performed for 
$55,000, and Study 9 (Vertical Integration) proposed to be performed 
for $60,000. Studies 2 (Ownership Structure and Robustness of Media), 4 
(News Operations) and 10 (Radio Industry Review: Trends in Ownership, 
Format, and Finance) will be performed by Commission staff.

    Question 4b. Would the Commission consider seeking public comment 
on what other studies might assist the Commission in its review of 
ownership rules?
    Answer. We currently have 10 studies that are in the process of 
being completed. Once the studies are finished, they will be put out 
for public comment. At that time, parties can address, among other 
things, whether or not they believe that other studies are necessary.

    Question 5. In November 2006, the Government Accountability Office 
(GAO) issued a report concluding that the cost of special access has 
gone up--not down--in many areas where the FCC predicted that 
competition would emerge. To address this error, the report recommended 
that the FCC develop a better definition of ``effective competition'' 
and monitor more closely the effect of competition in the marketplace. 
Do you agree with these findings? What action should the Commission 
take in response?
    Answer. As you note, on November 30, 2006, the U.S. Government 
Accountability Office (GAO) released a report entitled 
Telecommunications FCC Needs to Improve Its Ability to Monitor and 
Determine the Extent of Competition in Dedicated Access Services (GAO-
07-80). On January 29, 2007, I provided my written response to the GAO 
conclusions and recommendations contained in this report to the 
Chairman and Ranking member of the U.S. Senate Committee on Homeland 
Security and Governmental Affairs and the Chairman and Ranking Member 
of the U.S. House of Representatives Committee on Oversight and 
Government Reform. In that letter I outline in detail my concerns with 
the GAO's findings and the steps the Commission will take to respond to 
the recommendations contained in the report. I have attached a copy of 
that letter for your review.
    [The information referred to follows:]
                                                   January 29, 2007
Hon. Tom Davis,
Ranking Member,
Committee on Oversight and Government Reform,
U.S. House of Representatives,
Washington, DC.

Dear Congressman Davis:

    On November 30, 2006, the U.S. Government Accountability Office 
(GAO) released a report entitled Telecommunications FCC Needs to 
Improve Its Ability to Monitor and Determine the Extent of Competition 
in Dedicated Access Services (GAO-07-80). This letter provides the 
Federal Communications Commission's (FCC) written response to the GAO 
conclusions and recommendations contained in the GAO Report.
    As the Commission's Managing Director, Anthony Dale, explained in 
written comments on an earlier draft, the GAO Report, taken as a whole, 
appears to imply the need for a return to price control policies that 
the Commission abandoned in 1999 during the previous Administration.\1\ 
Since 1996, the Commission has followed the direction found in the 
Telecommunications Act of 1996 to foster policies and rules that 
``promote competition and reduce regulation in order to secure lower 
prices and higher quality services for American telecommunications 
consumers and encourage the rapid deployment of new telecommunications 
technologies.'' In 1999, the Commission specifically recognized the 
significant costs associated with direct price regulation (including 
regulation of wholesale prices) of special access services. The 
Commission recognized that special access price regulation ``imposes 
costs on carriers and the public.'' \2\ Moreover, in granting pricing 
flexibility for special access services to price-cap incumbent LECs, 
the Commission explicitly found that the cost of further delaying 
regulatory relief was greater than the cost of granting relief 
prematurely. The Commission determined that ``the public interest is 
better served by permitting market forces to govern the rates for the 
access services at this point.'' \3\
    In that order, the Commission explained:
    ``[W]e will not require incumbent LECs to demonstrate that they no 
longer possess market power in the provision of any access services to 
receive pricing flexibility . . . [R]egulation imposes costs on 
carriers and the public, and the cost of delaying regulatory relief 
outweigh any costs associated with granting that relief before 
competitive alternatives have developed to the point that the incumbent 
lacks market power.'' \4\
    Thus, the Commission determined that, even if competition had not 
fully developed, the cost of regulating special access pricing was 
still greater than the benefits. So, even if GAO is correct that 
competitive alternative facilities have not developed as fast as the 
Commission had projected, the cost of price regulation to ``carriers 
and the public'' is still greater than the benefits.
    Instead of requiring a disaggregated market power analysis, the 
Commission, in the Pricing Flexibility Order, determined to rely on 
more easily verifiable investment in collocation as a proxy for 
competition in access services. The Commission found that ``collocation 
by competitors in incumbent LEC wire centers is a reliable indication 
of sunk investment by competitors.'' \5\ The Commission rejected any 
approach to price deregulation that relied on granular findings of 
``non-dominance'' because ``non-dominance showings are neither 
administratively simple nor easily verifiable.'' \6\ Indeed, the 
Commission reasoned that it was simply infeasible to rely on evidence 
of market share erosion or supply elasticity because such ``analyses 
require considerable time and expense, and they generate considerable 
controversy that is difficult to resolve.'' \7\
    Moreover, the Commission explicitly recognized that Phase II 
pricing relief could lead to price increases for customers in some 
areas, but rationalized that such a result was still superior to 
continued price regulation for two reasons. First, the Commission 
recognized that our special access pricing rules ``may have required 
incumbent LECs to price access services below cost in certain areas.'' 
\8\ Second, the Commission found that ``When an incumbent LEC charges 
an unreasonably high rate for access to an area that lacks a 
competitive alternative, that rate will induce competitive entry, and 
that entry will in turn drive rates down.'' \9\
    In its review of the Commission's decision, the United States Court 
of Appeals for the D.C. Circuit (D.C. Circuit) rejected arguments that 
the Commission should be required to measure actual competition before 
allowing incumbent carriers pricing flexibility. The D.C. Circuit found 
the Commission's determination to use collocation as a proxy for 
competition to be reasonable.\10\ In addition, both the Commission and 
the courts have determined that price regulation of incumbents' network 
facilities imposes costs and creates significant disincentives--for 
both incumbent and competitive carriers--to invest in economically 
beneficial facilities and innovation. Thus, such price regulation 
should be used minimally in areas where sunk investment indicates that 
competition is developing.\11\ The Commission is committed to continued 
implementation of policies that bring the benefits of competition--more 
and better services and lower prices--to all Americans.
    The GAO Report contains factual findings which appear to be based 
primarily on two studies.\12\ Significantly, the FCC was not provided 
the data used to perform these studies. Without access to the data used 
to perform these studies, the FCC cannot evaluate the reliability of 
the GAO studies or assess the validity of the conclusions drawn 
therefrom. For example, we do not know what rate elements the incumbent 
LECs included in generating their average revenue data and how that 
might have affected the estimates.\13\ It is also not clear how 
differences in demand from one MSA to another may have affected the 
average revenue estimates. Although the GAO Report states that it 
attempted to address this problem by weighting the data, it is not 
clear how this was accomplished. Moreover, the GAO Report acknowledges 
that theirs was an ``imperfect weight.'' \14\ Thus, we are unable to 
assess the reliability or relevance of these studies.
    The GAO Report makes two specific recommendations. The GAO Report 
first recommends that the FCC ``develop a definition of effective 
competition, or true customer choice, using an approach that evaluates 
the competitive nature of a market by accounting for the number of 
effective competitive choices available to customers.'' \15\ This 
recommendation seems administratively impracticable. First, there is no 
universally accepted, bright-line definition of ``effective 
competition.'' Second, before applying such a definition, it would be 
necessary to define the relevant product and geographic markets, which, 
as GAO suggests, are likely to be extremely narrow. For example, the 
GAO study seems to suggest that at least each individual building and 
perhaps each floor of a building needs to be considered a separate 
market.\16\ As the Commission recognized, and as the D.C. Circuit has 
agreed, implementing national telecommunications price deregulation by 
counting the number of competitive alternatives available to individual 
consumers would be administratively infeasible.\17\ Recognizing these 
difficulties as well as the need to adopt an administratively feasible 
methodology, the Commission, in the Pricing Flexibility Order, chose to 
develop triggers that would apply to MSAs. The Commission reasoned that 
``defining geographic areas smaller than MSAs would force incumbents to 
file additional pricing flexibility petitions, and, although these 
petitions might produce a more fine-tuned picture of competitive 
conditions, the record does not suggest that this level of detail 
justifies the increased expenses and administrative burdens associated 
with these proposals.'' \18\ Finally, the Commission recognized that it 
would ``not delay . . . regulatory relief until access customers have a 
competitive alternative for access to every end user.'' \19\
    In affirming this order, the D.C. Circuit found that the choice of 
MSAs for pricing flexibility was reasonable because ``the Commission 
considered alternatives to MSA-wide relief and determined that, on 
balance, these alternatives would be less beneficial to consumers and 
regulated entities.'' \20\ Similarly, in considering and rejecting a 
building-by-building approach to its impairment analysis, the 
Commission concluded:
    [A] building specific impairment analysis would be impracticable 
and unadministrable. As noted above, it would be exceedingly difficult 
for us to conduct . . . nationwide, fact-intensive, building specific 
inquiries. . . . The record suggests that there are at least 700,000 
commercial buildings, and perhaps as many as 3 million buildings, for 
which impairment would have to be evaluated. Such case-by-case 
evaluation would be impracticable even if the relevant evidence were 
entirely objective and readily forthcoming. Here, however, the 
difficulty would be magnified by carriers' disincentives to provide 
relevant data that is in their possession and by the subjectivity 
inherent in the interpretation of that data.\21\
    Thus, we question whether the recommendation to measure effective 
competition on a granular basis is consistent with the deregulatory 
goals of the 1996 Act and court orders sustaining the Commission's 
implementation of the Act.
    In addition, the Commission has reviewed market-specific data 
regarding special access competition in the context of the SBC/AT&T, 
Verizon/MCI, and AT&T/BellSouth merger proceedings over the last 2 
years. Specifically, the Commission examined data on over 705,000 
buildings in the SBC, Verizon, and BellSouth territories combined as 
part of its merger analyses.\22\ These analyses focused on buildings 
where the data indicated that the merger would reduce the number of 
competitors with direct connections from two to one, and where 
competitive entry was unlikely based on estimates of the revenue 
opportunity associated with a particular building and the distance to 
the closest competitive LEC fiber. Where the data indicated that a 
merger would have resulted in buildings without competitive 
alternatives, divestitures were required. In the SBC/AT&T merger, the 
parties committed to divest facilities to only 384 of the more than 
240,000 buildings in SBC territory.\23\ In the Verizon/MCI merger, the 
parties committed to divest facilities to only 356 of the more than 
246,000 buildings in Verizon territory.\24\ In the AT&T/BellSouth 
merger, the parties committed to divest facilities to only 31 of the 
more than 219,000 buildings in BellSouth territory.\25\ Moreover, in 
each of these mergers, the applicants made commitments, enforceable by 
the Commission, to implement a performance metrics plan, under which 
they will provide performance data on a quarterly basis.\26\ As a 
result, special access performance metrics are in place for three of 
the four Bell regions.\27\
    Notwithstanding these clear Commission and Court decisions, GAO 
argues that the Commission should develop a more granular definition of 
competition and then collect ``meaningful'' data, asserting that the 
Commission's comments on the draft GAO Report ``suggest a preference 
for economic theory rather than empirical data.'' To the contrary, as 
explained in Mr. Dale's letter, the Commission balanced the need for a 
costly, burdensome, detailed empirical analysis with the benefits of 
having market forces (as identified through more objectively verifiable 
proxies for competition) govern the rates for special access services. 
The GAO Report also states that the Commission's comments on the draft 
report took the position that the data gathered in the special access 
rulemaking is ``sufficient'' and ``adequate to monitor competition and 
that additional data collection is not needed.'' This mischaracterizes 
the Commission's comments, which simply noted that there is an open 
proceeding considering the competitiveness of special access markets, 
that detailed information had been requested in that proceeding, and 
that the Commission will use ``all available data'' to fulfill its 
obligations to foster competition in telecommunications markets. The 
Commission made no comments or suggestions regarding the 
``sufficiency'' or ``adequacy'' of any information received by the 
Commission to date.
    Nevertheless, I have asked Commission staff to take the following 
actions in response to the report's recommendations. First, I have 
asked staff to: (i) request access to all the data used by GAO to 
develop its conclusions in the GAO Report; and (ii) perform its own 
analysis of such data. To the extent that such data is covered by 
confidentiality or other agreements restricting access to and/or use of 
the data, we would agree to use the data subject to the same terms and 
conditions as agreed to by GAO and will sign any necessary 
confidentiality agreements. If such access is not possible, we would 
request that GAO provide Commission staff with the necessary contact 
information to acquire the data directly.
    Second, I have asked staff to carefully examine the analysis GAO 
has performed and to consider GAO's analysis in the Commission's 
ongoing examination of competition in the market for all special access 
services. Finally, I have asked staff to determine if it is necessary 
to supplement the Commission's request for data in the Special Access 
proceeding discussed in Mr. Dale's November 13th response.\28\
    The Commission appreciates the opportunity to report on its actions 
to implement GAO's recommendations in this important area. If I can 
provide additional information concerning this or any other matter, 
please do not hesitate to contact me.
            Sincerely,
                                           Kevin J. Martin,
                                                          Chairman.
    cc: Director, Physical Infrastructure, U.S. Government 
Accountability Office, Office of Management and Budget

Endnotes
    \1\ In the GAO Report, the GAO concludes that ``facilities-based 
competition for [high capacity] dedicated access services exists in a 
relatively small subset of buildings'' and that ``prices and average 
revenues are higher, on average, in phase II [metropolitan statistical 
areas (MSAs)]--where competition is theoretically more vigorous--than 
they are in phase I MSAs or in areas where prices are still constrained 
by the price cap.'' GAO Report at 12-13. The GAO Report finds further 
that the GAO's analysis of ``facilities based competition also suggests 
that the FCC's predictive judgment [in the Pricing Flexibility Order]--
that MSAs with pricing flexibility have sufficient competition--may not 
have been borne out.'' Id. at 42.
    \2\ Access Charge Reform, CC Docket Nos. 96-262, 94-1, 98-157, CCB/
CPD File No. 98-63, Fifth Report and Order and Further Notice of 
Proposed Rulemaking, 14 FCC Red 14221, 14271-72, para. 90 (1999) 
(Pricing Flexibility Order), aff'd, WorldCom, Inc. v. FCC, 238 F.3d 449 
(D.C. Cir. 2001).
    \3\ Id. at 14301, para. 155.
    \4\ Id.
    \5\ Id. at 14263-65, paras. 79-81.
    \6\ Id. at 14271-72, para. 90.
    \7\ Id.
    \8\ Id. at 14301-02, para. 155.
    \9\ Id. at 14297-98, para. 144.
    \10\ WorldCom, Inc. v. FCC, 238 F.3d at 459.
    \11\ See, e.g., Review of the Section 251 Unbundling Obligations of 
Incumbent Local Exchange Carriers, Implementation of the Local 
Competition Provisions of the Telecommunications Act of 1996, 
Deployment of Wireline Services Offering Advanced Telecommunications 
Capability, CC Docket Nos. 96-98, 98-147, 01-338, Report and Order on 
Remand and Further Notice of Proposed Rulemaking, 18 FCC Rcd 16978, 
17150, para. 290 (2003) (Triennial Review Order) (``Section 706 
requires the Commission to encourage deployment of advanced 
telecommunications services by using, among other things, `methods that 
remove barriers to infrastructure investment.' '' (citation omitted)), 
aff'd in part, remanded in part, vacated in part, United States Telecom 
Ass'n v. FCC, 359 F.3d 554 (D.C. Cir. 2004) (USTA II), cert. denied sub 
nom. Nat'l Assn Regulatory Util. Comm'rs v. United States Telecom Assn, 
125 S.Ct. 313, 316, 345 (2004); see also Petition for Forbearance of 
the Verizon Telephone Companies Pursuant to 47 U.S.C. Sec. 160(c); SBC 
Communications Inc.'s Petition for Forbearance Under 47 U.S.C. 
Sec. 160(c); Qwest Communications International Inc. Petition for 
Forbearance Under 97 U.S.C. Sec. 160(c); BellSouth Telecommunications, 
Inc. Petition for Forbearance Under 47 U.S.C. Sec. 160(c), WC Docket 
Nos. 01-338, 03-235, 03-260, 04-48, Memorandum Opinion and Order, 19 
FCC Rcd 21496, 21505, para. 21 (2004) (Section 271 Broadband 
Forbearance Order), aff'd, Earthlink v. FCC, 462 F.3d 1 (D.C. Cir. 
2006).
    \12\ First, using data from GeoResults providing building level 
estimates of demand for dedicated access services and from Telcordia 
and GeoResults concerning the extent to which competitive alternatives 
exist in particular buildings, GAO estimated the extent of facilities-
based competition for end-user channel terminations in sixteen MSAs. 
Second, the GAO conducted an average revenue study to compare the rates 
paid for dedicated access services in MSAs where incumbent LECs have 
received pricing flexibility.
    \13\ It is not clear from the report whether non-recurring charges, 
early termination penalties, or other charges were included in the 
data.
    \14\ GAO Report at Appendix II.
    \15\ Id. at 37.
    \16\ Id. at 17.
    \17\ See Pricing Flexibility Order, 14 FCC Rcd at 14260, paras. 72-
74.
    \18\ Id.
    \19\ Id. at 14298, para. 144.
    \20\ See Worldcom, Inc. v. FCC, 238 F.3d at 460-61.
    \21\ Unbundled Access to Network Elements, Review of the Section 
251 Unbundling Obligations of Incumbent Local Exchange Carriers, WC 
Docket No. 04-313 & CC Docket No. 01-338, Order on Remand, 20 FCC Rcd 
2533, 2620, para. 157 (2004) (Triennial Review Remand Order) aff'd, 
Covad Communications v. FCC, 450 F.3d 528.
    \22\ See SBC Communications Inc. and AT&T Corp. Applications for 
Approval of Transfer of Control, WC Docket No. 05-65, Memorandum 
Opinion and Order, FCC 05-183 at para. 37 n.98 (rel. Nov. 17, 2005) 
(SBC/AT&T Merger Order); Verizon Communications Inc. and MCI, Inc. 
Applications for Approval of Transfer of Control, WC Docket No. 05-75, 
Memorandum Opinion and Order, FCC 05-184 at para. 37 n.97 (rel. Nov. 
17, 2005) (Verizon/MCI Merger Order); AT&T Inc. and BellSouth 
Corporation Application for Transfer of Control, WC Docket No. 06-74, 
Application, Declaration of Dennis W. Carlton and Hal S. Sider at para. 
112 (filed Mar. 31, 2006).
    \23\ United States v. SBC, Final Judgment, Civil Action No. 
1:05CV02102 (EGS), App. A (filed Nov. 28, 2005) available at http://
www.usdoj.gov/atr/cases/f213300/213378.htm.
    \24\ United States v. Verizon, Final Judgment, Civil Action No. 
1:05CV02103 (HHK), App. A (filed Nov. 28, 2005) available at http://
www.usdoj.gov/atr/cases/f213400/213413.htm.
    \25\ AT&T Inc. and BellSouth Corporation Application for Transfer 
of Control, WC Docket No. 06-74, Public Notice, App. at Attach. B (rel. 
Dec. 29, 2006) (AT&T/BellSouth Merger PN).
    \26\ SBC/AT&T Merger Order, para. 51; Verizon/MCI Merger Order, 
para. 51; AT&T/BellSouth Merger PN, App. at 4.
    \27\ See Industry Analysis and Technology Division, Wireline 
Competition Bureau, Local Telephone Competition: Status as of December 
31, 2005 at Table 1 (rel. July 2006); RBOC Form 477 Data as of December 
31, 2005, available at http://www.fcc.gov/wcb/iatd/comp.html.
    \28\ See Special Access Rates far Price Cap Local Exchange 
Carriers, WC Docket No. 05-25, RM-10593, Order and Notice of Proposed 
Rulemaking, 20 FCC Rcd 1994 (2005) (Special Access NPRM).
    The GAO Report appears to imply the need for a return to price 
control policies that the Commission abandoned in 1999 during the 
previous Administration. As was noted in the Commission's preliminary 
response to the Report, since 1996, the Commission has followed the 
direction found in the Telecommunications Act of 1996 to ``promote 
competition and reduce regulation in order to secure lower prices and 
higher quality services for American telecommunications consumers and 
encourage the rapid deployment of new telecommunications 
technologies.''
    The GAO Report contains factual findings which appear to be based 
on two studies. The Commission was not provided the underlying data for 
these studies, and thus cannot evaluate either the reliability of the 
studies or the validity of the conclusions based on these studies 
contained in the Report. We have requested this information and hope to 
receive it soon.
    The GAO report suggests that a building by building (potentially 
floor by floor) analysis is necessary to determine whether competition 
is sufficient to constrain rates for special access service. As the 
Commission recognized, and as the United States Court of Appeals for 
the D.C. Circuit (D.C. Circuit) has agreed, implementing national 
telecommunications price deregulation by counting the number of 
competitive alternatives available to individual customs would be 
administratively infeasible. Recognizing these difficulties, the 
Commission, in the Pricing Flexibility Order, chose to develop 
triggers, based on collocation by competitors in incumbent LEC wire 
centers, that would apply to MSAs. The D.C. Circuit upheld the use of 
these triggers as a proxy for measuring the extent of competition in 
the market and rejected arguments that the Commission should be 
required to measure actual competition before allowing incumbent 
carriers special access pricing flexibility. Given the costs of 
regulation on carriers and the public, I question whether GAO's 
recommendation to measure effective competition is consistent with the 
deregulatory goals of the 1996 Act and Federal court orders sustaining 
the Commission's implementation of the Act.
    In addition, I note that the Commission reviewed market-specific 
data regarding special access competition in the SBC/AT&T, Verizon/MCI 
and the AT&T/BellSouth merger proceedings over the past 2 years. 
Specifically, the Commission examined data on over 700,000 buildings in 
the SBC, Verizon, and BellSouth territories as part of its merger 
review and, where data indicated that a merger would have resulted in 
buildings without competitive alternatives, divestitures were required.
    Moreover, in each of these mergers, the applicants made 
commitments, enforceable by the Commission, to implement a performance 
metrics plan and to freeze special access prices for a certain period 
of time. And, the Commission imposed special access performance metrics 
on Qwest as a condition of forbearance relief that it recently 
received. Thus, special access performance metrics are currently in 
place in all three Bell regions and special access price freezes are in 
place for two out of the three Bell regions.
    With regard to the GAO's recommendation that the Commission 
consider collecting additional data and developing additional measures 
to monitor competition, I note that the Commission continues to monitor 
the extent to which markets are open to competitive entry. I take 
seriously the Commission's obligation to foster competition in 
telecommunications markets and will use all available data to fulfill 
its obligation.

    Question 6. Last year, Congress passed legislation imposing a ten-
fold increase in the size of maximum fines for indecency violations, to 
a maximum of $325,000 per violation. At the time President Bush signed 
the law, he said ``[t]he problem we have is that the maximum penalty 
that the FCC can impose under current law is just $32,500 per 
violation, and for some broadcasters, this amount is meaningless. It's 
relatively painless for them when they violate decency standards.'' 
Should Congress similarly raise the statutory maximum fine for other 
violations? What other actions should be taken to promote swifter and 
more effective enforcement?
    Answer. I recommend that Congress similarly increase the statutory 
maximum forfeiture amounts the Commission can impose for all violations 
of the Communications Act and the Commission's rules and orders. The 
forfeiture limits set by Congress in Section 503 of the Communications 
Act have not been raised since 1989, other than to account for 
inflationary adjustments. Raising the maximum forfeiture penalties 
would assist the Commission in taking effective enforcement action, as 
well as act as a deterrent to companies who otherwise view our current 
forfeiture limits simply as costs of doing business. Even with 
increased forfeiture limits, the Commission would continue to have 
discretion to adjust forfeitures based on the specific circumstances of 
each case, consistent with the factors set forth in the Act and the 
Commission's rules, for example, the degree of culpability, any history 
of prior offenses, ability to pay and such other matters as justice may 
require.
    There are several changes that could promote swifter and more 
effective enforcement. First, the need to issue citations to non-
licensees before taking any other type of action sometimes hinders the 
Commission in its investigations, and it sometimes allows targets to 
disappear before we are in a position to take action against them. This 
situation occurs in cases as diverse as junk fax violations, universal 
service non-payment, caller ID spoofing, and equipment manufacturing. 
Therefore, to enable streamlined enforcement, I recommend that Congress 
eliminate the citation requirement in Section 503 of the Communications 
Act of 1934, as amended, 47 U.S.C. Sec. 503.
    In addition, the one-year statute of limitations in Section 503 of 
the Communications Act has been a source of difficulty at times. In 
particular, when a violation is not immediately apparent, or when the 
Commission undertakes a complicated investigation, we often run up 
against the statute of limitations and must compromise our 
investigation, or begin losing violations for which we can take action.

    Question 7. Recently, the FCC adopted an order to prohibit certain 
practices by franchising authorities that the Commission finds are 
unreasonable barriers to entry. One issue mentioned in that order, 
which is very important to the State of Hawaii, is the ability of the 
franchise authority to seek appropriate contributions for public, 
educational, and governmental (PEG) and institutional networks (I-
nets). I understand that some parties have disputed the veracity of 
some claims made in this proceeding. What, if any, efforts did the 
Commission take to independently investigate and verify the claims of 
unfair demands made by many of the carriers in this proceeding?
    Answer. The Commission followed its normal course of action in a 
rulemaking, adhering to APA notice and comment rulemaking procedures. 
These procedures are designed to help ensure public participation and 
fairness to affected parties. By allowing interested parties an 
opportunity to participate in the rulemaking through submission of 
written data, views, and arguments, and providing interested parties 
with an opportunity to respond to such submissions, the Commission 
obtains relevant information to render an informed decision. The 
Commission carefully reviewed the entire record presented in this 
proceeding, and took any conflicting claims or evidence in the record 
into account in making its decision.
    The Commission has rules in place to ensure that the information it 
receives from participants in its proceedings is correct and supported 
by evidence. A person's signature on comments constitutes a 
certification that ``to the best of his knowledge, information, and 
belief, there is good ground to support it.'' An attorney may be 
subject to disciplinary action for falsely verifying a filing with the 
Commission. Moreover, a licensee that submits false or misleading 
information to the Commission is subject to disqualification on 
character grounds. The Commission's ex parte rules further enhance the 
transparency of the process by requiring any filings or presentations 
intended to affect the ultimate decision to be placed in the record of 
the proceeding, thereby providing interested parties an opportunity to 
respond.

    Question 8. In 2004, the FCC adopted a plan to move certain 
licenses within the 800 megahertz band in order to eliminate 
interference problems that were being experienced by public safety 
communications systems. What is your assessment of the pace of progress 
in rebanding the 800 MHz band and what steps does the Commission intend 
to take in order to get this process back on track?
    Answer. The Commission is committed to ensuring that 800 MHz 
rebanding is completed in a timely manner while, at the same time, 
protecting full continuity of public safety operations during the 
transition. To that end, the Public Safety and Homeland Security Bureau 
(Bureau) has worked closely with all 800 MHz stakeholders--public 
safety, Sprint Nextel, equipment vendors, and the Transition 
Administrator. In the last several months, the Bureau has issued 
multiple orders and notices resolving disputes and providing guidance 
to negotiating licensees that we expect to help speed ongoing 
negotiations. For example, in January 2007, the Bureau issued an order 
allowing public safety licensees to exchange information with one 
another about the terms of their respective agreements with Sprint 
Nextel, notwithstanding non-disclosure language added by Sprint Nextel 
to those agreements. Early reports indicate that this order has had a 
beneficial effect on the negotiation process. Nonetheless, significant 
work still lies ahead to ensure that the reconfiguration process is 
successfully and timely completed.
    The 800 MHz band reconfiguration process is divided into two 
stages: Stage 1 involves relocation of licensees (both public safety 
and non-public safety) from Channels 1-120 in the 800 MHz band, while 
Stage 2 involves relocation of licensees in the NPSPAC band from their 
current spectrum to the spectrum vacated by Channel 1-120 licensees. 
Overall, significant progress has been made toward completing Stage 1. 
We anticipate that Stage 1 relocation in all non-border areas will be 
substantially complete later this year. Stage 2 relocation is 
proceeding more slowly. Negotiations between NPSPAC public safety 
licensees and Sprint Nextel have been more complex and time-consuming 
than similar negotiations in Stage 1. This is due in large part to the 
size and complexity of many NPSPAC systems and the numerous 
interoperability relationships among NPSPAC licensees. These factors 
require careful planning and implementation of the NPSPAC transition 
process to ensure that existing interoperability is maintained while 
each system is retuned. This has led to concerns regarding the 
feasibility of completing rebanding on the current timetable.
    The Commission has also devoted significant resources to ensure 
that rebanding takes place as soon as possible in the border areas. 
Specifically, resolving international spectrum allocation issues as 
soon as possible with Mexico and Canada that affect 800 MHz rebanding 
in the U.S.-Mexico and U.S.-Canada border regions is a high priority. 
In coordination with the State Department, we are engaged in intensive 
dialogue with both Canada and Mexico on these issues. We are also 
working closely with public safety planning groups in the border 
regions to be sure their needs are given priority in our international 
discussions.
    The Commission's priorities are to ensure that Stage 1 is timely 
completed, that Stage 2 moves forward quickly, and that we accelerate 
the process where possible--but not at the expense of maintaining full 
public safety readiness to respond to emergencies during the 
transition. In a recent letter, public safety leadership and Sprint 
Nextel have requested that the Commission direct the TA to develop a 
system-by-system schedule for implementation of Stage 2 rebanding that 
would take into consideration factors as such as licensee preparedness, 
status of plans for maintaining interoperability among NPSPAC systems 
during the transition, resources available for planning and 
implementation, and impact on all incumbent operators in each area.

    Question 9. A number of wireless carriers have employed the use of 
high ``early termination fees'' to prevent wireless customers from 
switching to other carriers. In some cases these fees may be $200 or 
more, and may apply regardless of whether the subscriber wishes to 
cancel on the first or last date of their wireless contract. Do you 
believe these practices promote or impede competition?
    Answer. I am concerned that some practices relating to ``early 
termination fees'' may impede competition. I believe certain practices 
regarding ``early termination fees,'' whether employed by wireless 
providers or other communications service providers, may need to be 
examined. The Commission has received two related petitions seeking 
clarification of the Commission's jurisdiction over early termination 
fees in the wireless context. Should the Commission determine that it 
has jurisdiction over such early termination fees, it would address the 
appropriateness of certain practices regarding these fees.

    Question 10. Given requirements imposed by General Services 
Administration to promote greater redundancy of communications, how 
would the retirement of copper facilities impact Congress' directive to 
promote the availability of alternate network facilities in federally 
owned and leased buildings?
    Answer. In federally owned and leased buildings, it would be up to 
GSA to determine whether or not older facilities should be replaced and 
retired, or maintained to promote greater redundancy.

    Question 11. Given the Commission's policy of promoting broadband 
deployment and eliminating regulations that treat competitors in the 
provision of broadband differently, how is this policy being 
implemented with regard to pole attachment regulations?
    Answer. The Commission's pole attachment regulations, some of which 
predate the 1996 Act, currently reflect the historical differences 
between different networks and services. For example, the regulations 
have different rate structures for cable operators and 
telecommunications carriers seeking to attach to utility poles, with 
the carriers typically paying a higher rate. Notably, an entity that 
seeks to provide solely broadband services over its attachment 
currently is not subject to a regulated rate.
    Several parties have asked the Commission to begin a rulemaking to 
change its rules to create more regulatory parity and encourage 
broadband deployment, including a request to assure incumbent LECs of 
just and reasonable rates, and to unify the rate that utilities charge 
for all attachments. The goals of promoting the deployment of broadband 
infrastructure and allowing competitors to compete on a level playing 
field are important, and I have instructed the Bureau to prepare a 
Notice of Proposed Rulemaking to examine existing regulations to 
promote parity among broadband providers using such pole attachments.

    Question 12. Recently, a Virginia Federal court referred a matter 
to the FCC for review and clarification as to whether Internet Protocol 
Television or ``IPTV'' service meets the definition of a ``cable 
service'' under the Communications Act--a question that this Committee 
answered affirmatively during consideration of last year's 
telecommunications bill. How does the Commission intend to address this 
matter?
    Answer. Section 621(b)(1) of the Communications Act provides that 
``a cable operator may not provide cable service without a franchise.'' 
The Communications Act defines a ``cable operator'' as ``any person or 
group of persons (A) who provides cable service over a cable system and 
directly or through one or more affiliates owns a significant interest 
in such cable system, or (B) who otherwise controls or is responsible 
for, through any arrangement, the management and operation of such a 
cable system.'' The Act excludes from the definition of a ``cable 
system'' ``a facility of a common carrier which is subject, in whole or 
in part, to the provisions of Title II of this Act, except that such 
facility shall be considered a cable system (other than for purposes of 
section 621(c)) to the extent such facility is used in the transmission 
of video programming directly to subscribers, unless the extent of such 
use is solely to provide interactive on-demand services.''
    To the extent that IPTV is provided by a common carrier which is 
subject, in whole or in part, to the provisions of Title II of the 
Communications Act, the exception could apply. Thus, whether such video 
services are subject to the requirements of Title VI depends upon the 
characteristics of the video offering. To the extent that the offering 
involves solely ``interactive on-demand services,'' the franchising 
requirements of the Act would not apply.
    The Commission is currently considering the regulatory 
classification of IP-enabled services, including IPTV services, in its 
IP-Enabled Services rulemaking. No final determination on the 
appropriate classification of IPTV has yet been made.

    Question 13. Traditionally, Bureaus and Offices at the FCC have 
provided to the Chairman, or his designee, reports of processing 
backlogs within the Bureau or Offices. Are these reports still created 
by the Bureaus and Offices? If so, to whom are they provided? Please 
provide the Committee with all such reports created during the last 6 
months.
    Answer. The Commission currently has 164 items that are on 
circulation as of March 16, 2007. These items are pending before the 
Commission for action now. The answers [to questions 13-24] below do 
not include these items that are pending before the Commission now.
    Each bureau and office prepares a monthly report for the Chairman 
or his designee listing all open Commission-level items as well as 
those items that were completed within the previous 30 days. The last 6 
monthly reports for each bureau and office are included in Attachment 
to Question 13, with the exception of the new Public Safety and 
Homeland Security Bureau which began preparing reports in December 
2006.
    [NOTE: All attachments to responses to Questions 13-24 will be 
retained in Committee files.]

    Question 14. By Bureau or Office, please list the number of 
docketed proceedings in which the following period has elapsed since 
the Commission, Bureau or Office received the last formal round of 
public comments (i.e., comments for which public notice was given in 
the Federal Register or by Public Notice), without an intervening 
Commission, Bureau or Office order addressing the merits of the 
proceeding? Please itemize these docketed proceedings in an attachment 
to your response.
    a. 6 months or more, but less than 1 year
    b. One year or more, but less than 2 years
    c. More than 2 years.
    Answer. I would like to draw your attention to several notable 
items. First, questions 14 and 15 asked for docketed and non-docketed 
proceedings that were subject to public comment. In addition to our 
direct response, out of an abundance of caution, I included a category 
for those docketed and non-docketed matters that are pending at the 
Commission but were not subject to public comment (e.g., 
investigations, consumer complaints, waivers, etc., with the exception 
of indecency complaints). Although the chart does not depict indecency 
complaints, I note that since 2002, the Commission has received more 
than 2.3 million complaints and resolved approximately 1.7 million. 
Since I became Chairman, the Commission has taken actions that 
addressed nearly 50 programs and nearly 1 million complaints. These 
actions are the subject of pending litigation in Federal court. There 
remain approximately 584,000 complaints pending before the Commission.

----------------------------------------------------------------------------------------------------------------
              Bureau/Office               6 Months to 1 Year   1 Year to 2 Years   More than 2 Years     TOTAL
----------------------------------------------------------------------------------------------------------------
CGB                                                       4                  14                   4          22
----------------------------------------------------------------------------------------------------------------
IB                                                        2                   2                   5           9
----------------------------------------------------------------------------------------------------------------
MB                                                        5                  20                  19          44
----------------------------------------------------------------------------------------------------------------
OET                                                       2                   2                   2           6
----------------------------------------------------------------------------------------------------------------
PSHSB                                                     2                   3                   2           7
----------------------------------------------------------------------------------------------------------------
WCB                                                      27                  49                  37         113
----------------------------------------------------------------------------------------------------------------
WTB                                                       2                   4                   4          10
----------------------------------------------------------------------------------------------------------------
    TOTAL                                                44                  94                  73         211
----------------------------------------------------------------------------------------------------------------

    In addition, for the sake of completeness, the chart below provides 
data on docketed filings that do not require formal public comment. 
These include adjudicatory administrative hearings, requests for 
waivers of rules, requests for declaratory ruling, and requests for 
clarification. (Itemized in Attachment to Question 14.)

----------------------------------------------------------------------------------------------------------------
                                          6 Months to 1 Year   1 Year to 2 Years   More than 2 Years     TOTAL
----------------------------------------------------------------------------------------------------------------
EB                                                        0                   0                   5           5
----------------------------------------------------------------------------------------------------------------
PSHSB                                                     1                   4                   2           7
----------------------------------------------------------------------------------------------------------------
WTB                                                       0                   2                   0           2
----------------------------------------------------------------------------------------------------------------
    TOTAL                                                 1                   6                   7          14
----------------------------------------------------------------------------------------------------------------

    Question 15. By Bureau or Office, please list the number of non-
docketed proceedings in which the following period has elapsed since 
the Commission, Bureau or Office received the last formal round of 
public comments (i.e., comments for which public notice was given in 
the Federal Register or by Public Notice), without an intervening 
Commission, Bureau or Office order addressing the merits of the 
proceeding? Please itemize these non-docketed proceedings in an 
attachment to your response.
    a. 6 months or more, but less than 1 year
    b. One year or more, but less than 2 years
    c. More than 2 years.
    Answer. The Media Bureau receives approximately 10,000 applications 
related to non-docketed proceedings a year. Of the 1378 non-docketed 
Media Bureau proceedings over 2 years old, 752 are related to items 
currently circulating before the Commission and another 87 are awaiting 
international coordination. I also note that there are 5,390 pending 
wireless applications pending between 6 months and 1 year. This number 
represents only 1 percent of the approximately 520,000 license 
applications submitted annually. And, 4,991 of these applications are 
license applications associated with the AT&T/BellSouth merger 
transaction.
    (Itemized in Attachment to Question 15.)

----------------------------------------------------------------------------------------------------------------
              Bureau/Office               6 Months to 1 Year   1 Year to 2 Years   More than 2 Years     TOTAL
----------------------------------------------------------------------------------------------------------------
CGB                                                      47                   3                   0          50
----------------------------------------------------------------------------------------------------------------
IB                                                        3                   3                   2           8
----------------------------------------------------------------------------------------------------------------
MB*                                                     578                 463               1,378       2,419
----------------------------------------------------------------------------------------------------------------
OET                                                       0                   0                   1           1
----------------------------------------------------------------------------------------------------------------
OGC                                                       1                   0                   0           1
----------------------------------------------------------------------------------------------------------------
PSHSB                                                     1                   0                   1           2
----------------------------------------------------------------------------------------------------------------
WCB                                                       1                   0                   0           1
----------------------------------------------------------------------------------------------------------------
WTB                                                       0                   3                   2           5
----------------------------------------------------------------------------------------------------------------
    TOTAL                                               631                 472               1,384       2,487
----------------------------------------------------------------------------------------------------------------
*The Media Bureau receives approximately 10,000 applications related to non-docketed proceedings a year. Of the
  1,378 applications more than 2 years old, 752 are related to items currently on circulating before the
  Commission and another 87 are awaiting International coordination.

    In addition, for the sake of completeness, the chart below provides 
data on non-docketed filings that do not require formal public comment. 
(Itemized in Attachment to Question 15.) These include formal and 
informal complaints, complaints concerning junk faxes, and requests for 
waivers of some rules. As explained [above], this chart does not 
include pending indecency complaints.

----------------------------------------------------------------------------------------------------------------
                                          6 Months to 1 Year   1 Year to 2 Years   More than 2 Years     TOTAL
----------------------------------------------------------------------------------------------------------------
CGB                                                   1,365               1,053                  35       2,453
----------------------------------------------------------------------------------------------------------------
EB                                                      581                  63                  19         663
----------------------------------------------------------------------------------------------------------------
PSHSB                                                     6                  48                   5          59
----------------------------------------------------------------------------------------------------------------
WTB                                                      19                  10                  18          47
----------------------------------------------------------------------------------------------------------------
    TOTAL                                             1,971               1,174                  77       3,222
----------------------------------------------------------------------------------------------------------------

    The chart below provides data on pending applications. The FCC does 
not consider each of these applications to be a ``proceeding.'' For the 
sake of completeness, however, the table below shows the numbers of 
applications for which the referenced time periods have elapsed. 
(Itemized in Attachment to Question 15.)

----------------------------------------------------------------------------------------------------------------
                                          6 Months to 1 Year   1 Year to 2 Years   More than 2 Years     TOTAL
----------------------------------------------------------------------------------------------------------------
IB                                                      109                  82                  46         237
----------------------------------------------------------------------------------------------------------------
PSHSB                                                    49                  37                  17         103
----------------------------------------------------------------------------------------------------------------
WTB**                                                 5,390                 243                 389       6,022
----------------------------------------------------------------------------------------------------------------
    TOTAL                                             5,548                 362                 452       6,362
----------------------------------------------------------------------------------------------------------------
**The 5,390 applications pending 6 months to 1 year represents 1 percent of the approximately 520,000 license
  applications submitted annually. 4,991 of the 5,390 applications relate to the AT&T/BellSouth merger.

    Question 16. Please list the pending proceedings in which a court 
has remanded a matter to the FCC, but the Commission has not yet issued 
an order in response to the remand? Please indicate the decision and 
year in which the court remanded the matter to the FCC.
    Answer. BellSouth Telecommunications, Inc. v. FCC, 469 F.3d 1052 
(D.C. Cir. 2006) (mandate issued Jan. 25, 2007), remanding In the 
Matter of AT&T Corp. v. BellSouth Telecommunications, 19 FCC Rcd 23898 
(2004). The issue on remand is whether a volume discount plan offered 
by BellSouth violates 47 U.S.C. Sec. 272(e).
    AT&T Inc. v. FCC, 452 F.3d 830 (D.C. Cir. 2006) (mandate issued 
Aug. 21, 2006), remanding In the Matter of Petition of SBC 
Communications, Inc. for Forbearance from the Application of Title II 
Common Carrier Regulation to IP Platform Services, 20 FCC Rcd 9361 
(2005). The issue on remand is whether the Commission should grant a 
petition filed by SBC Communications under 47 U.S.C. Sec. 160(c) 
seeking forbearance from application of Title II regulation to IP 
platform services.
    Qwest Communications v. FCC, 398 F.3d 1222 (10th Cir. 2005), 
remanding In the Matter of Federal-State Joint Board on Universal 
Service, 18 FCC Rcd 22559 (2003). The issue on remand is the meaning of 
the term ``reasonably comparable'' in 47 U.S.C. Sec. 254(b)(3) as it 
relates to non-rural high cost universal service support.
    U.S. Telecom Ass'n v. FCC, 400 F.3d 29 (D.C. Cir. 2005), remanding 
In the Matter of Telephone Number Portability, CTIA Petitions for 
Declaratory Ruling on Wireline-Wireless Porting Issues, 18 FCC Rcd 
23697 (2003). The remand order directed the Commission to prepare a 
final regulatory flexibility analysis in accordance with 5 U.S.C. 
Sec. 604. In response to the remand, the Commission sought comment on a 
draft regulatory flexibility analysis, 20 FCC Rcd 8616 (2005). Comments 
were received, and the matter is pending.
    Prometheus Radio Project v. FCC, 373 F.3d 372 (3rd Cir. 2004), 
remanding In the Matter of 2002 Biennial Regulatory Review--Review of 
the Commission's Broadcast Ownership Rules, 18 FCC Rcd 13620 (2003). 
The remand order directed the Commission to modify its methodology for 
setting numerical limits on local cross-media ownership and on local 
television and radio station ownership. In response to the remand, the 
Commission issued a further notice of proposed rulemaking, 21 FCC Rcd 
8834 (2006).
    WorldCom, Inc. v. FCC, 288 F.3d 429 (D.C. Cir. 2002), cert. denied, 
123 S.Ct. 1927 (2003), remanding In the Matter of Implementation of the 
Local Competition Provisions in the Telecommunications Act of 1996, 
Intercarrier Compensation for ISP-Bound Traffic, 16 FCC Rcd 9151 
(2001). The issue on remand is whether calls made to an Internet 
service provider in the caller's local calling area are exempt from the 
reciprocal compensation requirement in 47 U.S.C. Sec. 251(b)(5).
    GTE Service Corp. v. FCC, 224 F.3d 768 (D.C. Cir. 2000), remanding 
In the Matter of Policy and Rules Concerning Interstate lnterexchange 
Marketplace, Implementation of Section 254(g) of the Communications Act 
of 1934, 14 FCC Rcd 391 (1998). The issue on remand is whether the rate 
integration requirement in 47 U.S.C. Sec. 254(g) applies to providers 
of commercial mobile radio service.

    Question 17. Please list the proceedings subject to a pending 
petition for reconsideration of a Commission order, for which the 
Commission has not addressed the matters raised in the petition for 
reconsideration. Please provide the year in which the petition for 
reconsideration was filed.
    Answer. A response will be provided shortly under separate cover.

    Question 18. Please list the proceedings subject to a pending 
application for review of a Bureau or Office order, for which the 
Commission has not addressed the matters raised in the application. 
Please provide the year in which the application for review was filed.
    Answer. A response will be provided shortly under separate cover.

    Question 19. Please list the number of pending petitions for 
designation as an eligible telecommunications carrier in which the 
following period has elapsed since the Commission, Bureau or Office 
received the last formal round of public comments (i.e., comments for 
which public notice was given in the Federal Register or by Public 
Notice), without an intervening Commission, Bureau or Office order 
addressing the merits of the proceeding? Please itemize these petitions 
in an attachment to your response.
    a. 6 months or more, but less than 1 year----
    b. One year or more, but less than 2 years----
    c. More than 2 years----
    Answer. (Itemized in Attachment to Question 19.)
    There are 31 CETC applications that have been pending with the 
Commission for 6 months or longer. I note that CETC payments have been 
growing at an astonishing rate, over 101 percent per year since 2002. 
In 2000, CETCs received $1 million in support. Based on recent USAC 
estimates, CETCs received almost $1 billion last year. And, CETC 
support in 2007 is projected to be at least $1.28 billion. If the 
Commission were to approve all pending CETC applications, CETC support 
could be as high as $1.56 billion this year. The Federal-State 
Universal Service Joint Board is currently considering what changes to 
make to address this issue and expects to make a recommendation within 
the next 30 days.

------------------------------------------------------------------------
   Eligible Telecommunications Carrier Designation         Number of
                      Requests                             Petitions
------------------------------------------------------------------------
Pending 6 months or more, but less than 1 year                        1
------------------------------------------------------------------------
Pending 1 year or more, but less than 2 years                        13
------------------------------------------------------------------------
Pending more than 2 years                                            17
------------------------------------------------------------------------
    TOTAL                                                            31
------------------------------------------------------------------------

    Question 20. Please list the number of pending petitions for a 
declaration of effective competition in which the following period has 
elapsed since the Commission, Bureau or Office received the last formal 
round of public comments (i.e., comments for which public notice was 
given in the Federal Register or by Public Notice), without an 
intervening Commission, Bureau or Office order addressing the merits of 
the proceeding? Please itemize these petitions in an attachment to your 
response.
    a. 6 months or more, but less than 1 year
    b. One year or more, but less than 2 years
    c. More than 2 years.
    Answer. (Itemized in Attachment to Question 20.)

------------------------------------------------------------------------
                                                           Number of
           Effective Competition Petitions                 Petitions
------------------------------------------------------------------------
Pending 6 months or more, but less than 1 year                        5
------------------------------------------------------------------------
Pending 1 year or more, but less than 2 years                        45
------------------------------------------------------------------------
Pending more than 2 years                                             7
------------------------------------------------------------------------
    TOTAL                                                            52
------------------------------------------------------------------------

    Question 21. Please list the number of pending petitions for 
license renewal in radio broadcasting, television broadcasting and 
wireless radio services (as defined in 47 C.F.R. 1.907) in which the 
following period has elapsed since the filing of any petition for 
renewal? Please itemize these petitions in an attachment to your 
response.
    a. 6 months or more, but less than 1 year
     b. One year or more, but less than 2 years
    c. More than 2 years.
    Answer. (Itemized in Attachment to Question 21.)
    For the past few years, the Media Bureau has received approximately 
6000 license renewal applications per year. Of the 368 renewal 
applications that are over 2 years old, 152 are the subject of 
complaints alleging violations of the sponsorship identification and/or 
indecency law and regulations. The Commission frequently enters tolling 
agreements that allow the processing of renewal applications but ensure 
that the Commission retains its ability to enforce its rules should it 
find a violation occurred. The Commission has taken steps to ensure 
that these applicants are aware of this option.

------------------------------------------------------------------------
                                                           Number of
          Radio and Television Broadcasting                Petitions
------------------------------------------------------------------------
Pending 6 months or more, but less than 1 year                      578
------------------------------------------------------------------------
Pending 1 year or more, but less than 2 years                     1,068
------------------------------------------------------------------------
Pending more than 2 years                                          368*
------------------------------------------------------------------------
    TOTAL                                                         2,014
------------------------------------------------------------------------
*For the past few years, the Media Bureau has received approximately
  6000 license renewal applications per year.


------------------------------------------------------------------------
                                                           Number of
               Wireless Radio Services                     Petitions
------------------------------------------------------------------------
Pending 6 months or more, but less than 1 year                       53
------------------------------------------------------------------------
Pending 1 year or more, but less than 2 years                         5
------------------------------------------------------------------------
Pending more than 2 years                                            22
------------------------------------------------------------------------
    TOTAL                                                            80
------------------------------------------------------------------------

    Question 22. As you know, FCC rules (47 C.F.R. 54.724) require the 
Wireline Competition Bureau to act on appeals from the USF 
Administrator within 90 days, subject to a potential 90 day extension. 
The Commission may also further extend the time period for action. 
Please list the number of appeals from decisions of the USF 
Administrator in which the following period has elapsed since filing of 
the appeal, without an order extending the time period for action? 
Please separately list the number of appeals for which an extension 
order was issued, but for which the following period has elapsed since 
filing of the appeal. Please separately enumerate appeals with respect 
to USF contribution, high cost support, school and libraries support, 
rural health care support and low-income support.
    a. More than 90 days, but less than 6 months
    b. 6 months or more, but less than 1 year
    c. One year or more, but less than 2 years
    d. More than 2 years.
    Answer. There were 712 schools and libraries appeals pending when I 
assumed the Chairmanship. Since this time, however, the Commission 
acted upon nearly 600 appeals and has several additional items in front 
it for consideration.

------------------------------------------------------------------------
 Schools and Libraries    Extension Order   No Extension Order
        Support              Released             Released        TOTAL
------------------------------------------------------------------------
More than 90 days, but                  0                  96        96
 less than 6 months
------------------------------------------------------------------------
6 months or more, but                   0                 126       126
 less than 1 year
------------------------------------------------------------------------
One year or more, but                   0                 158       158
 less than 2 years
------------------------------------------------------------------------
More than 2 years                     111                  47       158
------------------------------------------------------------------------
    TOTAL                             111                 427      538*
------------------------------------------------------------------------
*Since I became Chairman, we have acted upon nearly 600 applications.


------------------------------------------------------------------------
   Rural Health Care      Extension Order   No Extension Order
        Support              Released             Released        TOTAL
------------------------------------------------------------------------
More than 90 days, but                  0                   0         0
 less than 6 months
------------------------------------------------------------------------
6 months or more, but                   0                   2         2
 less than 1 year
------------------------------------------------------------------------
One year or more, but                   0                   2         2
 less than 2 years
------------------------------------------------------------------------
More than 2 years                       0                   0         0
------------------------------------------------------------------------
    TOTAL                               0                   4         4
------------------------------------------------------------------------


------------------------------------------------------------------------
                          Extension Order   No Extension Order
   USF Contribution          Released             Released        TOTAL
------------------------------------------------------------------------
More than 90 days, but                  0                   2         2
 less than 6 months
------------------------------------------------------------------------
6 months or more, but                   0                  13        13
 less than 1 year
------------------------------------------------------------------------
One year or more, but                   0                   7         7
 less than 2 years
------------------------------------------------------------------------
More than 2 years                       0                   4         4
------------------------------------------------------------------------
    TOTAL                               0                  26        26
------------------------------------------------------------------------


------------------------------------------------------------------------
                          Extension Order   No Extension Order
   High Cost Support         Released             Released        TOTAL
------------------------------------------------------------------------
More than 90 days, but                  0                   0         0
 less than 6 months
------------------------------------------------------------------------
6 months or more, but                   0                   0         0
 less than 1 year
------------------------------------------------------------------------
One year or more, but                   0                   0         0
 less than 2 years
------------------------------------------------------------------------
More than 2 years                       0                   1         1
------------------------------------------------------------------------
    TOTAL                               0                   1         1
------------------------------------------------------------------------
There are no pending appeals for Low Income Support

    Question 23. Please list all the proceedings during your service as 
Chairman in which an order was released by the Commission more than 30 
days following the adoption of the order by the Commission.
    Answer.

------------------------------------------------------------------------
           FCC Number                         Title of Item
------------------------------------------------------------------------
06-180                           Implementation of Section 621(a)(1) of
                                  the Cable Communications Policy Act of
                                  1984 as amended by the Cable
                                  Television Consumer Protection Act of
                                  1992 (R&O)
------------------------------------------------------------------------
06-121                           Application of Paxson Communications
                                  License Co., LLC and Univision
                                  Communications, Inc., for consent to
                                  the assignment of the license for
                                  Station KTFF(TV), Porterville, CA.
                                  (MO&O)
------------------------------------------------------------------------
06-117                           Implementation of Section 629 of the
                                  Consolidated Appropriations Act, 2004
                                  (National Broadcast Television
                                  Ownership) (Order)
------------------------------------------------------------------------
06-177                           Premio, Inc., Notice of Debarment
                                  (Order)
------------------------------------------------------------------------
06-126                           NextiraOne LLC, Notice of Debarment and
                                  Order denying waiver petition (Order)
------------------------------------------------------------------------
06-66                            Request for Limited Waiver--United
                                  States Cellular Corporation (Order)
------------------------------------------------------------------------
06-65                            Request of Centennial Communications
                                  Corp. for Limited Waiver/Extension of
                                  Location-Capable Handset Penetration
                                  Deadline (Order)
------------------------------------------------------------------------
06-64                            Alltel Corporation Petition For Limited
                                  Waiver of Location-Capable Handset
                                  Penetration Rule (Order)
------------------------------------------------------------------------
06-61                            Petition for Limited Waiver and Brief
                                  Extension of Leap Wireless
                                  International, Inc. and Qwest
                                  Wireless, LLC Request for Limited
                                  Waiver of Automatic-Location-
                                  Information-Capable Handset
                                  Penetration Requirements (Order)
------------------------------------------------------------------------
06-60                            Request for Waiver of Location-Capable
                                  Handset Penetration Rule By Verizon
                                  Wireless (Order)
------------------------------------------------------------------------
06-59                            Joint Petition of CTIA and the Rural
                                  Cellular Association for Suspension or
                                  Waiver of the Location-Capable Handset
                                  Penetration Deadline (Order)
------------------------------------------------------------------------
06-132                           Mid-Rivers Telephone Cooperative, Inc.
                                  (R&O)
------------------------------------------------------------------------
06-122                           Application for Transfer of Control of
                                  Fox Television Stations, Inc. (MO&O)
------------------------------------------------------------------------
06-35                            Establishment of the Public Safety and
                                  Homeland Security Bureau and Other
                                  Organizational Changes (Order)
------------------------------------------------------------------------
06-86                            In the Matter of Biennial Regulatory
                                  Review of Regulation Administered by
                                  the Wireline Competition Bureau
                                  (Order)
------------------------------------------------------------------------
06-93                            2006 Quadrennial & 2002 Biennial
                                  Regulatory Review--Review of the
                                  Commission's Broadcast Ownership Rules
                                  (FNPRM)
------------------------------------------------------------------------
05-170                           Petition of Qwest Corporation for
                                  Forbearance Pursuant to 47 U.S.C.
                                  160(c) in the Omaha Metropolitan
                                  Statistical Area (MO&O)
------------------------------------------------------------------------
05-150                           Appropriate Framework for Broadband
                                  Access to the Internet over Wireline
                                  Facilities (WC Docket No. 05-271)
                                  (R&O)
------------------------------------------------------------------------
05-153                           Communications Assistance for Law
                                  Enforcement Act and Broadband Access
                                  and Services (R&O)
------------------------------------------------------------------------

    Question 24. Please list the number of orders released by the 
Commission, its Bureaus or Offices during the month prior to our 
February 1 hearing (January 2007). Please also list the number of 
orders released by the Commission, its Bureaus or Offices for each 
month during the last 6 months of 2006.
    Answer.

----------------------------------------------------------------------------------------------------------------
      Bureau/Office         Jan 07     Dec 06     Nov 06     Oct 06    Sept 06     Aug 06    July 06     TOTAL
----------------------------------------------------------------------------------------------------------------
CGB                             44         19         43         76        301         38          3        524
----------------------------------------------------------------------------------------------------------------
EB                             174         75         96        137        153        135        148        918
----------------------------------------------------------------------------------------------------------------
IB                               6          7          2          0          1          0          1         17
----------------------------------------------------------------------------------------------------------------
MB                             149         91         85         99        100         80        120        724
----------------------------------------------------------------------------------------------------------------
OET                              2          0          1          1          1          3          1          9
----------------------------------------------------------------------------------------------------------------
OGC                              0          0          0          1          0          0          0          1
----------------------------------------------------------------------------------------------------------------
OMD                              0          0          0          0          0          0          1          1
----------------------------------------------------------------------------------------------------------------
PSHSB*                          25          4          4          0          1                               34
----------------------------------------------------------------------------------------------------------------
WCB                             11         11          7         10         10         19          3         71
----------------------------------------------------------------------------------------------------------------
WTB                            161         82         73        123         72         75         65        651
----------------------------------------------------------------------------------------------------------------
TOTAL                          572        289        311        447        639        350        342      2,950
----------------------------------------------------------------------------------------------------------------
*PSHSB established in September 2006

                                 ______
                                 
   Response to Written Questions Submitted by Hon. John F. Kerry to 
                          Hon. Kevin J. Martin

    Question 1. The President has promised ubiquitous broadband by 
year-end 2007. Are we on pace to achieve that goal? What is our current 
ranking in the world for broadband deployment? Why do we continue to 
fall behind other industrialized countries? What is the 
Administration's broadband strategy? Will those measures alone get us 
to total ubiquitous broadband by year-end 2007? What additional 
measures should Congress take to ensure ubiquitous broadband?
    Answer. Encouraging the deployment of broadband infrastructure is a 
top priority. Since I arrived at the Commission in July 2001, high-
speed lines in the U.S. have gone from more than 9 million to nearly 65 
million. According to the Commission's most recent data, high-speed 
connections increased by 26 percent in the first half of 2006 and by 52 
percent for the full year ending June 30, 2006.
    An independent study by Pew confirmed this trend, finding that from 
March 2005 to March 2006, overall broadband adoption increased by 40 
percent--from 60 to 84 million--twice the growth rate of the year 
before. The study found that, although overall penetration rates in 
rural areas still lags behind urban areas, broadband adoption in rural 
America also grew at approximately the same rate (39 percent).
    Perhaps most importantly, the Pew study found that the significant 
increase in broadband adoption was widespread and cut across all 
demographics. According to their independent research:

   broadband adoption grew by almost 70 percent among middle-
        income households (those with incomes between $40,000 and 
        $50,000 per year);

   broadband adoption grew by more than 120 percent among 
        African Americans;

   broadband adoption grew by 70 percent among those with less 
        than a high school education; and

   broadband adoption grew by 60 percent among senior citizens.

    According to the Pew study, the price of broadband service has also 
dropped in the past 2 years. Specifically, the Pew Report found that 
between February 2004 and December 2005, the average price for high-
speed service declined from $39 per month to $36 per month. Currently, 
Verizon and Comcast each offer promotional broadband packages for 
$19.99 per month, for example, and AT&T and BellSouth have committed to 
providing new retail broadband customers a $10 a month broadband 
Internet access service throughout the combined region.
    The United States is the largest broadband market in the world with 
over 56 million broadband subscribers according to the Organization for 
Economic Co-operation and Development (OECD). The OECD currently ranks 
the U.S. as 12th in the world in terms of broadband penetration. It is 
important to note, however, that the OECD does not adjust for factors 
including population density, which puts a country as large as ours 
with sizable rural areas at a significant disadvantage. For instance, 
New Jersey has a similar population density as Korea, ranked 4th, yet 
has a higher penetration rate (30 subscribers per 100 residents, versus 
26 for Korea). Nevertheless, our current standing of 12th is not good 
enough. We must continue to build on our efforts to encourage 
competition, speed broadband deployment, and lower prices for 
consumers.
    The Commission has worked hard to create a regulatory environment 
that promotes investment and competition. We have taken actions to 
ensure that there is a level playing field that fosters competition and 
investment in broadband infrastructure. The Commission has also removed 
legacy regulations like tariffs and price controls that discouraged 
providers from investing in broadband networks. More recently, the 
Commission took action under section 621 of the Act, to ensure that 
local franchising authorities do not unreasonably refuse to award new 
video service providers the franchises they need to compete against 
incumbent cable operators.
    In the wireless area, the Commission has made a significant amount 
of spectrum available on both a licensed and unlicensed basis that can 
be used to provide broadband service in municipalities, rural areas and 
across the Nation. For example, on the licensed side, we completed an 
auction of 90 megahertz of spectrum for advanced wireless services that 
generated the largest-ever receipts totaling nearly 14 billion dollars. 
We have also taken steps to completely reconfigure nearly 200 megahertz 
of spectrum in the 2.5 GHz region to create new broadband 
opportunities.
    On the unlicensed side, the Commission completed actions necessary 
to make available 255 MHz of unlicensed spectrum in the 5 GHz region--
nearly an 80 percent increase--that will fuel the deployment of Wi-Fi 
well into the future. And, last fall, the Commission initiated a 
proceeding to resolve technical issues associated with ``white spaces'' 
so that low power devices designed to operate on the unused television 
frequencies may reach the market with the completion of the DTV 
transition.
    We will continue to encourage deployment of broadband from all 
providers using a variety of technologies. As wireless technologies 
become an increasingly important platform for broadband access, it is 
critical to ensure that there is adequate spectrum available for 
providing broadband service. Spectrum auctions will continue to be an 
important part of our strategy for facilitating the build-out of mobile 
broadband networks. For example, the upcoming auction of spectrum in 
the 700 MHz region is well suited for the deployment of broadband 
services.
    The Commission is also considering an order that would classify 
wireless broadband Internet access service as an information service. 
This action would eliminate unnecessary regulatory barriers for service 
providers. This classification also would clarify any regulatory 
uncertainty and establish a consistent regulatory framework across 
broadband platforms, as we have already declared high-speed Internet 
access service provided via cable modem service, DSL, and BPL to be an 
information service. This action is particularly timely in light of the 
recently auctioned AWS-1 spectrum for wireless broadband and our 
upcoming 700 MHz auction.
    The Commission will continue to look for new and innovative ways to 
facilitate broadband deployment. We are committed to furthering the 
universal availability and adoption of affordable broadband services. 
To the extent that Congress passes legislation that enables the 
Commission to take action to further encourage the deployment of 
broadband in all areas of the country, the Commission will do 
everything in its power to faithfully and effectively implement it.

    Question 1a. Recent telecommunications mergers have required that 
providers offer naked DSL so that consumers are able to purchase a 
broadband pipe separate from their other services. Should such a 
requirement be extended to other companies that provide broadband 
services?
    Answer. Although this condition provides consumers additional 
flexibility when purchasing broadband services, it was a voluntarily 
commitment made to by AT&T and Verizon. Accordingly, this condition is 
not a general statement of Commission policy and does not alter 
Commission precedent or bind future Commission policy or rules.

    Question 2. Fifteen months ago, when you reported to the Congress 
on the state of retransmission consent in connection with the mandates 
of SHVERA, you indicated that cash has not emerged as a factor in 
negotiations and that generally, the process was working well. Do you 
still agree with that assessment? Is it true that broadcasters are 
increasingly receiving cash compensation for retransmission consent? If 
so, what are the potential end results of this trend? What is the FCC's 
authority in this area?
    The FCC has recently imposed baseball-style arbitration as an 
efficient way to resolve programming disputes. In that context, the FCC 
has prohibited parties from dropping programming while the dispute is 
pending. Is this an effective means for resolving disputes? If so, 
should baseball-style arbitration be expanded in the retransmission 
consent context?
    Answer. The retransmission consent rules are part of a carefully 
balanced combination of laws and regulations governing carriage of 
television broadcast signals, with the must-carry and retransmission 
consent regimes complementing one another. Broadcast mandatory carriage 
rights, which promote localism and ensure the viability of free, over-
the-air television, complement the retransmission consent regime. 
Together, must-carry and retransmission consent provide that all local 
stations are assured of carriage even if their audience is small, while 
also allowing more popular stations to seek compensation (cash or in-
kind) for the audience their programming will attract for the cable or 
satellite operator. Must-carry alone might fail to provide stations 
with the opportunity to be compensated for their popular programming. 
Retransmission consent alone might not preserve local stations that 
have a smaller audience yet still offer free over-the-air programming 
and serve the public in their local areas.
    Because retransmission consent involves private contractual 
negotiations, the Commission does not gather statistics regarding the 
amount or type of compensation resulting from retransmission consent 
agreements. Anecdotal evidence suggests that cash payments, although 
rare in the past, are becoming much more common. Hearst Argyle 
Television Inc., for example, reported a $2.1 million increase in 
retransmission revenues for the three-month period ending Sept. 30, 
2006. Sinclair Broadcast Group reported a $2.8 million increase in 
revenue from retransmission and other fees for the nine-month period 
ending Sept. 30, 2006.
    The Commission currently has limited authority to dictate or place 
limits on the terms of retransmission consent. The FCC concluded in 
2000 that the Communications Act does not permit it to require 
agreement between parties to a retransmission consent negotiation, or 
to force them to do anything other than meet to negotiate ``in an 
atmosphere of honesty, purpose and clarity of process.'' In that same 
order, the Commission addressed the suggestion made by certain parties 
that the insistence on cash payments in exchange for retransmission 
consent should be a per se violation of the good faith negotiation 
requirement. The Commission disagreed, stating that ``. . . to 
arbitrarily limit the range or type of proposals that the parties may 
raise in the context of retransmission consent will make it more 
difficult for broadcasters and [programming distributors] to reach 
agreement. By allowing the greatest number of avenues to agreement, we 
give the parties latitude to craft solutions to the problem of reaching 
retransmission consent.''
    As you note, the Commission has imposed a binding arbitration 
condition in approving two merger transactions. Baseball-style 
arbitration was chosen over other forms of arbitration because it was 
considered the most likely to lead to reasonable offers from both 
parties as well as enhancing the possibility of a mutually agreed-upon 
settlement prior to arbitration.
    While I generally have concerns about intervening in private 
negotiations, I recognize that the failure of a broadcaster and a cable 
operator to reach a retransmission consent agreement harms not just the 
broadcaster and the cable operator but all of the viewers affected by 
the removal of a station's signal from their cable system. If Congress 
believes the retransmission consent process needs reformation, it could 
give the Commission the authority to order arbitration of 
retransmission consent disputes by the Media Bureau, and require 
carriage during the arbitration process. To ensure that such 
arbitration process reaches a fair result in the context of the broader 
industry, the Commission would also need to be sure that it had the 
tools necessary to obtain similar pricing information from other 
broadcasters, cable operators and programmers. Without access to such 
information, it would be difficult for the Commission to determine 
whether offers from either party are appropriate.

    Question 3. The program access rules are designed to prevent 
vertically integrated companies that own content from favoring their 
own distribution pipes. Are the program access rules effectively 
carrying out their mission? Is the programming market competitive 
enough to allow the program access rules to sunset in October, as 
currently scheduled?
    We understand that, on average, the FCC appears to take many months 
to resolve a program access complaint. Is this true? If yes, why does 
it take so long? Should complaints be resolved within an established 
time frame?
    Answer. The program access rules prevent a programmer owned by 
affiliated with a cable operator from favoring that cable operator. In 
this way, the rules promote video competition.
    Access to the programming that consumers want is critical to new 
entrants. Today, the Commission's program access rules generally 
prohibit exclusive contracts between cable operators and programmers in 
which the cable operators have an attributable interest. Unless the 
Commission takes action, this prohibition will sunset next year. The 
Commission recently issued a Notice of Proposed Rulemaking to determine 
whether to allow the program access exclusivity prohibition to sunset 
later this year. I generally agree that this rule has been important, 
but because there is no record yet amassed in this proceeding, it would 
be premature to comment on whether or not the exclusivity prohibition 
should be allowed to sunset.
    In the NPRM noted above, the Commission also requests information 
on the current program access rules and regulations, including those 
governing the program access complaint process. Today, the resolution 
of program access complaints can take several months. I agree that 
complaints should be resolved within established time frames. The 
Commission already has in place processing time lines for program 
access complaints that provide for resolution of certain complaints 
within 5 months of submission of complaints and other complaints within 
9 months. However, given the length of time these guidelines allow for 
resolution of complaints, the NPRM expressly seeks comment on whether 
revised time limits would improve the existing program access complaint 
procedures.

    Question 4. It has been eleven years since enactment of the 1996 
Telecommunications Act that opened the floodgates of media 
consolidation in the radio industry. In terms of viewpoint diversity 
and localism, is American radio better or worse than it was in 1996? 
What has the impact of consolidation been on recording artists? How has 
consolidation impacted the public's ability to hear local music and 
news on the airwaves? How has the radio marketplace changed on account 
of the arrival of innovative music delivery options?
    Answer. Consumers rely upon the media for news, information, and 
entertainment. Our policies need to continue to preserve and promote 
localism and diversity in the media. At the same time, we must balance 
the concerns about too much consolidation and too little choice with 
appropriate consideration of the changes and innovation that are taking 
place in the media marketplace.
    The extent to which our current radio ownership rules promote 
diversity, localism and competition is one of the key issues raised in 
the periodic review of our media ownership rules and broadcast localism 
proceedings. We have received comments on all sides of this issue.
    Some commenters assert a failure on the part of radio stations to 
meet their obligations to air sufficient programming that is responsive 
to local needs and interests. These commenters assert that financial 
considerations, in combination with the relaxation of the broadcast 
ownership rules, have resulted in a critical decrease in the quality 
and quantity of responsiveness of licensees to the needs and interests 
of the communities they serve. Others disagree, noting that many 
broadcasters devote significant amounts of time and resources to airing 
programming responsive to the needs and interests of the communities.
    We also have received many comments on the changes to the radio 
marketplace since the passage of the Telecommunications Act of 1996. 
Some argue that new services and devices compete directly with 
broadcast radio while others argue that they do not.
    As part of our quadrennial review, we have commissioned a number of 
economic studies. One study, ``Station Ownership and Programming in 
Radio'', will use station-level data to examine how ownership 
structures affect the programming and audiences of radio stations. The 
results of this study and another study concerning radio, ``Radio 
Industry Review: Trends in Ownership, Format, and Finance'', should 
provide the Commission with more information on whether and, if so, how 
ownership and changes in the radio market affect the programming and 
news available on radio.
    Finally, in connection with the Commission's media ownership and 
localism proceedings, we are conducting hearings around the country to 
solicit public comment and to engage the American people in the process 
of reviewing the status of the media marketplace. One recent hearing, 
held in Nashville, focused on the general state of the music and radio 
industries. The Commission's efforts to collect a thorough public 
record will continue in the months ahead, with three more ownership 
hearings, and two additional hearings specifically focused on localism.
    Once our hearings and studies are complete, we will be in a better 
position to speak to both the impact of consolidation and how the radio 
marketplace has changed.

    Question 4a. The station license renewal process is often a pro 
forma process that entails little more than the periodic updating and 
filing of existing forms. Can this process be strengthened to ensure 
more robust station compliance with localism requirements?
    Answer. In 1996, Congress changed the standards for renewal of 
broadcast station licenses to provide that ``the Commission shall 
grant'' a station's renewal application if it finds that, during the 
preceding license term, (1) ``the station served the public interest, 
convenience, and necessity,'' (2) ``there have been no serious 
violations by the licensee of this Act or the rules and regulations of 
the Commission,'' and (3) ``there have been no other violations by the 
licensee of this Act or the rules and regulations of the Commission 
which, taken together, would constitute a pattern of abuse.''
    In preparing and submitting license renewal applications, broadcast 
licensees must certify their compliance during the previous license 
term with a number of substantive requirements of the Communications 
Act and the Commission's Rules. If a licensee cannot so certify, the 
license renewal form requires it to disclose all such violations. 
Applicants also must certify that the station's local public inspection 
file is complete and has been properly maintained during the previous 
license term.
    Our rules include the requirement that a station locate its main 
studio in or near to the community of license and make its public 
inspection file available for inspection to any requesting member of 
the public. Main studios must be open to the public during regular 
business hours, and stations are required to maintain a local phone 
line for use by the public. Every station also is required to prepare 
quarterly issues/programs lists that outline the significant issues 
facing the community and what programs the licensee aired covering 
those issues, and to place copies of these lists in its public file 
within 10 days of the end of each quarter. In addition, commercial 
television stations must place in their public file quarterly reports 
identifying the programs broadcast to serve the informational and 
educational needs of children ages 16 years and under. Stations also 
must retain all listener or viewer letters in their public files. As 
part of the renewal process, any interested party may review a station 
public file, including these materials.
    The Commission's rules also require each station to provide a 
series of local public notices regarding the station's license renewal 
process advising members of the public that they have the opportunity 
to file with the Commission petitions to deny the renewal application 
and advising them of the location of the station's public file. These 
notices begin 6 months prior to the expiration of the station's license 
term. Our rules apply the same renewal period and license expiration 
date for all radio and television stations licensed to communities in 
the same state.
    The Commission is always looking for ways to improve its processes. 
For example, the Commission has before it a Report and Order that would 
adopt a standardized form for the quarterly reporting of programming 
aired in response to issues facing a station's community. These 
requirements would ensure that the public had more and better 
information with which to evaluate whether a broadcaster has met its 
public interest obligations.

    Question 4b. According to recent press accounts, the FCC has 
conducted an investigation on payola and is on the cusp of reaching a 
consent decree on the issue. Based on your findings, to what degree has 
payola impacted radio play lists in the past few years, and what steps 
can the Commission take to effectively address this problem in a 
meaningful and enforceable manner?
    Answer. The Commission has a number of investigations pending 
regarding the alleged exchange of money, goods, or services for radio 
airplay of music or other material without the station's airing of a 
sponsorship identification announcement, i.e., payola. Four consent 
decrees with major broadcast groups are currently circulating among the 
Commissioners. Each would impose a significant fine and require 
adherence to a compliance plan designed to ensure that violations do 
not occur in the future. Through strong enforcement action, in the form 
of forfeiture proceedings, consent decrees or by other means, the 
Commission can provide clear guidance to licensees and send a strong 
message that payola will not be tolerated.

    Question 5. In your view, is there a lack of adequate independent 
programming on television and radio? If yes, are you concerned about 
the trend? Do you think independent programming is important for 
diversity, competition, consumer pricing and choice?
    Has vertical integration in the current television environment 
impacted the availability of independent programming? What can the FCC 
do to help ensure that diversity of information, which Congress has 
said is of the ``highest order of importance,'' is preserved and that 
independent television programmers are not wiped out?
    Since the early 1990s, the television production and distribution 
marketplace has undergone unparalleled vertical consolidation of 
content and distribution by the broadcast networks. How this 
consolidation resulted in a decline in the diversity of sources 
producing content on the Nation's broadcast networks? Is it true that 
more than 75 percent of the 2007 prime-time lineup is dominated by 
programming produced by the broadcast networks themselves--as compared 
to about 30 percent in 1993?
    In a vertically-integrated media world, what steps can the 
Commission take to preserve diversity in prime-time broadcast 
television? Does the Commission have the authority to impose a minimum 
independent production requirement?
    Answer. Independent programming is important for diversity, 
competition, consumer pricing, and choice. The issue of whether there 
is an adequate amount of independent programming on television and 
radio was a key topic at our first public hearing on Media Ownership in 
Los Angeles. There, members of the creative community and others 
presented their views on the impact of consolidation in television and 
radio on the production and availability of independent programming. 
Many of the participants in this hearing and a number of commenters 
have expressed concerns that there is a lack of independent programming 
on television and radio. On the other side, members of the broadcast 
industry have asserted that they have financial incentives to air the 
programming that their audiences want to hear and watch, be it 
independent programming or affiliated programming.
    As part of our quadrennial review, the Commission is committed to 
ensuring that our media ownership rules further the three interests of 
competition, localism and diversity. We have contracted for an 
independent economist to specifically look at the issue of vertical 
integration in the media industry. The results of this study hopefully 
will provide the Commission with more information on whether and, if 
so, how ownership affects independent programmers' access. Among other 
things, the study will enable us to quantify the amount of independent 
programming in broadcast networks' prime-time lineups. Two other 
independent studies will specifically look at the issue of minority 
ownership in the media.
    In terms of steps the Commission can take to preserve diversity in 
broadcast television lineups, one idea is to allow small and 
independently-owned businesses to enter the broadcast industry by 
leasing some of an existing broadcaster's spectrum to distribute their 
own programming. Conversion to digital operations enables broadcasters 
to fit a single channel of analog programming into a smaller amount of 
spectrum. Often, there is additional spectrum left over that can be 
used to air other channels of programming. Small and independently 
owned businesses could take advantage of this capacity and use a 
portion of the existing broadcasters' digital spectrum to operate their 
own broadcast channel. This new programming station would then obtain 
all the accompanying rights and obligations of other broadcast 
stations, such as public interest obligations and carriage rights.
    Finally, I believe that the offering of programming services by 
MVPDs on a more a la carte basis would enable consumers to better 
express their programming preferences. In addition, it would provide 
consumers with greater choice and the ability to manage the size of 
their cable bills.

    Question 6. Last fall, the Commission moved forward with a 
rulemaking designed to make productive use of the white spaces. This 
followed a 2004 rulemaking proceeding in which the FCC focused on 
unlicensed options. One of the most attractive features of unlicensed 
access is its affordability and low barriers to entry. I was pleased to 
hear you suggest at the February 1, 2007 hearing that licensing the 
white space is not a viable option because of technical barriers and 
other problems. Can you confirm that Commission is not reopening the 
question of whether to license these airwaves?
    Answer. In the First Report and Order and Further Notice of 
Proposed Rule Making adopted in October 2006, the Commission stated 
that it would continue to focus on low power devices operating in the 
TV bands on an unlicensed basis. However, the Commission noted that a 
number of parties suggested that, if new wireless operations are 
permitted in the TV bands, they should be on a licensed, rather than an 
unlicensed, basis. It therefore sought comment on whether new low power 
operations in the TV bands should be permitted on a licensed, 
unlicensed, or hybrid basis.
    The Commission identified a number of issues that would have to be 
addressed if low power operations in the TV bands were permitted on a 
licensed basis, including the rights and obligations of licensees, the 
allocation status of low power licensed operations, the appropriate 
interference avoidance mechanisms, whether licensing should be 
exclusive or non-exclusive, and the size of licensees' service areas. 
It also sought comment on the technical, operation, legal, or economic 
costs associate with the licensed, unlicensed and hybrid options, as 
well as the advantages and disadvantages of each. Parties filed 
comments supporting both licensed and unlicensed operations.
    Generally, the licensed model tends to work best when spectrum 
rights are (1) clearly defined, (2) exclusive, (3) flexible, and (4) 
transferable. When spectrum rights lack these attributes, potential 
licensees face uncertainty and may lack incentive to invest in a 
license or offer service.
    In those circumstances, the unlicensed model may better optimize 
spectrum access and utilization. As I indicated in my testimony, I 
believe there would be significant difficulties in making this spectrum 
available on a licensed basis, such as the need to precisely define the 
locations of the White Spaces as well as define the rights of new 
licensees vis-a-vis existing licensed services, including wireless 
microphones. We are planning to make a decision in the TV White Spaces 
proceeding later this year, including the issue of licensed versus 
unlicensed use.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                          Hon. Kevin J. Martin

    Question 1. Chairman Martin, you committed to hold six public 
hearings in the media ownership proceeding and so far two have been 
held. When and where can we expect the next four hearings to be 
announced?
    Answer. The media ownership public hearings are being held in 
geographically diverse locations around the country. Thus far, the 
Commission has conducted three hearings: Los Angeles/El Segundo, 
California on October 3, 2006; Nashville, Tennessee on December 11, 
2006; and Harrisburg, Pennsylvania on February 23, 2007.
    The Commission currently is in the process of planning the other 
three hearings. At this time, no final decisions have been made 
concerning the dates and locations of the remaining hearings.

    Question 2. Chairman Martin, I understand that you have announced 
10 studies to be completed in a variety of issues. Will these studies 
be subject to peer review and independent analysis?
    Answer. Each study will be subject to peer review and analysis in 
accordance with OMB guidelines and requirements. In addition, each 
study will be put out for public comment and review.

    Question 3. Eleven years after Congress passed the 1996 
Telecommunications Act that opened the floodgates of media 
consolidation in the radio industry is American radio better or worse 
than it was in 1996 in terms of viewpoint diversity and localism?
    Answer. The extent to which our current radio ownership rules 
promote diversity, localism and competition is one of the key issues 
raised in the periodic review of our media ownership rules and 
broadcast localism proceedings. We have received comments on all sides 
of this issue. Some commenters assert a failure on the part of radio 
stations to meet their obligations to air sufficient programming that 
is responsive to local needs and interests. These commenters assert 
that financial considerations, in combination with the relaxation of 
the broadcast ownership rules, have resulted in a critical decrease in 
the quality and quantity of responsiveness of licensees to the needs 
and interests of the communities they serve. Others disagree, noting 
that many broadcasters devote significant amounts of time and resources 
to airing programming responsive to the needs and interests of the 
communities.
    We also have received many comments on the changes to the radio 
marketplace since the passage of the Telecommunications Act of 1996. 
Some argue that new services and devices compete directly with 
broadcast radio while others argue that they do not.
    As part of our quadrennial review, we have commissioned a number of 
economic studies. One study, ``Station Ownership and Programming in 
Radio'', will use station-level data to examine how ownership 
structures affect the programming and audiences of radio stations. The 
results of this study and another study concerning radio, ``Radio 
Industry Review: Trends in Ownership, Format, and Finance'', should 
provide the Commission with more information on whether and, if so, how 
ownership and changes in the radio market affect the programming and 
news available on radio.
    Finally, in connection with the Commission's media ownership and 
localism proceedings, we are conducting hearings around the country to 
solicit public comment and to engage the American people in the process 
of reviewing the status of the media marketplace. One recent hearing, 
held in Nashville, focused on the general state of the music and radio 
industries. The Commission's efforts to collect a thorough public 
record will continue in the months ahead, with three more ownership 
hearings, and two additional hearings specifically focused on localism.
    Once our hearings and studies are complete, we will be in a better 
position to speak to both the impact of consolidation and how the radio 
marketplace has changed.

    Question 4. How has consolidation impacted the public's ability to 
hear local music and local news on the airwaves?
    Answer. We have received many complaints about the impact of media 
ownership on the public's ability to hear local music and local news on 
the airwaves. The impact of the current radio ownership rules on 
diversity, localism and competition is one of the key issues raised in 
the periodic review of our media ownership rules and broadcast localism 
proceedings. The extent to which broadcasters air local content is an 
issue frequently raised by commenters and is being addressed in two of 
the economic studies we have commissioned. The Commission's efforts to 
collect a thorough public record will continue in the months ahead, 
with three more ownership hearings, and two additional hearings 
specifically focused on localism. Once our hearings and studies are 
complete, we will be in a better position to speak to both the impact 
of consolidation and how the radio marketplace has changed.

    Question 5. Even with the existence of net neutrality conditions on 
AT&T, are there rules in place to ensure that other broadband providers 
do not discriminate against Internet content, services or applications? 
Given the rulings on information services, is it even clear that the 
FCC has authority to act if such discrimination occurs?
    Answer. Although the Commission has not adopted any rules, in 
August 2005, the Commission adopted an Internet Policy Statement ``to 
ensure that broadband networks are widely deployed, open, affordable, 
and accessible to all consumers.'' Specifically, the Commission adopted 
the four following principles:

   To encourage broadband deployment and preserve and promote 
        the open and interconnected nature of the public Internet, 
        consumers are entitled to access the lawful Internet content of 
        their choice.

   To encourage broadband deployment and preserve and promote 
        the open and interconnected nature of the public Internet, 
        consumers are entitled to run applications and use services of 
        their choice, subject to the needs of law enforcement.

   To encourage broadband deployment and preserve and promote 
        the open and interconnected nature of the public Internet, 
        consumers are entitled to connect their choice of legal devices 
        that do not harm the network.

   To encourage broadband deployment and preserve and promote 
        the open and interconnected nature of the public Internet, 
        consumers are entitled to competition among network providers, 
        application and service providers, and content providers.

    The Commission, under Title I of the Communications Act, has the 
ability to adopt and enforce the net neutrality principles it announced 
in the Internet Policy Statement. The Supreme Court reaffirmed last 
year that the Commission ``has jurisdiction to impose additional 
regulatory obligations under its Title I ancillary jurisdiction to 
regulate interstate and foreign communications.'' National Cable & 
Telecomm. Ass'n v. Brand X Internet Services, 125 S. Ct. 2688, 2696 
(2005) (Brand X). Indeed, the Supreme Court specifically recognized the 
Commission's ancillary jurisdiction to impose regulatory obligations on 
broadband Internet access providers. Brand X, 125 S. Ct at 2708 
(``[T]he Commission remains free to impose special regulatory duties on 
facilities-based ISPs under its Title I ancillary jurisdiction. In 
fact, it has invited comment on whether it can and should do so.'').
    Although the Commission did not adopt net neutrality rules, the 
Commission has the ability to take appropriate steps where needed. For 
example, when we learned that a particular phone company was blocking 
access to a competing VoIP provider, we opened an investigation and 
negotiated a consent decree that made the company cease discriminating 
and pay a fine. The Commission will not hesitate to take similar 
action, to the extent necessary, in the future.

    Question 6. In an environment of industry consolidation and 
technological integration, what role do you see the FCC playing to 
ensure nondiscriminatory access to infrastructure, content, roaming, 
spectrum and rights-of-way?
    Answer. The FCC continues to play a critical role in ensuring 
nondiscriminatory access in a variety of ways, and has continued to 
reexamine its role throughout the competitive and technological 
developments in the industry. Within the broader goals of its governing 
statutes, such as promoting competition, deregulating, and encouraging 
broadband deployment, as well as the specific parameters of individual 
provisions, the Commission has undertaken and continues to undertake a 
variety of rulemaking, enforcement, and other administrative measures.
    For example, section 251(c)(3) of the Act requires incumbent LECs 
to provide requesting telecommunications carriers nondiscriminatory 
access to network elements on a unbundled basis at any technically 
feasible point on rates, terms, and conditions that are just, 
reasonable, and nondiscriminatory. The Commission has issued numerous 
orders addressing this statutory obligation.
    And specifically, a number of Commission rules and policies are 
designed to provide nondiscriminatory access to essential assets that 
are necessary to the development of a competitive marketplace that 
promotes both consumer choice and technological innovation. In the 
content area, for example, our program access rules help to ensure that 
competitive multichannel video programming distributors (``MVPDs'') 
have access to popular programming services that are owned by cable 
operators on nondiscriminatory terms and conditions. In addition, the 
Commission has established program carriage regulations which are 
intended to ensure that independent program vendors are treated fairly 
by all video programming distributors. The Commission's rules also 
require cable television system operators to set aside channel capacity 
for leasing to unaffiliated programmers on terms and conditions subject 
to Commission oversight.
    The Commission also recently adopted regulations which prohibit 
local franchising authorities from unreasonably refusing to award 
competitive franchises for the provision of cable services. These rules 
will work to ensure that entities seeking to provide competitive video 
programming services to consumers will have nondiscriminatory access to 
local rights-of-way. Further, the Commission will soon examine whether 
and, if so, how competitive video providers are blocked from offering 
service to consumers who reside in apartment houses and other multi-
dwelling unit buildings.
    Regarding roaming, since 1996, the Commission has required that 
cellular, PCS, and certain SMR providers make manual roaming service 
available upon request to customers of other carriers, provided that 
the roamers' handsets are technically capable of accessing the roaming 
network. The Commission is currently examining whether its roaming 
requirements should be modified given the current state of the 
commercial mobile services market, including whether we should require 
carriers to provide automatic roaming.
    The Commission uses a variety of means to promote access to 
spectrum. In advance of the AWS-1 auction, the Commission took a number 
of measures to further participation of small businesses and rural 
telephone companies (e.g., designated entities) in the provision of 
wireless services. Shortly after I became Chairman in 2005, the 
Commission adopted a proposal to reconsider the AWS-1 band plan to 
address the needs of smaller entities for more manageable spectrum 
blocks and geographic license areas. The order designated more spectrum 
for licensing over smaller and rural geographic areas to promote access 
to AWS-1 spectrum by smaller carriers, new entrants, and rural 
telephone companies. It also broke portions of the spectrum into 
smaller bandwidth sizes, or ``blocks,'' to facilitate access.
    In addition to modifying the AWS-1 band plan, the Commission 
initiated a proceeding in early 2006 to consider whether we should 
modify our general competitive bidding rules governing benefits 
reserved for designated entities. During our reconsideration of the 
AWS-1 service rules, some had expressed concern that bidding credits 
intended for designated entities were instead benefiting companies with 
billions of dollars in revenues, who were partnering with small 
businesses to gain access to the bidding credits. We initiated a review 
of our rules to consider ways to curb these practices and subsequently 
adopted an order and applied it to the AWS-1 auction that strengthened 
our unjust enrichment rules, leasing requirements, reporting 
obligations, and auditing to better deter entities from attempting to 
circumvent our designated entity eligibility requirements.
    Going forward, I believe the Commission should use its experience 
in the AWS-1 auction as a guide in completing our reexamination of the 
rules applicable to our upcoming auction of 700 MHz spectrum. I believe 
we should reconfigure this spectrum to provide for smaller geographic 
licensing areas similar to the AWS-1 band plan. Providing for smaller 
license areas would likely make it easier for designated entities and 
other smaller companies to participate in the upcoming auction.
    The Commission also continues to license new radio stations in the 
AM, FM, and low power FM (``LPFM'') services, and to facilitate the 
transition from analog to digital technology in the television 
industry. To promote entry into broadcast markets in circumstances 
where the spectrum is required to be auctioned, the Commission provides 
bidding credits to new entrants, including businesses owned by 
minorities and women, that do not have an attributable ownership 
interest in more than three mass media facilities. Under this policy, a 
new entrant with no attributable interests is eligible for a 35 percent 
bidding credit, while a new entrant with an attributable interest in 
three or fewer mass media facilities would be eligible for a 25 percent 
bidding credit. In cases where an auction cannot be used, such as NCE 
radio and television service, the Commission employs objective 
selection criteria to determine the competing applicant that will be 
authorized to use the spectrum.
    Finally, another idea the Commission is considering is to allow 
small and independently owned businesses to enter the broadcast 
industry by leasing some of an existing broadcaster's spectrum to 
distribute their own programming. Conversion to digital operations 
enables broadcasters to fit a single channel of analog programming into 
a smaller amount of spectrum. Often, there is additional spectrum left 
over that can be used to air other channels of programming. Small and 
independently owned businesses could take advantage of this capacity 
and use a portion of the existing broadcasters' digital spectrum to 
operate their own broadcast channel. This new programming station would 
then obtain all the accompanying rights and obligations of other 
broadcast stations, such as public interest obligations and carriage 
rights.

    Question 7. Do you think that the current broadband market is 
sufficiently competitive and robust in terms of broadband deployment? 
Does the FCC currently have sufficient tools to even accurately 
determine whether Americans have access to broadband?
    Answer. Encouraging the deployment of broadband infrastructure is a 
top priority. Since I arrived at the Commission in July 2001, high-
speed lines in the U.S. have gone from more than 9 million to nearly 65 
million. According to the Commission's most recent data, high-speed 
connections increased by 26 percent in the first half of 2006 and by 52 
percent for the full year ending June 30, 2006.
    An independent study by Pew confirmed this trend, finding that from 
March 2005 to March 2006, overall broadband adoption increased by 40 
percent--from 60 to 84 million--twice the growth rate of the year 
before. The study found that, although overall penetration rates in 
rural areas still lags behind urban areas, broadband adoption in rural 
America also grew at approximately the same rate (39 percent).
    Perhaps most importantly, the Pew study found that the significant 
increase in broadband adoption was widespread and cut across all 
demographics. According to their independent research:

   broadband adoption grew by almost 70 percent among middle-
        income households (those with incomes between $40,000 and 
        $50,000 per year);

   broadband adoption grew by more than 120 percent among 
        African Americans;

   broadband adoption grew by 70 percent among those with less 
        than a high school education; and

   broadband adoption grew by 60 percent among senior citizens.

    According to the Pew study, the price of broadband service has also 
dropped in the past 2 years. Specifically, the Pew Report found that 
between February 2004 and December 2005, the average price for high-
speed service declined from $39 per month to $36 per month. Currently, 
Verizon and Comcast each offer promotional broadband packages for 
$19.99 per month, for example, and AT&T and BellSouth have committed to 
providing new retail broadband customers a $10 a month broadband 
Internet access service throughout the combined region.
    The Commission has worked hard to create a regulatory environment 
that promotes investment and competition. We have taken actions to 
ensure that there is a level-playing that fosters competition and 
investment in broadband infrastructure. The Commission has also removed 
legacy regulations like tariffs and price controls that discouraged 
providers from investing in broadband networks. More recently, the 
Commission took action under section 621 of the Act, to ensure that 
local franchising authorities do not unreasonably refuse to award new 
video service providers the franchises they need to compete against 
incumbent cable operators.
    In the wireless area, the Commission has made a significant amount 
of spectrum available on both a licensed and unlicensed basis that can 
be used to provide broadband service in municipalities, rural areas and 
across the Nation. For example, on the licensed side, we completed an 
auction of 90 megahertz of spectrum for advanced wireless services that 
generated the largest-ever receipts totaling nearly $14 billion. We 
have also taken steps to completely reconfigure nearly 200 megahertz of 
spectrum in the 2.5 GHz region to create new broadband opportunities.
    On the unlicensed side, the Commission completed actions necessary 
to make available 255 MHz of unlicensed spectrum in the 5 GHz region, 
nearly an 80 percent increase, that will fuel the deployment of Wi-Fi 
well into the future. And, last fall, the Commission initiated a 
proceeding to resolve technical issues associated with ``white spaces'' 
so that low power devices designed to operate on unused television 
frequencies may reach the market with the completion of the DTV 
transition.
    We will continue to encourage deployment of broadband from all 
providers using a variety of technologies. As wireless technologies 
become an increasingly important platform for broadband access, it is 
critical to ensure that there is adequate spectrum available for 
providing broadband service. Spectrum auctions will continue to be an 
important part of our strategy for facilitating the build-out of mobile 
broadband networks. For example, the upcoming auction of spectrum in 
the 700 MHz region is well suited for the deployment of broadband 
services.
    The Commission is also considering an order that would classify 
wireless broadband Internet access service as an information service. 
This action would eliminate unnecessary regulatory barriers for service 
providers. This classification also would clarify any regulatory 
uncertainty and establish a consistent regulatory framework across 
broadband platforms, as we have already declared high-speed Internet 
access service provided via cable modem service, DSL and BPL to be 
information services. This action is particularly timely in light of 
the recently auctioned AWS-1 spectrum for wireless broadband and our 
upcoming 700 MHz auction.
    The Commission will continue to look for new and innovative ways to 
facilitate the deployment of broadband technologies. We are committed 
to furthering the universal availability and adoption of affordable 
broadband services.
    Obtaining information that is useful to gauge deployment and 
consumer subscription to broadband is an ongoing effort at the 
Commission. In order to gain an even better picture of the extent of 
broadband deployment and consumer acceptance of broadband, I have 
circulated a Notice of Proposed Rulemaking (NPRM) to the Commission 
that asks questions about how we can obtain more specific information. 
In particular, the NPRM asks questions about how we can obtain more 
specific information about broadband deployment and consumer acceptance 
in specific geographic areas and how we can combine our data with those 
collected at the state level or by other public sources. By improving 
our data collection, we will be able to identify more precisely those 
areas of the country where broadband services are not available.
    I have also circulated our fifth inquiry under section 706 of the 
Telecommunications Act of 1996 into ``whether advanced 
telecommunications capability is being deployed to all Americans in a 
reasonable and timely fashion.'' 47 U.S.C. Sec. 157 nt. In this Notice, 
we seek comment on all aspects of broadband availability, including 
price and bandwidth speeds. In particular, we seek comment on whether, 
given the evolution of technology and the marketplace, we should 
redefine the term ``advanced services'' to require a higher minimum 
speed in one or both directions. Between these two proceedings, it is 
my hope that the Commission will solicit the information necessary to 
better assess the competitive progress in the broadband market.

    Question 8. How do you envision universal service reform moving 
ahead to keep the fund sustainable? I am concerned about proposals that 
would not require broadband connections to pay into universal service, 
or reverse auction proposals that advocate providing USF support in an 
auction type model to the least cost provider. Such proposals bring 
uncertainty to investment plans, and shift the universal service 
standard from comparable to urban areas, to one that would just go to 
the lower bidder, quality irrelevant. I understand that rural providers 
have expressed concern about both proposals. Can you discuss the least 
cost provider issue, as well as what possible distinctions exist to 
justify excluding broadband from paying into USF--why shouldn't a 
technology that uses and benefits from the network pay into universal 
service?
    Answer. I believe that a modern and high quality telecommunications 
infrastructure is essential to ensure that all Americans, including 
those living in rural communities, have access to the economic, 
educational, and healthcare opportunities available on a broadband 
network. Our universal service program must continue to promote 
investment in rural America's infrastructure and ensure access to 
telecommunications services that are comparable to those available in 
urban areas today, as well as provide a platform for delivery of 
advanced services. Indeed, in the Federal-State Universal Service Joint 
Board's (Joint Board) 2002 Recommended Decision, I urged the Commission 
to explore how, and to what extent, the Federal universal service 
support mechanism could assist the deployment of advanced services, or 
at least the removal of barriers to such deployment, particularly in 
rural, remote and high cost areas throughout the country.
    Unfortunately, the discussion about using universal service to fund 
broadband is being overshadowed by the uncontrolled growth in the fund 
as a result of subsidizing multiple competitors to provide voice 
services in rural areas. Before the Joint Board can make real progress 
on the true mission of universal service, ensuring access to high 
quality communications services in rural areas of the country, it must 
act to address the growth in the fund caused by competitive eligible 
telecommunications carriers. Specifically, CETC payments have been 
growing at a trend rate of 101 percent per year since 2002. In 2000, 
CETCs received $1 million in support. Based on recent USAC estimates, 
CETCs received almost $1 billion in 2007. And, CETC support in 2007 is 
estimated to be at least $1.28 billion.
    Of course, any viable reverse auction proposal will need to address 
concerns that the auctions might be won by service providers that have 
low costs, but offer poor service quality. I am hopeful that these 
concerns can be addressed through an auction design that clearly 
defines the substantial obligations, including service requirements of 
the auctions winner.
    Although the use of reverse auctions is one way of limiting the 
growth of the fund, I remain open to other ideas that could restrain 
growth and prioritize broadband investment in underserved areas of the 
country. The Joint Board will be issuing recommendations on these 
issues in the near future.
    Another aspect of universal service reform is examining the current 
contribution methodology. Preserving the stability of the universal 
service contribution system is one of the Commission's most important 
responsibilities. Changes in technology and increases in the number of 
carriers who are receiving universal service support have placed 
significant pressure on the stability of the fund. Today, universal 
service contributions are assessed on the interstate portion of end-
user telecommunications revenues of providers of telecommunications 
services and certain other providers of telecommunications, such as 
interconnected Voice over Internet Protocol (VoIP). support reforming 
the current contribution system and moving to a more competitively and 
technology neutral system based on telephone numbers. Specifically, 
such an approach would help maintain the stability of the fund by 
assessing all technologies used to make a phone call on a similar 
basis. Nevertheless, as the Commission reviews the various proposals to 
reform the current assessment system, it will carefully weigh the 
record and examine the potential impact of any course of action on all 
consumers.

    Question 9. What is your view of making the deployment of advanced 
infrastructure that is fully capable of offering the wide array of 
broadband oriented services the hallmark of our national universal 
service policy? Should universal service subsidize broadband?
    Answer. I believe that a modern and high quality telecommunications 
infrastructure is essential to ensure that all Americans, including 
those living in rural communities, have access to the economic, 
educational, and healthcare opportunities available on a broadband 
network. Our universal service program must continue to promote 
investment in rural America's infrastructure and ensure access to 
telecommunications services that are comparable to those available in 
urban areas today, as well as provide a platform for delivery of 
advanced services. Indeed, in the Federal-State Universal Service Joint 
Board's 2002 Recommended Decision, I urged the Commission to explore 
how, and to what extent, the Federal universal service support 
mechanism could assist the deployment of advanced services, or at least 
the removal of barriers to such deployment, particularly in rural, 
remote and high cost areas throughout the country.
    Unfortunately, the discussion about using universal service to fund 
broadband is being overshadowed by the uncontrolled growth in the fund 
as a result of subsidizing multiple competitors to provide voice 
services in rural areas. Before the Joint Board can make real progress 
on the true mission of universal service, ensuring access to high 
quality communications services in rural areas of the country, it must 
act to address the growth in the fund caused by competitive eligible 
telecommunications carriers. Specifically, CETC payments have been 
growing at a trend rate of 101 percent per year since 2002. In 2000 
CETCs received $1 million in support. Based on recent USAC estimates, 
CETCs received almost $1 billion in 2007. And, CETC support in 2007 is 
estimated to be at least $1.28 billion.
    Nevertheless, I would welcome the passage of an effective broadband 
deployment program that would make efficient use of scarce universal 
service moneys. Indeed, at an en banc meeting of the Federal-State 
Joint Board on Universal Service held on February 20, 2007, I and many 
of my Joint Board colleagues expressed support for exploring whether to 
support explicitly broadband as part of the high-cost universal service 
mechanism. To the extent legislation is passed, the Commission will 
faithfully and effectively implement it.

    Question 10. The FCC recently has been granting incumbent providers 
(ILECs) forbearance from regulations on the premise that sufficient 
competition exists in a specific market to make enforcement of the 
regulations unnecessary. However, a Fall 2006 GAO report indicates that 
the assumptions the FCC uses to determine the existence of competition 
may be flawed and further that prices in Phase II areas--that is, areas 
where competition is theoretically most intense--are going up. Is that 
the case, and if so, are price increases consistent with a competitive 
market?
    Answer. As you note, on November 30, 2006, the U.S. Government 
Accountability Office (GAO) released a report entitled 
Telecommunications FCC Needs to Improve Its Ability to Monitor and 
Determine the Extent of Competition in Dedicated Access Services (GAO-
07-80). On January 29, 2007, I provided my written response to the GAO 
conclusions and recommendations contained in this report to the 
Chairman and Ranking member of the U.S. Senate Committee on Homeland 
Security and Governmental Affairs and the Chairman and Ranking Member 
of the U.S. House of Representatives Committee on Oversight and 
Government Reform. In that letter I outline in detail my concerns with 
the GAO's findings and the steps the Commission will take to respond to 
the recommendations contained in the report. I have attached a copy of 
that letter for your review.
    Significantly, the GAO did not conclude that prices for special 
access are going up in Metropolitan Statistical Areas (MSAs) that 
received Phase II pricing flexibility. Rather, the GAO Report concluded 
that such prices were higher than in areas with less regulatory relief 
(Phase I pricing flexibility). These factual findings appear to be 
based primarily on two studies. Without access to the data used to 
perform these studies, the Commission cannot evaluate the reliability 
of the GAO studies or assess the validity of the conclusions drawn. 
therefrom. For example, we do not know what rate elements the incumbent 
LECs included in generating their average revenue data and how that 
might have affected the estimates. It is also not clear how differences 
in demand from one MSA to another may have affected the average revenue 
estimates.
    Although the GAO Report states that it attempted to address this 
problem by weighting the data, it is not clear how this was 
accomplished. Moreover, the GAO Report acknowledges that theirs was an 
``imperfect weight.'' Thus, we are unable to assess the reliability or 
relevance of these studies. Assuming these studies are true, the 
previous Commission in the Pricing Flexibility Order explicitly 
recognized that Phase II pricing relief could lead to price increases 
for some customers in some areas, but explained that such a result was 
still superior to continued price regulation for two reasons. First, 
the previous Commission explicitly recognized that our special access 
pricing rules ``may have required incumbent LECs to price access 
services below cost in certain areas.'' Accordingly, in such 
circumstances price increases may be consistent with a competitive 
market. Second, the Commission found that ``[i]f an incumbent LEC 
charges an unreasonably high rate for access to an area that lacks a 
competitive alternative, that rate will induce competitive entry, and 
that entry will in turn drive rates down.'' Nevertheless, we have asked 
the GAO for all the data underlying its report so that we may review it 
more completely.

    Question 11. Is forbearance for the ILECs in the public interest?
    Answer. Each petitioner bears the burden of establishing that the 
forbearance criteria outlined in section 10 of the Act are satisfied. 
Significantly, in evaluating an application, the Commission must 
determine, among other matters, whether grant of the petition would 
serve the public interest. Each application is judged on its own merits 
based on the specific factual circumstances at issue. Section 10 
permits all telecommunications carriers--incumbents and competitors 
alike--to avail themselves of this relief.

    Question 12. A proceeding to investigate the rates, terms and 
conditions for interstate special access services has been pending for 
a number of years. What is the status of the FCC's special access 
proceeding? What steps are being taken to speed resolution of this 
matter?
    Answer. The Commission is currently evaluating whether current 
market conditions warrant any revisions to our rules in this area. On 
January 30, 2007, the Commission sent a letter to the GAO requesting 
access to the data underlying the conclusions and recommendations 
contained in the GAO Report, Telecommunications FCC Needs to Improve 
Its Ability to Monitor and Determine the Extent of Competition in 
Dedicated Access Services (GAO-07-80). The Commission has not yet 
received access to that data. Receipt of this data will better enable 
the Commission to determine what actions, if any, we should take with 
respect to these issues.

    Question 13. Some say that the dispute between Mediacom and 
Sinclair signals a new period of confrontation between broadcasters and 
distributors. How many complaints involving retransmission consent 
disputes has the Commission received in the last couple of years? Is 
there any trend within that data that may be useful to consider? How 
long does the Commission typically take to resolve those complaints?
    Answer. Since the adoption of the good faith retransmission consent 
negotiation rules in March 2000, the Commission has received 17 
complaints. All but four of the complaints were withdrawn after the 
parties settled the dispute through negotiation. The first complaint 
addressed by the Commission under the good faith rule, was resolved by 
the Commission in approximately four and a half months. EchoStar 
Satellite Corporation v. Young Broadcasting, Inc., 16 FCC Rcd 15070 
(CSB 2001). Recently, the Commission resolved a good faith dispute 
arising from the retransmission consent negotiations between Sinclair 
Broadcast Group, Inc. and Mediacom Communications Corporation. Mediacom 
filed its complaint with the Commission on October 31, 2006. On January 
4, 2007, a little over 2 months after receiving the complaint, the 
Commission issued an order on the merits finding that Sinclair did not 
breach its duty to negotiate retransmission consent in good faith. 
Thereafter, Mediacom filed an Application for Review of the initial 
order. As you are aware, Mediacom and Sinclair settled their dispute by 
entering into a long-term retransmission consent agreement before the 
Commission could act on the Application for Review. Another complaint 
involved a broadcaster and cable television system operator in Puerto 
Rico in which the allegation of bad faith negotiation was tangential to 
the larger issue of whether the cable operator was carrying a 
broadcaster's signal without valid retransmission consent. That 
complaint was filed with the Commission on October 12, 2006 and was 
resolved in about four and a half months. The remaining pending 
complaint was filed on January 25, 2007, and involves VDC Corporation 
(a provider of Internet video streaming services) and CBS Broadcasting, 
Inc. The pleading cycle in this matter is not yet closed.

    Question 14. One issue specifically important for public radio 
stations is the opportunity to file for and receive additional reserved 
FM spectrum. It has been almost 7 years since the FCC provided the 
public with an opportunity to build new noncommercial educational 
stations on reserved FM spectrum. When will the FCC open a filing 
window for new reserved-FM noncommercial stations? Will the FCC provide 
public notice of a filing window sufficiently in advance to permit non-
profit, governmental, and other potential applicants adequate time to 
participate?
    Answer. The Commission currently is considering an order that will 
resolve 76 comparative licensing proceedings by applying, where 
appropriate, the Commission's ``point system'' used to select among 
competing applicants for a particular authorization. Upon release of 
this omnibus NCE order, the Commission intends to move forward 
immediately with the first-ever NCE FM application filing window. 
Because we recognize that some potential NCE applicants are not 
particularly knowledgeable about radio station licensing procedures, 
the Commission recognizes it needs to provide sufficient lead time for 
applicants to organize, determine whether spectrum is available, secure 
financing, and obtain reasonable assurance of transmitter site 
availability. To that end, the Commission will issue a detailed Public 
Notice announcing filing procedures and explaining comparative 
licensing rules at least ninety days prior to the opening of the filing 
window. The Commission also is considering outreach efforts to promote 
wide participation by community organizations, Indian tribes, and other 
non-profit entities.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                          Hon. Kevin J. Martin
    Question 1. In the Commission's September 2006 Public Notice on 
digital white spaces, you established a timetable for completing the 
final rules and issuing a final order by October 2007. Will the order 
cover all pending issues in the rulemaking? Does this include all 
requisite field testing?
    Answer. The Commission laid out a projected timetable for the white 
spaces proceeding in the First Report and Order and Further Notice of 
Proposed Rule Making adopted in October 2006. Specifically, the 
Commission stated that it intends to issue a report on measurements of 
DTV interference rejection capabilities by March 2007. It also intends 
to conduct a testing program, including field testing, to assess the 
potential for interference from low power devices in the TV bands and 
issue a report of the results by July 2007. The Commission also stated 
that it expects to adopt a Second Report and Order specifying final 
requirements for devices in the TV bands in the fall of 2007, and 
expects to begin accepting applications for certification of TV band 
devices by late 2007.
    We are currently on schedule and it is our intention to address all 
of the outstanding issues in the Second Report and Order that is 
planned for later this year. We are also considering whether we can 
accelerate the schedule; however, we must allow sufficient time for 
completion of the Laboratory and field tests, as well as thorough 
technical analysis of the public record, before adopting final rules. 
Although an industry coalition has indicated plans to deliver one or 
more prototype devices to our Laboratory for testing later this month, 
we have not yet received any such devices.

    Question 2. The Public Notice also stated that the Office of 
Engineering Technology would begin accepting devices for certification 
of unlicensed operations in the TV bands. How quickly does the 
Commission plan to decide on applications submitted to its Laboratory? 
Does the FCC have the human and financial resources to do meaningful 
field-testing in the white spaces?
    Answer. We plan to accept applications for certification of devices 
operating in the TV white spaces once the rules are finalized. Our 
processing time for certification of unlicensed devices by the FCC 
Laboratory is about 50 days. We believe we have sufficient staff and 
resources to perform meaningful Laboratory and field tests of devices 
operating in the TV white spaces. We will continue to monitor the 
situation.

    Question 3. The Commission's October 2006 Order and Further Notice 
stated that it would allow products to use the white spaces upon 
completion of the DTV transition after February 17, 2009. If devices 
can operate without causing harmful interference to licensees, why 
would the Commission delay the sale and use of devices until after the 
DTV transition ends on February 17, 2009?
    Answer. During the DTV transition, the TV spectrum has been a 
particularly crowded and dynamic environment. Most TV stations are 
currently broadcasting on both analog and digital channels, and it has 
been a challenge to accommodate all of these operations without causing 
harmful radio-frequency interference. Many TV stations have not 
completed building their transition facilities and their power and 
coverage patterns are changing. Other operations, such as low power TV, 
TV translators and wireless microphones are also adjusting their 
operations in response to this process. These ongoing changes have made 
it difficult to assess the amount of white space that might ultimately 
be available.
    Although several parties have suggested that TV white space 
spectrum will be available even during the DTV transition, they also 
assert that we should rely on spectrum sensing techniques to detect 
these white spaces and avoid causing harmful interference to existing 
services. Spectrum sensing techniques are promising. However, such 
proposed devices have yet to be proven effective in this particular 
spectrum environment, and no such devices have yet been provided to our 
Laboratory for testing. To the extent such devices are proven 
effective, we could consider allowing their operation sooner.
    Finally, the Commission's time line for allowing the marketing of 
such products was developed with industry input. Industry has indicated 
that it would take manufacturers 18-24 months from the time final rules 
are adopted before products could be designed, manufactured, and 
delivered to the market. According to their own projections, it is 
unlikely that any white spaces devices would be available prior to the 
end of the DTV transition. Nevertheless, we are prepared to accept 
equipment authorization applications once the rules are finalized so 
that manufacturers will be in position to introduce products as soon as 
possible.

    Question 4. On February 13 and 14, 2007, the Federal Trade 
Commission will host a public workshop on ``Broadband Connectivity 
Competition Policy'', bringing together experts from business, 
government, and the technology sector, consumer advocates, and 
academics to explore competition and consumer protection issues 
relating to broadband Internet access, including so-called ``net 
neutrality.'' What do you see as the appropriate roles between the FTC 
and the FCC with respect to ``net neutrality''?
    Answer. The FCC and FTC traditionally have coordinated to protect 
consumers where the agencies' interests and jurisdictions intersect. 
For example, we have worked closely with the FTC in implementing and 
enforcing the Telephone Consumers Protection Act and in various 
investigations such as pretexting. I believe we have worked together 
effectively in the past and will continue to do so as appropriate on 
issues such as ``net neutrality.''

    Question 5. Washington State is home to the wireless industry. 
Craig McCaw and other entrepreneurs in my state founded the companies 
that became AT&T Wireless, T-Mobile, Nextel and other smaller wireless 
carriers. The innovation of the wireless industry has proven the power 
of competition, new applications and services, lower costs and improved 
service for consumers. I am very supportive of the industry developing 
new and innovative applications while at the same time being concerned 
about ensuring sensitive customer information is protected. How does 
the Commission make certain that its CPNI rules finds the right balance 
between protecting customer privacy while not having an unintended 
consequence of severely hampering innovation in this dynamic industry? 
For example, how does the Commission approach a wireless application 
where carriers use aggregated, anonymous signaling data from inside the 
carrier firewall to deliver real-time traffic data to local, state and 
Federal Departments of Transportation nationwide?
    Answer. The Act's CPNI rules balance carriers' interests with 
consumers' privacy interests. The level of privacy protection varies 
based on the sensitivity of the customer information at issue. The Act 
affords greater protection for personally identifiable CPNI than it 
does for aggregate customer information that does not disclose 
personally identifying information. Assuming the circumstances that you 
describe concern the transmittal of CPNI, section 222(c)(3) allows a 
carrier to disclose such aggregate customer information so long as the 
individual customer identities have been removed.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                          Hon. Kevin J. Martin

    Question 1. It is my understanding that there are at least four 
investigations pending at the FCC into possible violations of 
sponsorship identification rules. Some of these investigations have 
been pending for two or 3 years. Should there be a deadline for the FCC 
to act on these complaints? Does the FCC have adequate staff and 
resources to conduct these investigations?
    Answer. We have a number of investigations regarding possible 
violations of the Commission's sponsorship identification rules that 
have been pending for varying amounts of time. Currently circulating 
among the Commissioners are four consent decrees involving large 
broadcast groups accused of violating these rules. If Congress chooses 
to set deadlines for Commission action on sponsorship identification 
complaints, we would comply. The Commission has adequate resources to 
conduct these investigations.

    Question 2. In approximately 2 years, broadcasters will shift to 
digital television. There are over 200,000 homes in New Jersey that 
rely exclusively on over-the-air television. Do you think most 
Americans are educated about this transition today? What role will the 
FCC play in preparing the public for this transition?
    Answer. As your question suggests, there are a significant number 
of Americans who rely exclusively on over-the-air television for news, 
public safety information, and other content. As we approach the 
February 17, 2009, deadline for the end of analog broadcasting, the 
Commission recognizes the importance of ensuring that consumers have 
access to the information they need to make informed decisions 
regarding the DTV transition. To that end, the Commission has 
undertaken consumer education efforts and worked with broadcasters, 
manufacturers, retailers, consumer organizations, and state and local 
governments to encourage their voluntary efforts to inform consumers 
about the DTV transition.
    The Commission has a website dedicated exclusively to the digital 
transition (http://www.dtv.gov) which provides information about the 
transition, equipment needed, and programming available, and also 
serves as a clearinghouse with links to broadcast, cable, satellite, 
consumer electronics manufacturing and retail. Our consumer education 
activities also include publications, participation in public exhibits, 
and community and consumer-oriented events. The Commission's Consumer 
and Government Affairs Bureau developed an ``Outreach Toolkit,'' 
available on our website, for consumer and community organizations to 
use in conducting their own local DTV consumer education programs. Our 
publications provide a range of information, from a booklet with 
general background information, DTV: What Every Consumer Should Know, 
to a brief Shopper's Guide and Tip Sheet. Most of our DTV information 
also is available in Spanish, and we are working on translations to 
other languages. The outreach staff also has participated in exhibits 
and presentations to a number of groups including AARP, the National 
Council of La Raza, the NAACP, educational institutions, and others.

    Question 3. New Jersey is the second largest net contributor among 
states to the existing Universal Service Fund in the amount of almost 
$200 million per year. Can you identify what your plans are for 
modifications to the current system and how they would affect New 
Jersey?
    Answer. Preserving the stability of the universal service 
contribution system is one of the Commission's most important 
responsibilities. Changes in technology and increases in the number of 
carriers who are receiving universal service support have placed 
significant pressure on the stability of the fund. Today, universal 
service contributions are assessed on the interstate portion of end 
user telecommunications revenues of providers of telecommunications 
services and certain other providers of telecommunications, such as 
interconnected Voice over Internet Protocol (VoIP). I support reforming 
the current contribution system and moving to a more competitively and 
technology neutral system based on telephone numbers. Specifically, 
such an approach would help maintain the stability of the fund by 
assessing all technologies used to make a phone call on a similar 
basis. Nevertheless, as the Commission reviews the various proposals to 
reform the current assessment system, it will carefully weigh the 
record and examine the potential impact of any course of action on all 
consumers. Because the Commission has yet to adopt a numbers-based 
methodology, it is not possible to know with any precision how such a 
change would affect specific states. I do believe, however, that such a 
system would be more sustainable and equitable than the current system.
    In addition, the Federal-State Joint Board on Universal Service 
(Joint Board) is exploring whether a ``reverse auction'' mechanism 
could be used as the basis for distributing universal service high-cost 
support. I believe that reverse auctions could provide a 
technologically and competitively neutral means of controlling fund 
growth and ensuring a move to most efficient technology over time. 
Indeed, just last month, the Joint Board held a hearing in which it 
heard testimony on the use of reverse auctions to determine universal 
service support as well as other ways to control the growth of the 
universal service fund. Although the use of reverse auctions is one way 
of limiting the growth of the fund, I remain open to other ideas that 
could restrain growth and prioritize broadband investment in 
underserved areas of the country. The Joint Board will be issuing 
recommendations on these issues in the near future.

    Question 4. In a filing with the FCC on the Missoula Plan, the New 
Jersey Board of Public Utilities notes that: ``The result is the Plan 
shifts the burden from carriers to consumers, in particular low and 
middle-income, low-usage urban consumers and the Plan will further 
burden New Jersey ratepayers by more than $300 million with little or 
no attendant benefits. This Plan is bad for consumers, and particularly 
low and middle-income consumers, who are the least able to afford the 
increased charges which are nothing more than additional subsidies.'' 
What is the status and time line for review of the Inter-Carrier 
Compensation (ICC) reform proceeding at the FCC, and in particular the 
Missoula Plan? Has the FCC done an assessment of how the Plan would 
affect residents in each state?
    Answer. The Commission is currently examining several proposals in 
the intercarrier compensation reform proceeding docket. The Missoula 
Plan is one such proposal. We recently sought comment on the Missoula 
Proposal and we received an extensive amount of information on the 
record in response. The Commission is currently reviewing this 
extensive record to determine how to address this complicated issue in 
a manner that best serves the public interest. The supporters of the 
Missoula Plan recently filed additional information regarding methods 
to lessen the burden on states that have already taken steps to reform 
intercarrier compensation by reducing intrastate access charges and/or 
creating state universal service funds. This filing includes an 
assessment of how adoption of the proposal would affect each state. We 
have sought additional comment on this filing, and the record in 
response does not close until April 3, 2007.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Mark L. Pryor to 
                          Hon. Kevin J. Martin

    Question 1. Over the past 4 years, consumers have enjoyed the 
successful emergence of a number of new players in the audio 
marketplace. Satellite radio and Internet radio now reach tens of 
millions of listeners every week, and portable MP3 players and iPods 
have become common household items. Digital Cable and DBS offer dozens 
of channels of uninterrupted music, and Wi-Max technology is evolving 
that will soon allow Internet-based listening options in automobiles. 
Would the Commissioners agree that the competitive landscape has 
changed dramatically in the audio market over the past few years? And 
would the Commissioners agree that this trend is only likely to 
continue for the foreseeable future?''
    Answer. This question is before the Commission in its pending 
review of the media ownership rules. As part of this review, we have 
commissioned a number of economic studies, including studies regarding 
the competitive landscape in the radio marketplace. Finally, in 
connection with the Commission's media ownership and localism 
proceedings, we are conducting hearings around the country to solicit 
public comment and to engage the American people in the process of 
reviewing the status of the media marketplace. One recent hearing, held 
in Nashville, focused on the general state of the music and radio 
industries. The Commission's efforts to collect a thorough public 
record will continue in the months ahead, with three more ownership 
hearings, and two additional hearings specifically focused on localism.

    Question 2. Consumers in many rural areas currently are not able to 
enjoy the same benefits wireless services offer as their urban 
counterparts enjoy. Due to low user concentration, the cost of 
providing high quality wireless service in rural areas is frequently 
more expensive than is possible in higher-density urban areas. 
Designation of wireless carriers as ETCs, which permits these carriers 
to receive support from the Universal Service Fund (``USF''), can help 
to ensure that all Americans enjoy the benefits of competition and 
high-quality wireless services. What steps has the FCC taken to ensure 
that wireless coverage is extended to all Americans, regardless of 
where they live, and to ensure that Americans living in rural areas 
have the opportunity to subscribe to high-quality wireless services?
    Answer. It is critical that all Americans, including those living 
in rural areas, stay connected to state-of-the art communications 
services. The Universal Service Fund is the lifeblood of this goal. 
Unfortunately, our current high-cost mechanism is in need of repair. As 
I noted during a recent meeting of the Federal-State Joint Board on 
Universal Service, CETC universal service payments, most of which are 
made to wireless carriers, have increased year after year. CETC 
payments have been growing at a trend rate of 101 percent per year 
since 2002. In 2000 CETCs received $1 million in support. Based on 
recent USAC estimates, CETCs received almost $1 billion in 2007. And, 
CETC support in 2007 is estimated to be at least $1.28 billion. If the 
Commission were to approve all the pending CETC applications, support 
could be as high as $1.56 billion in 2007. Thus, while I support the 
ability of Americans living in rural areas to subscribe to wireless 
services, I believe that the Commission must carefully evaluate the 
pending CETC applications. I expect that in the near future, the Joint 
Board will be issuing recommendations on how the Commission can reform 
the high-cost system to address this issue.
    I also note that the Commission is using spectrum management to 
promote the delivery of wireless services in rural areas. For example, 
in the coming year, we will auction 60 MHz of spectrum in the 700 MHz 
band that is particularly well-suited for the provision of wireless 
broadband services in rural and underserved areas. In particular, we 
are considering whether to reconfigure this band to provide for smaller 
geographic licensing areas and adopt more stringent build-out 
requirements for the band, which may further enhance rural and 
underserved deployment.

    Question 3. Following the natural disasters that recently hit the 
Gulf Coast region wireless services provided emergency personnel, 
utility repairmen and residents with the only immediate means for 
communicating. In light of the experience of the Commission from 
Hurricane Katrina and other disasters, please describe the role 
wireless services fill with respect to emergency response and disaster 
recovery during times of crisis?
    Answer. Wireless communications services are an essential component 
of emergency response and disaster recovery during times of crisis. 
Most first responder and other public safety communications rely on 
wireless-based services as the primary method of communications. As a 
result, it is critical that these services be restored as quickly as 
possible. In the aftermath of Hurricanes Katrina, Wilma and Rita, the 
Commission issued a number of Special Temporary Authorizations (STAs) 
and waivers to allow public safety agencies to restore communications 
services. Many public safety agencies from outside of the impacted 
regions obtained STAs and waivers in order to provide portable and 
mobile radios and other devices in support of first responders and 
relief agencies within the disaster areas. And, in response to 
Hurricane Katrina, the Commission released an Order to enable $211 
million in universal service funds to be used to respond to the 
disaster.
    Wireless communications services can also serve as an alternative 
means of communications for public safety agencies, relief 
organizations, and consumers who are displaced or have lost landline 
communications services. In the aftermath of the 2005 hurricanes, 
commercial wireless carriers took a number of steps to provide wireless 
communications services to public safety agencies, relief 
organizations, and consumers who had lost landline services. For 
example, carriers distributed wireless phones, emergency trailers, 
generators and other equipment to first responders and other public 
safety officials. The Commission facilitated this effort by directing 
universal service funds through the Lifeline/Link-Up program to provide 
wireless handsets and up to 300 free calling minutes for those eligible 
for individual housing relief under FEMA rules. In addition, wireless 
carriers provided priority access, through the Wireless Priority 
Service (WPS) Program to public safety personnel.
    In addition to public safety and commercial wireless services, 
there are a number of other wireless technologies that can play a key 
role in disaster response and recovery. For example, in the aftermath 
of the Gulf Coast hurricanes, service providers and others used 
unlicensed Part 15 frequencies to provide temporary Internet 
communications to various relief groups, Federal, state and local 
governments and agencies in the areas impacted by the hurricanes. These 
services were particularly useful to those who were displaced by the 
hurricanes.
    Satellite technologies also play a unique role in emergency 
response and disaster recovery efforts. Federal, state, and local 
emergency response providers use commercial satellite services either 
as stand-alone platforms or as part of an integrated satellite 
terrestrial network to enable a range of voice, data, video, and other 
services often in situations where existing terrestrial infrastructure 
is degraded or non-existent. In the immediate aftermath of Hurricanes 
Katrina, Rita, and Wilma, satellite operators were able to rapidly 
deploy mobile telephony, data, radio and television services to the 
region. Earth stations were deployed to support data transmissions, 
Internet access, and information sharing. Satellite services were also 
vital in restoring critical communications for construction companies, 
utilities, and oil refineries. In addition, terrestrial wireless and 
wireline providers can use satellite networks for backhaul when 
terrestrial backhaul networks are disabled.
    Finally, amateur radio operators provided wireless communications 
services in many locations where there was no other means of 
communicating and also provided technical aid to the communities 
affected by the hurricanes.

    Question 3a. If a petitioner for ETC designation meets the 
statutory criteria and has consistently been the only service provider 
to remain operative in certain areas during natural disasters despite 
the presence of other carriers (including other ETCs) in those areas, 
would you view the designation of the petitioner as an ETC to be in the 
public interest?
    Answer. The Commission reviews ETC designation petitions subject to 
its jurisdiction for compliance with section 214(e)(6) of the Act. 
Section 214(e)(6) provides that ``the Commission shall upon request 
designate such a common carrier that meets the requirements of 
paragraph (1) as an eligible telecommunications carrier for a service 
area designated by the Commission consistent with applicable Federal 
and State law. Upon request and consistent with the public interest, 
convenience and necessity, the Commission may, with respect to an area 
served by a rural telephone company, and shall, in the case of all 
other areas, designate more than one common carrier as an eligible 
telecommunications carrier for a service area designated under this 
paragraph, so long as each additional requesting carrier meets the 
requirements of paragraph (1). Before designating an additional 
eligible telecommunications carrier for an area served by a rural 
telephone company, the Commission shall find that the designation is in 
the public interest.'' 47 U.S.C. Sec. 214(e)(6). Pursuant to section 
214(e)(1), a common carrier designated as an ETC must offer and 
advertise the services supported by the Federal universal service 
mechanisms throughout the designated service area.
    In addition to the statutory requirements of section 214(e)(6), the 
Commission also ensures that any ETC designation is consistent with the 
universal service principles set out in section 254 of the Act, but 
certainly providing service during emergencies is an important public 
interest consideration.

    Question 3b. Some of the areas hardest hit by recent natural 
disasters were underserved communities. To the extent a petitioner for 
ETC designation that meets the statutory criteria for ETC designation 
has demonstrated a strong commitment to serving rural and underserved 
communities since well before designation as an ETC, would the 
designation of the petitioner as an ETC be in the public interest? If 
not, please explain why.
    Answer. The Commission reviews ETC designation petitions subject to 
its jurisdiction for compliance with section 214(e)(6) of the Act. 
Section 214(e)(6) provides that ``the Commission shall upon request 
designate such a common carrier that meets the requirements of 
paragraph (1) as an eligible telecommunications carrier for a service 
area designated by the Commission consistent with applicable Federal 
and State law. Upon request and consistent with the public interest, 
convenience and necessity, the Commission may, with respect to an area 
served by a rural telephone company, and shall, in the case of all 
other areas, designate more than one common carrier as an eligible 
telecommunications carrier for a service area designated under this 
paragraph, so long as each additional requesting carrier meets the 
requirements of paragraph (1). Before designating an additional 
eligible telecommunications carrier for an area served by a rural 
telephone company, the Commission shall find that the designation is in 
the public interest.'' 47 U.S.C. Sec. 214(e)(6). Pursuant to section 
214(e)(1), a common carrier designated as an ETC must offer and 
advertise the services supported by the Federal universal service 
mechanisms throughout the designated service area.
    In addition to the statutory requirements of section 214(e)(6), the 
Commission also ensures that any ETC designation is consistent with the 
universal service principles set out in section 254 of the Act, but 
certainly demonstrating a strong commitment to serving rural and 
underserved communities is an important public interest consideration.

    Question 4. The FCC has committed to resolve, within 6 months of 
the date filed, all ETC designation requests for non-tribal lands that 
are properly before the FCC. How many petitions for ETC designation are 
currently pending at the FCC?
    Answer. 34

    Question 4a. What is the average length of time that the ETC 
Petitions currently before the FCC have been pending?
    Answer. Less than 2 years

    Question 4b. Of these petitions, what is the earliest filing date?
    Answer. 12/31/2003

    Question 4c. How many of these petitions were filed in 2004 or 
earlier?
    Answer. 17

    Question 4d. How many petitions for ETC designation did the FCC act 
on in 2006?
    Answer. 2

    Question 4e. How many petitions for ETC designation did the FCC act 
on in 2005?
    Answer. 12

    Question 4f. How many petitions for ETC designation did the FCC act 
on in 2004?
    Answer. 8

    Question 4g. What does the FCC intend to do about the backlog of 
pending ETC petitions? How soon does the FCC intend to act upon ETC 
petitions that have been pending for more than 6 months? Do you believe 
that Americans living in rural areas and the carriers who have filed 
ETC Petitions deserve to have those petitions acted upon promptly 
rather than simply kept pending without a yes or no answer? If you do 
not, please explain why.
    Answer. It is critical that all Americans, including those in rural 
areas, stay connected to state-of-the art communications services. The 
Universal Service Fund is the lifeblood of this goal. Unfortunately, 
our current high-cost mechanism is in need of repair. As I noted during 
a recent meeting of the Federal-State Joint Board on Universal Service, 
CETC universal service payments have increased year after year. CETC 
payments have been growing at a trend rate of 101 percent per year 
since 2002. In 2000 CETCs received $1 million in support. Based on 
recent USAC estimates, CETCs received almost $1 billion in 2007. And, 
CETC support in 2007 is estimated to be at least $1.28 billion. If the 
Commission were to approve all the pending CETC applications, support 
could be as high as $1.56 billion in 2007. Consequently, I believe that 
the Commission should carefully examine the merits of the pending 34 
CETC applications. I expect that in the near future, the Joint Board 
will be issuing recommendations on how the Commission can ream the 
high-cost system to address this issue.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Amy Klobuchar to 
                          Hon. Kevin J. Martin

    Question 1. In a September 8, 2005 report, the FCC stated, ``Our 
review of the record does not lead us to recommend any changes to the 
retransmission consent regime at this time.'' What if any steps have 
you taken since that time to review and assess the retransmission 
consent regime; what if any additional conclusions have you reached; 
what if any plans do you have for additional formal or informal review; 
and what do you perceive to be the strengths and weaknesses of the 
retransmission consent process?
    Answer. As part of our annual Video Competition Report, the 
Commission monitors the current state of retransmission consent market. 
In its most recent report to Congress, the Commission noted that 
distributors of video programming generally assert that retransmission 
consent, regardless of the form of compensation (e.g., cash, purchases 
of advertising, carriage of other affiliated programming, etc. was too 
expensive and has caused rates to increase. The Commission noted that 
broadcasters, on the other hand, support the existing system as a 
process that fairly compensates them for the carriage of their 
programming.
    In the most recent Notice of Inquiry seeking comments for the 
upcoming Video Competition Report, the Commission requested specific 
information on a range of issues related to retransmission consent. For 
example, with respect to television stations carried pursuant to 
retransmission consent, the Commission requested information on the 
extent to which cable operators pay cash for broadcast station carriage 
rights, carry non-broadcast programming networks, provide advertising 
time, or otherwise compensate broadcasters. We also sought comment on 
the effect of retransmission consent compensation on cable television 
rates, the ability of small cable system operators to secure 
retransmission consent on fair and reasonable terms, and the impact of 
agreements that require the carriage of non-broadcast networks in 
exchange for the right to carry local broadcast stations on MVPDs and 
consumers. The Commission will report on its findings in its next Video 
Competition Report.
    The retransmission consent rules are part of a carefully balanced 
combination of laws and regulations governing carriage of television 
broadcast signals, with the must-carry and retransmission consent 
regimes complementing one another. Broadcast mandatory carriage rights, 
which promote localism and ensure the viability of free, over-the-air 
television, complement the retransmission consent regime. Together, 
must-carry and retransmission consent provide that all local stations 
are assured of carriage even if their audience is small, while also 
allowing more popular stations to seek compensation (cash or in-kind) 
for the audience their programming will attract for the cable or 
satellite operator. Must-carry alone might fail to provide stations 
with the opportunity to be compensated for their popular programming. 
Retransmission consent alone might not preserve local stations that 
have a smaller audience yet still offer free over-the-air programming 
and serve the public in their local areas.
    While I generally have concerns about intervening in private 
negotiations, I recognize that the failure of a broadcaster and a cable 
operator to reach a retransmission consent agreement harms not just the 
broadcaster and the cable operator but all of the viewers affected by 
the removal of a station's signal from their cable system. If Congress 
believes the retransmission consent process needs reformation, it could 
give the Commission the authority to order arbitration of 
retransmission consent disputes by the Media Bureau, and require 
carriage during the arbitration process. To ensure that such 
arbitration process reaches a fair result in the context of the broader 
industry, the Commission would also need to be sure that it had the 
tools necessary to obtain similar pricing information from other 
broadcasters, cable operators and programmers. Without access to such 
information, it would be difficult for the Commission to determine 
whether offers from either party are appropriate.

    Question 2. Section 10(a) of the Communications Act allows the 
Commission to forbear from applying any regulation or any statutory 
provision to a particular or multiple telecommunications carriers or 
services, in any or some geographic markets, if certain criteria are 
met--most notably that competition exists in the market and that such 
relief is in the public interest. The FCC recently has been granting 
incumbent providers (ILECs) forbearance from regulations on the premise 
that sufficient competition exists in a specific market to make 
enforcement of the regulations unnecessary. What are each of your 
respective positions on the conditions and circumstances under which 
forbearance for ILECs is appropriate?
    Answer. Each petitioner bears the burden of establishing that the 
forbearance criteria outlined in section 10 of the Act are satisfied. 
Significantly, in evaluating an application, the Commission must 
determine, among other matters, whether grant of the petition would 
serve the public interest. Each application is judged on its own merits 
based on the specific factual circumstances at issue. Section 10 
permits all telecommunications carriers--incumbents and competitors 
alike--to avail themselves of this relief.

    Question 3. From the City of Saint Paul (similar questions were 
raised by Burnsville/Eagan Community Television and the Northern 
Suburban Communications Commission):
    The Order issued by the FCC on December 20,2006 allows new 
franchise entrants to ``cherry pick'' the neighborhoods in our 
communities, rather than bring true competition to all of our 
businesses and residents. This would allow new entrants to serve or 
upgrade only the profitable areas of Saint Paul [and other cities and 
towns], leaving many of our residents on the wrong side of the 
``digital divide.''
    The Order authorizes a new entrant to withhold payment of fees that 
it deems to be in excess of a 5-percent franchise fee cap. This could 
completely undermine support for both Saint Paul's [and other cities' 
and towns'] very successful public, educational and government (PEG) 
operations.
    The Order imposes a 90-day shot clock for new entrants with 
existing rights of way, opening the potential to reduce Saint Paul's 
[and other cities' and towns'] ability to manage its rights-of-way.
    The Order authorizes a new entrant to refrain from obtaining a 
franchise when it is upgrading mixed use facilities that will be used 
in the delivery of video content.
    Saint Paul believes that the policy goals of the Order are laudable 
but strongly disagrees with the method and substance of the decision 
taken by the FCC. How do you respond to each of these concerns, and how 
do you respond to the claim that the FCC exceeded its authority in 
adopting this order?
    Answer. The Report and Order adopts rules and provides guidance to 
implement Section 621(a)(1) of the Communications Act, which prohibits 
franchising authorities from unreasonably refusing to award competitive 
franchises for the provision of cable services. Through the Report and 
Order, the Commission furthers the achievement of the interrelated 
Federal goals of enhanced cable competition and accelerated broadband 
deployment.
    In relation to the City of Saint Paul's concerns about ``cherry 
picking,'' the Report and Order does not limit an LFA's authority to 
appropriately enforce provisions of the Communications Act which ensure 
that consumers are protected against discrimination. This includes an 
LFA's authority to deny a franchise that would run afoul of the 
``redlining'' provisions of the Act.
    The Report and Order does indicate that a local franchising 
authority's refusal to award a competitive franchise because the 
applicant will not agree to unreasonable build-out requirements can be 
unreasonable. However, it seeks to strike a balance between encouraging 
as widespread deployment of broadband as possible while not deterring 
entry altogether. For instance, the Report and Order notes that, absent 
other factors, it would seem unreasonable to require a new competitive 
entrant to serve everyone in a franchise area before it has begun 
providing service to anyone. At the same time, the Report and Order 
specifically notes that it would seem reasonable for an LFA in 
establishing build-out requirements to consider the new entrant's 
market penetration. It would also seem reasonable for an LFA to 
consider benchmarks requiring the new entrant to increase its build-out 
after a reasonable period of time had passed after initiating service 
and taking into account its market success.
    Regarding the City of Saint Paul's concerns about the Report and 
Order's findings regarding the franchise fee cap and their impact on 
support for PEG and I-Nets, the Commission clarified that ``capital 
costs'' for PEG facilities do not count toward the 5 percent limit on 
franchise fees. The Commission then explained that, pursuant to Section 
622(g)(2)(B) of the Communications Act, PEG support payments are 
considered franchise fees and are subject to the 5 percent limit.
    Beyond these limits on PEG support set forth in the Act, the 
Commission found simply that it would be unreasonable for an LFA to 
require a new entrant to provide PEG support that is in excess of the 
incumbent cable operator's obligations. The Commission also found that 
completely duplicative PEG requirements imposed by LFAs would be 
unreasonable. The Commission's actions set reasonable, and minimal, 
limits on LFA authority to require support for PEG channels.
    The order finds that it would constitute an unreasonable refusal to 
grant a competitive franchise for an LFA to fail to act upon a 
franchise application filed by an entity that has access to the public 
rights-of-way within 90 days or to fail to act upon a franchise 
application filed by an entity with such access within 6 months. The 
record in this proceeding indicated that parties could complete the 
process under these timeframes. If not, the Report and Order indicates 
that the parties may agree to an extension of the relevant deadline.
    In terms of the 90-day timeframe, as noted, this applies only where 
the applicant already has access to the public rights-of-way. The order 
notes that this timeframe should not impose an unreasonable burden on 
LFAs as it should take less time for an LFA to work through rights-of-
way management issues and confirm an applicant's qualifications to 
provide service if the applicant already occupies the public rights-of 
way, and the applicant, in obtaining a certificate for public 
convenience and necessity from a state, already has had its legal, 
technical, and financial qualifications reviewed.
    The City of Saint Paul is correct that, with regard to mixed use 
facilities, the Report and Order states that so long as there is a non-
cable purpose associated with the network upgrade, the provider is not 
required to obtain a franchise until and unless it proposes to provide 
cable services. The Report and Order does not affect a municipality's 
ability to require a cable franchise once a provider seeks to provide 
cable service.
    Finally, in terms of the Commission's authority, the Commission 
found it has legal authority to implement Section 621(a)(1) of the Act. 
The Commission has broad authority to adopt rules to implement Title VI 
and, specifically, Section 621(a)(1). As the Supreme Court has 
explained, the Commission serves ``as the `single Government agency' 
with `unified jurisdiction' and `regulatory power over all forms of 
electrical communication, whether by telephone, telegraph, cable, or 
radio.' '' \1\ To that end, ``[t]he Act grants the Commission broad 
responsibility to forge a rapid and efficient communications system, 
and broad authority to implement that responsibility.'' \2\ Section 
201(b) authorizes the Commission to ``prescribe such rules and 
regulations as may be necessary in the public interest to carry out the 
provisions of this Act.'' \3\ According to the Supreme Court, ``the 
grant in Sec. 201(b) means what it says: The FCC has rulemaking 
authority to carry out the `provisions of this Act.' '' \4\ That grant 
of authority therefore necessarily includes Title VI of the 
Communications Act in general, and Section 621(a)(1) in particular.
---------------------------------------------------------------------------
    \1\ United States v. Southwestern Cable Co., 392 U.S. 157, 167-68 
(1968) (citations omitted).
    \2\ United Telegraph Workers, AFL-CIO v. FCC, 436 F.2d 920, 923 
(D.C. Cir. 1970) (citations and quotations omitted).
    \3\ 47 U.S.C. Sec. 201(b).
    \4\ AT&T Corp. v. Iowa Utilities Board, 525 U.S. 366,378 (1999).
---------------------------------------------------------------------------
    Other provisions in the Act reinforce the Commission's general 
rulemaking authority. Section 303(r), for example, states that ``the 
Commission from time to time, as public convenience, interest, or 
necessity requires shall . . . make such rules and regulations and 
prescribe such restrictions and conditions, not inconsistent with law, 
as may be necessary to carry out the provisions of this Act. . . .'' 
\5\ Our authority is reinforced by Section 4(i) of the Act which gives 
us broad power to perform acts necessary to execute our functions as 
well as the mandate in section 706 of the Act that we encourage the 
deployment of broadband services to all Americans.\6\
---------------------------------------------------------------------------
    \5\ See also 47 U.S.C. Sec. 151 (the Commission ``shall execute and 
enforce the provisions of this Act'').
    \6\ See 47 U.S.C. Sec. 154(i) (stating that the Commission ``may 
perform any and all acts, make such rules and regulations, and issue 
such orders, not inconsistent with the Act, as may be necessary in the 
executions of its functions.''); 47 U.S.C. Sec. 157 nt.
---------------------------------------------------------------------------
    More specifically, Section 2 of the Communications Act grants the 
Commission explicit jurisdiction over ``cable services.'' \7\ 
Furthermore, Congress specifically charged the Commission with the 
administration of the Cable Act, including Section 621, and Federal 
courts have consistently upheld the Commission's authority in this 
area. \8\ Thus, just as the Commission has the authority to interpret 
other provisions of Title VI, it also has the authority to interpret 
section 621(a)(1)'s requirement that LFAs not ``unreasonably refuse to 
award an additional competitive franchise.'' Indeed, in another 
context, the D.C. Circuit noted that the term ``unreasonable'' is among 
the ``ambiguous statutory terms'' in the Communications Act, and that 
the ``court owes substantial deference to the interpretation the 
Commission accords them.'' \9\
---------------------------------------------------------------------------
    \7\ 47 U.S.C. Sec. 152 (``The provisions of this Act shall apply 
with respect to cable service, to all persons engaged within the United 
States in providing such service, and to the facilities of cable 
operators which relate to such service, as provided in title VI.'').
    \8\ See City of Chicago v. FCC, 199 F.3d 424 (7th Cir. 1999) 
(finding the FCC is charged by Congress with the administration of the 
Cable Act, including Section 621); see also City of New York v. FCC, 
486 US. 57, 70 n.6 (1988) (explaining that section 303 gives the FCC 
rulemaking power with respect to the Cable Act); National Cable 
Television Ass'n. v. FCC, 33 F.3d 66, 70 (D.C. Cir. 1994) (upholding 
Commission finding that certain services are not subject to the 
franchise requirement in Section 621(b)(1)); United Video v. FCC, 890 
F.2d 1173, 1183 (D.C. Cir. 1989) (denying petitions to review the 
Commission's syndicated exclusivity rules); ACLU v. FCC, 823 F.2d 1554 
(D.C. Cir. 1987) (upholding the Commission's interpretive rules 
regarding Section 621(a)(3)).
    \9\ Capital Network System, Inc. v. FCC, 28 F.3d 201, 204 (D.C. 
Cir. 1994).
---------------------------------------------------------------------------
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Ted Stevens to 
                          Hon. Kevin J. Martin

    Question 1. What is the current status of any proposals to use 
auctions to determine universal service support?
    Answer. The Federal-State Joint Board on Universal Service (Joint 
Board) is exploring whether a ``reverse auction'' mechanism could be 
used as the basis for distributing universal service high-cost support. 
I believe that reverse auctions could provide a technologically and 
competitively neutral means of controlling fund growth and ensuring a 
move to most efficient technology over time. Indeed, just last month, 
the Joint Board held a hearing in which it heard testimony on the use 
of reverse auctions to determine universal service support as well as 
other ways to control the growth of the universal service fund. 
Although the use of reverse auctions is one way of limiting the growth 
of the fund, I remain open to other ideas that could restrain growth 
and prioritize broadband investment in underserved areas of the 
country. The Joint Board will be issuing recommendations on these 
issues in the near future.

    Question 2. Do you believe any of the proposals submitted to the 
Joint Board are viable alternative approaches to universal service 
support and can adequately support rural carriers like those in Alaska?
    Answer. I believe that a modern and high quality telecommunications 
infrastructure is essential to ensure that all Americans, including 
those living in rural communities, have access to the economic, 
educational, and healthcare opportunities available on a broadband 
network. Our universal service program must continue to promote 
investment in rural America's infrastructure and ensure access to 
telecommunications services that are comparable to those available in 
urban areas today, as well as provide a platform for delivery of 
advanced services. Indeed, in the Joint Board's 2002 Recommended 
Decision, I urged the Commission to explore how, and to what extent, 
the Federal universal service support mechanism could assist the 
deployment of advanced services, or at least the removal of barriers to 
such deployment, particularly in rural, remote and high cost areas 
throughout the country.
    Unfortunately, the discussion about using universal service to fund 
broadband is being overshadowed by the uncontrolled growth in the fund 
as a result of subsidizing multiple competitors to provide voice 
services in rural areas. Before the Joint Board can make real progress 
on the true mission of universal service, ensuring access to high 
quality communications services in rural areas of the country, it must 
act to address the growth in the fund caused by competitive eligible 
telecommunications carriers (CETCs). Specifically, CETC payments have 
been growing at a trend rate of 101 percent per year since 2002. In 
2000 CETCs received $1 million in support. Based on recent USAC 
estimates, CETCs received almost $1 billion in 2007. And, CETC support 
in 2007 is estimated to be at least $1.28 billion.

    Question 3. When Chairman Powell visited a remote Eskimo village in 
Alaska, his plane got stuck in the mud on the unpaved runway during 
take-off. He and his staff whipped out their cell phones to try to call 
for help, but they didn't work. No roaming agreements. The villages 
call came and pulled his plane out of the mud, but he was not able to 
call his wife to tell her he was running late. I am pleased to report 
that the runway is now being paved, but the roaming problem has yet to 
be resolved. Many small cell phone companies in Alaska have been 
unsuccessful in getting the large national carriers to respond to their 
desires to arrange roaming agreements. As data, video, and other 
services are transmitted to mobile devices this problem will only grow 
more acute. What can you do to address this problem, and what is the 
time frame for moving forward?
    Answer. I agree that ensuring roaming in rural areas is an 
important issue for the Commission to address. Since 1996, the 
Commission has required that cellular, PCS, and certain SMR providers 
make manual roaming service available upon request to customers of 
other carriers, provided that the roamers' handsets are technically 
capable of accessing the roaming network. The Commission is currently 
examining whether its roaming requirements should be modified given the 
current state of the commercial mobile services market, including 
whether we should require carriers to provide automatic roaming.
    Parties in our proceeding significantly differ on their 
characterization of the state of roaming and whether Commission action 
is required in the current market. Rural carriers argue that, in many 
cases, they are unable to obtain reasonable roaming agreements with 
larger carriers. Larger carriers, however, argue that wireless markets 
are competitive and that no regulatory intervention is required at this 
time.
    The Bureau is currently drafting an order to address the complex 
technical, economic, and competitive issues being raised in the 
proceeding. I expect to be able to circulate a draft order this spring.

    Question 4. I continue to have concerns that too often domestic 
satellite services do not offer service to Alaska and Hawaii. In last 
year's Senate Communications Bill, a measure was included to require 
satellite operators to make good faith efforts in their satellite 
planning and development to ensure service to the entire United States. 
Are there measures that the FCC could take independent of Congressional 
legislation to ensure better service to Alaska and Hawaii?
    Answer. Ensuring that there is adequate satellite coverage for 
Alaska and Hawaii is extremely important. The Commission is committed 
to taking action to ensure that satellite providers do not neglect 
these areas when deploying their systems. The Commission currently 
requires DBS satellite licensees to provide service to Alaska and 
Hawaii from any location at which such service is technically feasible, 
unless the licensee can demonstrate that such services would require so 
many compromises in satellite design as to make the service 
economically unreasonable.
    In addition, the Commission has recently initiated two rulemaking 
proceedings to consider rules that would strengthen the requirement to 
provide satellite service in Alaska and Hawaii. For example, in the 17/
24 GHz BSS NPRM, the Commission invited comment on requiring satellite 
operators in the 17/24 GHz BSS to design any satellite that will be 
operated at an orbit location where it is technically feasible to 
provide service to Alaska and Hawaii to be capable of doing so. 
Similarly, in the DBS Spacing NPRM, the Commission is considering rule 
revisions that would increase the number of satellites in orbit, which 
would improve DBS service throughout the United States, including 
Alaska and Hawaii.

    Question 5. The FCC frequently faces the problem of making tough 
policy decisions that are wrapped in technological debates. There are 
several waivers pending at the FCC that deal with CableCARDs. What is 
the impact on the consumer and the impact on the development and 
deployment of downloadable security? How will these petitions be 
considered and will the full Commission address these issues?
    Answer. Set-top box issues have been facing cable operators, the 
consumer electronics industry and the Commission for over a decade. It 
was in 1996 that Congress first ordered the Commission to establish a 
competitive market for the set-top boxes that are used for watching 
digital cable television. Congress explained: ``Competition in the 
manufacturing and distribution of consumer devices has always led to 
innovation, lower prices and higher quality.'' A competitive market for 
set-top boxes has the great potential to result in significant 
innovation, lower prices, and extensive consumer choice for the 
television and set-top box markets.
    In order to realize Congress' goals, the Commission required cable 
operators to separate their security functions, putting them into a 
CableCARD, which can be used in televisions and set-top boxes made by 
other manufacturers. The Commission originally gave cable operators 7 
years, followed by two further extensions, to achieve this competitive 
market through separable security and common reliance. During this 
period, the cable operators twice challenged the Commission's rules in 
court. And, twice the court upheld them. And yet, almost 10 years 
later, cable operators have never fully implemented the Commission's 
set-top box requirement.
    On January 10, 2007, the Media Bureau took steps to implement the 
statutory requirements to facilitate a competitive market for set-top 
boxes in a reasonable manner. The Bureau resolved several set-top 
waiver requests, furthering both pro-competition and pro-consumer 
policies. The Bureau granted the request filed by Cablevision by 
grandfathering Cablevision's implementation of its own separated 
security solution for 2 years. The Bureau also granted the request 
filed by Bend Cable Communications, LLC, d/b/a, BendBroadband, 
conditioned on its proposal to go all digital by 2008--a significant 
benefit to consumers. Finally, the Bureau denied the broad waiver 
request filed by Comcast but provided for several ways it could amend 
its request. Finally, the Bureau reiterated that a downloadable 
security solution would comply with the Commission's rules and noted 
that at least one company has already developed such a solution.
    Finally, I would have preferred to establish a timeframe for cable 
operators to develop and deploy downloadable security with adequate 
assurance that this timeframe would actually be met. I would also have 
preferred that the cable industry and the consumer electronics industry 
agree on a two-way standard that would ensure that subscribers who do 
not wish to rely on set-top boxes provided by their cable operators can 
access two-way, as well as one-way, cable services. I have encouraged 
the cable industry and the consumer electronics industry to work 
together to make progress on these issues. However, in the absence of 
real progress on either of these issues, I think the Commission needs 
to move forward with its current rules.

    Question 6. Obviously we are all concerned about the new frontiers 
that can be created on the Internet for pedophiles and child 
pornographers. To advance the safety of our children, everyone must do 
their part. Is there more that the Internet service providers can be 
doing to help law enforcement and does the FCC need any additional 
authority from Congress to ensure that entities under the Commission's 
authority are doing their part?
    Answer. We must do everything in our power to ensure that 
technological advances do not empower pedophiles and child 
pornographers. Internet Service Providers (ISPs) currently have 
obligations under 42 U.S.C. Sec. 13032 to report apparent violations of 
certain Federal statutes involving child pornography to the 
CyberTipLine operated by the National Center for Missing and Exploited 
Children (NCMEC). NCMEC then is required to forward that report to a 
law enforcement agency or agencies designated by the Attorney General. 
In addition to these obligations, I believe that Internet Service 
Providers can and should adopt internal mechanisms to enable them to 
better detect the distribution of such material over their network. The 
Commission stands ready to enforce any requirements adopted by Congress 
in this area. Protecting children from predators is of the utmost 
importance and the Commission will do everything in its power to ensure 
that the entities we regulate are vigilant in the monitoring of their 
networks.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                          Hon. Kevin J. Martin

    Question 1. Is it true that eleven years ago Congress required the 
FCC to adopt a new universal service mechanism that ensures that local 
telephone rates in rural areas are reasonably comparable to rates in 
urban areas?
    Answer. The United States and the Commission have a long history 
and tradition of making sure that rural areas of the country are 
connected and have the same opportunities for communications as other 
areas. In the 1996 Act, Congress explicitly required that the 
Commission ensure that consumers in all regions of the Nation have 
access to services, including advanced services, that ``are reasonably 
comparable to those services provided in urban areas and that are 
available at rates that are reasonable comparable to rates charged for 
similar services in urban areas.'' 47 U.S.C. Sec. 254(b)(3). 
Specifically Congress required the Commission to establish Universal 
Service Fund mechanisms that are ``specific, predictable and sufficient 
. . . to preserve and advance universal service.''

    Question 2. Is it true that the 10th Circuit Court of Appeals has 
twice remanded the FCC's method of providing universal service support 
for rural customers served by larger carriers?
    Answer. Congress required the Commission to ensure that consumers 
living in rural and high cost areas have access to similar 
telecommunications services at rates that are reasonably comparable to 
rates paid by urban customers. Unfortunately, as you point out, this 
issue has been twice been remanded to the Commission.
    As a Commissioner, I dissented from the method of providing 
universal service support that was adopted by my colleagues. As I said 
at the time, I thought that the Commission's decision fell short of our 
statutory obligations to ensure that consumers living in rural and high 
cost areas have access to similar telecommunications services at rates 
that are reasonably comparable to rates paid by urban consumers. The 
10th Circuit, in its most recent remand, apparently agreed with this 
assessment. Specifically, the court held that the Commission failed to 
reasonably define the terms ``sufficient'' and ``reasonably 
comparable.'' Because the non-rural, high-cost support mechanism rests 
on the application of the definition of ``reasonably comparable'' rates 
invalidated by the court, the court also deemed the support mechanism 
invalid.

    Question 3. Is it true that the second decision was issued in 
February of 2005 with the court expressing an expectation that the FCC 
would respond expeditiously?
    Answer. The court said that it expects the Commission to comply 
with its decision ``in an expeditious manner.'' It also expressly 
recognized the complexity of the task before the Commission on remand. 
Moreover, it declined the Petitioners' request that the court retain 
jurisdiction and impose a deadline for Commission action.

    Question 4. What steps will the FCC take now to ensure that it 
meets its obligations to the rural residents of large incumbent 
carriers? Will you commit that the FCC will take action on this remand 
during the next 6 months?
    Answer. Congress required the Commission to ensure that consumers 
living in rural and high cost areas have access to similar 
telecommunications services at rates that are reasonably comparable to 
rates paid by urban customers. As a Commissioner, I dissented from the 
method of providing universal service support that was adopted by my 
colleagues. As I said at the time, I thought that the Commission's 
decision fell short of our statutory obligations to ensure that 
consumers living in rural and high cost areas have access to similar 
telecommunications services at rates that are reasonably comparable to 
rates paid by urban consumers. The 10th Circuit directed the Commission 
to ``utilize its unique expertise to craft a support mechanism taking 
into account all the factors that Congress identified in drafting that 
Act and its statutory obligation to preserve and advance universal 
service.'' In response to this second remand, the Commission is 
currently considering additional modifications to the methodology for 
calculating universal service support for high-cost areas served by 
larger carriers (i.e., the non-rural high-cost support mechanism. I 
intend to circulate an order resolving this issue before the end of the 
year.

    Question 5. Now that the Antideficiency Act (ADA) exemption has 
expired, what kind of guarantees can you give that there will be no 
further E-Rate program shut downs or delays?
    Answer. In the February 15, 2007 Continuing Resolution for Fiscal 
Year 2007's appropriations, Congress extended the Antideficiency Act 
exemption for the Universal Service Fund through December 31, 2007.

    Question 6. Can you tell us how much USAC has in its E-Rate 
accounts currently and whether those reserves will be sufficient to 
cover funding?
    Answer. As of February 26, 2007, USAC has a cash balance of 
approximately $4.103 billion allocated to the E-rate program 
(approximately $3.057 billion of which has been obligated). At this 
time, the Commission staff estimates that the universal service program 
can continue to operate as it does today without triggering an 
Antideficiency Act violation. However, there is a possibility that 
(without an Antideficiency Act exemption) a temporary increase to the 
USF Contribution Factor--approximately 0.1 percent--may be necessary to 
address a potential deficiency in late 2008 and again in late 2009.

    Question 7. Are you still working with the Office of Management and 
Budget (OMB) on a reinterpretation of the ADA that would exempt 
Universal Service?
    Answer. We continue to work with the Office of Management and 
Budget on the application of the Antideficiency Act to the Universal 
Service Fund. OMB has informed the Commission staff that, for the High 
Cost and Low Income program, the Commission should accelerate slightly 
the timing for recognizing obligations to pay beneficiaries in these 
programs. Accelerating this process would require temporarily 
increasing USF collections to raise approximately $500 million to 
ensure the High Cost and Low Income programs can continue to operate as 
they do today.

    Question 8. Given that AT&T and BellSouth agreed to abide by a 
definition of ``network neutrality'' as part of there merger 
conditions, do you believe that the argument that it is impossible to 
craft such a definition is false?
    Answer. To better assess how the marketplace is functioning and to 
address any potential harm to consumers, I have proposed that the 
Commission examine this issue more fully in a formal Notice of Inquiry, 
which is presently pending before my colleagues. This Notice of Inquiry 
will certainly inform the Commission as to whether and how to craft a 
definition of ``network neutrality.''

    Question 9. Will you enforce the ``network neutrality'' provision 
agreed to as part of AT&T's and BellSouth's gaining approval for the 
merger?
    Answer. Yes; the Commission adopted voluntary commitments that are 
enforceable by the Commission. I expect that the merged entity will 
comply with all their commitments. To the extent that AT&T does not, we 
will take appropriate enforcement action.

    Question 10. Do you consider the U.S. broadband marketplace to be 
competitive?
    Answer. Encouraging the deployment of broadband infrastructure is a 
top priority. Since I arrived at the Commission in July 2001, high-
speed lines in the U.S. have gone from more than 9 million to nearly 65 
million. According to the Commission's most recent data, high-speed 
connections increased by 26 percent in the first half of 2006 and by 52 
percent for the full year ending June 30, 2006.
    An independent study by Pew confirmed this trend, finding that from 
March 2005 to March 2006, overall broadband adoption increased by 40 
percent--from 60 to 84 million--twice the growth rate of the year 
before. The study found that, although overall penetration rates in 
rural areas still lags behind urban areas, broadband adoption in rural 
America also grew at approximately the same rate (39 percent).
    Perhaps most importantly, the Pew study found that the significant 
increase in broadband adoption was widespread and cut across all 
demographics. According to their independent research:

   broadband adoption grew by almost 70 percent among middle-income 
        households (those with incomes between $40,000 and $50,000 per 
        year);

   broadband adoption grew by more than 120 percent among African 
        Americans;

  O broadband adoption grew by 70 percent among those with less than a 
        high school education; and

  O broadband adoption grew by 60 percent among senior citizens.

    According to the Pew study, the price of broadband service has also 
dropped in the past 2 years. Specifically, the Pew Report found that 
between February 2004 and December 2005, the average price for high-
speed service declined from $39 per month to $36 per month. Currently, 
Verizon and Comcast each offer promotional broadband packages for 
$19.99 per month, for example, and AT&T and BellSouth have committed to 
providing new retail broadband customers a $10 a month broadband 
Internet access service throughout the combined region.
    The Commission has worked hard to create a regulatory environment 
that promotes investment and competition. We have taken actions to 
ensure that there is a level-playing that fosters competition and 
investment in broadband infrastructure. The Commission has also removed 
legacy regulations like tariffs and price controls that discouraged 
providers from investing in broadband networks. More recently, the 
Commission took action under section 621 of the Act, to ensure that 
local franchising authorities do not unreasonably refuse to award new 
video service providers the franchises they need to compete against 
incumbent cable operators.
    In the wireless area, the Commission has made a significant amount 
of spectrum available on both a licensed and unlicensed basis that can 
be used to provide broadband service in municipalities, rural areas and 
across the Nation. For example, on the licensed side, we completed an 
auction of 90 megahertz of spectrum for advanced wireless services. the 
largest-ever receipts totaling nearly 14 billion dollars. We have also 
taken steps to completely reconfigure nearly 200 megahertz of spectrum 
in the 2.5 GHz region to create new broadband opportunities.
    On the unlicensed side, the Commission completed actions necessary 
to make available 255 MHz of unlicensed spectrum in the 5 GHz region--
nearly an 80 percent increase--that will fuel the deployment of Wi-Fi 
well into the future. And, last fall, the Commission initiated a 
proceeding to resolve technical issues associated with ``white spaces'' 
so that low power devices designed to operate on the unused television 
frequencies may reach the market with the completion of the DTV 
transition.
    We will continue to encourage deployment of broadband from all 
providers using a variety of technologies. As wireless technologies 
become an increasingly important platform for broadband access, it is 
critical to ensure that there is adequate spectrum available for 
providing broadband service. Spectrum auctions will continue to be an 
important part of our strategy for facilitating the build-out of mobile 
broadband networks. For example, the upcoming auction of spectrum in 
the 700 MHz region is well suited for the deployment of broadband 
services.
    The Commission is also considering an order that would classify 
wireless broadband Internet access service as an information service. 
This action would eliminate unnecessary regulatory barriers for service 
providers. This classification also would clarify any regulatory 
uncertainty and establish a consistent regulatory framework across 
broadband platforms, as we have already declared high-speed Internet 
access service provided via cable modem service, DSL and BPL to be 
information services. This action is particularly timely in light of 
the recently auctioned AWS-1 spectrum for wireless broadband and our 
upcoming 700 MHz auction.
    The Commision will continue to look for new and innovative ways to 
facilitate the deployment of broadband technologies. We are committed 
to furthering the universal availability and adoption of affordable 
broadband services.

    Question 11. Do you believe a wireless connection, which is two to 
four times more expensive and two to four times slower than DSL or 
cable, can be a substitute for a wireline connection to the Internet?
    Answer. Wireless service is becoming increasingly important as 
another platform to compete with cable and DSL as a platform for 
broadband access.
    Several wireless carriers are deploying broadband data services 
that offer speeds comparable to some DSL offerings. For example, 
Verizon and Sprint have deployed EV-DO Rev. A technology that has 
average download rates of 450-850 kb/s (3.1 Mb/s peak) and average 
upload rates of 300-400 kb/s (1.8 Mb/s peak). Moreover, although we are 
uncertain as to the exact nature of services that will be provided in 
the WCS and BRS bands, we expect that these spectrum bands may be used 
to provide fixed or portable wireless broadband services that will 
provide alternative service platforms for last-mile connections to 
residences and businesses. Operators providing such services will 
likely compete with DSL and cable modem service providers.
    Furthermore, the Commission has made a significant amount of 
spectrum available on both a licensed and unlicensed basis that can be 
used to provide broadband service in municipalities, rural areas, and 
across the Nation. For example, on the licensed side, we completed an 
auction of 90 megahertz of spectrum for advanced wireless services that 
generated the largest-ever receipts, totaling nearly 14 billion 
dollars. We have also taken steps to completely reconfigure nearly 200 
megahertz of spectrum in the 2.5 GHz region to create new broadband 
opportunities.
    On the unlicensed side, the Commission completed actions necessary 
to make available 255 MHz of unlicensed spectrum in the 5 GHz region--
nearly an 80 percent increase--that will fuel the deployment of Wi-Fi 
well into the future. And, last fall, the Commission initiated a 
proceeding to resolve technical issues associated with ``white spaces'' 
so that low power devices designed to operate on unused television 
frequencies may reach the market with the completion of the DTV 
transition.
    We will continue to encourage deployment of broadband from all 
providers using a variety of technologies. As wireless technologies 
become an increasingly important platform for broadband access, it is 
critical to ensure that there is adequate spectrum available for 
providing broadband service. Spectrum auctions will continue to be an 
important part of our strategy for facilitating the build-out of mobile 
broadband networks. For example, the upcoming auction of spectrum in 
the 700 MHz region is well-suited for the deployment of broadband 
services.

    Question 12. How can we ensure that a variety of news and 
entertainment outlets will be there if the telephone and cable 
companies are allowed to limit what people can see and do online?
    Answer. Market forces will help ensure that network providers do 
not block or otherwise limit the content that is available to 
consumers. To the extent that market forces do not protect consumers, 
the Commission has the ability to take appropriate steps where needed. 
For example, when we learned that a particular phone company was 
blocking access to a competing VoIP provider, we opened an 
investigation and negotiated a consent decree that made the company 
cease discriminating and pay a fine.
    In addition, although the Commission has not adopted any rules, in 
August 2005, the Commission adopted an Internet Policy Statement ``to 
ensure that broadband networks are widely deployed, open, affordable, 
and accessible to all consumers.'' Specifically, the Commission adopted 
the four following principles:

   To encourage broadband deployment and preserve and promote 
        the open and interconnected nature of the public Internet, 
        consumers are entitled to access the lawful Internet content of 
        their choice.

   To encourage broadband deployment and preserve and promote 
        the open and interconnected nature of the public Internet, 
        consumers are entitled to run applications and use services of 
        their choice, subject to the needs of law enforcement.

   To encourage broadband deployment and preserve and promote 
        the open and interconnected nature of the public Internet, 
        consumers are entitled to connect their choice of legal devices 
        that do not harm the network.

   To encourage broadband deployment and preserve and promote 
        the open and interconnected nature of the public Internet, 
        consumers are entitled to competition among network providers, 
        application and service providers, and content providers.

    The Commission, under Title I of the Communications Act, has the 
ability to adopt and enforce the net neutrality principles it announced 
in the Internet Policy Statement. The Supreme Court reaffirmed that the 
Commission ``has jurisdiction to impose additional regulatory 
obligations under its Title I ancillary jurisdiction to regulate 
interstate and foreign communications.'' National Cable & Telecomm. 
Ass'n v. Brand X Internet Services, 125 S.Ct. 2688, 2696 (2005) (Brand 
X). Indeed, the Supreme Court specifically recognized the Commission's 
ancillary jurisdiction to impose regulatory obligations on broadband 
Internet access providers. Brand X, 125 S. Ct at 2708 (``[T]he 
Commission remains free to impose special regulatory duties on 
facilities-based ISPs under its Title I ancillary jurisdiction. In 
fact, it has invited comment on whether it can and should do so.'')
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Gordon H. Smith to 
                          Hon. Kevin J. Martin

    Question 1. Under a couple of the conditions, AT&T and BellSouth 
committed that for 42 months, they would continue to offer, and would 
not increase the price of, unbundled network elements. They also 
committed not to seek forbearance with respect to unbundled loops and 
transport. Will these conditions preserve the option for consumers to 
purchase high-speed broadband service from companies that combine an 
AT&T/BellSouth UNE loop with their own electronics and other network 
facilities to offer their own high-speed Internet broadband services?
    Answer. The Commission current rules require incumbent LECs to make 
UNE loops available to competing telecommunications carriers. The 
voluntary commitments made by AT&T in connection with the AT&T/
BellSouth merger do not alter this obligation. With the voluntary 
commitments, competitors have the certainty that, for 42 months, AT&T 
will not seek forbearance from its current obligation to provide UNE 
loops.

    Question 2. Has the Commission concluded that it is in the public 
interest to preserve additional broadband options for consumers through 
these UNE as part of the AT&T/BellSouth merger conditions?
    Answer. The AT&T merger conditions are voluntary, enforceable 
commitments by AT&T, but are not general statements of Commission 
policy, and do not alter Commission precedent or bind future Commission 
policy or rules.

    Question 3. I am pleased that the Media Bureau recognized the 
burdens that the ban on ``integrated'' set-top boxes places on small 
cable operators and granted a waiver of that requirement to Oregon's 
BendBroadband. Given that the economic implications of enforcing this 
mandate to viewers could be huge (as much as $600 million nationwide 
according to the cable industry) why were some of these waiver requests 
not dealt with at the full Commission?
    Answer. Set-top box issues have been facing cable operators, the 
consumer electronics industry and the Commission for over a decade. It 
was in 1996 that Congress first ordered the Commission to establish a 
competitive market for the set-top boxes that are used for watching 
digital cable television. Congress explained: ``Competition in the 
manufacturing and distribution of consumer devices has always led to 
innovation, lower prices and higher quality.'' A competitive market for 
set-top boxes has the great potential to result in significant 
innovation, lower prices, and extensive consumer choice for the 
television and set-top box markets.
    In order to realize Congress' goals, the Commission required cable 
operators to separate their security functions, putting them into a 
CableCARD, which can be used in televisions and set-top boxes made by 
other manufacturers. The Commission originally gave cable operators 7 
years, followed by two further extensions, to achieve this competitive 
market through separable security and common reliance. During this 
period, the cable operators twice challenged the Commission's rules in 
court. And, twice the court upheld them. And yet, almost 10 years 
later, cable operators have never fully implemented the Commission's 
set-top box requirement.
    On January 10, 2007, the Media Bureau took steps to implement the 
statutory requirements to facilitate a competitive market for set-top 
boxes in a reasonable manner. The Bureau resolved several set-top 
waiver requests, furthering both pro-competition and pro-consumer 
policies. The Bureau granted the request filed by Cablevision by 
grandfathering Cablevision's implementation of its own separated 
security solution for 2 years. The Bureau also granted the request 
filed by Bend Cable Communications, LLC, d/b/a, BendBroadband, 
conditioned on its proposal to go all digital by 2008--a significant 
benefit to consumers. Finally, the Bureau denied the broad waiver 
request filed by Comcast but provided for several ways it could amend 
its request. Finally, the Bureau reiterated that a downloadable 
security solution would comply with the Commission's rules and noted 
that at least one company has already developed such a solution.
    I would have preferred to establish a timeframe for cable operators 
to develop and deploy downloadable security with adequate assurance 
that this timeframe would actually be met. I would also have preferred 
that the cable industry and the consumer electronics industry agree on 
a two-way standard that would ensure that subscribers who do not wish 
to rely on set-top boxes provided by their cable operators can access 
two-way, as well as one-way, cable services. I have encouraged the 
cable industry and the consumer electronics industry to work together 
to make progress on these issues. However, in the absence of real 
progress on either of these issues, I think the Commission needs to 
move forward with its current rules.
    Finally, I would note that generally requests for waivers of the 
Commission's cable equipment rules routinely are handled at the Bureau 
level. Indeed, the Bureau has addressed requests for waiver of the ban 
on integrated set-top boxes in the past. See, e.g., Bellsouth 
Interactive Media Services, LLC, 19 FCC Rcd 15607, 15609, para. 4 
(Media Bur. 2004). Moreover, Comcast's waiver requests was actually 
addressed and made to the Chief of the Media Bureau not to the full 
Commission. I have attached a copy of that page of their filing for 
your review.

    Question 4. Don't you think a ruling of that magnitude should be 
voted upon by you and your colleagues?
    Answer. Generally requests for waivers of the Commission's cable 
equipment rules routinely are handled at the Bureau level. Indeed, the 
Bureau has addressed requests for waiver of the ban on integrated set-
top boxes in the past. See, e.g., Bellsouth Interactive Media Services, 
LLC, 19 FCC Rcd 15607, 15609, para. 4 (Media Bur. 2004). Moreover, 
Comcast's waiver requests was actually addressed and made to the Chief 
of the Media Bureau not to the full Commission. I have attached a copy 
of that page of their filing for your review.
    [The information referred to follows:]

    
    
    Question 5. I believe the National Cable & Telecommunications 
Association and others still have waiver requests pending and Comcast 
has appealed the bureau's denial of its waiver. Can you let us know 
when we should expect the full Commission to address these requests?
    Answer. Comcast's Application for Review is currently before the 
full Commission, and the pleading cycle for that proceeding ended 
February 26. Other requests for waiver, including the National Cable & 
Telecommunications Association's request, remain pending. I expect the 
pending waiver requests to be handled soon.

    Question 6. The U.S. has more broadband subscribers than any other 
nation. However, according to the Organization for Economic Cooperation 
and Development, as of June 2006, the U.S. ranked a paltry 12th among 
the OECD nations in broadband subscribers per 100 inhabitants. In other 
words, the penetration rate for broadband in the U.S. is slightly above 
the middle of the pack for the OECD countries. What are some of the 
specific ways the FCC can help: (1) increase our broadband penetration; 
(2) increase broadband speeds; (3) lower consumer pricing for 
broadband; and (4) promote deployment to rural and underserved areas?
    Answer. Encouraging the deployment of broadband infrastructure is a 
top priority. Since I arrived at the Commission in July 2001, high-
speed lines in the U.S. have gone from more than 9 million to nearly 65 
million. According to the Commission's most recent data, high-speed 
connections increased by 26 percent in the first half of 2006 and by 52 
percent for the full year ending June 30, 2006.
    An independent study by Pew confirmed this trend, finding that from 
March 2005 to March 2006, overall broadband adoption increased by 40 
percent--from 60 to 84 million--twice the growth rate of the year 
before. The study found that, although overall penetration rates in 
rural areas still lags behind urban areas, broadband adoption in rural 
America also grew at approximately the same rate (39 percent).
    Perhaps most importantly, the Pew study found that the significant 
increase in broadband adoption was widespread and cut across all 
demographics. According to their independent research:

   broadband adoption grew by almost 70 percent among middle-
        income households (those with incomes between $40,000 and 
        $50,000 per year);

   broadband adoption grew by more than 120 percent among 
        African Americans;

   broadband adoption grew by 70 percent among those with less 
        than a high school education; and

   broadband adoption grew by 60 percent among senior citizens.

    According to the Pew study, the price of broadband service has also 
dropped in the past 2 years. Specifically, the Pew Report found that 
between February 2004 and December 2005, the average price for high-
speed service declined from $39 per month to $36 per month. Currently, 
Verizon and Comcast each offer promotional broadband packages for 
$19.99 per month, for example, and AT&T and BellSouth have committed to 
providing new retail broadband customers a $10 a month broadband 
Internet access service throughout the combined region.
    The Commission has worked hard to create a regulatory environment 
that promotes investment and competition. We have taken actions to 
ensure that there is a level-playing field that fosters competition and 
investment in broadband infrastructure. The Commission has also removed 
legacy regulations like tariffs and price controls that discouraged 
providers from investing in broadband networks. More recently, the 
Commission took action under section 621 of the Act, to ensure that 
local franchising authorities do not unreasonably refuse to award new 
video service providers the franchises they need to compete against 
incumbent cable operators.
    In the wireless area, the Commission has made a significant amount 
of spectrum available on both a licensed and unlicensed basis that can 
be used to provide broadband service in municipalities, rural areas and 
across the Nation. For example, on the licensed side, we completed an 
auction of 90 megahertz of spectrum for advanced wireless services. We 
have also taken steps to completely reconfigure nearly 200 megahertz of 
spectrum in the 2.5 GHz region to create new broadband opportunities.
    On the unlicensed side, the Commission completed actions necessary 
to make available 255 MHz of unlicensed spectrum in the 5 GHz region, 
nearly an 80 percent increase, that will fuel the deployment of Wi-Fi 
well into the future. And, last fall, the Commission initiated a 
proceeding to resolve technical issues associated with ``white spaces'' 
so that low power devices designed to operate on unused television 
frequencies may reach the market with the completion of the DTV 
transition.
    We will continue to encourage deployment of broadband from all 
providers using a variety of technologies. As wireless technologies 
become an increasingly important platform for broadband access, it is 
critical to ensure that there is adequate spectrum available for 
providing broadband service. Spectrum auctions will continue to be an 
important part of our strategy for facilitating the build-out of mobile 
broadband networks. For example, the upcoming auction of spectrum in 
the 700 MHz region is well suited for the deployment of broadband 
services.
    The Commission is also considering an order that would classify 
wireless broadband Internet access service as an information service. 
This action would eliminate unnecessary regulatory barriers for service 
providers. This classification also would clarify any regulatory 
uncertainty and establish a consistent regulatory framework across 
broadband platforms, as we have already declared high-speed Internet 
access service provided via cable modem service, DSL and BPL to be 
information services. This action is particularly timely in light of 
the recently auctioned AWS-1 spectrum for wireless broadband and our 
upcoming 700 MHz auction.
    The Commission will continue to look for new and innovative ways to 
facilitate the deployment of broadband technologies. We are committed 
to furthering the universal availability and adoption of affordable 
broadband services.

    Question 7. Is there anything we here in Congress can specifically 
do to help you to accomplish these goals?
    Answer. While the Commission recently took limited action to ensure 
that the local franchising authorities did not unreasonably refuse to 
award competitive franchises, Congress could further ensure that the 
local franchising process does not deter investment and competition in 
broadband networks. The Commission will faithfully and effectively 
implement whatever legislation that is passed by Congress.

    Question 8. As you are aware, in 2005 I introduced the first 
legislation in Congress that called for easing restrictions into the 
video marketplace. I continue to believe that a robust, competitive 
video marketplace will promote a diversity of programming choices and 
lower prices for consumers. I applaud the Commission's recent efforts 
to expedite competition to the video marketplace by passing its video 
franchising reform order. However, ensuring that all video providers 
compete on a level playing field is fundamental to promoting full and 
fair competition. The video franchising order appears to adopt 
deregulatory interpretations of various provisions of the Cable Act but 
limits the applicability of those interpretations to new entrants. I 
know you are revisiting this issue in your further notice of proposed 
rulemaking. Can you tell us when we should anticipate that the 
Commission will address the issue of a level playing field in the video 
services marketplace?
    Answer. As you note, in December of last year, the Commission 
adopted a Report and Order (FCC 06-180) regarding Section 621 of the 
Communications Act, which applies to competitive entrants. Because the 
notice in this proceeding was limited to competitive entrants, it did 
not address franchising as it relates to incumbent providers. We are 
looking at the franchising process as it relates to incumbents as part 
of the Further Notice of Proposed Rulemaking (``FNPRM''). In the FNPRM, 
we tentatively conclude that the findings in the December Order should 
apply to cable operators that have existing franchise agreements as 
they negotiate renewal of those agreements with LFAs. The Commission 
has committed to issue an Order in response to the FNPRM within 6 
months.

    Question 9. My state of Oregon receives no Federal Universal 
Service high cost funding in the rural areas served by larger carriers 
such as Qwest or Verizon. In 2006, there were forty states, including 
Arkansas, Arizona, Missouri, Texas, Florida, Washington, Nevada and 
California, that received no high cost funding for the rural areas 
served by their large incumbents. Would you support changing the 
administration of the Universal Service non-rural high cost fund to 
allow for a fair redistribution of those funds to include states with 
high cost rural areas that currently receive no support?
    Answer. The Commission does need to change the administration of 
the universal service non-rural high cost fund, in part to comply with 
a remand from the United States Court of Appeals for the 10th Circuit 
(10th Circuit).
    Qwest, Verizon, and other non-rural carriers serving Oregon do not 
currently receive high-cost universal service support pursuant to the 
non-rural mechanism. In 2005, however, Oregon received $68.5 million in 
high-cost universal service support. This includes over $20 million in 
Interstate Access Support received by Qwest, Verizon, and other, mainly 
large, carriers subject to price cap regulation in the interstate 
jurisdiction. For the Federal universal service fund as a whole, Oregon 
was a net recipient, rather than a net contributor, of approximately $5 
million of universal service support in 2005.
    Congress required the Commission to ensure that consumers living in 
rural and high cost areas have access to similar telecommunications 
services at rates that are reasonably comparable to rates paid by urban 
customers. As a Commissioner, I dissented from the method of providing 
universal service support that was adopted by my colleagues. As I said 
at the time, I thought that the Commission's decision fell short of our 
statutory mandate and our statutory obligations to ensure that 
consumers living in rural and high cost areas have access to similar 
telecommunications services at rates that are reasonably comparable to 
rates paid by urban consumers. The 10th Circuit, in its most recent 
remand, apparently agreed with this assessment. Specifically, the court 
held that the Commission failed to reasonably define the terms 
``sufficient'' and ``reasonably comparable.'' Because the non-rural, 
high-cost support mechanism rests on the application of the definition 
of ``reasonably comparable'' rates invalidated by the court, the court 
also deemed the support mechanism invalid.
    The court directed the Commission to ``utilize its unique expertise 
to craft a support mechanism taking into account all the factors that 
Congress identified in drafting that Act and its statutory obligation 
to preserve and advance universal service.'' In response to this second 
remand, the Commission is currently considering additional 
modifications to the methodology for calculating universal service 
support for high-cost areas served by larger carriers (i.e., the non-
rural high-cost support mechanism). I intend to circulate an order 
resolving this issue before the end of the year.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                          Hon. Kevin J. Martin

    Question 1. Even as we are strategizing on how to complete the 
deployment of DSL and cable modem broadband networks to the hard to 
reach places of our country, other countries are well on their way to 
deploying next-generation fiber networks. High-speed fiber will change 
how we use the Internet similar to the change we saw between dial-up 
and broadband. Is there anything Congress can be doing to help speed 
the deployment of our high-speed fiber network here at home, and in 
rural areas particularly?
    Answer. I believe that it is critical that consumers in all areas 
of the country enjoy the benefits of broadband deployment. To this end, 
the Commission has taken actions to level the playing-field between 
broadband providers by eliminating legacy regulations, like tariffs and 
price controls that discourage providers from investing in broadband 
networks. Since then broadband penetration has increased while prices 
has decreased.
    Obtaining information that is useful to gauge deployment and 
consumer subscription to broadband is an ongoing effort at the 
Commission. In order to gain an even better picture of the extent of 
broadband deployment and consumer acceptance of broadband, I have 
circulated a Notice of Proposed Rulemaking (NPRM) to the Commission 
that asks questions about how we can obtain more specific information. 
In particular, the NPRM asks questions about how we can obtain more 
specific information about broadband deployment and consumer acceptance 
in specific geographic areas and how we can combine our data with those 
collected at the state level or by other public sources. By improving 
our data collection, we will be able to identify more precisely those 
areas of the country where broadband services are not available.
    I have also circulated our fifth inquiry under section 706 of the 
Telecommunications Act of 1996 into ``whether advanced 
telecommunications capability is being deployed to all Americans in a 
reasonable and timely fashion.'' 47 U.S.C. Sec. 157 nt. In this Notice, 
we seek comment on all aspects of broadband availability, including 
price and bandwidth speeds. In particular, we seek comment on whether, 
given the evolution of technology and the marketplace, we should 
redefine the term ``advanced services'' to require a higher minimum 
speed in one or both directions. Between these two proceedings, it is 
my hope that the Commission will solicit the information necessary to 
better assess the competitive progress in the broadband market.
    Of course, the universal service fund plays an important role in 
broadband deployment. It is this fund which is essential to enabling 
rural carriers to upgrade and maintain their networks. We must ensure 
that the universal service remains stable to support these efforts.
    To the extent that Congress passes legislation that enables the 
Commission to take action to further encourage the deployment of 
broadband to rural areas, the Commission will do everything in its 
power to faithfully and effectively implement it.

    Question 2. When I speak with some of South Dakota's rural 
telephone cooperatives and other telecommunications providers, I hear 
about the large amount of resources they must put toward legal fees to 
keep pace with the legal and regulatory maneuvers being made by some of 
the larger telecommunications providers with seemingly bottomless 
pockets for such actions. Some of these small providers honestly think 
part of the larger competitors' plan is to beat them through legal fees 
instead of the marketplace. The Commission obviously cannot do anything 
about the fees lawyers are charging, but they can do something about 
the speed at which regulatory decisions are made and the hoops that 
must be jumped through. How can the FCC improve its decisionmaking 
processes so that small telecommunications providers don't bear such an 
imbalanced burden?
    Answer. The Commission is continually working to improve its 
decision-making processes and to resolve issues more expeditiously. In 
addition, the Commission is always looking for ways to ease the 
regulatory burdens on small carriers. For example, the Commission has, 
over the years, attempted to lessen substantially the level of 
regulation imposed on small incumbent LECs, such as the rural telephone 
cooperatives you describe. Specifically, the Commission has taken 
action to exempt small telephone companies from certain reporting and 
recordkeeping requirements. In addition, telephone companies whose 
operating revenues are below $129 million (which is indexed annually) 
do not file Automated Reporting Management Information System (ARMIS) 
reports, do not submit cost allocation manuals for review, and may 
account for their operations in accordance with a streamlined version 
of the Commission's Part 32 accounting rules. In addition, small local 
telephone companies also benefit from the Commission's streamlined 
tariff process, and members of the National Exchange Carrier 
Association (NECA) may avoid filing individual tariffs altogether by 
participating in the NECA tariff.
    For small carriers that seek approval to transfer control of their 
domestic assets or operating authority, the Commission's streamlined 
section 214 rules ease the burden associated with obtaining Commission 
authorization for these transfers. The rules allow the carriers to 
close a proposed transaction on the 31st day after the date of the 
public notice listing their section 214 application as accepted for 
filing as a streamlined application. In particular, this streamlined 
process applies to rural incumbent LECs that have, in combination, 
fewer than 2 percent of the Nation's subscriber lines nationwide and no 
overlapping or adjacent service territories. And, of course, section 
251(f) of the Act exempts rural telephone companies from the 
interconnection and unbundling requirements of section 251(c) unless 
certain prerequisites are met.
    In light of the dramatic growth and technological developments in 
the communications industry, we believe that our small entity policies 
must continue to evolve with the industry. Accordingly, we will 
continue our efforts to resolve proceedings as expeditiously as 
possible and thereby create greater regulatory certainty and stability.

    Question 3. As you know, some media companies and others are 
pushing for the repeal of the newspaper cross-ownership ban. They argue 
that a media outlet owning both the local newspaper and a local 
broadcast station could make better use of scarce resources to gather 
and report the local news. They also argue that the handful of 
``grandfathered'' newspaper-broadcast combinations, which were in place 
before the ban was implemented in 1975, have not shown any gross abuse. 
Some consumer groups and others who support keeping the newspaper 
cross-ownership ban in place alternatively argue that combining 
newspaper and broadcast outlets could reduce competition among media 
outlets. There could be less incentive to get ``the scoop'' or report a 
contradicting viewpoint. What do you believe would happen to local news 
coverage if the newspaper cross-ownership ban was lifted? Do the 1975 
grandfathered combinations really provide us with a good example since 
some of them are currently owned by those media companies who want to 
lift the ban? For example Gannett knows its management of Arizona's 
largest newspaper, the Arizona Republic, and television outlet KPNX-TV 
is under the microscope, so perhaps their behavior would not be 
representative of how news gathering would be conducted if the ban was 
permanently lifted.
    Answer. The Commission has received many comments on this issue in 
our media ownership proceedings, including the 2006 quadrennial 
ownership review proceeding. Proponents of cross-ownership indicate 
that the editorial management of jointly owned newspaper and broadcast 
station operations generally do not overlap and that cross-owned 
stations compete for readers and viewers. They have explained that 
joint newsgathering resources allow economic efficiencies that can help 
newspapers and local television stations compete in an expanded 
marketplace. There is evidence that combining news-gathering resources 
can lead to more local news programming, particularly in smaller or 
rural markets. On the other hand, opponents of cross-ownership have 
stated that the newspaper/television cross-ownership prohibition is 
necessary to preserve and promote viewpoint diversity and competition.
    While there has been an explosion of new sources of news and 
information over the last thirty years, when the cross-ownership ban 
was adopted, the number of newspapers has actually declined. At least 
300 daily papers have stopped publishing since the cross-ownership rule 
was adopted. Newspaper circulation has declined steadily for more than 
10 years. Losses have accelerated in recent years. These results have 
led to cuts in papers' newsgathering operations. For instance, the 
number of people working in the newsrooms of U.S. daily newspapers 
dropped 4.1 percent between 2001 and 2005.
    During the Commission's last review of its media ownership rules, 
the Commission conducted a number of studies, including one entitled 
``The Measurement of Local Television News and Public Affairs 
Programs.'' That study found that newspaper-owned affiliated stations 
provide almost 50 percent more news and public affairs programming than 
other network-affiliated stations. In addition, the study found that 
the average number of hours of local news and public affairs 
programming provided by the same-market cross-owned television-
newspaper combinations was 25.6 hours per week, compared to 16.3 hours 
per week for the sample of television stations owned by a newspaper 
that is not in the same market as the station. The study also found 
that the ratings for newspaper-owned stations' 5:30 and 6 p.m. 
newscasts during the November 2000 sweeps period averaged 8 compared to 
an average rating of 6.2 for non-newspaper-affiliated stations. 
Further, newspaper-owned stations received 319 percent of the national 
average per station Radio and Television News Directors Association 
(``RTNDA'') awards, and 200 percent of the national average E.I. DuPont 
Awards in 2000-2001. During that same period, non-newspaper-owned 
stations received RTNDA Awards at a rate of only 22 percent of the 
national average. They received DuPont Awards at a rate of 39 percent 
of the national average per station.
    A second study, performed by the Project for Excellence in 
Journalism (``PEJ''), supported the findings of the study discussed 
above. In its study, PEJ analyzed 5 years of data on ownership and news 
quality. PEJ concluded that cross-owned stations in the same Nielsen 
Designated Market Area were more than twice as likely to receive an 
``A'' grade as were other stations.
    In its 2003 Order, the Commission noted these findings above and 
concluded that, ``[n]ot only do newspaper-owned stations provide more 
news and public affairs programming, they also appear to provide 
higher-quality programming, on average, at least as measured by ratings 
and industry awards.'' As a result, the Commission found it in the 
public interest to remove the cross-ownership ban. Although the Third 
Circuit remanded the revised rule that the Commission adopted, the 
court upheld the Commission's decision to remove the ban, finding that 
``[t]he Commission's decision not to retain a ban on newspaper/
broadcast cross-ownership [was] justified under Sec. 202(h) and [was] 
supported by record evidence.''
    As part of its 2006 media ownership proceeding, the Commission is 
committed to a thorough examination of the newspaper/broadcast cross-
ownership rule and its impact on local news and information as we move 
forward with the review of our media ownership rules launched last 
summer. The Commission is conducting a study to examine the effect of 
newspaper cross-ownership on television news coverage using matched 
pairs of cross-owned and non-cross-owned television stations. This 
study, as well as all of the other economic studies, will be released 
to the public for review and comment.
    The Commission also has already held three hearings on media 
ownership and plans to hold three more ownership hearings. In addition, 
the Commission intends to conduct two more hearings on broadcast 
localism this year.
    I intend to take account of all we learn in these hearings and in 
our proceedings. I expect that this extended process will result in a 
complete record, including a thorough airing of all sides of this 
important issue, as well as empirical evidence from our studies and 
from the rulemaking, upon which we can base our decisions.

    Question 4. The closest daily newspaper can be 100 miles away in 
some parts of my state. Do you see any particular challenges in 
providing a diversity of news viewpoints in rural parts of our country 
if further media consolidation is allowed to occur? Some argue local 
cable news channels and local Internet news sites can enhance 
competition and bring out a diversity of viewpoints, but are these 
answers going to work in rural communities?
    Answer. I recognize the unique challenges small and rural 
communities face in their efforts to access media and information 
technologies. In this regard, broadband infrastructure is particularly 
important to those living in rural and other insular areas. These 
consumers need to have access to the same types of news and information 
resources as those who live in urban areas.
    Some media companies, on the other hand, have commented in our 
media ownership proceeding that allowing newspaper-broadcast cross-
ownership or allowing broadcasters to form additional duopolies is 
particularly important in smaller and rural markets to allow economies 
of scale that will both allow newspapers to survive in a time of 
declining circulation and permit broadcasters to compete effectively by 
offering more and improved local news coverage and local programming in 
their communities. As we engage in our ongoing examination of broadcast 
localism and media ownership, I intend to devote specific attention to 
the status of competition, diversity, and localism in smaller and rural 
markets.

    Question 5. You have stated that a primary goal of your term as 
Chairman is to increase access to broadband throughout our country. I 
commend you for making this a top priority at the FCC. I agree with 
this goal and hope I help you in achieving it. While a vast majority of 
Americans have access to broadband, there are still key rural and other 
hard to reach areas that have not yet been connected. Every study shows 
that access to broadband increases economic opportunities as well as 
increases access to education and quality health care services. Do you 
believe the current Federal programs to advance broadband deployment 
are doing the job? Senator Stevens recently introduced USF reform 
legislation which leaves many details up to the FCC. If Congress were 
to implement these reforms, could the Commission fashion an effective 
USF broadband deployment program that would make efficient use of 
scarce USF dollars?
    Answer. I believe that a modern and high quality telecommunications 
infrastructure is essential to ensure that all Americans, including 
those living in rural communities, have access to the economic, 
educational, and healthcare opportunities available on a broadband 
network. Our universal service program must continue to promote 
investment in rural America's infrastructure and ensure access to 
telecommunications services that are comparable to those available in 
urban areas today, as well as provide a platform for delivery of 
advanced services. Indeed, in the Federal-State Universal Service Joint 
Board's 2002 Recommended Decision, I urged the Commission to explore 
how, and to what extent, the Federal universal service support 
mechanism could assist the deployment of advanced services, or at least 
the removal of barriers to such deployment, particularly in rural, 
remote and high cost areas throughout the country.
    Unfortunately, the discussion about using universal service to fund 
broadband is being overshadowed by the uncontrolled growth in the fund 
as a result of subsidizing multiple competitors to provide voice 
services in rural areas. Before the Joint Board can make real progress 
on the true mission of universal service, ensuring access to high 
quality communications services in rural areas of the country, it must 
act to address the growth in the fund caused by competitive eligible 
telecommunications carriers (CETCs). Specifically, CETC payments have 
been growing at a trend rate of 101 percent per year since 2002. In 
2000 CETCs received $1 million in support. Based on recent USAC 
estimates, CETCs received almost $1 billion in 2007. And, CETC support 
in 2007 is estimated to be at least $1.28 billion.
    Nevertheless, I would welcome the passage of an effective broadband 
deployment program that would make efficient use of scarce universal 
service moneys. Indeed, at an en banc meeting of the Federal-State 
Joint Board on Universal Service held on February 20, 2007, I and many 
of my Joint Board colleagues expressed support for exploring whether to 
support explicitly broadband as part of the high-cost universal service 
mechanism. To the extent legislation is passed, the Commission will 
faithfully and effectively implement it.

    Question 6. South Dakota's nine Indian reservations have distinct 
challenges in their effort to increase access to broadband and wireless 
telecommunication services. There are unique characteristics in regards 
to existing infrastructure, local government, and population density. 
In your assessment are Native American communities taking full 
advantage of the USF program and other programs available to them? Has 
the FCC's ``Indian Telecommunications Initiative'' been effective in 
building partnerships and identifying solutions to bringing affordable 
telecommunications services to Indian country? Should we be doing more?
    Answer. The unique characteristics and needs of consumers on tribal 
lands are addressed in part by the Commission's Lifeline and Link-Up 
low income programs. For example, residents of tribal lands can receive 
Federal Lifeline discounts above the typical Lifeline discounts of up 
to an additional $25 off the monthly cost of telephone service. 
Similarly, Link-Up discounts for consumers in tribal areas are 
available to fully cover charges between $60 and $130, representing up 
to a maximum of $100 in discounts for initial connection charges for 
telephone service.
    As reported in the December 2006 Federal-State Joint Board 
Monitoring Report, support to tribal areas in 2005 totaled more than 
$45.5 million for Lifeline services and more than $2.5 million in Link-
Up benefits.
    However, getting the word out to all consumers eligible for these 
programs, including those on tribal lands, remains a challenge. A 
Federal/state working group was formed in 2005 to address precisely 
this issue, staffed by the FCC, the National Association of Regulatory 
Utility Commissioners and the National Association of State Utility 
Consumer Advocates. In a report released in February 2007, the working 
group identified tribal lands as an area with particular challenges due 
to the characteristics such as population density, and has suggested a 
focus on coordinating with tribal governments to facilitate 
dissemination of program information. On February 28, 2007, the 
National Congress of American Indians (NCAI), which includes 250 member 
tribes from throughout the United States met here at the FCC to further 
discuss these issues.
    The Commission's Indian Telecommunications Initiatives (ITI) 
recognizes that different tribes are at different stages of economic 
development and their experiences with telecommunications vary. The ITI 
holds interactive regional workshops designed to provide ``how to'' 
information about telecommunications services and telecommunications 
infrastructure development, with an emphasis on the unique 
characteristics and needs of consumers on tribal lands in the region. 
Workshop participants typically include tribal, Federal agency, and 
communications industry representatives and agendas are set with the 
primary goal of providing clear, practical information tribes can use 
to gain access to critical telecommunications services. Informing 
tribes about the financial support available through Federal Government 
programs, such as Lifeline and Link-Up, is a consistent component of 
our regional workshops. Our most recent ITI regional workshops were 
held in Polson, Montana, in October 2006 and San Diego, California in 
July 2006.
    In addition to the ITI workshops, senior Commission officials and 
staff regularly attend and participate in conferences, meetings, and 
other events sponsored by American Indian tribes, tribal organizations, 
and others interested in Indian country issues. These outreach 
activities provide excellent opportunities to establish beneficial 
relationships with tribal governments and their members, and to listen 
and learn about their telecommunications needs and requirements. They 
also provide opportunities to distribute detailed information about 
Commission rules and policies affecting telecommunications services in 
Indian country. Commission staff consults regularly with tribal 
government representatives to analyze and explore other initiatives and 
activities that will assist in ensuring that consumers on tribal lands 
have access to affordable, quality telecommunications services.
    Finally, the Commission also makes available a tribal land bidding 
credit to any winning auction bidder that commits to deploying 
facilities and providing wireless services to qualifying tribal lands. 
A licensee receiving a tribal land bidding credit for providing 
services to tribal lands has 3 years from the grant date for 
constructing and operating its system to cover at least 75 percent of 
the tribal population within its market, or repay the credit plus 
interest. For example, the Commission recently conditioned a waiver 
granting relief from power limits to Crown Castle International 
Corporation upon fulfillment of its tribal lands construction 
obligation associated with the White Mountain Apache Reservation.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Jim DeMint to 
                          Hon. Kevin J. Martin

    Question 1. Are any proceedings pending that would significantly 
reform universal service in a way that would reduce the amount of 
subsidies disbursed?
    Answer. The Commission needs to move to a universal service 
distribution system that is more efficient. There are several 
proceedings in which the Commission is examining how best to disburse 
Federal universal service support. The Federal-State Joint Board on 
Universal Service (Joint Board) is currently exploring how best to 
reform the rural high-cost support mechanism. One of the ideas that 
they are considering is whether a ``reverse auction'' mechanism could 
be used as the basis for distributing universal service high-cost 
support. I believe that reverse auctions could provide a 
technologically and competitively neutral means of controlling fund 
growth and ensuring a move to most efficient technology over time. The 
Joint Board will be issuing recommendations on these issues in the near 
future.

    Question 2. Congress has mandated that analog broadcasting cease by 
February 2009, and that the auction of the analog spectrum occurs no 
later than January 2008. What proceedings need to be completed this 
year so that the auction can go forward as directed by Congress?
    Answer. There are two proceedings that must be completed so that 
the auction can go forward as directed by Congress:

   Service Rules for the 698-746, 747-762 and 777-792 MHz 
        Bands, Notice of Proposed Rulemaking, WT Docket No. 06-150, 21 
        FCC Rcd 9345 (2006)--seeking comment, among other things, on 
        possible modifications to the service, technical, and auctions-
        related rules to be applied in the Congressionally mandated 
        auction of analog spectrum and the use of that spectrum.

   700 MHz Auctions Procedures Proceeding--before the auction, 
        specific procedures need to be adopted for the conduct of the 
        700 MHz auction. Such procedures encompass auction structure as 
        well as the specific bidding procedures to be applied--
        including minimum opening bids, minimum acceptable bid amounts 
        during the course of the auction, and auction activity 
        requirements.

    Question 3. What is the current status of each of those 
proceedings?
    Answer. The status of each proceeding listed above is as follows:

   Service Rules for the 698-746, 747-762 and 777-792 MHz 
        Bands--the Commission released a Notice of Proposed Rulemaking 
        on August 10, 2006. Comments were filed on September 29, 2006. 
        Reply Comments were filed on October 20, 2006. I anticipate the 
        Commission issuing an order on the service rules in the spring 
        of this year.

   700 MHz Auctions Procedures Proceeding--once the Commission 
        completes the service rules proceeding, comment will be sought 
        on auction procedures. The Commission will need to complete 
        this proceeding by late summer.

    Question 4. What percent of retransmission consent agreements 
between broadcasters and cable providers result in the broadcast 
channel being taken off the cable system?
    Answer. Because retransmission consent involves private contractual 
negotiations, the Commission does not currently have information on 
retransmission consent arrangements.

    Question 5. How many retransmission consent agreements are 
negotiated successfully each year?
    Answer. As noted above, the Commission does not currently have 
information on retransmission consent arrangements.

    Question 6. The requirement to provide analog cellular service 
expires in February 2008. Do you see any possibility that the February 
2008 deadline would be extended?
    Answer. We have under consideration a request that the deadline be 
extended that was filed by the Alarm Industry Communications Committee 
and ADT Security Services, Inc. Comments were filed on January 19, 
2007. Reply Comments were filed on February 6, 2007.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. David Vitter to 
                          Hon. Kevin J. Martin

    Question 1. I wanted to ask about the Image Access, Inc. (NewPhone) 
Petition for Declaratory Ruling pending before the Commission, WC 
Docket No. 06-129. This petition deals with the rates for local 
services charged by wholesale incumbent telephone companies to 
telephone service resellers. A few companies in Louisiana are 
interested in how the Commission will deal with this petition and if it 
will be considered soon. These companies state that a disposition of 
this petition would help bring certainty to their market and by 
clearing up rules related to the FCC's regulations on the pricing for 
service resellers. Please let me know the status of the Commission's 
efforts to address this petition.
    Answer. The 1996 Act requires all incumbent LECs to offer for 
resale any telecommunications service that the carrier provides at 
retail to subscribers who are not telecommunications carriers. The 
Commission has found that resale restrictions are presumptively 
unreasonable. Accordingly, it adopted rules outlining circumstances 
under which incumbent LECs' promotional and discounted offerings are 
subject to the wholesale rate requirements in the Act. I also believe 
that incumbent LECs should allocate their costs consistently throughout 
all aspects of their operations. Thus, to the extent an incumbent 
offers a mixed bundle of telecommunications and non-telecommunications 
services, I expect that they will allocate the telecommunications 
portion of their service for resale purposes in the same manner that it 
allocations this portion of the service for all other purposes. The 
Commission sought comment on NewPhone's petition and the record closed 
last summer. We are currently considering the policy and legal 
clarifications sought by NewPhone.

    Question 2. I have been alerted to a problem regarding compensation 
to payphone providers for coinless calls made from their phones. 
According to recent FCC statistics, about 6 percent of Louisiana 
households do not have any type of phone in their home. During the 
immediate aftermath of Hurricanes Katrina and Rita, payphones were the 
only way many people--both those without any other phones and also 
those whose mobile phones were not working due to the networks being 
overloaded--could reach emergency personnel or family and loved ones. 
Without being fairly compensated according the rules set forth by the 
Commission, payphone providers will not be able to maintain these 
phones. I have been told that in the last 2 years since the Commission 
most recently revised the payphone compensation rules, a large number 
of carriers have failed to comply with their obligations under these 
rules. I also understand that in December 2006, the FCC issued its 
first sanctions against one of these carriers that violated these 
rules. I would appreciate hearing your comments on whether you think 
the agency has sufficient power and resources under your existing 
authority to continue to enforce these rules and help ensure that 
companies are not able to disregard the Commission's payphone 
compensation rules.
    Answer. Enforcement of the Commission's rules, including our 
payphone compensation rules, is a priority. The Commission has taken 
several enforcement actions against carriers who have not complied with 
our payphone rules and is currently investigating other carriers. As 
you mention, last December, the Commission found that Compass, Inc., d/
b/a Compass Global, Inc., apparently failed to meet its statutory and 
regulatory obligations related to payphone compensation, and the 
Commission imposed a total forfeiture of $466,000. More recently, on 
February 23, 2007, the Commission released an order awarding 
approximately $2.7 million in damages, plus prejudgment interest, to 
billing and collection agents for various payphone service providers 
(``PSPs''), which represented per-call compensation owed to the PSPs 
pursuant to section 276 of the Communications Act.
    In addition to enforcement actions, the Commission has taken steps 
to help payphone providers receive compensation by reminding carriers 
of their obligations to payphone providers. On September 13, 2006, the 
Commission's Wireline Competition Bureau released a Public Notice 
reminding carriers of their obligations under the payphone rules, and 
also reiterating that it will not hesitate to take enforcement action, 
including imposing forfeitures, should carriers fail to comply with 
their compensation and reporting obligations.
    The combination of enforcement actions and the Public Notice 
informing carriers of their obligations are steps that the Commission 
has taken to ensure that carriers do not disregard our payphone rules. 
We also recognize the importance of payphones, especially in emergency 
situations. As such, we will continue our efforts of investigating and 
taking enforcement actions against carriers who fail to compensate 
payphone providers for completed calls.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                         Hon. Michael J. Copps

    Question 1. In March, 2006, the FCC allowed a Verizon forbearance 
petition to become effective by operation of law. Because there was a 
vacancy on the Commission at that time and a 2-2 split among 
Commissioners, Verizon was able to gain regulatory relief through 
Commission inaction. Does the current process regarding the disposition 
of forbearance petitions in the absence of a Commission majority 
essentially allow petitioners to write the terms of their relief?
    Answer. Yes. As I said at the time of the Commission's inaction on 
the Verizon petition, permitting a forbearance petition to go into 
effect like this is akin to providing industry the pen and giving it 
the go-ahead to rewrite the law. I believe Congress trusted the FCC to 
implement the law, but it did not tell us to delegate far-reaching 
policy changes to the companies that fall under our jurisdiction. I 
note a recent submission to the D.C. Circuit Court of Appeals 
concerning the appeal of the Verizon forbearance petition, which argues 
that ``[w]hen the FCC voted 2-2 on Verizon's Petition, the legal effect 
of its deadlock was to deny Verizon's Petition.'' Sprint Nextel Corp. 
et al. v. FCC, Case No. 06-1111, filed Feb. 26, 2007.

    Question 1a. Is it fair in such situations to allow petitioners to 
amend the scope of their requested relief after the period for comment 
on the original petition has concluded?
    Answer. I fear that allowing petitioners to amend the scope of the 
relief requested after the comment period has concluded denies the 
public the opportunity to offer input. This is of special concern when 
petitions address vast areas of communications policy and inaction is 
tantamount to the Commission erasing decades of communications policy 
in a single stroke.

    Question 1b. Should forbearance petitions be denied in the absence 
of an order approved by a majority of Commissioners?
    Answer. Ideally, yes. I believe the Commission would benefit from 
additional Congressional guidance on this point.

    Question 2. One of the biggest challenges we face over the next 2 
years is moving our Nation from analog to digital television with 
minimal consumer disruption. I understand that the FCC is currently 
receiving comment on its Proposed Final Table of DTV allotments, 
proposing final digital channels for TV broadcast stations. However, 
even after that is final, additional actions will be needed to complete 
the transition. Given the enormity of the task before us, what action 
is the Commission taking and what action should it take to ensure that 
our country is ready in February 2009?
    Answer. I believe the Commission needs to confront head-on the 
significant consumer confusion that exists in this area. We should be 
working to ensure that every customer understands what the February 
2009 date will mean for his or her viewing options. We should strive to 
let every consumer understand how his or her buying decisions between 
now and then will affect those options. I appreciate the actions taken 
by the agency to date, including our Consumer and Governmental Affairs 
Bureau reaching out to state, local, and tribal governments and public 
service organizations, as well as its efforts in creating a DTV website 
(www.dtv.gov), shopper's guide and DTV tip sheet. But if we are going 
to succeed here, we have to do more. We need to be working closely with 
NTIA and the consumer electronics industry to ensure that we get the 
word out to every American as early as possible. Consumer education and 
outreach have not always been at the core of this agency's mission--but 
with the transition less than 2 years away, the time to make it a 
priority is now.

    Question 3. A recent study conducted by Free Press entitled, Out of 
the Picture: Minority & Female TV Station Ownership in the United 
States, contained some sobering statistics.

        Women comprise 51 percent of the entire U.S. population, but 
        own a total of only 67 stations, or 4.97 percent of all 
        stations.

        Minorities comprise 33 percent of the entire U.S. population, 
        but own a total of only 44 stations, or 3.26 percent of all 
        stations.

        Latinos comprise 14 percent of the entire U.S. population, but 
        own a total of only 15 stations, or 1.11 percent of all 
        stations.

        African Americans comprise 13 percent of the entire U.S. 
        population but only own 18 stations, or 1.3 percent of all 
        stations.

        Asians comprise 4 percent of the entire U.S. population but 
        only own a total of 6 stations or 0.44 percent of all stations.

    Do these facts trouble you as they do me, and what action should 
the Commission take to promote greater diversity of ownership?
    Answer. These facts are beyond troubling and they deserve far more 
attention than they are getting. Today, the media and communications 
industries account for one-sixth of the U.S. economy. It may be the 
most influential industry in our country. We need to harness the 
promise and power of this sector for the benefit of all Americans, 
because every person in this country is entitled to a media that 
reflects America and serves the public interest. But as these numbers 
show, we are nowhere near taking advantage of our great diversity when 
it comes to the state of media in this country.
    When it comes to media, ownership rules. If we truly want to 
increase the number of voices on the public airwaves, we need to 
diversify ownership. To get this process rolling, the FCC must seek 
comment on the minority ownership proposals remanded by the Third 
Circuit in 2003. To date, the Commission's failure to seek comment 
specifically on these proposals undermines the credibility of FCC 
efforts to respond to the court's remand. That leads me to question 
whether the agency is willing to be really proactive in promoting 
greater ownership diversity.
    Finally, let me note that recent proposals that would have 
broadcasters leasing spectrum on non-primary digital channels to 
independent minority businesses so they can access the airwaves more 
easily after the digital transition do not get to the root of the 
problem. They may be fine as far as they go, but they go nowhere near 
far enough. They fail to address the troubling state of minority media 
ownership. Offering a few hours on the fourth or fifth channel ensures 
little more than second class citizenship on the digital airwaves.

    Question 4. On November 22, 2006, the day before Thanksgiving, the 
FCC released a list of economic studies to be performed in the media 
ownership proceedings. How did the Commission choose the economic 
studies to be performed in the media ownership proceedings?
    Answer. The Chairman's Office selected the studies to be performed.

    Question 4a. Who at the Commission or elsewhere was consulted for 
input on the topics chosen?
    Answer. Early in the process, the Chairman's Office asked for input 
from our office. I remain concerned, however, that the topics are so 
generalized that they may not be of much assistance as we address 
specific questions raised by the court remand.

    Question 4b. How were parties selected for the studies done outside 
the Commission, and what is the cost of these contracts?
    Answer. I believe the public has a right to know how the 
contractors were selected and how much money is being spent on each 
project. To date, this information has not been made publicly 
available. When the majority of the previous FCC voted to loosen the 
ownership rules in 2003, the court took them to task for inadequate 
justification of their handiwork. My hope has been that the Commission 
would not head off on the same course again--especially at a time when 
so many people already doubt the credibility of the research we do.

    Question 4c. Would the Commission consider seeking public comment 
on what other studies might assist the Commission in its review of 
ownership rules?
    Answer. I wholeheartedly support seeking public comment on what 
other studies could assist the Commission in its review of ownership 
rules. More than that, I believe it is imperative for whatever studies 
that are produced to be subject to peer review and public comment. The 
previous FCC was taken to task by the Congress, court and American 
people for its failure to seek public input during our last effort at 
revising our media ownership rules. It is vitally important that the 
Commission not trip itself up by failing to get public input during 
this current effort.

    Question 5. In November 2006, the Government Accountability Office 
(GAO) issued a report concluding that the cost of special access has 
gone up--not down--in many areas where the FCC predicted that 
competition would emerge. To address this error, the report recommended 
that the FCC develop a better definition of ``effective competition'' 
and monitor more closely the effect of competition in the marketplace. 
Do you agree with these findings?
    Answer. Yes. I have long pushed the FCC to review its policies 
governing special access. Special access is the backbone of business 
communications in this country. If our rules are inadequate to ensure 
competitive pricing, we must revisit them.

    Question 5a. What action should the Commission take in response?
    Answer. I have long pushed the FCC to review its policies governing 
special access. In 2005, the Commission began a Notice of Proposed 
Rulemaking to consider changes to our rules governing special access. 
We are overdue to complete this effort. It would have the added benefit 
of responding to some of the very same criticisms that are in the GAO 
report.

    Question 6. Last year, Congress passed legislation imposing a ten-
fold increase in the size of maximum fines for indecency violations, to 
a maximum of $325,000 per violation. At the time President Bush signed 
the law, he said ``[t]he problem we have is that the maximum penalty 
that the FCC can impose under current law is just $32,500 per 
violation, and for some broadcasters, this amount is meaningless. It's 
relatively painless for them when they violate decency standards.'' 
Should Congress similarly raise the statutory maximum fine for other 
violations?
    Answer. I worry that too many Commission fines are treated by our 
largest regulatees as simply the cost of doing business. Because larger 
fines are greater deterrents, I think it would be valuable to see in 
what areas under our jurisdiction compliance with FCC rules is the most 
problematic. In those areas, I believe Congress may want to consider 
increasing maximum fines.

    Question 6a. What other actions should be taken to promote swifter 
and more effective enforcement?
    Answer. Without swifter responses from the FCC, businesses will be 
disinclined to seek redress through Commission enforcement processes. 
Imposing deadlines on FCC action would increase the effectiveness of 
FCC enforcement action.

    Question 7. Recently, the FCC adopted an order to prohibit certain 
practices by franchising authorities that the Commission finds are 
unreasonable barriers to entry. One issue mentioned in that order, 
which is very important to the State of Hawaii, is the ability of the 
franchise authority to seek appropriate contributions for public, 
educational, and governmental (PEG) and institutional networks (I-
nets). I understand that some parties have disputed the veracity of 
some claims made in this proceeding. What, if any, efforts did the 
Commission take to independently investigate and verify the claims of 
unfair demands made by many of the carriers in this proceeding?
    Answer. Too few, if any. In this context and in others the 
Commission relied heavily on the submissions of interested parties. 
These submissions are vitally important, but need to be accompanied by 
the FCC's own independent research, verification and investigation. For 
this reason, among others, I dissented to this decision.

    Question 8. In 2004, the FCC adopted a plan to move certain 
licenses within the 800 megahertz band in order to eliminate 
interference problems that were being experienced by public safety 
communications systems. What is your assessment of the pace of progress 
in rebanding the 800 MHz band and what steps does the Commission intend 
to take in order to get this process back on track?
    Answer. We are now half-way through the 36-month re-banding 
process. It is my understanding that the new Public Safety and Homeland 
Security Bureau has been working closely with the Transition 
Administrator, public safety agencies and organizations and the other 
relevant stakeholders. I understand that some, but not all, parties 
think an extension of time will be necessary, and that various 
stakeholders have requested that the Commission work with the 
Transition Administrator to develop specific intermediate benchmarks. I 
would be very reluctant to grant an extension of the June 2008 deadline 
and would consider doing so only if it became absolutely necessary to 
make the process work and in order to avoid any disruptions to public 
safety operations. Obviously, any potential relief would depend on the 
specific facts and those facts would need to be compelling. I continue 
to monitor the timetable closely in order to make sure that public 
safety receives the benefits promised by re-banding.

    Question 9. A number of wireless carriers have employed the use of 
high ``early termination fees'' to prevent wireless customers from 
switching to other carriers. In some cases these fees may be $200 or 
more, and may apply regardless of whether the subscriber wishes to 
cancel on the first or last date of their wireless contract. Do you 
believe these practices promote or impede competition?
    Answer. Too often, I believe these practices impede competition. I 
have heard from consumers who feel that they are left with little or no 
option in terms of changing providers because of the early termination 
fees that they would be forced to pay, even if they are dissatisfied 
with their provider.

    Question 10. Given requirements imposed by General Services 
Administration to promote greater redundancy of communications, how 
would the retirement of copper facilities impact Congress' directive to 
promote the availability of alternate network facilities in federally 
owned and leased buildings?
    Answer. Having redundant networks is an important part of ensuring 
the security of our communications system. Under the statute and under 
Commission rules, incumbent local exchange carriers seeking to retire 
copper loops must comply with FCC network modification disclosure 
requirements. While carriers should be permitted to update their 
network architecture, there is reason to be concerned that this process 
may reduce the availability of alternate network facilities in, among 
other places, federally owned and leased buildings. The Commission 
should consider reviewing its rules in order to ensure that under the 
guise of upgrading facilities, carriers do not sacrifice the safety and 
security that comes with having redundant networks.

    Question 11. Given the Commission's policy of promoting broadband 
deployment and eliminating regulations that treat competitors in the 
provision of broadband differently, how is this policy being 
implemented with regard to pole attachment regulations?
    Answer. While implementing pole attachment policy is one of the 
drier and more technical issues the Commission faces, it is also 
essential to ensuring that we have a competitive broadband market. 
Unfortunately, I do not believe the Commission has done all it should 
in order to ensure that businesses have certainty about what our rules 
require and to welcome new entrants into the market for broadband 
services. I believe we owe the broadband over power line industry some 
certainty about how pole attachment rules will apply to them. I also 
believe we need to act in an expeditious fashion to resolve petitions 
before the agency that would clarify the rules that apply to 
competitive entrants into the wireline broadband market who seek to use 
poles and conduits owned by incumbent wireline providers.

    Question 12. Recently, a Virginia Federal court referred a matter 
to the FCC for review and clarification as to whether Internet Protocol 
Television or ``IPTV'' service meets the definition of a ``cable 
service'' under the Communications Act--a question that this Committee 
answered affirmatively during consideration of last year's 
telecommunications bill. How does the Commission intend to address this 
matter?
    Answer. In 2002, the Commission took its first steps down the 
reclassification road by pronouncing cable modem service to be an 
information service under the Communications Act. Three years later, 
the Commission reclassified wireline broadband Internet access as an 
information service. As I have noted from the start, this 
reclassification frenzy has consequences. Moving a service from one 
title to another means the FCC has an obligation to spell out what it 
means for everything from homeland security to universal service to 
consumer privacy to disabilities access. Furthermore, it means the FCC 
should consider what the consequences are for new services, like IPTV. 
Unfortunately, the FCC has ducked and dodged too many of these 
questions, and new ones have arisen in the wake of these decisions. I 
believe the Commission is overdue to answer questions like these and 
provide consumers and industry alike with clear answers.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                         Hon. Michael J. Copps

    Question 1. Eleven years after Congress passed the 1996 
Telecommunications Act that opened the floodgates of media 
consolidation in the radio industry is American radio better or worse 
than it was in 1996 in terms of viewpoint diversity and localism?
    Answer. I fear it is substantially worse. The Telecommunications 
Act of 1996 eliminated the national radio cap, ushering in a tremendous 
and totally unanticipated wave of consolidation in terrestrial radio. 
The top ten radio conglomerates now control \2/3\ of the total American 
radio audience. The result is that fewer companies own more radio 
stations in each market. This has had a scary impact on viewpoint 
diversity and localism. Fewer owners mean fewer voices in each market, 
and too often it means deep cuts in local newsgathering. As a result 
viewpoint diversity suffers, as does reporting on the truly local news.
    Well-informed citizens are the lifeblood of our democracy. Having 
less local news and fewer viewpoints leaves us poorer as citizens, 
voters and as participants in community life. I am deeply concerned 
that further consolidation will further erode the viewpoint diversity 
and local character of radio.

    Question 2. How has consolidation impacted the public's ability to 
hear local music and local news on the airwaves?
    Answer. Over the past 5 years, I have been in scores of media 
markets across the nation, trying to understand how various localities 
are faring under the tremendous consolidation that has overtaken 
America's media during the past decade. The vast majority of local 
television and radio markets are tight oligopolies, with even higher 
levels of concentration for local news. In this environment, add a 
merger between the monopoly newspaper and dominant television station 
and you get fewer reporters covering fewer beats, less diversity of 
opinion and a reduction in editorial voices. This wave of consolidation 
may serve shareholder interest by reducing competition and cutting 
newsgathering costs. But far too often this comes at the expense of the 
public interest, because it strips to bare bones the amount of 
independently produced news available in a local community.
    The same consolidation tune has played out on radio. A study of the 
top 50 radio markets shows that local market concentration means more 
homogenous formats, fewer overall songs played and less attention to 
songs that are no longer on the charts. In this environment, local 
music rarely has a chance to get on the airwaves.

    Question 3. Even with the existence of net neutrality conditions on 
AT&T, are there rules in place to ensure that other broadband providers 
do not discriminate against Internet content, services or applications? 
Given the rulings on information services, is it even clear that the 
FCC has authority to act if such discrimination occurs?
    Answer. The Communications Act has long prohibited common carriers 
from unjust or unreasonable discrimination. With the Commission's 
effort to reclassify wireline broadband Internet access service as an 
information service, this prohibition may no longer directly apply. So 
in response to the effort to reclassify, I pushed for the FCC to adopt 
its Internet Policy Statement. I see this effort as a starting point, 
because if we want Internet Freedom, we need to ensure that FCC policy 
adjusts so it continuously promotes the openness that has made the 
Internet so great. I believe that under Title I of the Communications 
Act the FCC has authority to act if discrimination occurs. Nonetheless, 
I acknowledge that this authority is less than optimally clear. In this 
environment, the FCC surely would benefit from Congressional guidance.

    Question 4. In an environment of industry consolidation and 
technological integration, what role do you see the FCC playing to 
ensure nondiscriminatory access to infrastructure, content, roaming, 
spectrum and rights of way?
    Answer. I believe that in the coming years, the Commission should 
make enforcement of the basic principle of nondiscrimination one of its 
central goals in a variety of technical areas--just as it has 
traditionally done in its regulation of the Public Switched Telephone 
Network. That is why I support the idea of Internet Freedom, which 
ensures that consumers of one Internet service provider will have equal 
access to the customers and content served by every other Internet 
service provider. I also believe that the principle of openness and 
non-discrimination should apply in a variety of other, comparable 
contexts. For example, I believe customers of smaller wireless carriers 
should have access--through commercially-reasonable, non-discriminatory 
roaming agreements--to the networks of larger carriers. Similarly, new 
entrants should have fair access to rights-of-way in order to promote 
competition. I believe that a strong commitment to the principles of 
competition, non-discrimination and open and interconnected networks 
will ensure that America's consumers are able to take full advantage of 
the rapid pace of technological innovation and evolution.

    Question 5. Do you think that the current broadband market is 
sufficiently competitive and robust in terms of broadband deployment? 
Does the FCC currently have sufficient tools to even accurately 
determine whether Americans have access to broadband?
    Answer. I am not satisfied that the current broadband market is 
sufficiently competitive. In the United States, 96 percent of consumer 
broadband is provided by either cable modem or DSL technology. If they 
are lucky, then, consumers have a choice between the cable and DSL 
duopoly. But too many lack even this choice and we are paying a price 
for this low level of competition. Americans spend twice as much for 
broadband connections that are one-twentieth the speed of some 
countries in Asia and Europe. This state of affairs has to change. 
Without greater competition and a viable third broadband pipe, we 
consign too many of our businesses to tough stakes in the global 
digital economy and too many of our students to learning at dial-up 
speeds.
    I also am not satisfied that the FCC has the data necessary to 
adequately determine where there is broadband access in this country. I 
have long been on record as a critic of the FCC's broadband data 
gathering techniques. No business in its right mind would make 
decisions based on the weak set of statistics we gather. The FCC 
assumes that if there is a single subscriber to 200 kilobit broadband 
in a zip code, then broadband is available throughout the area. This is 
like--as someone recently told me--finding a driver of a Mercedes in 
each zip code and concluding, ergo, everyone there drives a Benz. What 
I'd really like to see is the FCC collect more granular information on 
consumers' competitive choices; gather data on broadband price and 
measure the cost per bit in this country; compare these statistics to 
our international counterparts; and develop a deeper understanding of 
why our Nation's consumers--in urban, suburban, rural and tribal 
regions--are or are not able to subscribe to broadband services. That 
would really tell us something about just what the state of broadband 
deployment and penetration looks like in this country.

    Question 6. How do you envision universal service reform moving 
ahead to keep the fund sustainable? I am concerned about proposals that 
would not require broadband connections to pay into universal service, 
or reverse auction proposals that advocate providing USF support in an 
auction type model to the least cost provider.
    Such proposals bring uncertainty to investment plans, and shift the 
universal service standard from comparable to urban areas, to one that 
would just go to the lower bidder, quality irrelevant. I understand 
that rural providers have expressed concern about both proposals. Can 
you discuss the least cost provider issue, as well as what possible 
distinctions exist to justify excluding broadband from paying into 
USF--why shouldn't a technology that uses and benefits from the network 
pay into universal service?
    Answer. The Commission is charged with preserving and advancing 
universal service. That means ensuring everyone, from the inner city to 
the most rural reaches of the country, has access to the wonders of 
communications. The challenge we face in meeting this great objective 
is ensuring that our universal service mechanisms are sustainable. As 
more of our networks and communications migrate to broadband 
technology, I believe the key to sustainability lies in modernizing the 
universal service system. That means having broadband both contribute 
to and receive support from the universal service fund.
    While I am open to considering a wide array of reform proposals 
designed to ensure the sustainability of universal service, I have 
serious questions about the impact of an auction-based universal 
service system on rural areas in this country. Congress directed the 
Commission to ensure that consumers in all regions have access to 
comparable services at comparable rates. It is not yet clear to me that 
an auction-based system that rewards the least-cost provider will 
guarantee comparable services at comparable rates. Furthermore in 1997, 
when the Commission last considered the use of auctions, it noted ``it 
is unlikely that there will be competition in a significant number of 
rural, insular, or high cost areas in the near future. Consequently, it 
is unlikely that competitive bidding mechanisms would be useful in many 
areas in the near future.'' Before moving ahead here, it is imperative 
that we understand what, if anything, has changed since the Commission 
reached this conclusion.

    Question 7. What is your view of making the deployment of advanced 
infrastructure that is fully capable of offering the wide array of 
broadband oriented services the hallmark of our national universal 
service policy? Should universal service subsidize broadband?
    Answer. Yes. Broadband is the infrastructure challenge of our time. 
Our future will be decided by how we master, or fail to master, 
advanced communications networks and how quickly and how well we build 
out broadband connectivity. The challenge comes in making sure that 
rural Americans get there right in time with the rest of the country. 
Universal service can play a vital role in making this happen. First, 
as more and more of our communication migrates to broadband technology, 
broadband should be part of the contribution base. Second, as part of 
the contribution base, broadband should also be the subject of 
universal service support. This way we can modernize our current system 
to make the deployment of advanced infrastructure the hallmark of our 
national universal service policy.
    Finally, it is important to note that universal service is only one 
of several policies that can speed the way for broadband in rural 
America. Ultimately, our efforts at the FCC must be part of a larger 
national broadband strategy that entails additional components that may 
be outside of Commission jurisdiction, like matching grants and tax 
incentives. On this point, however, time is not our friend. I believe 
every industrialized country around the globe already has a national 
broadband policy, save for the Untied States. We are long overdue to 
adopt and implement a policy to address this pressing national 
infrastructure challenge.

    Question 8. The FCC recently has been granting incumbent providers 
(ILECs) forbearance from regulations on the premise that sufficient 
competition exists in a specific market to make enforcement of the 
regulations unnecessary. However, a Fall 2006 GAO report indicates that 
the assumptions the FCC uses to determine the existence of competition 
may be flawed and further that prices in Phase II areas--that is, areas 
where competition is theoretically most intense--are going up. Is that 
the case, and if so, are price increases consistent with a competitive 
market?
    Answer. We all know that in a truly competitive market, consumers 
will enjoy lower prices due to competition among providers. But as the 
GAO report notes, some aspects of the special access market in this 
country are characterized by rising rates. In particular, the GAO found 
that in areas where the FCC has granted full pricing flexibility due to 
the presumed presence of competitive alternatives, prices are higher 
than in areas that remain subject to FCC regulation. This suggests 
something is askew with FCC policies. After all, price increases are 
not naturally the product of a competitive marketplace. It may very 
well be that the key competitive market assumptions on which the 
Commission built its pricing flexibility relief were flawed. I believe 
the FCC is past due to review its policies governing special access. 
For this reason, I have pushed for the Commission to resolve its 
outstanding 2005 Notice of Proposed Rulemaking concerning special 
access. The GAO report makes it even clearer that this is the right 
thing to do.

    Question 9. Is forbearance for the ILECs in the public interest?
    Answer. I have concerns about the existing forbearance process 
regardless of whether the petition at issue is filed by an incumbent 
LEC or any other party. If the Commission fails to act on a forbearance 
petition within the statutory timeframe, it effectively hands the 
petitioning party the pen and permits it to rewrite the law. I believe 
Congress trusted the FCC to implement the law, but it did not tell us 
to delegate far-reaching policy changes to the companies that fall 
under our jurisdiction. For this reason, the Commission would benefit 
from additional Congressional guidance in this area.

    Question 10. A proceeding to investigate the rates, terms and 
conditions for interstate special access services has been pending for 
a number of years. What is the status of the FCC's special access 
proceeding? What steps are being taken to speed resolution of this 
matter?
    Answer. I have long pushed the FCC to review its policies governing 
special access. Special access is the backbone of business 
communications in this country. If our rules are inadequate to ensure 
competitive pricing, we must revisit them. In 2005, the Commission 
began a Notice of Proposed Rulemaking to consider changes to our rules 
governing special access. We are overdue to complete this effort. This 
would have the added benefit of responding to some of the very same 
criticisms that are in the GAO report on special access.

    Question 11. Some say that the dispute between Mediacom and 
Sinclair signals a new period of confrontation between broadcasters and 
distributors. How many complaints involving retransmission consent 
disputes has the Commission received in the last couple of years? Is 
there any trend within that data that may be useful to consider? How 
long does the Commission typically take to resolve those complaints?
    Answer. In 2000, the Commission adopted rules governing good faith 
retransmission consent negotiation, pursuant to the Satellite Home 
Viewer Improvement Act of 1999. Since that time, the Commission has 
received 17 complaints. Thirteen of these complaints were withdrawn 
after the parties settled the dispute through private negotiation. Of 
the four remaining complaints, two led to decisions and two are 
pending. For the two decisions issued, the FCC took between 2 months 
and four and a half months to resolve the complaints.
    Due in part to the dispute between Mediacom and Sinclair, this 
issue has received increased attention in recent months. One the one 
hand, multichannel video programming distributors claim the large 
integrated programmers tie their non-network programming to carriage of 
the network. They suggest that this leads to higher prices for the 
basic tier and occupies capacity that could be used to carry 
independent networks. On the other hand, broadcasters claim that they 
will need retransmission consent to negotiate the carriage of all of 
their digital signals. One thing is certain. Small broadcasters claim 
that they are at a disadvantage when negotiating against big cable 
companies and small cable operators claim the rules put them at a 
disadvantage when negotiating with large programming networks. All in 
all, the problem seems to stem from media concentration.

    Question 12. One issue specifically important for public radio 
stations is the opportunity to file for and receive additional reserved 
FM spectrum. It has been almost 7 years since the FCC provided the 
public with an opportunity to build new noncommercial educational 
stations on reserved FM spectrum. When will the FCC open a filing 
window for new reserved-FM noncommercial stations? Will the FCC provide 
public notice of a filing window sufficiently in advance to permit non-
profit, governmental, and other potential applicants adequate time to 
participate?
    Answer. The Chairman's Office will determine when the FCC will next 
open a filing window for new reserved-FM noncommercial stations. I will 
do everything in my power to ensure that the FCC provides public notice 
of a filing window sufficiently in advance to permit non-profit, 
governmental and other potential applicants adequate time to apply for 
licenses. Low power radio is one of the last vestiges of localism and 
diversity and we need to provide an environment in which it can 
flourish.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                         Hon. Michael J. Copps

    Question 1. When the Commission re-examines the existing ban on 
newspaper-television cross ownership, should the analysis be focused on 
how people obtain their local news and information or how they obtain 
all of their news and information? Does this distinction make a 
difference?
    Answer. This distinction is vitally important. It goes to the heart 
of the FCC's consideration of the newspaper-broadcast cross-ownership 
ban. While there are new and exciting ways to gather news and 
information--most notably, the Internet--local broadcasting and 
newspapers are still forces to be reckoned with when it comes to local 
news. More than eighty percent of Americans say that local television, 
local radio or local print outlets are their most important source of 
news and information. Furthermore, what makes broadcasting unique is 
the obligation of station owners to address the needs and interest of 
the local community of license. I know of no other news medium that has 
this obligation under the law. So the Commission must keep its eye on 
the ball when it examines the existing ban and make certain that it 
focuses on how citizens get their local news.

    Question 2. Do you consider blogs to be a reliable source of news?
    Answer. Many blogs offer interesting commentary and exceptional 
news analysis. Blogs democratize punditry and make it easy to publish 
and share ideas across the country and across the globe. At the same 
time, few blogs are able to support the kind of investigative staffs 
and hard-hitting newsgathering and journalism that have traditionally 
characterized their larger counterparts at TV stations, radio stations 
and newspapers. Moreover, not all blogs subject themselves to the same 
journalistic standards that you'll find at these institutions. In the 
end, I believe the blogosphere is a fantastic addition to our media 
landscape. But in light of the different elements that make up this 
medium, I believe we must be extremely careful not to generalize about 
its substitutability for other forms of journalistic media.

    Question 3. Do you believe the Commission's streamlining of the 
license renewal process over the years has led to a reduction in the 
local news and other public interest programming on television and 
radio?
    Answer. Yes. Over time the Commission has pared back its license 
renewal process from one in which it examined every 3 years whether the 
broadcaster was actually serving the public interest to one where 
companies need only send us a postcard every 8 years and nothing more. 
Unless there is a major complaint pending against a station, license 
renewal is all but automatic. At the same time, the Commission has 
allowed too many of the fundamental protections of the public interest 
to wither and die--requirements like understanding the needs of the 
local audience, teeing up controversial issues and providing 
demonstrated diversity in programming, to name a few of the safeguards 
we had once but have since abandoned. As the Commission has dismantled 
these provisions, it has relied instead on marketplace forces as a 
proxy for serving the public interest. Along the way, make no mistake 
about it, localism, diversity and competition suffered grievous wounds. 
We not only see less local news and public interest programming, we 
have come perilously close to taking the ``public'' out of the public 
airwaves.

    Question 4. Are there actions the Commission can take within its 
existing authority to ensure that broadcasters are more responsive to 
the needs and interests of the communities they serve without being 
overly burdensome?
    Answer. Yes. Under the law, broadcasters have a duty to benefit the 
public in return for using the public's airwaves. As our Nation moves 
from analog to digital broadcasting, we have an opportunity to ensure 
that these technologies support our oldest values--like diversity, 
localism and competition. To this end, the Commission could use the 
dawn of digital television to ensure digital broadcasters offer a 
streamlined minimum of local civic programming, local electoral affairs 
coverage, public service announcements and creative independent 
programming. This could enrich our communications landscape 
immeasurably, with more coverage of the democratic process, more 
opportunities for new voices and more local news. Finally, I would note 
that the Commission has already made some progress in this area by 
virtue of adopting its children's programming rules. This effort could 
be used as a model for further efforts to enumerate public interest 
obligations in a digital age.

    Question 5. In your opinion does Congress need to give the 
Commission new authority with respect to specifying factors it needs to 
consider when renewing a broadcasting license or for the length of a 
license?
    Answer. I believe the Commission has the authority it needs to 
specify factors to consider when renewing a broadcasting license. It 
used to be that broadcasters had a duty to demonstrate compliance with 
a clear set of public interest obligations in order to ensure the 
renewal of their license. But while the Commission may have the 
authority to again specify such factors--and in a digital age it seems 
doubly important to do so--it does not appear to have the will. So I 
believe this is an area where the Commission--and the American public--
would truly benefit from additional Congressional guidance.

    Question 6. Do you believe that Congress needs to review the 
rationale and process for addressing petitions for forbearance in 
Section 10 of the Communications Act? If so, why?
    Answer. Yes. The Communications Act permits the Commission, either 
on its own motion or in response to a petition, to forbear from 
applying regulations or provisions of the Act to telecommunications 
carriers or telecommunications services. Furthermore, the Act provides 
that forbearance is warranted if the regulation or provision at issue 
is not necessary to prevent discrimination, not necessary to protect 
consumers and otherwise in the public interest. While these guideposts 
are useful in shaping our assessment of the need for relief, I believe 
the Commission would benefit from having more precise parameters. In 
addition, I have concerns that if the Commission fails to act on a 
forbearance petition, it effectively hands the petitioning party the 
pen and permits it to rewrite the law. I believe Congress trusted the 
FCC to implement the law, but it did not tell us to delegate far-
reaching policy changes to the companies that fall under our 
jurisdiction. For this reason, the Commission would benefit from 
additional Congressional guidance in this area.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Frank R. Lautenberg to 
                         Hon. Michael J. Copps

    Question. In approximately 2 years, broadcasters will shift to 
digital television. There are over 200,000 homes in New Jersey that 
rely exclusively on over-the-air television. Do you think most 
Americans are educated about this transition today? What role will the 
FCC play in preparing the public for this transition?
    Answer. I believe the Commission needs to confront head-on the 
significant consumer confusion that exists in this area. We should be 
working to ensure that every customer understands what the February 
2009 date will mean for his or her viewing options. We should strive to 
let every consumer understand how his or her buying decisions between 
now and then will affect those options. I appreciate the actions taken 
by the agency to date, including our Consumer and Governmental Affairs 
Bureau reaching out to state, local, and tribal governments and public 
service organizations, as well as its efforts in creating a DTV website 
(www.dtv.gov), shopper's guide and DTV tip sheet. But if we are going 
to succeed here, we have to do more. We need to be working closely with 
NTIA and the consumer electronics industry to ensure that we get the 
word out to every American as early as possible. Consumer education and 
outreach have not always been at the core of this agency's mission--but 
with the transition less than 2 years away, the time to make it a 
priority is now.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Mark L. Pryor to 
                         Hon. Michael J. Copps

    Question 1. Over the past 4 years, consumers have enjoyed the 
successful emergence of a number of new players in the audio 
marketplace. Satellite radio and Internet radio now reach tens of 
millions of listeners every week, and portable MP3 players and Ipods 
have become common household items.
    Digital Cable and DBS offer dozens of channels of uninterrupted 
music, and Wi-Max technology is evolving that will soon allow Internet-
based listening options in automobiles.
    Would the Commissioners agree that the competitive landscape has 
changed dramatically in the audio market over the past few years?
    And would the Commissioners agree that this trend is only likely to 
continue for the foreseeable future?
    Answer. In some ways, the media music landscape has changed 
dramatically over the past few years. There are new options and new 
technologies. But in too many ways, the song remains the same. A study 
of the top 50 radio markets shows that local market concentration means 
more homogenous formats, fewer overall songs played and less attention 
to songs no longer on the charts. Other studies have shown that for 
most radio formats (i.e., rock, country, news) four firms control 60 
percent of the national audience. Some radio markets now lack any 
stations devoted to even popular formats, like country music. Sure, 
there are alternatives out there. But terrestrial radio is special. 
Licensees use the public spectrum in return for providing programming 
in the public interest. They have unique duties and obligations to 
serve their communities of license. We should be sure this obligation 
supports local music, more diverse programming and more competitive 
choices. While changes in the competitive landscape are likely to 
continue, that does not prevent us from working to ensure that our 
local radio marketplace is as vibrant--and as local--as it can be.

    Question 2. Consumers in many rural areas currently are not able to 
enjoy the same benefits wireless services offer as their urban 
counterparts enjoy. Due to low user concentration, the cost of 
providing high quality wireless service in rural areas is frequently 
more expensive than is possible in higher-density urban areas. 
Designation of wireless carriers as ETCs, which permits these carriers 
to receive support from the Universal Service Fund (``USF''), can help 
to ensure that all Americans enjoy the benefits of competition and 
high-quality wireless services. What steps have the FCC taken to ensure 
that wireless coverage is extended to all Americans, regardless of 
where they live, and to ensure that Americans living in rural areas 
have the opportunity to subscribe to high-quality wireless services?
    Answer. From the start, wireless services have been a part of the 
universal service picture. In 1997, the Commission adopted an approach 
it characterized as ``competitive neutrality,'' ensuring that wireless 
services would be among the beneficiaries of universal service support. 
Since that time, many wireless providers have received universal 
service funds. As a result, we have seen the expansion of wireless 
service to rural areas.
    Separate and apart from universal service, the Commission operates 
under a statutory obligation to bring the benefits of spectrum-based 
services to all Americans, including those living in rural areas. On 
the licensed spectrum front, we have an ideal opportunity to do that if 
we can create the right band plan, license area sizes and substantial 
service requirements for the upcoming 700 MHz auction. I also believe 
we should be trying to free up more spectrum for unlicensed uses. 
Unlicensed spectrum has been a hotbed for innovation and has special 
potential in rural areas. That is why I am supportive of our decision 
to authorize operation in the TV white spaces, provided of course that 
we can adequately protect existing users of the band.

    Question 3. Following the natural disasters that recently hit the 
Gulf Coast region wireless services provided emergency personnel, 
utility repairmen and residents with the only immediate means for 
communicating.
    In light of the experience of the Commission from Hurricane Katrina 
and other disasters, please describe the role wireless services fill 
with respect to emergency response and disaster recovery during times 
of crisis?
    Answer. Wireless services play a critical role providing emergency 
response and in assisting in disaster recovery during times of crisis. 
With that important role in mind, there are actions the Commission can 
and should take with respect to wireless services and public safety and 
homeland security needs.
    First, the FCC must address the concerns of the public safety 
community about interference, interoperability, and other issues. This 
means completing the 800 MHz rebanding process in a timely and just 
fashion and fulfilling our statutory responsibilities to implement 
Emergency Alert System regulations as required by the SAFE Port Act of 
2006.
    In addition, the FCC must focus on the suite of pending issues 
raised in the 700 MHz band. In December 2006, the Commission adopted a 
Notice of Proposed Rulemaking proposing an inventive public safety 
model--the creation of a nationwide, interoperable broadband public 
safety communications network in the 700 MHz band. While I think we 
must be especially careful that public safety users will not be 
adversely affected before authorizing government-commercial sharing of 
public safety spectrum, given the long-standing need for reform in this 
area we simply cannot afford to ignore innovative ideas that could 
potentially revolutionize existing public safety spectrum management.

    Question 3a. If a petitioner for ETC designation meets the 
statutory criteria and has consistently been the only service provider 
to remain operative in certain areas during natural disasters despite 
the presence of other carriers (including other ETCs) in those areas, 
would you view the designation of the petitioner as an ETC to be in the 
public interest?
    Answer. I would agree that this should be a key factor in any 
public interest analysis.

    Question 3b. Some of the areas hardest hit by recent natural 
disasters were underserved communities. To the extent a petitioner for 
ETC designation that meets the statutory criteria for ETC designation 
has demonstrated a strong commitment to serving rural and underserved 
communities since well before designation as an ETC, would the 
designation of the petitioner as an ETC be in the public interest? If 
not, please explain why.
    Answer. I would agree that this should be a key factor in any 
public interest analysis.

    Question 4. The FCC has committed to resolve, within 6 months of 
the date filed, all ETC designation requests for non-tribal lands that 
are properly before the FCC. How many petitions for ETC designation are 
currently pending at the FCC?
    There are 34 such petitions currently pending.

    Question 4a. What is the average length of time that the ETC 
Petitions currently before the FCC have been pending? Of these 
petitions, what is the earliest filing date? How many of these 
petitions were filed in 2004 or earlier?
    Answer. There are 18 petitions that have been pending more than 2 
years. There are 13 petitions that have been pending more than a year, 
but less than 2 years. There are 3 petitions that have been pending 
less than a year. Of these petitions, the earliest was filed on 
December 31, 2003. Eighteen petitions were filed in 2004 or earlier.

    Question 4b. How many petitions for ETC designation did the FCC act 
on in 2006?
    Answer. The FCC's Wireline Competition Bureau granted 2.

    Question 4c. How many petitions for ETC designation did the FCC act 
on in 2005?
    Answer. The FCC's Wireline Competition Bureau granted 4.

    Question 4d. How many petitions for ETC designation did the FCC act 
on in 2004?
    Answer. The FCC and/or its Wireline Competition Bureau granted 23.

    Question 4e. What does the FCC intend to do about the backlog of 
pending ETC petitions?
    Answer. I believe we should resolve them as expeditiously as 
possible.

    Question 4f. How soon does the FCC intend to act upon ETC petitions 
that have been pending for more than 6 months?
    Answer. I believe the FCC should resolve any backlog in this area 
as expeditiously as possible.

    Question 4g. Do you believe that Americans living in rural areas 
and the carriers who have filed ETC Petitions deserve to have those 
petitions acted upon promptly rather than simply kept pending without a 
yes or no answer? If you do not, please explain why.
    Answer. Yes. While there are pending Universal Service Joint Board 
referrals on this subject and policy changes may be on the horizon as a 
result, all petitions in front of the FCC deserve a prompt answer.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Amy Klobuchar to 
                         Hon. Michael J. Copps

    Question 1. In a September 8, 2005 report, the FCC stated, ``Our 
review of the record does not lead us to recommend any changes to the 
retransmission consent regime at this time.'' What if any steps have 
you taken since that time to review and assess the retransmission 
consent regime; what if any additional conclusions have you reached; 
what if any plans do you have for additional formal or informal review; 
and what do you perceive to be the strengths and weaknesses of the 
retransmission consent process?
    Answer. Due in part to the dispute between Mediacom and Sinclair, 
this issue has received increased attention in recent months. One the 
one hand, multichannel video programming distributors claim the large 
integrated programmers tie their non-network programming to carriage of 
the network. They suggest that this leads to higher prices for the 
basic tier and occupies capacity that could be used to carry 
independent networks. On the other hand, broadcasters claim that they 
will need retransmission consent to negotiate the carriage of all of 
their digital signals. One thing is certain. Small broadcasters claim 
that they are at a disadvantage when negotiating against big cable 
companies and small cable operators claim the rules put them at a 
disadvantage when negotiating with large programming networks. All in 
all, the problem seems to stem from media concentration.
    I did not participate in developing the Media Bureau's 2005 report, 
nor was I a part of developing its conclusions. But I believe that we 
must judge the retransmission consent process not from the vantage 
point of companies, but from the vantage point of consumers. If screens 
go dark in homes because large media companies are waging war over 
retransmission consent rights, consumers are the real losers. So if 
this starts to occur with greater frequency, changes--legislative or 
regulatory--may be required.

    Question 2. Section 10(a) of the Communications Act allows the 
Commission to forbear from applying any regulation or any statutory 
provision to a particular or multiple telecommunications carriers or 
services, in any or some geographic markets, if certain criteria are 
met--most notably that competition exists in the market and that such 
relief is in the public interest. The FCC recently has been granting 
incumbent providers (ILECs) forbearance from regulations on the premise 
that sufficient competition exists in a specific market to make 
enforcement of the regulations unnecessary. What are each of your 
respective positions on the conditions and circumstances under which 
forbearance for ILECs is appropriate?
    Answer. The Communications Act permits the Commission, either on 
its own motion or in response to a petition, to forbear from applying 
regulations or provisions of the Act to telecommunications carriers or 
telecommunications services. Furthermore, the Act provides that 
forbearance is warranted if the regulation or provision at issue is not 
necessary to prevent discrimination, not necessary to protect consumers 
and otherwise in the public interest. While these guideposts are useful 
in shaping our assessment of the need for relief, I believe the 
Commission would benefit from having more precise parameters. In 
addition, I have concerns that if the Commission fails to act on a 
forbearance petition, it effectively hands the petitioning party the 
pen and permits it to rewrite the law. I believe Congress trusted the 
FCC to implement the law, but it did not tell us to delegate far-
reaching policy changes to the companies that fall under our 
jurisdiction. For this reason, the Commission would benefit from 
additional Congressional guidance in this area.

    Question 3. From the City of Saint Paul (similar questions were 
raised by Burnsville/Eagan Community Television and the Northern 
Suburban Communications Commission):

        The Order issued by the FCC on December 20, 2006 allows new 
        franchise entrants to ``cherry pick'' the neighborhoods in our 
        communities, rather than bring true competition to all of our 
        businesses and residents. This would allow new entrants to 
        serve or upgrade only the profitable areas of Saint Paul [and 
        other cities and towns], leaving many of our residents on the 
        wrong side of the ``digital divide.''

        The Order authorizes a new entrant to withhold payment of fees 
        that it deems to be in excess of a 5-percent franchise fee cap. 
        This could completely undermine support for both Saint Paul's 
        [and other cities' and towns'] very successful public, 
        educational and government (PEG) operations.

        The Order imposes a 90-day shot clock for new entrants with 
        existing rights of way, opening the potential to reduce Saint 
        Paul's [and other cities' and towns'] ability to manage its 
        rights-of-way.

        The Order authorizes a new entrant to refrain from obtaining a 
        franchise when it is upgrading mixed use facilities that will 
        be used in the delivery of video content.

    Saint Paul believes that the policy goals of the Order are laudable 
but strongly disagrees with the method and substance of the decision 
taken by the FCC. How do you respond to each of these concerns, and how 
do you respond to the claim that the FCC exceeded its authority in 
adopting this order?
    Answer. I share many of the same concerns with Saint Paul. We all 
want more video competition. With cable rates rising faster than the 
rate of inflation, wireline cable competition can be helpful in 
bringing those rates down. Consumers deserve rules that will bring 
competition to their doorsteps because they are not being well-served 
by the lack of competition today. But I dissented to the Commission's 
franchising decision because I believe the FCC fell short of coming up 
with rules that encourage fair competition within the framework of the 
statutes that Congress provided. Among other things, I fear that the 
FCC's effort does not adequately address concerns about cherry-picking 
and its consequences for communities that find themselves on the wrong 
side of the digital divide. I similarly fear that the decision falls 
short of fully protecting each community's ability to negotiate for PEG 
and I-NET facilities. Finally, I have concerns about the operation of 
the shot clock and language in the decision that suggests new entrants 
can refrain from obtaining a franchise when they upgrade mixed use 
facilities.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Ted Stevens to 
                         Hon. Michael J. Copps

    Question 1. What is the current status of any proposals to use 
auctions to determine universal service support?
    Answer. Last year, the Joint Board sought comment on the merits of 
using auctions to determine high-cost universal service support. Last 
month, the Joint Board held an en banc hearing to discuss the use of 
reverse auctions, or competitive bidding, to set levels of universal 
service support. Next, the Joint Board may follow up with a 
recommendation for the Commission. By statute, the Commission is 
required to act on any such recommendation within 1 year of receipt. I 
recognize the FCC is charged with preserving and advancing universal 
service. For this reason, I believe both the Joint Board and Commission 
must be cautious that any further action in this area fully complies 
with this Congressional directive.

    Question 2. Do you believe any of the proposals submitted to the 
Joint Board are viable alternative approaches to universal service 
support and can adequately support rural carriers like those in Alaska?
    Answer. I am concerned about the impact of an auction-based 
universal service system on rural areas in this country. Congress 
charged the Commission with ensuring that consumers in all regions of 
the Nation--including rural and high-cost areas in Alaska--have access 
to comparable services at comparable rates. It is not yet clear to me 
that an auction-based system would ensure adequate levels of support 
and meet this Congressional objective. In fact, in 1997, when the 
Commission last considered the use of auctions, it noted ``it is 
unlikely that there will be competition in a significant number of 
rural, insular, or high cost areas in the near future. Consequently, it 
is unlikely that competitive bidding mechanisms would be useful in many 
areas in the near future.'' Before moving ahead here, it is imperative 
that we understand what, if anything, has changed since the Commission 
reached this conclusion.

    Question 3. When Chairman Powell visited a remote Eskimo village in 
Alaska, his plane got stuck in the mud on the unpaved runway during 
take-off. He and his staff whipped out their cell phones to try to call 
for help, but they didn't work. No roaming agreements. The villages 
call came and pulled his plane out of the mud, but he was not able to 
call his wife to tell her he was running late. I am pleased to report 
that the runway is now being paved, but the roaming problem has yet to 
be resolved. Many small cell phone companies in Alaska have been 
unsuccessful in getting the large national carriers to respond to their 
desires to arrange roaming agreements. As data, video, and other 
services are transmitted to mobile devices this problem will only grow 
more acute. What can you do to address this problem, and what is the 
timeframe for moving forward?
    Answer. In 2005, the Commission opened a proceeding to consider 
modifying the FCC's roaming requirements. I have heard numerous 
concerns from consumers about roaming. I also have heard allegations 
from small and rural carriers concerning anticompetitive behavior in 
negotiating roaming agreements. Because the record in this proceeding 
closed over a year ago, I believe the Commission should examine this 
situation closely and act soon.

    Question 4. I continue to have concerns that too often domestic 
satellite services do not offer service to Alaska and Hawaii. In last 
year's Senate Communications Bill, a measure was included to require 
satellite operators to make good faith efforts in their satellite 
planning and development to ensure service to the entire United States. 
Are there measures that the FCC could take independent of Congressional 
legislation to ensure better service to Alaska and Hawaii?
    Answer. Independent of legislative action, the FCC should be doing 
all it can to ensure that satellite services in Alaska and Hawaii are 
on par with those available on the mainland. In fact, the FCC's rules 
require that DBS licensees provide service where technically feasible 
to Alaska and Hawaii, and DBS licensees must offer packages of services 
in Alaska and Hawaii that are reasonably comparable to what they offer 
in the contiguous states. Despite this, in 2003 the FCC allowed a major 
satellite deal to go through without giving proper weight to coverage 
in Alaska and Hawaii. I dissented from this decision, for among other 
reasons, an inadequate public interest analysis of the impact of 
consolidation on the availability of reasonably comparable service 
packages in Alaska and Hawaii. In any future decisions regarding direct 
broadcast satellite service, it is imperative that the Commission do a 
better job of taking consumers from Alaska and Hawaii into account. 
Furthermore, when the FCC updates its policies and rules governing 
direct broadcast satellite service, it should consider whether our 
existing rule is sufficient to ensure satellite operators make good 
faith efforts in their satellite planning and development to ensure 
service to the entire United States.

    Question 5. The FCC frequently faces the problem of making tough 
policy decisions that are wrapped in technological debates. There are 
several waivers pending at the FCC that deal with CableCARDs. What is 
the impact on the consumer and the impact on the development and 
deployment of downloadable security? How will these petitions be 
considered and will the full Commission address these issues?
    Answer. In technological debates, I start from the premise that 
consumers are better served by having more choices and options. This is 
why I believe competition in the manufacturing and distribution of 
consumer navigation devices can lead to greater innovation, lower 
prices and higher quality services. But more importantly, Congress 
charged the FCC with ensuring that consumers have the opportunity to 
purchase navigation devices from sources other than their multichannel 
video programming distributor. To this end, nearly a decade ago the FCC 
concluded that cable operators should be prohibited as of a date-
certain from integrating navigation and security functionalities in 
set-top-boxes. The FCC has extended the date of this integration ban on 
multiple occasions. But with the deadline for the integration ban now 
looming once again, more than a handful of multichannel video 
programming distributors have filed petitions seeking waiver of the 
ban.
    In reviewing these petitions, the Commission needs to consider the 
impact upon consumers and is required by statute to conclude that a 
waiver is necessary to assist in the development or introduction of new 
or improved services, technology or products. I believe there remains a 
strong case for the continued existence of the ban. I should also note 
that I am optimistic that a downloadable security solution is on the 
not-too-distant horizon. This would allow set-top boxes and other 
consumer electronics devices to download security automatically over a 
cable system. I believe that over time, downloadable security solutions 
will bring even greater benefits to consumers by providing them with 
more choices and options.
    The Commission's Media Bureau recently resolved three of these 
waiver requests. To date, only one of these decisions has been appealed 
to the full Commission. I expect the Commission will act on this appeal 
shortly.

    Question 6. Obviously we are all concerned about the new frontiers 
that can be created on the Internet for pedophiles and child 
pornographers. To advance the safety of our children, everyone must do 
their part. Is there more that the Internet service providers can be 
doing to help law enforcement and does the FCC need any additional 
authority from Congress to ensure that entities under the Commission's 
authority are doing their part?
    Answer. To ensure the safety of our children, we can all do more. 
Parents can monitor and control what their children read and see over 
the Internet. Internet service providers can ensure that parents have 
the tools they need to do this, and that these tools are simple and 
easy to use. But when these efforts fall short and put our children at 
risk, government has a duty to protect the safety of our children. One 
area I believe the FCC should address involves the consequences of 
interactive television for children and advertising. As a regulatory 
matter, clicking out beyond the regulated confines of broadcasting has 
important consequences. Although the kids with their remotes in hand 
won't know it, a single click of the bottom can transport them beyond 
the regulated world of television to an Internet bazaar bereft of any 
rules. While I believe that the FCC has adequate authority to move 
ahead on this issue, and in fact began a Notice of Proposed Rulemaking 
on it several years ago, the Commission certainly would benefit from 
additional Congressional guidance.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                         Hon. Michael J. Copps

    Question 1. Is it true that eleven years ago Congress required the 
FCC to adopt a new universal service mechanism that ensures that local 
telephone rates in rural areas are reasonably comparable to rates in 
urban areas?
    Answer. Yes. In Section 254 of the Communications Act, Congress 
charged the Commission with ensuring that consumers in all regions of 
the Nation, including low-income consumers and those in rural, insular, 
and high-cost areas, should have access to services that are reasonably 
comparable to those provided in urban areas and that are available at 
rates that are reasonably comparable to rates charged for similar 
services in urban areas.

    Question 2. Is it true that the 10th Circuit Court of Appeals has 
twice remanded the FCC's method of providing universal service support 
for rural customers served by larger carriers?
    Answer. Yes. In 2001, the 10th Circuit Court of Appeals first 
remanded the FCC's first effort to develop a mechanism for providing 
high-cost universal service support for rural customers served by 
larger carriers. In 2005, the same court remanded the FCC's second 
effort to develop such a mechanism.

    Question 3. Is it true that the second decision was issued in 
February of 2005 with the court expressing an expectation that the FCC 
would respond expeditiously?
    Answer. Yes. While in its 2005 decision the 10th Circuit Court of 
Appeals chose not to impose a specific deadline for FCC compliance, the 
court stated that it fully expected the FCC to comply with its decision 
``in an expeditious manner, bearing in mind the consequences inherent 
in further delay.''

    Question 4. What steps will the FCC take now to ensure that it 
meets its obligations to the rural residents of large incumbent 
carriers? Will you commit that the FCC will take action on this remand 
during the next 6 months?
    Answer. The FCC has a duty to resolve the outstanding remand and 
develop a universal service support mechanism that meets the needs of 
rural residents served by large incumbent carriers. To respond to the 
court, the FCC must develop a plan that defines the statutory terms 
``sufficient'' and ``reasonably comparable'' in a manner that comports 
with its duty to preserve and advance universal service. It has been 
over 2 years since the court directed the FCC to do so. For this 
reason, the Commission is overdue to resolve the outstanding issues. 
When a decision regarding this matter is provided to my office, I will 
complete my review of it as expeditiously as possible.

    Question 5. Now that the Antideficiency Act (ADA) exemption has 
expired, what kind of guarantees can you give that there will be no 
further E-Rate program shut downs or delays?
    Answer. I was pleased that as part of last month's Continuing 
Resolution, Congress extended the Antideficiency Act exemption until 
December 31, 2007. I also fully support efforts to exempt permanently 
universal service from the ADA. I believe an exemption would ensure 
that USAC can administer universal service programs without disrupting 
service to beneficiaries or increasing the universal service fees paid 
by residential and business customers. In the absence of Congressional 
action, I believe the FCC must do everything it can to provide 
assurance that there will be no further ADA-related regulatory snafus 
that jeopardize the students and library patrons who are the real 
beneficiaries of the E-Rate program.

    Question 6. Can you tell us how much USAC has in its E-Rate 
accounts currently and whether those reserves will be sufficient to 
cover funding?
    Answer. I understand that Chairman Martin will make these figures 
available to the Committee in his response to this question.

    Question 7. Are you still working with the Office of Management and 
Budget (OMB) on a reinterpretation of the ADA that would exempt 
Universal Service?
    Answer. I believe that the Chairman's Office has had discussions 
with OMB regarding a reinterpretation of the ADA that would exempt 
universal service. I have not been invited to participate in these 
discussions, but would welcome the opportunity to offer my input. Above 
all else, I believe the FCC must do everything it can to ensure that 
USAC can administer universal service programs without disrupting 
service to beneficiaries or increasing the universal service fees paid 
by residential and business customers.

    Question 8. Given that AT&T and BellSouth agreed to abide by a 
definition of ``network neutrality'' as part of there merger 
conditions, do you believe that the argument that it is impossible to 
craft such a definition is false?
    Answer. Yes. The condition concerning network neutrality, or 
Internet freedom, in the AT&T/BellSouth merger is proof positive that 
it is possible to craft a workable definition of ``network 
neutrality.''

    Question 9. Will you enforce the ``network neutrality'' provision 
agreed to as part of AT&T's and BellSouth's gaining approval for the 
merger?
    Answer. I will do everything in my power to ensure that it is 
enforced.

    Question 10. Do you consider the U.S. broadband marketplace to be 
competitive?
    Answer. FCC statistics demonstrate that at present the United 
States broadband market is insufficiently competitive. In the United 
States, 96 percent of consumer broadband is provided by either cable 
modem or DSL technology. If they are lucky, consumers have a choice 
between the cable and DSL duopoly. But too many lack even this choice 
and we are paying a price for this low level of competition. Americans 
spend twice as much for broadband connections that are one-twentieth 
the speed of some countries in Asia and Europe. This state of affairs 
has to change. Without greater competition and a viable third broadband 
pipe, we consign too many of our businesses to tough stakes in the 
global digital economy and too many of our students to learning at 
dial-up speeds.

    Question 11. Do you believe a wireless connection, which is two to 
four times more expensive and two to four times slower than DSL or 
cable, can be a substitute for a wireline connection to the Internet?
    Answer. Over the past few years, we have seen that a wireline 
Internet connection using the cutting-edge technology at a particular 
point in time will typically be faster and less expensive than a 
wireless connection using cutting-edge technology at that same point in 
time. And while technological evolution is never entirely predictable, 
I expect that this relationship will remain true for the near term.
    At the same time, I believe that wireless technologies may be 
appropriate as a primary means for accessing the Internet for consumers 
who lack affordable wireline Internet access options, who live in 
remote areas where wireline technologies may be especially expensive, 
or who may be willing to tradeoff speed and/or cost in return for 
mobility and the convenience of ``cutting the cord.''

    Question 12. How can we ensure that a variety of news and 
entertainment outlets will be there if the telephone and cable 
companies are allowed to limit what people can see and do online?
    Answer. The more concentrated our facilities providers grow, the 
greater their ability to limit what people can see and do online. For 
this reason, we need a watchful eye to ensure that network providers, 
like telephone and cable companies, do no become Internet gatekeepers, 
with the ability to dictate who can use the Internet and for what 
purposes. If we allow such harms to occur, we will put innovation, 
content diversity and our nation's competitive posture at risk. I 
believe we must be vigilant and adopt net neutrality--or Internet 
freedom--policies to prevent this from happening.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Gordon H. Smith to 
                         Hon. Michael J. Copps

    Question 1. Under a couple of the conditions, AT&T and BellSouth 
committed that for 42 months, they would continue to offer, and would 
not increase the price of, unbundled network elements. They also 
committed not to seek forbearance with respect to unbundled loops and 
transport. Will these conditions preserve the option for consumers to 
purchase high-speed broadband service from companies that combine an 
AT&T/BellSouth UNE loop with their own electronics and other network 
facilities to offer their own high-speed Internet broadband services?
    Answer. AT&T's commitment to maintain its existing UNE rates 
promotes competition by preserving competitive carriers' access to 
UNEs. Competitive carriers use UNEs to deliver a wide array of services 
to both residential and business customers across the country. These 
include voice, data and Internet access services. Data collected by the 
FCC makes clear that competitive carriers continue to rely on the 
availability of UNEs to provide these services to consumers. For 
instance, the FCC's most recent report on the state of local 
competition finds that as of June 2006 competitive carriers were using 
over 4.4 million UNE loops to deliver these services to customers 
across the country. The report also found that competitive carriers had 
deployed their own facilities to provide approximately 10.7 million 
lines. The condition was not broadband-specific, but allows competitive 
carriers to incorporate the benefits of this commitment in their 
efforts to offer the panoply of competitive services they make 
available to their consumers.

    Question 2. Has the Commission concluded that it is in the public 
interest to preserve additional broadband options for consumers through 
these UNE AT&T/BellSouth merger conditions?
    Answer. As a general matter, the Commission has strived to promote 
a variety of broadband options, regardless of the technology (e.g., 
wireless, copper, fiber and broadband over powerline). However, in the 
context of the merger I was asked to decide whether the merger as a 
whole served the public interest. AT&T made commitments concerning a 
wide range of issues including the openness of the Internet, consumers' 
access to broadband, video and advanced wireless services; business 
prices for high-volume voice and data services; competitor access to 
UNEs and interconnection; public safety and disaster relief; and the 
repatriation of jobs to the United States. In the final analysis, I 
believed that this package of commitments sufficiently benefited 
consumers in AT&T's territory that I concurred in the merger.

    Question 3. This Committee has operated under Republican and 
Democratic chairmen on largely a bipartisan, consensus basis on the 
vast majority of communications issues. In the last several years, 
however, a larger number of these issues, particularly media ownership, 
have become extremely divisive, largely upon political lines. I think 
Americans have sent us a signal that they don't want this kind of 
divisiveness and partisanship. They want us to work together to find 
reasonable, workable solutions. Does media ownership really have to be 
such a partisan issue? Aren't there areas of consensus where common 
sense reforms can be made?
    Answer. During the past 5 years, I have visited scores of 
communities in this country to discuss the state of local media. What I 
have learned is that the effort to hold media consolidation at bay is 
not a partisan issue. People from every political stripe are alive to 
the consequences of concentrated media ownership.
    Nothing made this clearer than when in 2003 former Chairman 
Powell--over my objection--authorized a sea change in the number of 
media outlets a single corporation could own in a single community. 
What we saw in response was nothing short of amazing. The American 
people, the Congress and a Federal court rose up with one voice to 
oppose these new rules and the way they were crafted out of view from 
the public. Dozens of organizations--from all over the political map--
weighed in. Among others, we heard from the Writers Guild of America, 
the Parents Television Council, the Communications Workers of America, 
the National Association of Black Journalists, the Conference of 
Catholic Bishops, the American Civil Liberties Union, the National 
Rifle Association, the National Organization of Women, United Church of 
Christ and the Leadership Conference on Civil Rights.
    As Brent Bozell of the Parents Television Council so aptly put it, 
``When all of us are united on an issue, then one of two things has 
happened. Either the Earth has spun off its axis and we have all lost 
our minds or there is universal support for a concept.'' I think it is 
the concept--a transcending, nationwide concept. This issue is not 
Republican or Democratic. It is not liberal or conservative. Not North 
or South. Not young or old or red state versus blue. It is an all-
American issue. That is why I am convinced if we all work together--to 
identify common sense reform--we will lay the groundwork for not only a 
better media, but a better America.

    Question 4. I understand that AT&T agreed to lower the rates it 
charges big business customers for special access services, as a 
condition to the FCC's approval of the merger with BellSouth, but that 
these rate reductions would not apply to a subset of companies, 
including Qwest, Verizon and others, unless those companies lower their 
special access rates as well. This effectively placed burdens on 
companies who weren't parties to the merger. As Chairman Martin and 
Commissioner Tate stated in their Joint Statement ``the Democratic 
Commissioners want to price regulate not only AT&T but also Verizon and 
Qwest.'' ``. . . [N]ot only are the conditions unnecessary as there is 
no finding of a public harm, but the conditions attempt to impose 
requirements on companies that are not even parties to the merger.'' 
How can you explain using the merger process to impose burdens on other 
parties, and isn't this just a way to circumvent the rulemaking 
process?
    Answer. I believe that AT&T's commitments regarding special access, 
including the price reductions for these services, are reasonable, 
address clear merger-specific harms raised by the consolidation of AT&T 
and do not impose a burden on other companies. I believe that this 
commitment is reasonable within the meaning of Section 202 of the 
Communications Act because it takes into account the difference in 
regulatory and marketplace position between price cap incumbent local 
exchange carriers and their competitors. It is merger-specific because 
it addresses the fact that the merged entity is the only choice most 
companies within AT&T's 22-state region will have for business access 
services, which means a substantial increase in market power. In 
November 2006, the Government Accountability Office issued a report 
raising particular concerns regarding competition in special access 
services. I also do not believe that the commitment in question imposes 
a burden on other companies. It provides only that, in order to receive 
discounts in AT&T territory, other incumbent local exchange carriers 
must provide reciprocal discounts in their own territories. If the 
other incumbent local exchange carriers elect not to offer these 
reciprocal discounts then they are in no worse position than before the 
merger and if they elect to offer these discounts I would expect that 
they would benefit from them. While I would hope that the FCC quickly 
completes the special access rulemaking that has been open for over 2 
years, the merger condition does not circumvent this process at all. In 
the end, I believe that these conditions are good for competition and 
good for consumers in AT&T's territory.

    Question 5. As Congress contemplates whether to enact legislation 
addressing net neutrality, it would be helpful to understand whether 
there is some particular behavior in the U.S. broadband marketplace 
related to net neutrality that is harming consumers today. Aside from 
the one reported incident involving Madison River Communications 
blocking Voice over Internet Protocol (VoIP) calls, which the FCC 
rectified in March 2005, can you identify any specific, concrete 
examples of actual conduct by a broadband provider that runs afoul of 
net neutrality?
    Answer. The broadband market in this country is highly 
concentrated. Ninety-six percent of consumer broadband in this country 
is provided by either DSL or cable modem. The more powerful and 
concentrated our facilities providers grow, the more they have the 
ability--and perhaps even the incentive--to close off Internet lanes 
and block IP byways. It may be that this is not part of their business 
plans today. But we create the power to inflict such harms only at 
great risk to consumers, innovation and our Nation's competitive 
posture. Because in practice, such stratagems can mean filtering 
technologies that restrict the use of Internet-calling services or that 
make it difficult to watch videos or listen to music over the web. In 
fact, the Wall Street Journal has pointed out that large carriers 
already ``are starting to make it harder for consumers to use the 
Internet for phone calls or swapping video files.'' While the Madison 
River episode is the most public example of this behavior, I believe 
there are others that demonstrate the potential for abuse. We have seen 
already that the technology is capable of this kind of discrimination. 
In Canada, for instance, during a labor dispute, a telephone company 
blocked its customers from reaching a union website. And we have seen 
the top management of key broadband providers publicly state that they 
want to pursue business models built on discriminatory network 
policies.
    When you add this up, what you have is the specter of broadband 
providers restricting where you go and what you do on the Internet. 
History shows when firms have both the technology and the incentive to 
do something to enhance their sway, chances are some will give it a 
try. But while they experiment, the public who uses the Internet loses 
out. That is why net neutrality--or Internet freedom--policies are so 
vital.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                         Hon. Michael J. Copps

    Question 1. Even as we are strategizing on how to complete the 
deployment of DSL and cable modem broadband networks to the hard to 
reach places of our country, other countries are well on their way to 
deploying next-generation fiber networks. High-speed fiber will change 
how we use the Internet similar to the change we saw between dial-up 
and broadband. Is there anything Congress can be doing to help speed 
the deployment of our high-speed fiber network here at home, and in 
rural areas particularly?
    Answer. The deployment of broadband is the central infrastructure 
challenge facing this country in the first part of the twenty-first 
century. We are going to work differently, learn differently and play 
differently because of the transformative power of advanced 
communications. Communities around the country have come to realize the 
critical importance of broadband facilities. Without access to advanced 
services like broadband, whole communities--and particularly rural 
areas--may be left behind, stranded without the economic tools and 
educational opportunities that high-speed services, such as those using 
fiber, can provide.
    In the first instance, we look to the private sector to deploy 
advanced communications. That is as it should be. But if the market is 
passing communities by, they should have a right to develop municipal 
fiber alternatives. The FCC should review its policies to ensure they 
do not hamstring these kinds of efforts. In addition, Congress and the 
FCC should consider how to recast the universal service system to 
provide appropriate incentives to ensure the deployment of broadband 
all across this country--from the inner city to the outer farm. 
Finally, the FCC must get serious about our data collection efforts. By 
surveying the deployment of broadband based on zip codes, we do a real 
disservice to rural America. In areas where land is vast and 
populations are sparse, it defies common sense to assume that if one 
subscriber to broadband exists in a zip code, high-speed services are 
available throughout. We need to do a better job surveying the 
deployment of high-speed fiber to really learn what the challenges are 
on the ground. Moreover, better data will lay the groundwork for better 
policy and help us target our efforts to ensure that all Americans--
rural Americans included--have access to affordable, high-speed 
broadband service.

    Question 2. When I speak with some of South Dakota's rural 
telephone cooperatives and other telecommunications providers, I hear 
about the large amount of resources they must put toward legal fees to 
keep pace with the legal and regulatory maneuvers being made by some of 
the larger telecommunications providers with seemingly bottomless 
pockets for such actions. Some of these small providers honestly think 
part of the larger competitors' plan is to beat them through legal fees 
instead of the marketplace. The Commission obviously cannot do anything 
about the fees lawyers are charging, but they can do something about 
the speed at which regulatory decisions are made and the hoops that 
must be jumped through. How can the FCC improve its decisionmaking 
processes so that small telecommunications providers don't bear such an 
imbalanced burden?
    Answer. The FCC should strive to provide greater certainty. 
Businesses are not able to operate with question marks. And consumers 
have fewer products and services to choose from if the regulatory rules 
of the road are less than clear. While issues like legal fees are well 
outside of the Commission's jurisdiction, the FCC can make a greater 
effort to ensure that its decisions are built on sturdy legal ground. 
Decisions with a well-laid foundation can reduce the likelihood of 
challenges in court and the expense associated with the resulting legal 
battles. In addition, the FCC should strive to make faster decisions to 
provide greater clarity for small and large businesses alike.

    Question 3. As you know, some media companies and others are 
pushing for the repeal of the newspaper cross-ownership ban. They argue 
that a media outlet owning both the local newspaper and a local 
broadcast station could make better use of scarce resources to gather 
and report the local news. They also argue that the handful of 
``grandfathered'' newspaper-broadcast combinations, which were in place 
before the ban was implemented in 1975, have not shown any gross abuse. 
Some consumer groups and others who support keeping the newspaper 
cross-ownership ban in place alternatively argue that combining 
newspaper and broadcast outlets could reduce competition among media 
outlets. There could be less incentive to get ``the scoop'' or report a 
contradicting viewpoint. What do you believe would happen to local news 
coverage if the newspaper cross-ownership ban was lifted? Do the 1975 
grandfathered combinations really provide us with a good example since 
some of them are currently owned by those media companies who want to 
lift the ban? For example Gannett knows its management of Arizona's 
largest newspaper, the Arizona Republic, and television outlet KPNX-TV 
is under the microscope, so perhaps their behavior would not be 
representative of how news gathering would be conducted if the ban was 
permanently lifted.
    Answer. The future of our media--how few are going to be allowed to 
own how much, and what public interest standards media should be 
expected to operate under--is so important to each of us. Over the past 
5 years, I have been in scores of media markets across this nation, 
trying to understand how various localities are faring under the 
tremendous consolidation that has overtaken America's media during the 
past decade. Most communities have become one newspaper towns. The vast 
majority of local television and radio markets are tight oligopolies, 
with even higher levels of concentration for local news. In this 
environment, add a merger between the monopoly newspaper and dominant 
television station and you get fewer reporters covering fewer beats, 
less diversity of opinion and a reduction in editorial voices. Merging 
newspapers and broadcast outlets may serve shareholder interest by 
reducing competition and cutting newsgathering costs. But far too often 
this comes at the expense of the public interest, because it strips to 
bare bones the amount of independently produced news available in a 
local community.
    Well-informed citizens are the lifeblood of our democracy. Having 
less news, less newsgathering--and less local news, in particular--
leaves us poorer as citizens, voters and as participants in community 
life. So that's the risk we face with relaxing the newspaper broadcast 
cross-ownership ban. While some grandfathering of these properties has 
been permitted in some areas in the country, the results are mixed at 
best. So I am fearful that relaxing the ban across the board will be 
tough stakes for too many American communities.

    Question 4. The closest daily newspaper can be 100 miles away in 
some parts of my state. Do you see any particular challenges in 
providing a diversity of news viewpoints in rural parts of our country 
if further media consolidation is allowed to occur? Some argue local 
cable news channels and local Internet news sites can enhance 
competition and bring out a diversity of viewpoints, but are these 
answers going to work in rural communities?
    Answer. People across this country are concerned that greater media 
consolidation will have a devastating effect on the diversity of news 
and viewpoints. Perhaps nowhere is this concern greater than in rural 
America, where less media competition, less diversity and less localism 
can hit especially hard. By way of example, farm bureaus from across 
the country have written to the FCC, concerned that media concentration 
has resulted in too many farmers and ranchers being denied the local 
news and up-to-the minute market reports and weather they need to make 
vital decisions. They suggest that big city, out-of-state media 
companies are not devoting resources to the kind of news and 
information--ranging from hog reports to weather analysis--that will 
help the local economy and local community thrive. Add to this 
situation newspapers that are as much as 100 miles away, and you are 
facing a situation with a serious shortage of meaningful local news.
    While some contend that cable channels and Internet sites will be 
able to fill the gap, rural Americans have their doubts. Again, the 
farm bureaus point out that while there are other sources for commodity 
market and weather news, including subscription-based, satellite-
delivered and Internet offerings, radio remains the medium farmers rely 
on most. Moreover, when you look at the top Internet news sites, they 
are virtually all owned by big companies with few resources devoted to 
covering news and events in rural locales. For these reasons, I am 
fearful that if we allow greater media consolidation in this country, 
we will leave too many in rural America without the news and 
information they need for their communities to prosper.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Jim DeMint to 
                         Hon. Michael J. Copps

    Question 1. In the 4 years since the term ``network neutrality'' 
has existed, can you give me any examples, aside from the often-cited 
2004 Madison River case, that justify the need for new regulations?
    Answer. As the Wall Street Journal has noted, large carriers 
already ``are starting to make it harder for consumers to use the 
Internet for phone calls or swapping video files.'' As you point out, 
the Madison River case is the most frequently cited example of this 
behavior. But other signs are out there. We have seen already that the 
technology is capable of this kind of discrimination. In Canada, for 
instance, during a labor dispute, a telephone company blocked its 
customers from reaching a union website. And we have seen the top 
management of key broadband providers publicly state that they want to 
pursue business models built on discriminatory network policies. When 
the technology is available to discriminate and there are business 
means to make it happen, we have reason to be concerned.

    Question 2. What problem exists today that necessitates government 
intrusion in the market?
    Answer. In a competitive marketplace, by all means the government 
should step out of the picture and let a thousand flowers bloom. If a 
market is truly competitive, we can rely on its genius. But where it 
falls short of full competition, where monopolies and oligopolies 
emerge, where prices are unnaturally high and the rate of innovation is 
low, government oversight and consumer protection are essential.

    Question 3. Why are anti-trust laws and basic laws of economics 
insufficient to protect consumers?
    Answer. We are dramatically changing the ways we communicate in 
this country--and around the globe. Antitrust law prohibiting 
anticompetitive behavior and unfair business practices is an important 
part of protecting consumers. But regulatory policy has long had a 
recognized role in modern international economies. If we ask the right 
questions, dig deep in the data and then compose our policies based on 
the facts, I believe we will have a regulatory climate that protects 
consumers, encourages investment and speeds the way for new and 
innovative services. Such a climate can provide more certainty to both 
businesses and consumers than one which tries to operate without 
commonly-developed and commonly-accepted rules and procedures.

    Question 4. Today's media landscape includes ubiquitous options 
that did not exist in 1996: broadband offered by both cable and 
telephone companies, satellite radio, the Internet, and a far more 
mature DBS service. Given the growth of these new media outlets over 
the past decade, do you believe there are any areas where some 
relaxation of ownership limits could be in the public interest?
    Answer. I certainly believe that the Commission must continually 
reassess its ownership regulations in light of evolving technologies 
and changes to the communications marketplace. Indeed, in the case of 
our broadcast ownership rules, we are required to do so periodically by 
statute. We must also address requests for waivers from our ownership 
rules filed by parties who assert that a particular station is 
``failing''--and I have supported such waivers, including most recently 
the Media Bureau's decision regarding WCWN(TV) in Schenectady on 
November 22, 2006.
    At the same time, I also believe we need to consider the fact that 
the increase in distribution channels (such as DBS, the Internet and 
satellite radio) has not been accompanied by a comparable increase in 
the number of entities that engage in substantial newsgathering, 
especially at the local level. Many of the products offered over DBS, 
the Internet and satellite radio simply report information that was 
originally uncovered by more traditional sources, such as newspapers 
and TV broadcasters. Given the increased influence that these 
newsgathering organizations appear to have, I believe we need to be 
very careful about allowing changes to our ownership rules that could 
lead to greater consolidation among the entities that engage in 
substantial local newsgathering.
                                 ______
                                 
    Response to Written Question Submitted by Hon. David Vitter to 
                         Hon. Michael J. Copps

    Question. I have been alerted to a problem regarding compensation 
to payphone providers for coinless calls made from their phones. 
According to recent FCC statistics, about 6 percent of Louisiana 
households do not have any type of phone in their home. During the 
immediate aftermath of Hurricanes Katrina and Rita, payphones were the 
only way many people--both those without any other phones and also 
those whose mobile phones were not working due to the networks being 
overloaded--could reach emergency personnel or family and loved ones. 
Without being fairly compensated according to the rules set forth by 
the Commission, payphone providers will not be able to maintain these 
phones. I have been told that in the last 2 years since the Commission 
most recently revised the payphone compensation rules, a large number 
of carriers have failed to comply with their obligations under these 
rules. I also understand that in December 2006, the FCC issued its 
first sanctions against one of these carriers that violated these 
rules. I would appreciate hearing your comments on whether you think 
the agency has sufficient power and resources under your existing 
authority to continue to enforce these rules and help ensure that 
companies are not able to disregard the Commission's payphone 
compensation rules.
    Answer. Even in a day and age when personal wireless phones can 
seem ubiquitous, payphones remain an important component of our 
Nation's communications systems. They are a vital link to public safety 
and to loved ones when other means of communication are not available 
or affordable. Congress charged the Commission with ensuring that all 
payphone providers are fairly compensated for completed calls. In 2004, 
the Commission adjusted its payphone compensation rules to require the 
last facilities-based long distance carrier in a call path to be 
responsible for compensating payphone service providers for coinless 
calls that are completed on that long distance carrier's platform. For 
local calls, the local exchange carrier is responsible for 
compensation. These rules are admittedly complex. But if carriers fail 
to comply with their obligations, the Commission must address the 
situation. This means vigorously enforcing our existing rules and 
taking swift action if they are violated. It also means we should 
consider if there are ways we can streamline this process in order to 
ensure that parties are appropriately compensated.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                       Hon. Jonathan S. Adelstein

    Question 1. In March, 2005, the FCC allowed a Verizon forbearance 
petition to become effective by operation of law. Because there was a 
vacancy on the Commission at that time and a 2-2 split among 
Commissioners, Verizon was able to gain regulatory relief through 
Commission inaction. Does the current process regarding the disposition 
of forbearance petitions in the absence of a Commission majority 
essentially allow petitioners to write the terms of their relief?
    Answer. In cases in which the Commission has not been able to reach 
a majority on the resolution of Section 10 forbearance petitions, the 
Commission's approach has effectively permitted petitioners to write 
the terms of their relief, to amend their request multiple times during 
the course of the Commission's consideration, and to obtain that relief 
without the Commission issuing an order.\1\ In effect, it permits 
interested parties to rewrite the law as well as the Commission's 
regulations. Such an approach raises serious legal and constitutional 
questions and does not best serve the public interest.
---------------------------------------------------------------------------
    \1\ See Statement of Commissioner Jonathan S. Adelstein, Petition 
of Verizon Telephone Companies for Forbearance under 47 U.S.C. 
Sec. 160(c) from Title II and Computer Inquiry Rules with Respect to 
their Broadband Service, WC Docket No. 04-440 (March, 20, 2006).

    Question 1a. Is it fair in such situations to allow petitioners to 
amend the scope of their requested relief after the period for comment 
on the original petition has concluded?
    Answer. It is important that the Commission be able to compile 
detailed records, obtain data, and engage parties in an open analytical 
process. However, granting petitioners an unlimited ability to 
continually modify the scope of their forbearance requests raises 
serious questions of fairness.
    The ``moving target'' quality to this process was particularly 
troubling in one recent case, in which the filed petition sought 
forbearance with respect to all broadband services that the petitioner 
``does or may offer.'' More than a year after the initial filing, the 
petitioner sought multiple times to narrow its request, though the 
parameters of these amended filings were disputed. This approach is 
particularly troubling in circumstances where the Commission does not 
issue an order addressing the merits of the petition, leaving the scope 
of the relief unclear.
    I have urged the Commission to adopt rigorous procedural rules 
requiring parties to include in their original petitions detailed 
information about the services subject to the forbearance petition and 
analysis of how such proposals satisfy the statutory test.

    Question 1b. Should forbearance petitions be denied in the absence 
of an order approved by a majority of Commissioners?
    Answer. I have serious concerns about a process that allows private 
parties to change the law or the Commission's rules without a 
determination by the Commission that Congress's statutory test for 
forbearance has been met.
    Section 10 of the Act grants the Commission authority to forbear 
from enforcing all or a portion of the Title II of the Act and sets 
forth significant substantive standards upon which the Commission is to 
base forbearance decisions. Section 10(c) of the Act provides that a 
forbearance petition ``shall be deemed granted if the Commission does 
not deny the petition'' within 1 year, which can be extended by an 
additional 90 days.
    In many forbearance proceedings, I have worked with my colleagues 
to support regulatory relief where the record reflects the development 
of competition. I am concerned, however, about the Commission's recent 
willingness to allow complex and controversial forbearance petitions to 
grant without issuing an order. Congress has given the Commission a 
powerful tool in our Section 10 forbearance authority, but the 
Commission must wield this tool responsibly. Allowing petitions to 
grant by operation of law, and without disclosing a shred of analysis, 
does not best serve the public interest. Moreover, this approach 
inappropriately ignores Congress's directive to consider the specific 
substantive standards set out in Section 10 and raises serious legal 
questions about the scope, effect, and validity of its actions.\2\
---------------------------------------------------------------------------
    \2\ I note that petitioners challenging the FCC's disposition of 
the Verizon forbearance petition in WC Docket No. 04-440 have argued to 
the D.C. Circuit Court of Appeals that the legal effect of ``a 
deadlocked vote constitutes a denial [and] a retention of the rules 
currently in place. . . .'' See Brief of Carrier Petitioners, Sprint 
Nextel Corporation, et al. v. FCC at 17 (Feb. 26, 2007).

    Question 2. One of the biggest challenges we face over the next 2 
years is moving our Nation from analog to digital television with 
minimal consumer disruption. I understand that the FCC is currently 
receiving comment on its Proposed Final Table of DTV allotments, 
proposing final digital channels for TV broadcast stations. However, 
even after that is final, additional actions will be needed to complete 
the transition. Given the enormity of the task before us, what action 
is the Commission taking and what action should it take to ensure that 
our country is ready in February 2009?
    Answer. Last March, in my keynote address at the consumer 
electronics industry's spring policy summit, I issued a ``Call to 
Action'' to both public and private industry leaders. Specifically, I 
encouraged the Commission to take a greater leadership role in 
preparing the Nation for this historic transition to digital television 
(DTV). For a complete text of my keynote, please find it at: http://
hraun
foss.fcc.gov/edocs_public/attachmatch/DOC_264354A1.pdf.

   With the end of analog broadcasting in 2 years, there is a 
        critical need for greater national attention on the impending 
        DTV transition and for more focused leadership from the FCC.

    With less than 2 years to the end of analog broadcasting, I believe 
there is a critical need for greater national attention on the 
impending DTV transition. More focused leadership from the FCC--the 
nation's expert agency--and the National Telecommunications and 
Information Administration (NTIA) is needed. Currently, the DTV 
preparedness effort lacks a clear national message and a coordinated 
set of industry activities.
    The DTV transition is a significant public policy issue that is 
worthy of mention in the State of Union Address and other nationally 
televised speeches to the American people. Studies continue to show 
that the most Americans are unaware of the transition, few understand 
the benefits of digital television, and even fewer Americans who rely 
exclusively on over-the-air TV are aware of the deadline. To date, the 
Commission's outreach initiative and the effort of the broadcast, 
cable, satellite, and consumer electronics industries have had limited 
success, primarily reaching only high-end consumers. The latest study 
shows that 61 percent of Americans are totally unaware of the DTV 
transition.

   To improve awareness, the FCC needs to develop a unified 
        message among all levels of government, particularly with the 
        NTIA; coordinate the efforts of the various industry 
        stakeholders; and improve education, especially in insular 
        communities.

    To begin to address this general lack of public awareness, the 
Commission needs to take the following steps: (1) develop a unified, 
coherent message among Federal, state, local and tribal governmental 
entities; (2) coordinate the efforts of the broadcast, cable, 
satellite, and consumer electronics industries; and (3) educate insular 
communities about the consequences and benefits of the impending 
transition.
    Failure to administer a comprehensive national DTV transition plan 
will almost certainly result in a tsunami of consumer complaints to 
congressional and other government offices from viewers across the 
country. To better manage this potential national disruption, I would 
recommend establishing a clear chain of command.
    While the NTIA is principally charged with administering the 
converter box program, the FCC's technical and consumer outreach 
expertise makes us especially well-suited to spearhead a national 
consumer education initiative. The two agencies should work 
collaboratively to develop a unified Federal message about the DTV 
transition, and to inform consumers about options they have to continue 
receiving broadcast programming after February 17, 2009.
    An inter-agency, public/private Federal Task Force could also be 
established to reach out to state, local and tribal governments, as 
well as private sector stakeholders, to further refine our message and 
approach. For example, while the DTV website (www.dtv.gov) has been 
successful, that may not be the best way to reach certain insular 
communities--communities with relatively low Internet subscribership, 
i.e., low income, elderly, minority, non-English speaking and tribal 
communities. Local officials and organizations may be able to offer the 
best approach for their television market. While we need a clear, 
unified and consistent message emanating from both the public and 
private sectors, we need to target a number of unique communities to 
ensure we reach specialized audiences.
    Since my keynote address last March, the Commission and the 
principal stakeholders have taken steps in right direction, but we are 
far from a national plan. Accordingly, in addition to the 
abovementioned steps, the Commission specifically could enhance 
consumer DTV education by: (1) developing quantitative public interest 
obligations for DTV broadcasters; (2) encouraging more PSAs on analog 
television as well as pay-TV services; (3) conducting more targeted 
outreach to insular communities; (4) standardizing the information that 
consumers receive at points of sale; and (5) establishing achievable 
benchmarks for industry stakeholders.

   The FCC must develop DTV public interest obligations and 
        encourage more PSAs.

    First, in order to maximize the benefits to the American people, 
the Commission needs to determine DTV broadcasters' public interest 
obligations. This proceeding has been pending since 1999, and the 
Commission has failed to produce final rules. Quantitative public 
interest obligations would encourage broadcasters to develop news and 
entertainment programming that is compelling and relevant to the 
viewing audience.
    Second, the best way to inform the American people, especially 
analog-only viewers, about the DTV transition is through public service 
announcements (PSAs) on broadcast channels. Additionally, the 
Commission should encourage PSAs on cable and satellite systems.

   The FCC must conduct more outreach to insular communities, 
        standardize the information that consumers receive at points of 
        sale, and establish achievable benchmarks for industry 
        stakeholders.

    Third, the Commission needs a more targeted outreach to insular 
communities across the United States. While the physical reach of FCC 
staff is limited, the Commission should hold regional seminars to train 
members of public interest organizations in local communities. 
Additionally, the Commission should take advantage of the numerous 
official and unofficial media ownership/localism hearings to educate 
the American public about the DTV transition. The FCC needs to move 
beyond attending industry trade shows and visit people in their local 
communities.
    Fourth, the Commission should make an affirmative effort to contact 
consumer electronic retailers and strongly encourage them to improve 
floor signs and displays, educate their sales-forces and ensure all 
analog sets have informational labels.
    And finally, considering the potential disruption this transition 
could cause, the Commission could serve as the central clearinghouse 
for all DTV initiatives. For the principal industry stakeholders--
broadcasting, cable, satellite, and the consumer electronics retail and 
manufacturing sectors--the Commission could coordinate their dispersed 
efforts and establish achievable benchmarks to ensure a smooth 
transition. The Task Force could help accomplish these goals.

    Question 3. A recent study conducted by Free Press entitled, Out of 
the Picture: Minority & Female TV Station Ownership in the United 
States, contained some sobering statistics.

        Women comprise 51 percent of the entire U.S. population, but 
        own a total of only 67 stations, or 4.97 percent of all 
        stations.

        Minorities comprise 33 percent of the entire U.S. population, 
        but own a total of only 44 stations, or 3.26 percent of all 
        stations.

        Latinos comprise 14 percent of the entire U.S. population, but 
        own a total of only 15 stations, or 1.11 percent of all 
        stations.

        African Americans comprise 13 percent of the entire U.S. 
        population but only own 18 stations, or 1.3 percent of all 
        stations.

        Asians comprise 4 percent of the entire U.S. population but 
        only own a total of 6 stations or 0.44 percent of all stations.

    Do these facts trouble you as they do me, and what action should 
the Commission take to promote greater diversity of ownership?
    Answer. These facts trouble me deeply because they reflect the 
Commission's failure over the years to acknowledge and study the 
reasons there are so few women and minority FCC broadcast licensees. 
This lack of concern and no comprehensive Commission review of female 
and minority ownership are barriers preventing the development and 
implementation of regulatory policies that are specifically targeted to 
improve ownership diversity--a compelling national interest.
    The FCC media ownership decision in 2003 would have been an 
enormous setback for diversity in broadcasting. Opportunities to 
promote minority, small and start-up broadcasters were cast aside to 
enable the big media companies to get even bigger. Criticizing the 
Commission's 2003 decision, the Third Circuit Court of Appeals said the 
FCC utterly failed in rational decision-making by repealing the only 
policy specifically aimed at fostering minority station ownership 
without any analysis whatsoever of the effect on minorities. The 
Commission's decision did not even acknowledge the decline in minority 
station ownership.
    For starters, the Commission needs to first acknowledge that the 
state of female and minority ownership in the United States is a direct 
result of Commission policy. The Commission then needs to develop a 
``white paper'' to determine whether diversity of ownership in the 
broadcasting industry is a compelling state interest, in light of the 
enormous influence broadcasting has in our public and political 
discourse. These first two steps are critical because they will set the 
constitutional bounds of the Commission's ability to study and 
implement reform measures that have been proposed by the Commission's 
own Diversity Committee and the Minority Media and Telecommunications 
Committee.
    The Commission's acknowledgment and the white paper would 
complement the two outstanding minority ownership studies which should 
examine levels of minority ownership of media companies and the 
barriers to entry.
    As the Commission goes through this process, it is important to 
bear in mind that we should develop policies with the specific goal to 
improve minority ownership. The policies we develop should put minority 
groups on the path of ownership--not mere subleasing opportunities.

    Question 4. On November 22, 2006, the day before Thanksgiving, the 
FCC released a list of economic studies to be performed in the media 
ownership proceedings.

   How did the Commission choose the economic studies to be 
        preformed in the media ownership proceedings?

   Who at the Commission or elsewhere was consulted for input 
        on the topics chosen?

   How were parties selected for the studies done outside the 
        Commission, and what is the cost of these contracts?

   Would the Commission consider seeking public comment on what 
        other studies might assist the Commission in its review of 
        ownership rules?
    Answer. Those are all very important questions, and I wish I could 
answer them. The studies were developed, topics were chosen, and the 
analysts were selected, all without the full Commission's knowledge or 
input. As I said in my press release shortly after hearing about 
announcement of the studies,

        [The] unilateral release of this Public Notice on the eve of 
        the Thanksgiving holiday ultimately undermines the public's 
        confidence by raising more questions than it answers. The 
        legitimacy of the studies is directly correlated to the 
        transparency of the process undertaken to develop the studies 
        and select the authors.

        The descriptions of the studies are scant, lacking any sense of 
        the Commission's expectations for scope, proposed methodology 
        and data sources. In certain instances, the truncated period of 
        time to complete the studies is an ingredient for a study that 
        doesn't engender public faith and confidence. The release of 
        this deficient Public Notice is unfortunate given the 
        importance of these studies in evaluating the impact of media 
        ownership on the American public.

    I still feel the same way about the studies today. I hope, in the 
future, all Commissioners are able to provide input.

    Question 5. In November 2006, the Government Accountability Office 
(GAO) issued a report concluding that the cost of special access has 
gone up--not down--in many areas where the FCC predicted that 
competition would emerge. To address this error, the report recommended 
that the FCC develop a better definition of ``effective competition'' 
and monitor more closely the effect of competition in the marketplace. 
Do you agree with these findings? What action should the Commission 
take in response?
    Answer. GAO's report appears to be based on a comprehensive study 
that takes into account relevant evidence in making its findings. The 
Commission must closely examine GAO's recommendations and move forward 
with its own pending proceeding on special access services because many 
business customers and wholesale carriers rely heavily on incumbent 
providers' special access services for their voice and high-speed 
connections. Independent wireless companies, satellite providers, rural 
companies, and long distance providers also depend on access to 
incumbents' nearly ubiquitous network and services to connect their 
networks to other carriers. So, it is important that the Commission 
tackle these issues as comprehensively and expeditiously as possible.
    In particular, I agree with GAO's recommendations that the FCC must 
more closely monitor the effect of its rules and competition in the 
marketplace. GAO recommended that the FCC consider collecting 
additional data and developing additional measures to monitory 
competition on an ongoing basis that more accurately represents market 
developments and individual customer choice.\3\ The GAO report should 
give further impetus to move forward with the Commission's long-pending 
proceeding on special access services.
---------------------------------------------------------------------------
    \3\ I note that the National Association of Regulatory Utility 
Commissioners (NARUC) recently convened a Task Force to examine 
competitive issues involving special access services. I commend NARUC 
for that effort and look forward to reviewing its analysis, findings, 
and recommendations.

    Question 6. Last year, Congress passed legislation imposing a ten-
fold increase in the size of maximum fines for indecency violations, to 
a maximum of $325,000 per violation. At the time President Bush signed 
the law, he said ``[t]he problem we have is that the maximum penalty 
that the FCC can impose under current law is just $32,500 per 
violation, and for some broadcasters, this amount is meaningless. It's 
relatively painless for them when they violate decency standards.'' 
Should Congress similarly raise the statutory maximum fine for other 
violations? What other actions should be taken to promote swifter and 
more effective enforcement?
    Answer. It would be fairer and more equitable to raise the 
statutory maximum fine for other violations in addition to indecency. 
This would provide the proper deterrent against violating Commission 
rules. The Commission certainly could use its discretion not to impose 
the maximum fine indiscriminately, but to calibrate the level of the 
fine based on the nature of the offense. In other words, increasing the 
maximum fine should not mean it is employed in every circumstance. 
Given increasing size and scope of the entities we oversee, including 
the revenue growth of the media and telecommunications industries in 
recent years, an increase in the maximum fine amounts is fully 
justified.
    In terms of improving our enforcement efforts, I have long believed 
that the best way to improve compliance is through strict enforcement 
of existing rules. Strong enforcement measures send the most effective 
message that violations of our rules will not be tolerated, and by thus 
improving compliance, it reduces the need for further enforcement 
actions.
    In order to accomplish the goal of strict enforcement, additional 
resources would benefit the Enforcement Bureau. Given the scope of new 
laws that Congress has required us to enforce, and the ballooning 
number of complaints about alleged violations of existing laws, the 
demands on our staff have exceeded our ability to respond adequately. 
If Congress provides additional resources to our enforcement efforts, 
it would also send a strong message and help us to deal with backlogs.
    Clarity in our rules is also essential. The more clearly we draw 
the lines, the less likely we are to encounter excuses that parties 
failed to comply because they did not understand what is permitted 
under the rules.

    Question 7. Recently, the FCC adopted an order to prohibit certain 
practices by franchising authorities that the Commission finds are 
unreasonable barriers to entry. One issue mentioned in that order, 
which is very important to the State of Hawaii, is the ability of the 
franchise authority to seek appropriate contributions for public, 
educational, and governmental (PEG) and institutional networks (I-
nets). I understand that some parties have disputed the veracity of 
some claims made in this proceeding. What, if any, efforts did the 
Commission take to independently investigate and verify the claims of 
unfair demands made by many of the carriers in this proceeding?
    Answer. I am not aware of the Commission taking any steps to 
independently investigate and verify the claims of the major phone 
companies. Nor am I aware of the Media Bureau contacting a 
representative sample of franchising authorities. There are no specific 
instances of the Bureau doing its own research concerning claims of 
unfair demands. In my dissenting opinion on this proceeding I wrote:

        Instead of acknowledging the vast dispute in the record as to 
        whether there are actually any unreasonable refusals being made 
        today, the majority simply accepts in every case that the phone 
        companies are right and the local governments are wrong, all 
        without bothering to examine the facts behind these competing 
        claims, or conduct any independent fact-finding. This is 
        breathtaking in its disrespect of our local and state 
        government partners and in its utter disregard for agency 
        action based on a sound record.

    The Bureau simply took all the carriers claims of unfair practices 
as true, without even questioning the fact that the ones providing the 
examples had the most to gain in the proceeding. All other viewpoints, 
primarily from state and local governments, were summarily dismissed.

    Question 8. In 2004, the FCC adopted a plan to move certain 
licenses within the 800 megahertz band in order to eliminate 
interference problems that were being experienced by public safety 
communications systems. What is your assessment of the pace of progress 
in rebanding the 800 MHz band and what steps does the Commission intend 
to take in order to get this process back on track?
    Answer. I am concerned about the pace of progress in rebanding the 
800 MHz band. It appears that the Commission's initial oversight of the 
process and of the role of the Transition Administrator (TA) may have 
not been sufficiently vigorous. Indeed, last month, the major 
organizations affected by the transition and Sprint Nextel filed a 
letter with the Commission asking us to direct the TA to develop 
specific benchmarks to complete reconfiguration of the NPSPAC channels 
(channels 601-720). The letter also counsels the TA to work closely 
with public safety organizations, Sprint Nextel, and equipment and 
service providers to develop plans and schedules to ensure a smooth 
transition to the reconfigured channel plan. The letter's signatories 
also indicated that the TA, by July 15, 2007, should identify NPSPAC 
systems that can complete their reconfiguration in 2007 and schedule 
them accordingly. I support the specific action items laid out in that 
letter and will do what I can to ensure the Commission is taking the 
appropriate steps to implement these recommendations.

    Question 9. A number of wireless carriers have employed the use of 
high ``early termination fees'' to prevent wireless customers from 
switching to other carriers. In some cases these fees may be $200 or 
more, and may apply regardless of whether the subscriber wishes to 
cancel on the first or last date of their wireless contract. Do you 
believe these practices promote or impede competition?
    Answer. As I travel the country, I often hear consumers complain 
about the practice of early termination fees or ETFs. Indeed, it is one 
of the complaints the Commission receives most frequently with respect 
to wireless services. Clearly, consumers have a concern with ETFs and 
its impact on their ability to switch service providers. We have seen 
the success of local number portability in promoting competition among 
mobile wireless providers. Some argue that ETFs have the effect of 
limiting some of the pro-consumer and pro-competitive impact of that 
significant policy decision.

    Question 10. Given requirements imposed by General Services 
Administration to promote greater redundancy of communications, how 
would the retirement of copper facilities impact Congress' directive to 
promote the availability of alternate network facilities in federally 
owned and leased buildings?
    Answer. The Commission has recognized the importance of redundant 
communications in several contexts.\4\ Indeed, the Independent Panel 
Reviewing the Impact of Hurricane Katrina on Communications Networks 
found that failure of redundant pathways for communications traffic was 
one of three main problems that caused the majority of communications 
network interruptions.\5\
---------------------------------------------------------------------------
    \4\ See, e.g., United Power Line Council's Petition for Declaratory 
Ruling Regarding the Classification of Broadband over Power Line 
Internet Access Service as an Information Service, WC Docket No.06-10, 
FCC 06-165, Memorandum Opinion and Order (rel. Nov. 7, 2006).
    \5\ See Recommendations of the Independent Panel Reviewing the 
Impact of Hurricane Katrina on Communications Networks, Notice of 
Proposed Rulemaking, EB Docket No. 06-119, App. B (rel. June 19, 2006).
---------------------------------------------------------------------------
    Two currently pending petitions ask the Commission to investigate 
whether the retirement of copper facilities would lessen the redundant 
capabilities available for consumers, including federally owned and 
leased buildings.\6\ These petitions argue that copper loop and subloop 
retirement eliminate network alternatives that might otherwise prove 
essential for network redundancy in the event of a homeland security 
crisis, natural disaster, or the recovery period after such events. The 
Commission has sought comment on these petitions, and I look forward to 
reviewing the record developed in response to these petitions.\7\
---------------------------------------------------------------------------
    \6\ See Petition for a Rulemaking to Amend Certain Part 51 Rules 
Applicable to Incumbent LEC Retirement for Copper Loops and Copper 
Subloops, filed by XO Communications, LLC et al. (filed Jan. 18, 2007); 
Petition for Rulemaking and Clarification filed by BridgeCom 
International, Inc. et al., Policies and Rules Governing Retirement of 
Copper Loops By Incumbent Local Exchange Carriers (filed Jan. 18, 
2007).
    \7\ See Pleading Cycle Established For Comments On Petitions For 
Rulemaking And Clarification Regarding The Commission's Rules 
Applicable To Retirement Of Copper Loops And Copper Subloops, Public 
Notice, DA 07-209, Docket No. RM-11358 (2007).

    Question 11. Given the Commission's policy of promoting broadband 
deployment and eliminating regulations that treat competitors in the 
provision of broadband differently, how is this policy being 
implemented this policy with regard to pole attachment regulations?
    Answer. The Commission has, in recent years, taken a number of 
actions designed to level the competitive playing field for facilities-
based providers of broadband services.\8\ A number of parties have 
suggested that the Commission should also explore changes to its pole 
attachment rules in order to reduce competitive distortions among 
broadband providers.\9\ These parties have asked the Commission to 
consider, among other things, changes to its rules for pole attachment 
rates, complaint processes, and procedures for providing access to 
poles, ducts, and conduits. The Commission has sought comment on two 
such petitions and comments have now been filed.\10\ Given that access 
to poles, ducts, and conduits is critical for facilities-based 
providers of broadband services, it is important that the Commission 
move forward with its consideration of these petitions as expeditiously 
as possible.
---------------------------------------------------------------------------
    \8\ See, e.g., Appropriate Framework for Broadband Access to the 
Internet over Wireline Facilities, CC Docket No.02-33, FCC 05-150, 
Report and Order (Aug. 5, 2005); United Powerline Council's Petition 
for Declaratory Ruling Regarding the Classification of Broadband Over 
Power Line Internet Access Service as an Information Service, WC Docket 
No. 06-10, Memorandum Opinion and Order, 20 FCCR 13281 (2006).
    \9\ See Petition of United States Telecom Association for a 
Rulemaking to Amend Pole Attachment Rate Regulation and Complaint 
Procedures, RM-11293 (filed Oct. 2005); Petition for Rulemaking of 
Fibertech Networks, LLC, RM 11303 (filed Dec. 2005).
    \10\ Id.

    Question 12. Recently, a Virginia Federal court referred a matter 
to the FCC for review and clarification as to whether Internet Protocol 
Television or ``IPTV'' service meets the definition of a ``cable 
service'' under the Communications Act--a question that this Committee 
answered affirmatively during consideration of last year's 
telecommunications bill. How does the Commission intend to address this 
matter?
    Answer. I would expect the Commission to follow the plain meaning 
of the law and the intent of Congress, and promote the public interest. 
At this time, I am not aware of how the Commission intends to address 
this matter.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                       Hon. Jonathan S. Adelstein

    Question 1. Eleven years after Congress passed the 1996 
Telecommunications Act that opened the floodgates of media 
consolidation in the radio industry is American radio better or worse 
than it was in 1996 in terms of viewpoint diversity and localism?
    Answer. Since joining the Commission in 2002, I have visited dozens 
of local communities throughout the country and the overwhelming public 
belief is that viewpoint diversity and localism have not improved since 
1996. In fact, many say that diversity and localism in radio have 
gotten much worse. Studies from independent organizations have 
confirmed public sentiment. A recent study from Future of Music 
Coalition has found that local ownership has declined by nearly 30 
percent since 1996. Just fifteen formats make up 76 percent of 
commercial programming, and radio formats with different names can 
overlap up to 80 percent in terms of songs played on them.

    Question 2. How has consolidation impacted the public's ability to 
hear local music and local news on the airwaves?
    Answer. A recent study from the Future Music Coalition has revealed 
that the playlists of many radio stations are very similar. And for 
commonly owned stations in the same format, their playlists overlap 
over 97 percent. In addition concentration of ownership, programming 
ownership is also concentrated. For instance, the Top 3 radio companies 
in terms of station ownership are also the Top 3 in terms of 
programming-network ownership.

    Question 3. Even with the existence of net neutrality conditions on 
AT&T, are there rules in place to ensure that other broadband providers 
do not discriminate against Internet content, services or applications? 
Given the rulings on information services, is it even clear that the 
FCC has authority to act if such discrimination occurs?
    Answer. I do not believe that the FCC has adequate rules in place 
to ensure that broadband providers do not discriminate in their 
provision of Internet content, services, or applications. In August 
2005, the FCC ruled that the Act's long-standing non-discrimination 
safeguards in Sections 201 and 202 no longer apply to wireline 
broadband Internet access services.\11\ At the same time, the 
Commission also adopted its Internet Policy Statement that outlines 
four principles to encourage broadband deployment and preserve and 
promote the open and interconnected nature of public Internet: (1) 
consumers are entitled to access the lawful Internet content of their 
choice; (2) consumers are entitled to run applications and services of 
their choice, subject to the needs of law enforcement; (3) consumers 
are entitled to connect their choice of legal devices that do not harm 
the network; and (4) consumers are entitled to competition among 
network providers, application and service providers, and content 
providers.\12\ The Commission stated that it would incorporate these 
principles into its ongoing policymaking activities but it did not 
adopt rules in this regard.
---------------------------------------------------------------------------
    \11\ See Appropriate Framework for Broadband Access to the Internet 
over Wireline Facilities, CC Docket No.02-33, FCC 05-150, Report and 
Order (Aug. 5, 2005).
    \12\ See Appropriate Framework for Broadband Access to the Internet 
over Wireline Facilities, CC Docket No.02-33, FCC 05-151, Policy 
Statement (Aug. 5, 2005).
---------------------------------------------------------------------------
    The Commission's authority to act if discrimination occurs can 
fairly be characterized as unclear. The Supreme Court, in the Brand X 
decision, suggested that the Commission has broad authority to ``impose 
additional regulatory obligations under its Title I ancillary 
jurisdiction to regulate intestate and foreign communications.'' \13\ 
It is noteworthy, however, that other courts have taken a narrow view 
of the Commission's ancillary authority. For example, in reviewing the 
Commission's authority to set rules related to the unauthorized copying 
and redistribution of digital programming, the D.C. Circuit has stated 
that ``[the Commission's] position in this case amounts to the bare 
suggestion that it possesses plenary authority to act within a given 
area simply because Congress has endowed it with some authority to act 
in that area. We categorically reject that suggestion.'' \14\ Given the 
importance of preserving the open character of the Internet, Congress 
may wish to provide a stronger legal foundation for Commission 
oversight.
---------------------------------------------------------------------------
    \13\ National Cable & Telecommunications Association, et al. v. 
Brand X Internet Services, et al., No. 04-277, 125 S.Ct. 2688 (June 27, 
2005).
    \14\ American Library Association v. Federal Communications 
Commission, No. 04-1037 (Mar. 15, 2005).

    Question 4. In an environment of industry consolidation and 
technological integration, what role do you see the FCC playing to 
ensure nondiscriminatory access to infrastructure, content, roaming, 
spectrum and rights of way?
    Answer. The goal of the Telecommunications Act of 1996 is to 
establish a competitive and de-regulatory telecommunications 
environment. Over the past few years, the Commission has done much to 
reduce regulation by eliminating obligations on incumbent local 
exchange carriers, but the Commission can do much more to promote truly 
dynamic competitive markets. Going forward, it is critical that the 
Commission improve its efforts to monitor market developments and to 
make decisions based on sound data and analysis.
    This is a time of great change in telecommunications markets with 
the emergence of new services, increased convergence, and seismic 
structural changes among the market participants. For many residential 
customers, there is an emerging rivalry between traditional telephone 
providers and new cable entrants, along with an increasing opportunity 
for use of wireless and VoIP services. Nonetheless, the Commission must 
continue to promote competition between providers and to be vigilant 
about the potential impacts of increased consolidation in these 
markets. I have been concerned about the adequacy and vigor of the 
Commission's analysis in its consideration of recent mergers and 
forbearance petitions. I believe that the Act contemplates more than 
just competition between a wireline and cable provider, and that both 
residential and business consumers deserve more.
    It is also noteworthy that GAO recently raised concerns about the 
development of competition for business customers. In its report on 
special access services, GAO found that competitive providers are 
serving, on average, less than 6 percent of the buildings with demand 
for dedicated access, leaving 94 percent of the market served only by 
incumbent providers. The Commission has a long-pending proceeding on 
special access services and, with fresh motivation from GAO's report, 
it will be even more critical that the Commission tackle these issues 
as comprehensively and expeditiously as possible.
    In considering recent wireline mergers that represented major 
consolidation of the marketplace, I have also looked for ways to 
counter-balance the effects of the transactions through meaningful 
conditions that protect the open and neutral character of the Internet, 
benefit consumers by promoting affordable broadband services, and 
preserve competitive choices for residential and business consumers. 
For example, in the recent AT&T/BellSouth merger, I supported 
conditions designed to promote and preserve competition by requiring 
the divesture of wireless broadband spectrum that will be critical to 
the development of an independent broadband option; by ensuring that 
competitive carriers continue to have access to critical wholesale 
inputs; and by providing that these conditions last for a meaningful 
period of time.
    On the spectrum side, I have long advocated that we should 
continually evaluate our spectrum policies to ensure that we are doing 
what we can to get spectrum into the hands of operators who are ready 
and willing to serve consumers at the most local levels. I want 
auctions to be a real opportunity for new and incumbent carriers to 
expand existing networks and develop new and exciting wireless 
broadband services. I have worked hard to put in place policies and 
rules that would promote opportunities for all carriers in auctions, 
such as a more diverse group of license blocks.
    During our review of the bandplan in advance of the auction last 
year of 90 MHz of new spectrum for the Advanced Wireless Service (AWS), 
I pressed for the inclusion of an additional smaller block of licenses. 
I believe that smaller licenses will improve access to spectrum by 
those providers who want to offer service to smaller, more rural, 
areas, while also providing a better opportunity for larger carriers to 
more strategically expand their spectrum footprint. As we prepare for 
the 700 MHz and future auctions, it is critical we build on the success 
of the AWS auction by providing a diverse group of licenses so that all 
bidders have an opportunity to obtain licenses that best match their 
business plan. While I have supported rules to facilitate the secondary 
market for spectrum rights and licenses, I think we are best served by 
providing a wide variety of license sizes at the initial auction when 
appropriate.
    Finally, I am increasingly concerned with the competitiveness of 
the commercial mobile radio service (CMRS) wholesale market. Whether in 
the context of recent mergers or other rulemakings, the Commission 
hears regularly from small and mid-size carriers who are increasingly 
frustrated with their inability to negotiate automatic roaming 
agreements with larger regional and nationwide carriers for the full 
range of CMRS services. I was pleased that we initiated a proceeding in 
August 2005 to explore all aspects of roaming and more specifically the 
effects that consolidation has on the ability of smaller carriers to 
negotiate access to larger networks. Currently, we are hearing from 
parties on both sides of the issue. Yet, I think we should get access 
to more information. I have supported an FCC review of actual roaming 
agreements so that the Commission truly is informed on the nature of 
these contracts. I also believe we should move forward with this 
proceeding as quickly as possible.

    Question 5. Do you think that the current broadband market is 
sufficiently competitive and robust in terms of broadband deployment? 
Does the FCC currently have sufficient tools to even accurately 
determine whether Americans have access to broadband?
    Answer. It is difficult to assess the relative competitiveness of 
the current broadband services market because of the lack of sufficient 
data collected at the FCC and because the industry is changing so 
dramatically.
    Even though we have made strides with broadband deployment, we must 
work to promote meaningful competition, as competition is the most 
effective driver of lower prices and innovation. Given that cable and 
DSL providers control 98 percent of the broadband market, we must be 
vigilant to ensure that the U.S. broadband market does not stagnate 
into a comfortable duopoly.
    Unfortunately, the Commission's current efforts to gauge broadband 
deployment, competition, and affordability fall short. In a May 2006 
report, the Government Accountability Office (GAO) took the FCC to task 
for the quality of its broadband data. GAO criticized the Commission's 
ability to analyze who is getting broadband and where it is deployed, 
observing that the FCC's data ``may not provide a highly accurate 
depiction of deployment of broadband infrastructures for residential 
service, especially in rural areas.'' Similarly, GAO observed that the 
number of providers reported in a Zip Code overstates the level of 
competition to individual households. One clear conclusion from the 
GAO's report is that the Commission must explore ways to develop 
greater granularity in its assessment and analysis of broadband 
availability, whether through statistical sampling, Census Bureau 
surveys, or other means.

    Question 6. How do you envision universal service reform moving 
ahead to keep the fund sustainable? I am concerned about proposals that 
would not require broadband connections to pay into universal service, 
or reverse auction proposals that advocate providing USF support in an 
auction type model to the least cost provider.
    Such proposals bring uncertainty to investment plans, and shift the 
universal service standard from comparable to urban areas, to one that 
would just go to the lower bidder, quality irrelevant. I understand 
that rural providers have expressed concern about both proposals. Can 
you discuss the least cost provider issue, as well as what possible 
distinctions exist to justify excluding broadband from paying into 
USF--why shouldn't a technology that uses and benefits from the network 
pay into universal service?
    Answer. Congress and the Commission recognized early on that the 
economic, social, and public health benefits of the telecommunications 
network are increased for all subscribers by the addition of each new 
subscriber. Federal universal service continues to play a vital role in 
meeting our commitment to connectivity, helping to maintain high levels 
of telephone penetration, and increasing access for our Nation's 
schools and libraries.
    I have worked hard to preserve and advance the universal service 
programs as Congress intended. It is vital to keep them on solid 
footing. The Commission has taken a number of positive steps over the 
past year to maintain the base of support for universal service, but 
the Commission must continue to be vigilant and look for long-term 
solutions that ensure universal service remains effective. As we 
consider further changes to our contribution rules, it is apparent that 
ensuring a stable base of support means expanding it. Any changes to 
these rules must also meet the statutory requirements, be 
administratively workable, and not unduly impact consumers. One 
specific area for Commission attention is the question of whether 
broadband providers must contribute. As a result of the FCC's 
reclassification decisions, the de facto result is that broadband 
revenues have dropped out of the contribution base. Given that 
broadband services represent the future of our telecommunications 
networks, it is critical that the Commission not undermine the long-
term foundation of universal service.
    The Commission also has open proceedings looking at how it 
distributes federal Universal Service Funds to both large and small 
companies. On August 11, 2006, the Federal-State Joint Board on 
Universal Service sought comment on the use of reverse auctions to 
determine high cost universal service funding to eligible 
telecommunications carriers pursuant to Section 254 of the Act. While I 
do not currently serve on the Joint Board, this is an important 
proceeding for consumers in rural America, and I have heard concern 
from many rural providers about whether reverse auctions will create 
appropriate incentives for carriers to invest in their networks. It is 
critical that we have a framework that creates incentives for providers 
to invest in rural America, so I will consider the Joint Board's 
recommendations very carefully. Particularly given the impact of this 
proceeding on the services available in Rural America, I will look 
closely to make sure that any changes are consistent with the Act's 
requirement that universal service be specific, sufficient, and 
predictable.
    On a larger scale, it is important that the Commission conducts its 
stewardship of universal service with the highest of standards. 
Ensuring the vitality of universal service will be particularly 
important as technology continues to evolve. As voice becomes just one 
application over broadband networks, we must ensure that universal 
service evolves to promote advanced services, which is a priority that 
Congress has made clear.

    Question 7. What is your view of making the deployment of advanced 
infrastructure that is fully capable of offering the wide array of 
broadband oriented services the hallmark of our national universal 
service policy? Should universal service subsidize broadband?
    Answer. Americans should have the opportunity to maximize their 
potential through communications, no matter where they live or what 
challenges they face. We have got to make broadband truly affordable 
and accessible to everyone. Some have argued that the reason we have 
fallen so far in the international broadband rankings is that we are a 
more rural country than many of those ahead of us. If that is the case, 
we should strengthen our efforts to address any rural challenges head-
on.
    As voice, video, and data increasingly flow to homes and businesses 
over broadband platforms, voice is poised to become just one 
application over broadband networks. So, in this rapidly-evolving 
landscape, we also must ensure that universal service evolves to 
promote advanced services, which is a priority that Congress made 
clear.

    Question 8. The FCC recently has been granting incumbent providers 
(ILECs) forbearance from regulations on the premise that sufficient 
competition exists in a specific market to make enforcement of the 
regulations unnecessary. However, a Fall 2006 GAO report indicates that 
the assumptions the FCC uses to determine the existence of competition 
may be flawed and further that prices in Phase II areas--that is, areas 
where competition is theoretically most intense--are going up. Is that 
the case, and if so, are price increases consistent with a competitive 
market?
    Answer. GAO's report found that list prices and average revenue for 
dedicated business services appear to be higher in areas where the FCC 
had granted full pricing flexibility due to the presumed presence of 
competitive alternatives than they are in areas still under some FCC 
price regulation. As to whether this is consistent with a competitive 
market, GAO found that its analysis of facilities-based competition 
suggests that the FCC's predictive judgment--that areas with pricing 
flexibility have sufficient competition--may not have been borne out.
    GAO's report appears to be based on a comprehensive study that 
takes into account relevant evidence in making its findings. It is 
important that the Commission address GAO's recommendations and that it 
move forward with its own consideration of these issues through its 
pending special access rulemaking.

    Question 9. Is forbearance for the ILECs in the public interest?
    Answer. Section 10 of the Act sets out the standards for 
forbearance. Under Section 10, the Commission is required to forbear 
from any statutory provision or regulation if it determines that: (1) 
enforcement of the regulation is not necessary to ensure that charges, 
practices, classifications, or regulations are just and reasonable, and 
are not unjustly or unreasonably discriminatory; (2) enforcement is not 
necessary to protect consumers; and (3) forbearance is consistent with 
the public interest. In making this determination, the Commission must 
also consider pursuant to Section 10(b) ``whether forbearance from 
enforcing the provision or regulation will promote competitive market 
conditions.''
    I have supported a number of forbearance petitions where the 
statutory criteria were met. In two recent proceedings, I have 
supported Orders granting unbundling relief to incumbent LECs where 
there is especially strong evidence of competition between the 
incumbent cable and wireline provider. While I have been concerned with 
the analysis in these decisions and I believe that the Act contemplates 
more than just competition between a wireline and cable provider, I 
believe that these Orders were clearly superior to an automatic grant 
of the underlying petitions.
    I am concerned, however, about the Commission's recent willingness 
to allow complex and controversial forbearance petitions to grant 
without issuing an order. Congress has given the Commission a powerful 
tool in our Section 10 forbearance authority, but the Commission must 
wield this tool responsibly. Allowing petitions to grant by operation 
of law, and without disclosing a shred of analysis, does not best serve 
the public interest. Moreover, this approach inappropriately ignores 
Congress's directive to consider the specific substantive standards set 
out in Section 10 and raises serious legal questions about the scope, 
effect, and validity of its actions.

    Question 10. A proceeding to investigate the rates, terms and 
conditions for interstate special access services has been pending for 
a number of years. What is the status of the FCC's special access 
proceeding? What steps are being taken to speed resolution of this 
matter?
    Answer. In January 2005, in response to a petition filed by AT&T in 
2002, the FCC initiated a Notice of Proposed Rulemaking, seeking 
comment on whether regulation of dedicated access services and on 
whether the Commission's pricing flexibility rules should be 
revised.\15\ Comments and reply comments have been filed in this 
proceeding and it is pending before the Commission.
---------------------------------------------------------------------------
    \15\ Special Access Rates for Price Cap Local Exchange Carriers, 
Order and Notice of Proposed Rulemaking, WC Docket 05-25, 20 FCCR 1994 
(2005).
---------------------------------------------------------------------------
    While Orders are typically drafted at the direction of the Chairman 
rather than individual Commissioners, I will expeditiously review any 
Bureau recommendations regarding these rules. Indeed, the GAO report 
should give further impetus to move forward with that proceeding.

    Question 11. Some say that the dispute between Mediacom and 
Sinclair signals a new period of confrontation between broadcasters and 
distributors. How many complaints involving retransmission consent 
disputes has the Commission received in the last couple of years? Is 
there any trend within that data that may be useful to consider? How 
long does the Commission typically take to resolve those complaints?
    Answer. I have requested the necessary information and analysis 
concerning retransmission consent disputes from the FCC's Media Bureau.

    Question 12. One issue specifically important for public radio 
stations is the opportunity to file for and receive additional reserved 
FM spectrum. It has been almost 7 years since the FCC provided the 
public with an opportunity to build new noncommercial educational 
stations on reserved FM spectrum. When will the FCC open a filing 
window for new reserved-FM noncommercial stations? Will the FCC provide 
public notice of a filing window sufficiently in advance to permit non-
profit, governmental, and other potential applicants adequate time to 
participate?
    Answer. I have requested the necessary information and analysis 
concerning the filing window for new reserved-FM NCE stations from the 
Media Bureau. In any event, I believe the Commission should provide 
public notice of the filing window several months in advance to permit 
full and active public participation.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                       Hon. Jonathan S. Adelstein

    Question 1. Do you believe those individual and their employers who 
violated the commission's payola rules should be held accountable and 
those who have been injured receive fair compensation?
    Answer. Yes, they should be held accountable. I believe these 
objectives were achieved in the recently reported payola consent 
decrees with Clear Channel, CBS Radio, Entercom, and Citadel: $12.5 
million contribution to the Federal Treasury, and a separate voluntary 
commitment to program and broadcast over 4200 hours of local and 
independent music, which should help counteract the harm caused by 
payola.

    Question 2. Should significant fines be part of the penalty?
    Answer. Fines and all forms of financial or service contributions 
should be commensurate to the seriousness of the alleged offense. The 
$12.5 million fine in the announced payola settlement would be the 
largest fine collectively imposed on broadcasters in the history of the 
FCC.

    Question 3. How do you structure a consent decree so that it 
changes behavior and deters individuals from future violations beyond 
when the consent decree ends?
    Answer. First, the Commission could deter individuals and their 
employers from future violations by imposing a stiff fine. Second, the 
Commission could endeavor to change individual and employer behavior by 
requiring real business reform measures that better tracks record label 
transactions in radio stations. And finally, the Commission should 
structure a consent decree to prevent future violations by committing 
the Commission to perform certain meaningful oversight elements which 
the Commission is committed to perform. While the details of the 
consent decree and independent airtime agreement are not yet final, I 
believe that the Commission has achieved the primary three objectives 
of the investigation against Clear Channel, CBS Radio, Entercom, and 
Citadel.

    Question 4. What kind of enforcement mechanism do you envision to 
ensure the consent decree is effective?
    Answer. I envision the Commission requiring the four radio groups 
to designate one corporate-level Compliance Officer as well as market-
level Compliance Contacts to monitor all potential pay-for-play 
concerns. The groups will also maintain a database that tracks all 
record label transactions and the Commission will have unfettered 
access to the data base. Additionally, the groups will also be required 
to provide the Commission with annual reports.

    Question 5. Given how important music and radio is to many 
Americans, do you believe there should be public comment on any consent 
decree before the Commission adopts it?
    Answer. I would not oppose the opportunity for the public to 
comment on any consent decree before the Commission adopts it. After 
all, our job is to promote the public interest and the Commission's 
decision-making should be fair and transparent to the public. Comments 
would inform the Commission about the harms that many listeners 
experience and would ensure that our fines and requirements are 
supported by those we are trying to protect.
    Public comment on consent decrees, however, has not been the 
Commission's practice.

    Question 6. In your dissent of the Report and Order and Further 
Notice of Proposed Rulemaking that establishes rules and provides 
guidance to implement Section 621(a)(1) of the Communications Act of 
1934 issued in December 2006, you argued that you believed the 
Commission was on shaky legal ground and was using the item to 
legislate rather than to regulate. Do you believe that the record 
supports the Commission's decision? Why do you believe the Commission 
is on shaky legal ground?
    Answer. The policy goals of the Commission's decision, to promote 
competitive video offerings and broadband deployment, are laudable. But 
while I support these goals, the decision goes out on a limb in 
asserting Federal authority to preempt local governments, and then saws 
off the limb with a highly dubious legal scheme. It substitutes the 
Commission's judgment as to what is reasonable--or unreasonable--for 
that of local officials--all in violation of the franchising framework 
established in the Communications Act.
    I could not support the video franchise decision because the FCC is 
a regulatory agency, not a legislative body. In my years working on 
Capitol Hill, I learned enough to know that Commission's decision is 
legislation disguised as regulation. The courts will likely reverse 
such action because the Commission cannot act when it ``does not really 
define specific statutory terms, but rather takes off from those terms 
and devises a comprehensive regulatory regimen. . . . This extensive 
quasi-legislative effort to implement the statute does not strike [me] 
as merely a construction of statutory phrases.'' Kelley v. E.P.A., 15 
F.3d 1100, 1108 (DC. Cir. 1994)
    The decision also displays a fundamental misunderstanding about the 
commitment of franchising authorities to bring competition to their 
citizens. By law, a franchise under Title VI confers a right of access 
to people's property. Unlike members of the Commission, many state and 
local officials are elected and directly accountable to their citizens. 
Instead of acknowledging the vast dispute in the record as to whether 
there are actually any unreasonable refusals being made today, the 
majority simply accepts in every case that the phone companies are 
right and the local governments are wrong, all without bothering to 
examine the facts behind these competing claims, or conduct any 
independent fact-finding. Our embrace of everything interested 
companies say while discounting local elected officials on a matter 
grounded in local property rights certainly does not inspire a great 
deal of confidence in the Commission's ability on the Federal level to 
arbitrate every local dispute in the country and fairly decide who is 
unreasonable and who is not.
    Even if the Commission had such power, there is no mechanism 
outlined in the decision to establish how that process would work. 
Consequently, the end result will likely be litigation, confusion, 
abuse of the process, and a certain amount of chaos.
    Notwithstanding the scant record evidence to justify agency 
preemption and the creation of a national, unified franchising process 
in contravention of Federal law, the Commission conjures its authority 
to reinterpret and, in certain respects, rewrite Section 621 and Title 
VI of the Communications Act, on just two words in Section 621(a)(1)--
``unreasonably refuse.'' The Commission ignores the verb that follows: 
``to award.'' A plain reading of Section 621(a)(1) does not provide a 
wholesale ``unreasonable'' test for all LFA action. Rather, the 
statutory language focuses on the act of awarding a franchise. While I 
agree that the Commission has authority to interpret and implement the 
Communications Act, including Title VI, the Commission does not have 
authority to ignore the plain meaning, structure and legislative 
history of Section 621, and judicial precedent.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to 
                       Hon. Jonathan S. Adelstein

    Question 1. It is my understanding that there are at least four 
investigations pending at the FCC into possible violations of 
sponsorship identification rules. Some of these investigations have 
been pending for two or 3 years. Should there be a deadline for the FCC 
to act on these complaints? Does the FCC have adequate staff and 
resources to conduct these investigations?
    Answer. Deadlines would be helpful for the FCC to act on 
sponsorship ID and other enforcement investigation. Deadlines could 
serve as an incentive for the Commission to conclude all 
investigations. I am of the view that the FCC could use additional 
staff resources to deal with the large volume of complaints we receive.

    Question 2. In approximately 2 years, broadcasters will shift to 
digital television. There are over 200,000 homes in New Jersey that 
rely exclusively on over-the-air television. Do you think most 
Americans are educated about this transition today? What role will the 
FCC play in preparing the public for this transition?
    Answer. Last March, in my keynote address at the consumer 
electronics industry's spring policy summit, I issued a ``Call to 
Action'' to both public and private industry leaders. Specifically, I 
encouraged the Commission to take a greater leadership role in 
preparing the Nation for this historic transition to digital television 
(DTV). For a complete text of my keynote, please find it at: http://
hraunfoss.fcc.gov/edocs--public/attachmatch/DOC-264354A1.pdf.

   With the end of analog broadcasting in 2 years, there is a 
        critical need for greater national attention on the impending 
        DTV transition and for more focused leadership from the FCC.

    With less than 2 years to the end of analog broadcasting, I believe 
there is a critical need for greater national attention on the 
impending DTV transition. More focused leadership from the FCC--the 
nation's expert agency--and the National Telecommunications and 
Information Administration (NTIA) is needed. Currently, the DTV 
preparedness effort lacks a clear national message and a coordinated 
set of industry activities.
    The DTV transition is a significant public policy issue that is 
worthy of mention in the State of Union Address and other nationally 
televised speeches to the American people. Studies continue to show 
that the most Americans are unaware of the transition, few understand 
the benefits of digital television, and even fewer Americans who rely 
exclusively on over-the-air TV are aware of the deadline. To date, the 
Commission's outreach initiative and the effort of the broadcast, 
cable, satellite, and consumer electronics industries have had limited 
success, primarily reaching only high-end consumers. The latest study 
shows that 61 percent of Americans are totally unaware of the DTV 
transition.

   To improve awareness, the FCC needs to develop a unified 
        message among all levels of government, particularly with the 
        NTIA; coordinate the efforts of the various industry 
        stakeholders; and improve education, especially in insular 
        communities.

    To begin to address this general lack of public awareness, the 
Commission needs to take the following steps: (1) develop a unified, 
coherent message among Federal, state, local and tribal governmental 
entities; (2) coordinate the efforts of the broadcast, cable, 
satellite, and consumer electronics industries; and (3) educate insular 
communities about the consequences and benefits of the impending 
transition.
    Failure to administer a comprehensive national DTV transition plan 
will almost certainly result in a tsunami of consumer complaints to 
congressional and other government offices from viewers across the 
country. To better manage this potential national disruption, I would 
recommend establishing a clear chain of command.
    While the NTIA is principally charged with administering the 
converter box program, the FCC's technical and consumer outreach 
expertise makes us especially well-suited to spearhead a national 
consumer education initiative. The two agencies should work 
collaboratively to develop a unified Federal message about the DTV 
transition, and to inform consumers about options they have to continue 
receiving broadcast programming after February 17, 2009.
    An inter-agency, public/private Federal Task Force could also be 
established to reach out to state, local and tribal governments, as 
well as private sector stakeholders, to further refine our message and 
approach. For example, while the DTV website (www.dtv.gov) has been 
successful, that may not be the best way to reach certain insular 
communities--communities with relatively low Internet subscribership, 
i.e., low income, elderly, minority, non-English speaking and tribal 
communities. Local officials and organizations may be able to offer the 
best approach for their television market. While we need a clear, 
unified and consistent message emanating from both the public and 
private sectors, we need to target a number of unique communities to 
ensure we reach specialized audiences.
    Since my keynote address last March, the Commission and the 
principal stakeholders have taken steps in right direction, but we are 
far from a national plan. Accordingly, in addition to the 
abovementioned steps, the Commission specifically could enhance 
consumer DTV education by: (1) developing quantitative public interest 
obligations for DTV broadcasters; (2) encouraging more PSAs on analog 
television as well as pay-TV services; (3) conducting more targeted 
outreach to insular communities; (4) standardizing the information that 
consumers receive at points of sale; and (5) establishing achievable 
benchmarks for industry stakeholders.

   The FCC must develop DTV public interest obligations and 
        encourage more PSAs.

    First, in order to maximize the benefits to the American people, 
the Commission needs to determine DTV broadcasters' public interest 
obligations. This proceeding has been pending since 1999, and the 
Commission has failed to produce final rules. Quantitative public 
interest obligations would encourage broadcasters to develop news and 
entertainment programming that is compelling and relevant to the 
viewing audience.
    Second, the best way to inform the American people, especially 
analog-only viewers, about the DTV transition is through public service 
announcements (PSAs) on broadcast channels. Additionally, the 
Commission should encourage PSAs on cable and satellite systems.

   The FCC must conduct more outreach to insular communities, 
        standardize the information that consumers receive at points of 
        sale, and establish achievable benchmarks for industry 
        stakeholders.

    Third, the Commission needs a more targeted outreach to insular 
communities across the United States. While the physical reach of FCC 
staff is limited, the Commission should hold regional seminars to train 
members of public interest organizations in local communities. 
Additionally, the Commission should take advantage of the numerous 
official and unofficial media ownership/localism hearings to educate 
the American public about the DTV transition. The FCC needs to move 
beyond attending industry trade shows and visit people in their local 
communities.
    Fourth, the Commission should make an affirmative effort to contact 
consumer electronic retailers and strongly encourage them to improve 
floor signs and displays, educate their sales-forces and ensure all 
analog sets have informational labels.
    And finally, considering the potential disruption this transition 
could cause, the Commission could serve as the central clearinghouse 
for all DTV initiatives. For the principal industry stakeholders--
broadcasting, cable, satellite, and the consumer electronics retail and 
manufacturing sectors--the Commission could coordinate their dispersed 
efforts and establish achievable benchmarks to ensure a smooth 
transition. The Task Force could help accomplish these goals.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Mark L. Pryor to 
                       Hon. Jonathan S. Adelstein

    Question 1. Over the past 4 years, consumers have enjoyed the 
successful emergence of a number of new players in the audio 
marketplace. Satellite radio and Internet radio now reach tens of 
millions of listeners every week, and portable MP3 players and iPods 
have become common household items.
    Digital Cable and DBS offer dozens of channels of uninterrupted 
music, and Wi-Max technology is evolving that will soon allow Internet 
based listening options in automobiles.
    Would the Commissioners agree that the competitive landscape has 
changed dramatically in the audio market over the past few years? And 
would the Commissioners agree that this trend is only likely to 
continue for the foreseeable future?
    Answer. The competitive landscape is certainly changing. 
Nonetheless, I am optimistic about the future of the broadcasting 
industry because every device or platform you've mentioned presents a 
great opportunity for radio and television broadcasting. Change isn't 
always easy; but in the case of the broadcast industry, I believe the 
industry is holding the strongest card in the deck--quality content, 
which viewers and listeners love and is not substitutable overnight.

   Cable and Satellite TV have allowed the major broadcasters 
        to reach more homes and to create additional channels to 
        deliver more content to families. While broadcast television 
        has lost viewers to cable, network shows still dominate the 
        ratings.

   Satellite Radio presents an opportunity for broadcasters to 
        differentiate their service and to compete with satellite radio 
        by incorporating more quality local content--news and music--
        into their programming. HD Radio will enable radio broadcasters 
        and equipment manufacturers to offer new services and products 
        to consumers.

   TiVo and other DVR: Time-shifting (TiVo) and place-shifting 
        (Sling Box) technology will simply allow more people to watch 
        broadcast programming at a time and place that's convenient for 
        them. Since 2002, Nielsen Media Research and TiVo have agreed 
        to measure viewing habits through the collection of TiVo 
        recording data. When viewers record shows to watch later, their 
        viewing is counted in the total audience. That should help 
        broadcast ad revenue.

   iPods: Major networks, like ABC and NBC, are starting to 
        embrace MP3 players such as the iPod. Viewers can now download 
        their favorite NBC or ABC show for $1.99 an episode and take it 
        on the road.

   Internet: Recent studies demonstrate that Americans are 
        consuming more and more media everyday. TV and radio remain the 
        dominant forms of media for news and information. Although 
        there is a growing trend toward dual usage, with consumers 
        using the Internet while watching television at home, Americans 
        watch television twice as much as we use computers.

    Another interesting development is digital radio. I very much 
support the Commission moving the In Band on Channel (IBOC) proceeding 
as soon as possible. Since 2002, the Commission has selected IBOC as 
the digital technology for terrestrial radio broadcast service and some 
1000 stations are currently using IBOC technology on the air under 
special FCC experimental authorization.
    The IBOC technology allows radio broadcasters to use the first 
adjacent channel of their current spectrum frequency to transmit near-
CD quality audio signals to digital radio receivers along with new 
datacasting services such as station, song and artist identification, 
as well as local traffic and weather bulletins. This will help radio 
compete more effectively with satellite radio.

    Question 2. Consumers in many rural areas currently are not able to 
enjoy the same benefits wireless services offer as their urban 
counterparts enjoy. Due to low user concentration, the cost of 
providing high quality wireless service in rural areas is frequently 
more expensive than is possible in higher-density urban areas. 
Designation of wireless carriers as ETCs, which permits these carriers 
to receive support from the Universal Service Fund (``USF''), can help 
to ensure that all Americans enjoy the benefits of competition and 
high-quality wireless services.
    What steps has the FCC taken to ensure that wireless coverage is 
extended to all Americans, regardless of where they live, and to ensure 
that Americans living in rural areas have the opportunity to subscribe 
to high-quality wireless services?
    Answer. While we have taken some steps to improve wireless coverage 
and opportunity in rural areas, there is always room for improvement. 
For example, I am increasingly concerned with the competitiveness of 
the CMRS wholesale market. Whether in the context of recent mergers or 
other rulemakings, the Commission hears regularly from small and mid-
size carriers who are increasingly frustrated with their inability to 
negotiate automatic roaming agreements with larger regional and 
nationwide carriers for the full range of CMRS services. I was pleased 
that we initiated a proceeding in August 2005 to explore all aspects of 
roaming and more specifically the effects that consolidation has on the 
ability of smaller carriers to negotiate access to larger networks. 
Currently, we are hearing from parties on both sides of the issue. Yet, 
I think we should get access to more information. I have supported an 
FCC review of actual roaming agreements so that the Commission truly is 
informed on the nature of these contracts. I also believe we should 
move forward with this proceeding as quickly as possible.
    I have long advocated that we should continually evaluate our 
spectrum policies to ensure that we are doing what we can to get 
spectrum into the hands of operators who are ready and willing to serve 
consumers at the most local levels. I want auctions to be a real 
opportunity for new and incumbent carriers to expand existing networks 
and develop new and exciting wireless broadband services. I have worked 
hard to put in place policies and rules that would promote 
opportunities for all carriers in auctions, such as a more diverse 
group of license blocks.
    During our review of the bandplan in advance of the auction last 
year of 90 MHz of new spectrum for the Advanced Wireless Service (AWS), 
I pressed for the inclusion of an additional smaller block of licenses. 
I believe that smaller licenses will improve access to spectrum by 
those providers who want to offer service to smaller, more rural, 
areas, while also providing a better opportunity for larger carriers to 
more strategically expand their spectrum footprint. As we prepare for 
the 700 MHz and future auctions, it is critical we build on the success 
of the AWS auction by providing a diverse group of licenses so that all 
bidders have an opportunity to obtain licenses that best match their 
business plan. While I have supported rules to facilitate the secondary 
market for spectrum rights and licenses, I think we are best served by 
providing a wide variety of license sizes at the initial auction when 
appropriate.
    While I supported the bandplan changes made prior to the AWS 
auction, the Commission made a number of decisions in advance of the 
auction that I did not support because of their impact on small and 
rural businesses. For example, I was concerned with the decision to 
impose blind bidding on the AWS auction in the event certain thresholds 
were not met. While blind bidding ultimately was not imposed in that 
auction, I am troubled by the impact of this decision on small 
companies in the event that future auctions are subject to blind 
bidding. I was originally told by our staff that small companies would 
benefit from our blind bidding proposal because it would protect them 
from becoming victims of larger carrier bidding strategies. In an 
interesting twist, it was the smallest carriers who spoke the loudest 
against the proposal. They raised legitimate concerns about access to 
real time auction information that significantly informs their auction 
bidding strategy. So I am worried about the chilling effect of this 
decision on participation by smaller and medium-sized carriers in the 
future.
    As we prepare a schedule for the upcoming 700 MHz auction, we must 
remember that our rules have not yet been finalized. We have rightly 
teed up a number of important discussions to ensure that the 700 MHz 
band is quickly and efficiently put to use and that parts of the 
spectrum do not remain an untapped well for the spectrum-thirsty. I am 
very pleased that our items seek comment, for example, on whether we 
should revise performance requirements for licensees in the 700 MHz 
band and whether we should reconfigure or sub-divide the existing 
spectrum blocks in the 700 MHz band in order to make spectrum in the 
band more easily accessible.
    As these are significant questions, we must be mindful that some 
companies may not currently be in a position to move forward with plans 
to participate in the auction until the Commission makes a final 
decision about the size of auction licenses and the types of 
construction requirements. They need sufficient time to establish 
business plans and line up financing. Consequently, we must make sure 
that our auction schedule allows for sufficient spacing between the 
adoption of final 700 MHz band rules and the filing of auction 
applications. This will ensure that the auction truly is available to a 
diverse group of interested parties, and that full participation will 
lead to a more successful and robust auction. I am confident that we 
can provide the necessary time for preparation and still comply with 
our statutory obligations related to the auction.
    A different proceeding that could substantially help both our 
wireless broadband efforts and the opportunities afforded to smaller 
businesses is our rural wireless proceeding that has languished since 
the summer of 2004. While I was disappointed in several aspects of the 
Report and Order in that proceeding, I pushed strongly for a Further 
Notice that continues to explore possible re-licensing approaches and 
construction obligations for current and future licensees who hold 
licenses beyond their first term. I think this is an important 
dialogue. I continue to believe that we should consider an approach 
that provides for re-licensing in the event that market-based 
mechanisms still result in unused spectrum. We cannot afford to let 
spectrum lay fallow. If, after so many years, licensees do not plan to 
use or lease the spectrum they acquired in rural and other unserved 
areas, they should let someone else have access to it. Often a small 
business is best situated to fill this gap.

    Question 3. Following the natural disasters that recently hit the 
Gulf Coast region wireless services provided emergency personnel, 
utility repairmen and residents with the only immediate means for 
communicating. In light of the experience of the Commission from 
Hurricane Katrina and other disasters, please describe the role 
wireless services fill with respect to emergency response and disaster 
recovery during times of crisis?
    Answer. Wireless services are invaluable during times of crisis to 
enable emergency personnel and first responders to communicate 
effectively. Indeed, most state and local jurisdictions operate their 
own public safety wireless networks, which their first responders rely 
on for their primary source of communications during times of crisis. 
Our nation's commercial mobile service providers often provide the 
primary link for our Nation's citizens during emergencies. As cell 
phones have become a way of life they are an important connection to 
our families, friends, and emergency personnel when natural and man-
made disasters occur. The commercial networks also play an important 
role in providing supporting communications for first responders. 
Finally, we are increasingly seeing the use of satellite and unlicensed 
wireless services in times of emergency. These services have their own 
unique characteristics that can be particularly useful in enabling 
emergency response personnel to communicate and to have access to 
information during difficult times.

    Question 3a. If a petitioner for ETC designation meets the 
statutory criteria and has consistently been the only service provider 
to remain operative in certain areas during natural disasters despite 
the presence of other carriers (including other ETCs) in those areas, 
would you view the designation of the petitioner as an ETC to be in the 
public interest?
    Answer. The Commission has stated that functionality during 
emergency situations is an important consideration in designating 
eligible telecommunications carriers pursuant to Section 214(e)(6). In 
the ETC Designation Order, released March 17, 2005, the Commission 
found, consistent with the recommendation of the Federal-State Joint 
Board on Universal Service, that an ETC applicant must demonstrate: (1) 
a commitment and ability to provide services, including providing 
service to all customers within its proposed service area; (2) how it 
will remain functional in emergency situations; (3) that it will 
satisfy consumer protection and service quality standards; (4) that it 
offers local usage comparable to that offered by the incumbent LEC; and 
(5) an understanding that it may be required to provide equal access if 
all other ETCs in the designated service area relinquish their 
designations pursuant to Section 214(e)(4) of the Act.
    Prior to designating an eligible telecommunications carrier 
pursuant to Section 214(e)(6) of the Act, the Commission determines 
whether such designation is in the public interest. The Commission set 
forth, in the ETC Designation Order, its public interest analysis for 
ETC designations, which includes an examination of (1) the benefits of 
increased consumer choice, (2) the impact of the designation on the 
universal service fund, and (3) the unique advantages and disadvantages 
of the competitor's service offering. Thus, the ability to remain 
operative during natural disasters is one factor that the Commission 
must consider in designating eligible telecommunications carriers.

    Question 3b. Some of the areas hardest hit by recent natural 
disasters were underserved communities. To the extent a petitioner for 
ETC designation that meets the statutory criteria for ETC designation 
has demonstrated a strong commitment to serving rural and underserved 
communities since well before designation as an ETC, would the 
designation of the petitioner as an ETC be in the public interest? If 
not, please explain why.
    Answer. The Commission has stated that commitment to serve rural 
areas is an important consideration in designating eligible 
telecommunications carriers pursuant to Section 214(e)(6). As described 
above, the Commission found in the ETC Designation Order that an 
applicant seeking to be designated as an eligible telecommunications 
carrier must demonstrate, among other things, a commitment and ability 
to provide services, including providing service to all customers 
within its proposed service area.
    The Commission also found that, prior to designating an eligible 
telecommunications carrier, it must determine whether such designation 
is in the public interest. The Commission set forth, in the ETC 
Designation Order, its public interest analysis for ETC designations, 
which includes an examination of (1) the benefits of increased consumer 
choice, (2) the impact of the designation on the universal service 
fund, and (3) the unique advantages and disadvantages of the 
competitor's service offering. As part of the Order the Commission 
stated that it would also examine the potential for cream-skimming in 
instances where an ETC applicant seeks designation below the study area 
level of a rural incumbent LEC. Thus, commitment to serve rural areas 
is one factor that the Commission must consider.

    Question 4. The FCC has committed to resolve, within 6 months of 
the date filed, all ETC designation requests for non-tribal lands that 
are properly before the FCC.
    How many petitions for ETC designation are currently pending at the 
FCC?
    What is the average length of time that the ETC Petitions currently 
before the FCC have been pending? Of these petitions, what is the 
earliest filing date? How many of these petitions were filed in 2004 or 
earlier?
    How many petitions for ETC designation did the FCC act on in 2006?
    How many petitions for ETC designation did the FCC act on in 2005?
    How many petitions for ETC designation did the FCC act on in 2004?
    Answer. In response to the above questions, please see the response 
of Chairman Martin.

    Question 4a. What does the FCC intend to do about the backlog of 
pending ETC petitions? How soon does the FCC intend to act upon ETC 
petitions that have been pending for more than 6 months?
    Answer. Subsequent to the Commission's adoption of the ETC 
Designation Order, the Wireline Competition Bureau has reviewed 
petitions for designation of eligible telecommunications carriers. 
Please see the response of Chairman Martin.

    Question 4b. Do you believe that Americans living in rural areas 
and the carriers who have filed ETC Petitions deserve to have those 
petitions acted upon promptly rather than simply kept pending without a 
yes or no answer? If you do not, please explain why.
    Answer. Section 214(e) of the Act sets out the Congressional 
framework for designating eligible telecommunications carriers. Section 
214(e)(2) provides state commissions with the primary responsibility 
for performing ETC designations.\16\ Section 214(e)(6) provides that, 
``[i]n the case of a common carrier providing telephone exchange 
service and exchange access that is not subject to the jurisdiction of 
a State commission, the Commission shall upon request'' perform the 
relevant ETC designation. The Commission must strive for timely on 
action on industry petitions, in order to provide certainty for both 
carriers and consumers.
---------------------------------------------------------------------------
    \16\ Under Section 214(e)(2), ``[u]pon request and consistent with 
the public interest, convenience, and necessity, the State commission 
may, in the case of an area served by a rural telephone company, and 
shall, in the case of all other areas, designate more than one common 
carrier as an eligible telecommunications carrier'' for a designated 
service area, so long as the requesting carrier meets the requirements 
of Section 214(e)(1). Section 214(e)(2) further states: ``[b]efore 
designating an additional eligible telecommunications carrier for an 
area served by a rural telephone company, the State commission shall 
find that the designation is in the public interest.''
---------------------------------------------------------------------------
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Amy Klobuchar to 
                       Hon. Jonathan S. Adelstein

    Question 1. In a September 8, 2005 report, the FCC stated, ``Our 
review of the record does not lead us to recommend any changes to the 
retransmission consent regime at this time.'' What if any steps have 
you taken since that time to review and assess the retransmission 
consent regime; what if any additional conclusions have you reached; 
what if any plans do you have for additional formal or informal review; 
and what do you perceive to be the strengths and weaknesses of the 
retransmission consent process?
    Answer. The Report to Congress Pursuant to the Section 208 of the 
Satellite Home Viewer Extension and Reauthorization Act of 2004 was 
prepared and submitted to Congress without my participation or vote. I 
am not aware of any steps the Commission has taken since September 2005 
to review and assess the retransmission regime, in addition to dealing 
with specific complaints. Thus far, all complaints have been managed at 
the Bureau level with no input from the full Commission.
    Based on recent experience, the Commission can improve its handling 
of disputes to provide clarity and prompt resolution, and to protect 
viewers. One of the strengths of the retransmission consent process is 
to provide broadcasters with the opportunity to negotiate just 
compensation for their quality programming. It is not clear, however, 
whether Congress achieved its intent to prioritize the interests of 
viewers ahead of the commercial interests of cable operators and 
broadcasters.

    Question 2. Section 10(a) of the Communications Act allows the 
Commission to forbear from applying any regulation or any statutory 
provision to a particular or multiple telecommunications carriers or 
services, in any or some geographic markets, if certain criteria are 
met--most notably that competition exists in the market and that such 
relief is in the public interest. The FCC recently has been granting 
incumbent providers (ILECs) forbearance from regulations on the premise 
that sufficient competition exists in a specific market to make 
enforcement of the regulations unnecessary. What are each of your 
respective positions on the conditions and circumstances under which 
forbearance for ILECs is appropriate?
    Answer. Section 10 of the Act sets out the standards for 
forbearance. Under Section 10, the Commission is required to forbear 
from any statutory provision or regulation if it determines that: (1) 
enforcement of the regulation is not necessary to ensure that charges, 
practices, classifications, or regulations are just and reasonable, and 
are not unjustly or unreasonably discriminatory; (2) enforcement is not 
necessary to protect consumers; and (3) forbearance is consistent with 
the public interest. In making this determination, the Commission must 
also consider pursuant to Section 10(b) ``whether forbearance from 
enforcing the provision or regulation will promote competitive market 
conditions.''
    I have supported a number of forbearance petitions where the 
statutory criteria where met. In two recent proceedings, I have 
supported Orders granting unbundling relief to incumbent LECs where 
there is especially strong evidence of competition between the 
incumbent cable and wireline provider. While I have been concerned with 
the analysis in these decisions and I believe that Act contemplates 
more than just competition between a wireline and cable provider, I 
believe that these Orders were clearly superior to an automatic grant 
of the underlying petitions.
    I am concerned, however, about the Commission's recent willingness 
to allow complex and controversial forbearance petitions to grant 
without issuing an order. Congress has given the Commission a powerful 
tool in our Section 10 forbearance authority, but the Commission must 
wield this tool responsibly. Allowing petitions to grant by operation 
of law, and without disclosing a shred of analysis, does not best serve 
the public interest. Moreover, this approach inappropriately ignores 
Congress's directive to consider the specific substantive standards set 
out in Section 10 and raises serious legal questions about the scope, 
effect, and validity of its actions.

    Question 3. From the City of Saint Paul (similar questions were 
raised by Burnsville/Eagan Community Television and the Northern 
Suburban Communications Commission):

    The Order issued by the FCC on December 20, 2006 allows new 
franchise entrants to ``cherry pick'' the neighborhoods in our 
communities, rather than bring true competition to all of our 
businesses and residents. This would allow new entrants to serve or 
upgrade only the profitable areas of Saint Paul [and other cities and 
towns], leaving many of our residents on the wrong side of the 
``digital divide.''

        The Order authorizes a new entrant to withhold payment of fees 
        that it deems to be in excess of a 5 percent franchise fee cap. 
        This could completely undermine support for both Saint Paul's 
        [and other cities' and towns'] very successful public, 
        educational and government (PEG) operations.

        The Order imposes a 90-day shot clock for new entrants with 
        existing rights of way, opening the potential to reduce Saint 
        Paul's [and other cities' and towns'] ability to manage its 
        rights-of-way.

        The Order authorizes a new entrant to refrain from obtaining a 
        franchise when it is upgrading mixed use facilities that will 
        be used in the delivery of video content.

    Saint Paul believes that the policy goals of the Order are laudable 
but strongly disagrees with the method and substance of the decision 
taken by the FCC. How do you respond to each of these concerns, and how 
do you respond to the claim that the FCC exceeded its authority in 
adopting this order?
    Answer. The policy goals of the Commission's decision, to promote 
competitive video offerings and broadband deployment, are laudable. But 
while I support these goals, the decision goes out on a limb in 
asserting Federal authority to preempt local governments, and then saws 
off the limb with a highly dubious legal scheme. It substitutes the 
Commission's judgment as to what is reasonable--or unreasonable--for 
that of local officials--all in violation of the franchising framework 
established in the Communications Act.
    I could not support the video franchise decision because the FCC is 
a regulatory agency, not a legislative body. In my years working on 
Capitol Hill, I learned enough to know that Commission's decision is 
legislation disguised as regulation. The courts will likely reverse 
such action because the Commission cannot act when it ``does not really 
define specific statutory terms, but rather takes off from those terms 
and devises a comprehensive regulatory regimen. . . . This extensive 
quasi-legislative effort to implement the statute does not strike [me] 
as merely a construction of statutory phrases.'' Kelley v. E.P.A., 15 
F.3d 1100, 1108 (D.C. Cir. 1994)
    The decision also displays a fundamental misunderstanding about the 
commitment of franchising authorities to bring competition to their 
citizens. By law, a franchise under Title VI confers a right of access 
to people's property. Unlike members of the Commission, many state and 
local officials are elected and directly accountable to their citizens. 
Instead of acknowledging the vast dispute in the record as to whether 
there are actually any unreasonable refusals being made today, the 
majority simply accepted in every case that the phone companies are 
right and the local governments are wrong, all without bothering to 
examine the facts behind these competing claims, or conduct any 
independent fact-finding. Our embrace of everything interested 
companies say while discounting local elected officials on a matter 
grounded in local property rights certainly does not inspire a great 
deal of confidence in the Commission's ability on the Federal level to 
arbitrate every local dispute in the country and fairly decide who is 
unreasonable and who is not.
    Even if the Commission had such power, there is no mechanism 
outlined in the decision to establish how that process would work. 
Consequently, the end result will likely be litigation, confusion, 
abuse of the process, and a certain amount of chaos.
    The Order finds that franchising negotiations that extend beyond 
the time frames created by the Commission amount to an unreasonable 
refusal to award a competitive franchise within the meaning of 
621(a)(1). This finding ignores the plain reading of the first sentence 
of Section 621(a)(1), which provides that a franchising authority ``may 
not unreasonably refuse to award an additional competitive franchise.'' 
On its face, Section 621(a)(1) does not impose a time limitation on an 
LFA's authority to consider, award, or deny a competitive franchise. 
The second and final sentence of Section 621(a)(1) provides judicial 
relief, with no Commission involvement contemplated, when the 
competitive franchise has been ``denied by a final decision of the 
franchising authority.'' There is no ambiguity here: Congress simply 
did not impose a time limit on franchise negotiations, as it did on 
other parts of Title VI. Hence, whether you read the first sentence 
alone or in context of the entire statutory provision or title, its 
plain and unambiguous meaning is contrary to the Commission's 
interpretation. Section 621(a)(1) provides an expressed limitation on 
the nature, not the timing, of the refusal to award a competitive 
franchise.
    To make matters worse, the Commission-created 90-day shot clock 
seems to function more like a waiting period, during which time the new 
entrant has little incentive to engage in meaningful negotiations. An 
objective review of the evidence shows that there is sufficient blame 
on both sides of the negotiation table. Sometimes, there are good 
reasons for delay; and at other times, one side might stall to gain 
leverage. While the majority is certainly aware of these tactics, they 
fail to even mention the need for LFAs and new entrants to abide by, or 
so much as to have, reciprocal good faith negotiation obligations. The 
majority also has ignored the apparent need to develop a complaint or 
grievance mechanism for the parties to ensure compliance. Perhaps 
Congress might consider imposing on the Commission a binding deadline 
to resolve complaints, which would inject an incentive for both sides 
to negotiate, meaningfully and in good faith.
    In terms of build-out, the Commission seems to make a deliberate 
effort to overlook the plain meaning of the statute and to substitute 
its policy judgment for that of Congress. The Commission concludes that 
it is unlawful for LFAs to refuse to grant a competitive franchise on 
the basis of an applicants' refusal to agree to any build-out 
obligations. The Commission's analysis in this regard is anemic and 
facially inadequate.
    Section 621(a)(4)(A) provides that ``[i]n awarding a franchise the 
franchising authority shall allow the applicant's cable system a 
reasonable period of time to become capable of providing cable service 
to all households in the franchise area.'' Absent express statutory 
authority, the Commission cannot declare it unreasonable for LFAs to 
require build-out to all households in the franchise area over a 
reasonable period of time. The Commission's argument in this regard is 
particularly spurious in light of the stated objective of the Order to 
promote broadband deployment and our common goal of promoting 
affordable broadband to all Americans. In the end, this is less about 
fiber to the home and more about fiber to the McMansion.
    The Commission's decision should have made it clear that, while any 
requests made by an LFA unrelated to the provision of cable service and 
unrelated to PEG or I-NET are subject to the statutory 5 percent 
franchise fee cap, these are not the type of costs excluded from the 
term ``franchise fee'' by Section 622(g)(2)(C). That provision excludes 
from the term ``franchise fee'' any ``capital costs that are required 
by the franchise to be incurred by the cable operator for public, 
educational, or governmental access facilities.'' The legislative 
history of the 1984 Cable Act clearly indicates that ``any franchise 
requirement for the provision of services, facilities or equipment is 
not included as a `fee.' ''
    PEG facilities and access provide an important resource to 
thousands of communities across this country. Equally important, 
redundancy or even duplicative I-Net provides invaluable homeland 
security and public health, safety and welfare functions in towns, 
cities, and municipalities across America. It is my hope that the 
Commission's decision does not undermine these and other important 
community media resource needs.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Ted Stevens to 
                       Hon. Jonathan S. Adelstein

    Question 1. What is the current status of any proposals to use 
auctions to determine universal service support?
    Answer. On August 11, 2006, the Federal-State Joint Board on 
Universal Service sought comment on the use of reverse auctions to 
determine high cost universal service funding to eligible 
telecommunications carriers pursuant to Section 254 of the Act. 
Comments and reply comments have been filed in this proceeding. While I 
do not currently serve on the Joint Board, my understanding is that the 
Joint Board is continuing to consider reverse auction proposals, among 
others, in the context of that proceeding.

    Question 2. Do you believe any of the proposals submitted to the 
Joint Board are viable alternative approaches to universal service 
support and can adequately support rural carriers like those in Alaska?
    Answer. While I do not currently serve on the Joint Board, this is 
an important proceeding for consumers in Rural America and I will 
consider the Joint Board's recommendations very carefully. Congress 
recognized the importance of universal service in its passage of the 
Telecommunications Act of 1996 (1996 Act), and the outcome of Joint 
Board's current proceeding will be important for the ability of 
communities and consumers in rural America to thrive and grow with the 
rest of the country.

    Question 3. When Chairman Powell visited a remote Eskimo village in 
Alaska, his plane got stuck in the mud on the unpaved runway during 
take-off. He and his staff whipped out their cell phones to try to call 
for help, but they didn't work. No roaming agreements. The villages 
call came and pulled his plane out of the mud, but he was not able to 
call his wife to tell her he was running late. I am pleased to report 
that the runway is now being paved, but the roaming problem has yet to 
be resolved. Many small cell phone companies in Alaska have been 
unsuccessful in getting the large national carriers to respond to their 
desires to arrange roaming agreements. As data, video, and other 
services are transmitted to mobile devices this problem will only grow 
more acute. What can you do to address this problem, and what is the 
timeframe for moving forward?
    Answer. I am increasingly concerned with the competitiveness of the 
CMRS wholesale market. Whether in the context of recent mergers or 
other rulemakings, the Commission hears regularly from small and mid-
size carriers who are increasingly frustrated with their inability to 
negotiate automatic roaming agreements with larger regional and 
nationwide carriers for the full range of CMRS services. I was pleased 
that we initiated a proceeding in August 2005 to explore all aspects of 
roaming and more specifically the effects that consolidation has on the 
ability of smaller carriers to negotiate access to larger networks. 
Currently, we are hearing from parties on both sides of the issue. Yet, 
I think we should get access to more information. I have supported an 
FCC review of actual roaming agreements so that the Commission truly is 
informed on the nature of these contracts. I also believe we should 
move forward with this proceeding as quickly as possible.

    Question 4. I continue to have concerns that too often domestic 
satellite services do not offer service to Alaska and Hawaii. In last 
year's Senate Communications Bill, a measure was included to require 
satellite operators to make good faith efforts in their satellite 
planning and development to ensure service to the entire United States. 
Are there measures that the FCC could take independent of Congressional 
legislation to ensure better service to Alaska and Hawaii?
    Answer. The Commission could better monitor the efforts of domestic 
satellite services to serve Alaska and Hawaii. For instance, without 
the need for legislation, the Commission could develop a report on the 
services satellite operators provide and are planning to provide 
Alaska, Hawaii, and other parts of the United States. Satellite 
operators should remember that residents of all 50 states deserve a 
full suite of services.

    Question 5. The FCC frequently faces the problem of making tough 
policy decisions that are wrapped in technological debates. There are 
several waivers pending at the FCC that deal with CableCARDs. What is 
the impact on the consumer and the impact on the development and 
deployment of downloadable security? How will these petitions be 
considered and will the full Commission address these issues?
    Answer. While the Media Bureau has acted on several requests for 
waiver of the Commission's integration ban, I welcome the opportunity 
to resolve all waiver requests as soon as practicable. Section 629 of 
the Act requires the Commission to consider such waiver requests within 
90 days of filing. Excessive delay could adversely impact the ability 
of operators to migrate to an all-digital network and offer enhanced 
programming choices to consumers. Cable operators have asserted that 
the Commission's failure to grant waivers to the set top integration 
ban could cost consumers nearly $600 million per year. Cable operators 
have also asserted that the grant of these waivers will enable more 
consumers to receive digital picture quality and to access newly 
developed family tiers, parental controls, digital broadcast 
programming, and VOD programming by expanding the number of Comcast 
households that will have access to digital set-top boxes. The cable 
industry has committed to fully deploy downloadable security by 2009. 
The consumer electronics community, however, has argued that the 
competitive availability of devices that are used to view cable 
programming is an important pro-consumer objective in the digital age. 
A separate security device or CableCARD is the key to ensuring that 
consumers can use devices of their choice. The Consumer Electronics 
Association has estimated that the initial manufacturing costs required 
to add CableCARD functionality to be in the range of $10-$15, which 
translates into an initial price of $40 or less at retail (or a monthly 
cost of less than $1.25), not $72 or $93 as the cable industry has 
estimated.

    Question 6. Obviously we are all concerned about the new frontiers 
that can be created on the Internet for pedophiles and child 
pornographers. To advance the safety of our children, everyone must do 
their part. Is there more that the Internet service providers can be 
doing to help law enforcement and does the FCC need any additional 
authority from Congress to ensure that entities under the Commission's 
authority are doing their part?
    Answer. As a parent and a Commissioner, I am deeply concerned about 
the safety of our children on the Internet. Everyone must do their 
part: Internet service providers should better monitor illegal content 
on their servers, and parents must monitor their children. Law 
enforcement agencies have a particular role to play in enforcing 
current laws against offenders, and encouraging ISPs and others in 
private industry to develop better ISP-level and PC-based filters and 
enhance their data retention policies. I would expect that, should any 
Commission regulatee or licensee become aware of such illegal 
activities being conducted over its network, the company would work 
quickly with law enforcement to shut down the illegal service. The 
Commission could also assist in educating parents about predatory 
online threats and available tools that help protect unsuspecting 
children. Given the nature of these offenses, we must always be 
vigilant in ensuring that we are doing what we can to improve 
enforcement and compliance, and I welcome the further direction of 
Congress in dealing with this issue.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                       Hon. Jonathan S. Adelstein

    Question 1. Is it true that eleven years ago Congress required the 
FCC to adopt a new universal service mechanism that ensures that local 
telephone rates in rural areas are reasonably comparable to rates in 
urban areas?
    Answer. Yes. In the Telecommunications Act of 1996, Congress passed 
Section 254(b)(3) which states that consumers in all regions of the 
Nation should have access to telecommunications and information 
services at rates that are reasonably comparable to rates charged for 
similar services in urban areas. Furthermore, in Section 254(a)(2) 
Congress mandated that the Commission initiate a proceeding on the 
Joint Boards' recommendation on universal service.

    Question 2. Is it true that the 10th Circuit Court of Appeals has 
twice remanded the FCC's method of providing universal service support 
for rural customers served by larger carriers?
    Answer. Yes. On July 31, 2001, in Qwest Corp. v. Federal 
Communications Commission (258 F.3d 1191) (Qwest I), the 10th Circuit 
remanded the Commission's Ninth Report and Order (14 F.C.C.R. 20432), 
which established a Federal high-cost universal service support 
mechanism for larger carriers. Subsequently, on February 23, 2005 the 
10th Circuit in Qwest II (398 F.3d 1222) remanded a portion of the 
Commission's Order on Remand (18 F.C.C.R. 22559). In Qwest II, the 
Court directed the Commission to ``utilize its unique expertise to 
craft a support mechanism taking into account all the factors that 
Congress identified in drafting the Act and its statutory obligation to 
preserve and advance universal service.'' The court affirmed the 
portion of the Order on Remand that created a mechanism to induce state 
action to assist in implementing the goals of universal service.

    Question 3. Is it true that the second decision was issued in 
February of 2005 with the court expressing an expectation that the FCC 
would respond expeditiously?
    Answer. Yes. In Qwest II, the 10th Circuit expressed their 
expectation that the Commission comply with its decision ``in an 
expeditious manner, bearing in mind the consequences inherent in 
further delay.'' The court stated that the task before the Commission 
on remand will require ``the full development of an administrative 
record, empirical findings, and careful analysis'' and that ``[u]nder 
these circumstances, [the court would] not constrain the Commission's 
consideration of the issues before it.''

    Question 4. What steps will the FCC take now to ensure that it 
meets its obligations to the rural residents of large incumbent 
carriers? Will you commit that the FCC will take action on this remand 
during the next 6 months?
    Answer. On December 9, 2005, the Commission responded to the 10th 
Circuit's remand by issuing a Notice of Proposed Rulemaking (FCC 05-
205). The NPRM sought public comment on how to reasonably define the 
statutory terms ``sufficient'' and ``reasonably comparable,'' in light 
of the court's holding in Qwest II, and on the support mechanisms for 
non-rural carriers. While Orders are typically drafted at the direction 
of the Chairman rather than individual Commissioners, I will 
expeditiously review any Bureau recommendations that I receive 
regarding these rules.

    Question 5. Now that the Antideficiency Act (ADA) exemption has 
expired, what kind of guarantees can you give that there will be no 
further E-Rate program shut downs or delays?
    Answer. I note that, on February 15, 2007, Congress passed a 
continuing resolution that extends the exemption of the Universal 
Service Fund from the Anti-Deficiency Act (ADA) until December 31, 
2007. I do not believe the E-Rate program actually constitutes an 
appropriation by Congress and therefore did not believe that the ADA 
should have been applied in the first place. As a supporter of the E-
Rate program, I believe it is essential that we take steps to maintain 
the program's vitality on a more permanent basis, whether that requires 
further Congressional or administrative action.

    Question 6. Can you tell us how much USAC has in its E-Rate 
accounts currently and whether those reserves will be sufficient to 
cover funding?
    Answer. Please see the response of Chairman Martin.

    Question 7. Are you still working with the Office of Management and 
Budget (OMB) on a reinterpretation of the ADA that would exempt 
Universal Service?
    Answer. My office has had no contact with the OMB regarding the 
applicability of the ADA to Federal universal service programs. I 
would, however, encourage and support such a reinterpretation.

    Question 8. Given that AT&T and BellSouth agreed to abide by a 
definition of ``network neutrality'' as part of there merger 
conditions, do you believe that the argument that it is impossible to 
craft such a definition is false?
    Answer. Yes. I believe that it is possible and necessary to craft a 
balanced policy that protects the openness of the Internet. The precise 
contours, scope, and exclusions of AT&T's commitment reflect compromise 
and a predictive judgment about how to preserve the most attractive 
features of the Internet. The AT&T commitment strikes a reasonable 
balance by preserving the openness of Internet access while also 
allowing AT&T flexibility in certain areas that it deemed critical. It 
is important that we continue to explore comprehensive approaches to 
this issue, and any such provisions may need revision over time. 
Nonetheless, I hope that the AT&T commitment will inform the debate in 
the coming months and years.

    Question 9. Will you enforce the ``network neutrality'' provision 
agreed to as part of AT&T's and BellSouth's gaining approval for the 
merger?
    Answer. Yes. This provision is enforceable by the FCC and was 
critical for my support of this merger. The condition states that the 
combined company will not privilege, degrade, or prioritize the traffic 
of Internet content, applications or service providers, including their 
own affiliates. Given the increase in concentration presented by that 
transaction--particularly set against the backdrop of a market in which 
telephone and cable operators control nearly 98 percent of the market, 
with many consumers lacking any meaningful choice of providers--it was 
critical that the Commission add an enforceable condition to address 
incentives for anti-competitive discrimination.

    Question 10. Do you consider the U.S. broadband marketplace to be 
competitive?
    Answer. It is difficult to assess the relative competitiveness of 
the current broadband services market because of the lack of sufficient 
data collected at the FCC and because the industry is changing so 
dramatically.
    Even though we have made strides with broadband deployment, we must 
work to promote meaningful competition, as competition is the most 
effective driver of lower prices and innovation. Given that cable and 
DSL providers control 98 percent of the broadband market, we must be 
vigilant to ensure that the U.S. broadband market does not stagnate 
into a comfortable duopoly.
    Unfortunately, the Commission's current efforts to gauge broadband 
deployment, competition, and affordability fall short. In a May 2006 
report, the Government Accountability Office (GAO) took the FCC to task 
for the quality of its broadband data. GAO criticized the Commission's 
ability to analyze who is getting broadband and where it is deployed, 
observing that the FCC's data ``may not provide a highly accurate 
depiction of deployment of broadband infrastructures for residential 
service, especially in rural areas.'' Similarly, GAO observed that the 
number of providers reported in a Zip Code overstates the level of 
competition to individual households. One clear conclusion from the 
GAO's report is that the Commission must explore ways to develop 
greater granularity in its assessment and analysis of broadband 
availability, whether through statistical sampling, Census Bureau 
surveys, or other means.

    Question 11. Do you believe a wireless connection, which is two to 
four times more expensive and two to four times slower than DSL or 
cable, can be a substitute for a wireline connection to the Internet?
    Answer. It is difficult to answer your question because the FCC has 
not collected the type of data in its broadband collection report that 
would allow us to assess the substitutability of wireline broadband 
services with wireless ones--such as data speed, and cost of service. 
Based on anecdotal evidence, however, it does appear that current 
mobile broadband services are typically offered at a higher price, and 
for a lower speed, than those available to DSL or cable customers. I do 
believe, though, that one of the best options for promoting broadband, 
particularly in rural reas, and providing new competition all across 
the country, is maximizing the potential of spectrum-based services, 
particularly those that are comparable to cable and DSL broadband 
services.

    Question 12. How can we ensure that a variety of news and 
entertainment outlets will be there if the telephone and cable 
companies are allowed to limit what people can see and do online?
    Answer. The hallmark of the Internet has been its open and neutral 
character, which has given it such great potential as a tool for 
economic opportunity, innovation, and so many forms of civic, 
democratic, and social participation. Access to the wide range of news 
and entertainment outlets available through the Internet is one of its 
great strengths.
    Preserving the vibrant and open quality of the Internet is 
critical. Historically, there have not been gatekeepers on the 
Internet. It has enabled those with unique interests and needs, or with 
a unique cultural heritage, to meet and form virtual communities the 
likes of which have never been seen before. It also means that 
consumers are being empowered--as citizens and as entrepreneurs--and 
they are increasingly developing creative ways to use these new 
technologies. While the Commission has taken important steps by 
adopting an Internet Policy Statement and making enforceable 
commitments to maintain a neutral network in the context of license 
transfer proceedings, it is critical that we remain vigilant and 
continue to explore comprehensive approaches to maintaining freedom on 
the Internet.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Gordon H. Smith to 
                       Hon. Jonathan S. Adelstein

    Question 1. Under a couple of the conditions, AT&T and BellSouth 
committed that for 42 months, they would continue to offer, and would 
not increase the price of, unbundled network elements. They also 
committed not to seek forbearance with respect to unbundled loops and 
transport. Will these conditions preserve the option for consumers to 
purchase high-speed broadband service from companies that combine an 
AT&T/BellSouth UNE loop with their own electronics and other network 
facilities to offer their own high-speed Internet broadband services?
    Answer. Competitive providers use unbundled network elements to 
offer a suite of telecommunications and information services, including 
broadband services. AT&T committed, in response to concerns about the 
loss of competitive alternatives, to continue to offer these wholesale 
inputs and to freeze rates for these inputs. These commitments should 
result in more choice, lower prices, and increased innovation for 
consumers.

    Question 2. Has the Commission concluded that it is in the public 
interest to preserve additional broadband options for consumers through 
these UNE as part of the AT&T/BellSouth merger conditions?
    Answer. To address concerns about loss of competitive alternatives 
and concentration in the broadband market, AT&T made a number of 
commitments related to broadband services. As a result of these 
commitments, consumers will have access to more affordable broadband 
services, whether purchased as a bundled package or as a stand-alone 
offering that can be paired with wireless or Internet phone service. 
For example, AT&T's commitment to offer basic broadband service for 10 
per month should help lower the cost for many consumers who are just 
starting to take advantage of the broadband experience. In addition, 
the commitments will promote and preserve competition by requiring that 
the applicants divest wireless broadband spectrum critical to the 
development of an independent broadband option; by ensuring that 
competitive carriers continue to have access to critical wholesale 
inputs; and by providing that these conditions last for a meaningful 
period of time. I believe that these conditions will preserve 
additional broadband options for consumers in the AT&T and BellSouth 
regions and they were critical for my support of the transaction.

    Question 3. This Committee has operated under Republican and 
Democratic chairmen on largely a bipartisan, consensus basis on the 
vast majority of communications issues. In the last several years, 
however, a larger number of these issues, particularly media ownership, 
have become extremely divisive, largely upon political lines. I think 
Americans have sent us a signal that they don't want this kind of 
divisiveness and partisanship. They want us to work together to find 
reasonable, workable solutions. Does media ownership really have to be 
such a partisan issue? Aren't there areas of consensus where common 
sense reforms can be made?
    Answer. Media ownership is not a partisan issue even though it 
broke down on partisan lines in the Commission in 2003. We now have a 
different Chairman and two new Commissioners. I am hopeful we can avoid 
in the next decision the division that plagued the last and reach 
consensus on this issue, as we have on most other issues before us.
    In 2003, over three million Americans from different states and 
party affiliations--from the National Rifle Association, Parents 
Television Council to the NAACP--contacted the FCC to register their 
opposition to the FCC revised ownership rules which would have 
increased media consolidation. Additionally, in a bipartisan vote, the 
Senate voted to disapprove the new FCC rules.
    As I've traveled throughout the country and studied the historical 
development of media in the United States and Europe, I've seen first-
hand that Americans on a bipartisan and nonpartisan basis really want 
to preserve and promote competition, localism and diversity in their 
media.
    I believe that improving female and minority ownership of broadcast 
assets is an area where common sense reform can be made and is very 
much needed. Women make up over half of the U.S. population; they own 
less than 5 percent of all television stations. Racial and ethnic 
minorities make up over 30 percent of the population, yet they own less 
than 3.3 percent of all television stations. African Americans own 1.3 
percent; Latino Americans own 1.1 percent, and Asians and American 
Indians only own 0.44 and 0.37 percent, respectively, of all television 
stations.

    Question 4. As Congress contemplates whether to enact legislation 
addressing net neutrality, it would be helpful to understand whether 
there is some particular behavior in the U.S. broadband marketplace 
related to net neutrality that is harming consumers today. Aside from 
the one reported incident involving Madison River Communications 
blocking Voice over Internet Protocol (VoIP) calls, which the FCC 
rectified in March 2005, can you identify any specific, concrete 
examples of actual conduct by a broadband provider that runs afoul of 
net neutrality?
    Answer. In February-March 2005, the FCC's Enforcement Bureau 
conducted an investigation into Madison River Communications after that 
company blocked its DSL customers from using rival Web-based phone 
service, which it resolved through a consent decree.\1\
---------------------------------------------------------------------------
    \1\ I note also for Congress's consideration that, in 2005, 
Canada's telephone company Telus blocked customers from visiting a 
website sympathetic to the Telecommunications Workers Union during a 
contentious labor dispute. See Telus Cuts Subscriber Access To Pro-
Union Website, CBC News, http://www.cbc.ca/canada/story/2005/07/24/
telussites050724.html (2005).
---------------------------------------------------------------------------
    Although the Madison River case is the only such enforcement action 
by the FCC to date, many commenters have suggested that this is because 
the FCC applied the traditional nondiscrimination obligations of Act to 
the provision of wireline broadband services until the fall of last 
year.\2\ With the Commission's decision to eliminate the safeguards now 
in effect, there is increasing attention to the plans of U.S. broadband 
providers. In this regard, senior management of the largest U.S. 
broadband providers have expressed an explicit interest in changing 
their business models in ways that might impose new fees on 
applications providers or discriminate against online content and 
services. In its 2006 Report to Congress on Access to Broadband 
Networks, the Congressional Research Service found that broadband 
network providers will have the ability and incentive to build, 
operate, and manage their broadband networks in a fashion that favors 
their own applications over competitors' applications.
---------------------------------------------------------------------------
    \2\ See Appropriate Framework for Broadband Access to the Internet 
over Wireline Facilities, CC Docket No.02-33, FCC 05-150, Report and 
Order (Aug. 5, 2005) (adopting ``a one-year transition period, which 
begins on the effective date of this Order, in order to give both ISPs 
and facilities-based wireline broadband Internet access transmission 
providers sufficient time to adjust to our new framework'').
---------------------------------------------------------------------------
    Given the importance of the Internet as a tool for economic 
opportunity, innovation, and so many forms of civic, democratic, and 
social participation, I believe we must take these proposals seriously 
and consider policy changes to preserve the open character of the 
Internet.

    Question 5. I understand that AT&T agreed to lower the rates it 
charges big business customers for special access services, as a 
condition to the FCC's approval of the merger with BellSouth, but that 
these rate reductions would not apply to a subset of companies, 
including Qwest, Verizon and others, unless those companies lower their 
special access rates as well. This effectively placed burdens on 
companies who weren't parties to the merger. As Chairman Martin and 
Commissioner Tate stated in their Joint Statement ``the Democratic 
Commissioners want to price regulate not only AT&T but also Verizon and 
Qwest.'' ``. . . [N]ot only are the conditions unnecessary as there is 
no finding of a public harm, but the conditions attempt to impose 
requirements on companies that are not even parties to the merger.'' 
How can you explain using the merger process to impose burdens on other 
parties, and isn't this just a way to circumvent the rulemaking 
process?
    Answer. The special access conditions agreed to by AT&T address 
merger-specific concerns about the formation of the country's largest 
wireline, wireless, and broadband company and the resulting loss of 
competition. As GAO recognized in its November 2006 report on these 
services, the combined company will be the only source of dedicated 
access services for retail enterprise customers, long distance 
competitors, and local service competitors at the vast majority of 
locations in the post-merger territory. The special access conditions 
address these concerns in a reasonable manner that takes into account 
regulatory and marketplace differences between price cap ILECs and 
other competitors. The condition places no burdens and compels no 
actions by any party other than the combined company. While certain 
actions are necessary to avail themselves of the discounts, no party is 
required to take advantage of these discounts. Thus, the adoption of 
these conditions does not circumvent the Commission's consideration of 
the long-pending special access proceeding, but it does represent a 
modest benefit for consumers, including large and small businesses, 
schools, hospitals, government offices, and independent wireless 
providers.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                       Hon. Jonathan S. Adelstein

    Question 1. Even as we are strategizing on how to complete the 
deployment of DSL and cable modem broadband networks to the hard to 
reach places of our country, other countries are well on their way to 
deploying next-generation fiber networks. High-speed fiber will change 
how we use the Internet similar to the change we saw between dial-up 
and broadband. Is there anything Congress can be doing to help speed 
the deployment of our high-speed fiber network here at home, and in 
rural areas particularly?
    Answer. One of our central national priorities is promoting 
widespread broadband deployment, and deployment of high-speed fiber is 
an important part of that effort. Even though we have made strides, I 
am concerned we are not keeping pace with our global competitors. 
According to the ITU, the digital opportunity afforded to U.S. citizens 
is 21st in the world. Citizens of other countries are simply getting 
more megabits for less money. This is more than a public relations 
problem. It's a productivity problem, and our citizens deserve better. 
This effort warrants a comprehensive national strategy.
    We must encourage broadband development and the deployment of high-
speed fiber by increasing incentives for investment because we will 
rely on the private sector as the primary driver of growth. To this 
end, Congress may also wish to consider alternatives outside of the 
purview of the FCC, such as tax incentives for companies that invest in 
broadband to underserved areas; better depreciation rules for capital 
investments in targeted telecommunications services; providing adequate 
funding for Rural Utilities Service broadband loans and grants; 
investing in basic science research and development to spur further 
innovation in telecommunications technology; and improving math and 
science education to ensure that we have the human resources to fuel 
continued growth, innovation and usage of advanced telecommunications 
services.
    Another way to promote the deployment of high-speed fiber in rural 
areas is through universal service. As voice becomes just one 
application over broadband networks, we must ensure that universal 
service evolves to promote advanced services. Some have argued that our 
low broadband ranking is due to our dispersed population. If that is 
the reason, we need to re-double our efforts to promote rural 
broadband. Congress could help by authorizing the FCC to tap a stable 
and comprehensive base of support for universal service.

    Question 2. When I speak with some of South Dakota's rural 
telephone cooperatives and other telecommunications providers, I hear 
about the large amount of resources they must put toward legal fees to 
keep pace with the legal and regulatory maneuvers being made by some of 
the larger telecommunications providers with seemingly bottomless 
pockets for such actions. Some of these small providers honestly think 
part of the larger competitors' plan is to beat them through legal fees 
instead of the marketplace. The Commission obviously cannot do anything 
about the fees lawyers are charging, but they can do something about 
the speed at which regulatory decisions are made and the hoops that 
must be jumped through. How can the FCC improve its decisionmaking 
processes so that small telecommunications providers don't bear such an 
imbalanced burden?
    Answer. Small telecommunications providers provide critical 
communications services in many parts of our country. I have 
consistently supported efforts to minimize the impact of our 
regulations on small telecommunications providers. Indeed, the 
Commission has an obligation under the Regulatory Flexibility Act to 
consider the impact of its activities on small entities. I will 
continue to work with my colleagues to ensure that small 
telecommunications providers are not unduly impacted by FCC decisions.

    Question 3. As you know, some media companies and others are 
pushing for the repeal of the newspaper cross-ownership ban. They argue 
that a media outlet owning both the local newspaper and a local 
broadcast station could make better use of scarce resources to gather 
and report the local news. They also argue that the handful of 
``grandfathered'' newspaper-broadcast combinations, which were in place 
before the ban was implemented in 1975, have not shown any gross abuse. 
Some consumer groups and others who support keeping the newspaper 
cross-ownership ban in place alternatively argue that combining 
newspaper and broadcast outlets could reduce competition among media 
outlets. There could be less incentive to get ``the scoop'' or report a 
contradicting viewpoint. What do you believe would happen to local news 
coverage if the newspaper cross-ownership ban was lifted? Do the 1975 
grandfathered combinations really provide us with a good example since 
some of them are currently owned by those media companies who want to 
lift the ban? For example Gannett knows its management of Arizona's 
largest newspaper, the Arizona Republic, and television outlet KPNX-TV 
is under the microscope, so perhaps their behavior would not be 
representative of how news gathering would be conducted if the ban was 
permanently lifted.
    Answer. As part of its review of the media ownership rules, the 
Commission is conducting ten economic studies. Although I was not 
involved in developing these studies and selecting the researchers, it 
is my understanding that one study ``will examine the effect of 
newspaper cross-ownership on television news coverage using matched 
pairs of cross-owned and non-cross-owned television stations.'' One 
study conducted by Dr. Mark Cooper, Director of Research, Consumers 
Federation of America, documented that more media mergers in our 
already highly consolidated media markets will reduce already 
insufficient local news coverage and eliminate diverse voices and 
viewpoints, harming local communities across the country. A 2003 study 
by Professor Michael Zhaoxu Yan found that cross-owned television 
stations do not provide more local news and a local public affairs 
programming than do independently-owned stations.
    The cross-ownership rule was designed to promote the Commission's 
longstanding goals in broadcast regulation--localism, competition and 
diversity of information sources. Hopefully, the FCC-commissioned 
studies will provide us with the necessary information to determine, 
among other things, whether the 1975 grandfathered combinations really 
serve as good examples of local news coverage. Several studies have 
already concluded that the primary source of local news for the 
overwhelming majority of the public remains television and daily 
newspapers. Permitting one entity to monopolize both venues of local 
news and information could undercut diversity and thereby our 
democratic discourse.

    Question 4. The closest daily newspaper can be 100 miles away in 
some parts of my state. Do you see any particular challenges in 
providing a diversity of news viewpoints in rural parts of our country 
if further media consolidation is allowed to occur? Some argue local 
cable news channels and local Internet news sites can enhance 
competition and bring out a diversity of viewpoints, but are these 
answers going to work in rural communities?
    Answer. As a fellow South Dakotan, I do indeed see challenges in 
providing a diversity of news viewpoints in rural parts of America if 
further media consolidation is allowed to occur. Broadcast stations and 
newspapers tend to dominate the local marketplace of ideas, a function 
critical to a democratic society. Because rural markets have fewer 
newspapers and broadcast outlets, it is especially important that we 
ensure that rural residents are afforded diverse and divergent 
viewpoints on controversial issues. As the Supreme Court said in Red 
Lion, ``it is the purpose of the First Amendment to preserve an 
uninhibited marketplace of ideas in which truth will ultimately 
prevail, rather than to countenance monopolization of that market.'' 
These challenges in rural markets will be further exacerbated without 
clear and measurable public interest obligations.
    While some argue local cable news channels and local Internet news 
sites can enhance competition and bring out a diversity of viewpoints, 
these are virtually absent from rural areas. The facts show that local 
broadcast remains the clear dominant source for local news and 
information. Local cable news channels do not appear to be viable 
competitive alternatives for news in rural markets, and local Internet 
news sites are owned by the same dominant local broadcaster. Hence, if 
further media consolidation is allowed to occur, the effects on rural 
America could be particularly harmful. People in rural communities and 
small-town America have distinctive interests, and local stations offer 
programming that responds to these interests.

    Question 5. South Dakota's nine Indian reservations have distinct 
challenges in their effort to increase access to broadband and wireless 
telecommunication services. There are unique characteristics in regards 
to existing infrastructure, local government, and population density. 
In your assessment are Native American communities taking full 
advantage of the USF program and other programs available to them? Has 
the FCC's ``Indian Telecommunications Initiative'' been effective in 
building partnerships and identifying solutions to bringing affordable 
telecommunications services to Indian country? Should we be doing more?
    Answer. The FCC's Indian Telecommunications Initiative is an 
important part of the Commission's outreach to Native American 
communities. The economic and social prosperity of Native American 
communities depends on access to state-of the-art communications 
technologies, so I strongly support these efforts.
    It is difficult to assess, based on current FCC data, the precise 
extent to which Native American communities are participating in 
Federal universal service and other programs. It is clear however, 
based on the data we do have, and a January 2006 report from GAO, that 
more needs to be done. GAO's report on telecommunications in Indian 
country documented the substantial and unique barriers to improving 
telecommunications service on tribal lands. Although GAO encouraged the 
FCC to do more data collection about the availability of 
telecommunications and broadband services in Native American 
communities, GAO found that there is great variation among tribes in 
terms of the barriers faced and the level of success achieved thus far.
    The FCC has taken some important steps by adopting enhanced 
Lifeline and Link-Up programs to serve tribal communities, but we must 
continue to improve these programs. When these programs were started 6 
years ago, there were just under 20,000 tribal participants nationwide. 
Now there are approximately 176,000 tribal participants. While we have 
made progress, I continue to hear concern that some tribal members are 
not aware of these programs. So, we need to find ways to get even 
higher utilization.
    Also, the Commission initiated a tribal land bidding credits 
program that makes credits available to telecommunication carriers to 
help offset some of the costs of providing telecommunication services 
in tribal areas. I would like to see that program more fully used, and 
have pushed for modifications to ensure that the credit is utilized to 
its fullest possible extent. For example, we have allowed the wireline 
telephone penetration benchmark to increase from 70 to 85 percent for 
qualifying tribal lands, which will triple the number of tribal lands 
deemed eligible for bidding credits. Similarly, we increased the 
bidding credit limit by two-thirds to further incentivize investment in 
these underserved areas.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. Jim DeMint to 
                       Hon. Jonathan S. Adelstein

    Question 1. In the 4 years since the term ``network neutrality'' 
has existed, can you give me any examples, aside from the often-cited 
2004 Madison River case, that justify the need for new regulations?
    Answer. In February-March 2005, the FCC's Enforcement Bureau 
conducted an investigation into Madison River Communications after that 
company blocked its DSL customers from using rival web-based phone 
service, which it resolved through a consent decree.\3\
---------------------------------------------------------------------------
    \3\ I note also for Congress's consideration that in 2005 Canada's 
telephone company Telus blocked customers from visiting a website 
sympathetic to the Telecommunications Workers Union during a 
contentious labor dispute. See Telus Cuts Subscriber Access To Pro-
Union Website, CBC News, http://www.cbc.ca/canada/story/2005/07/24/
telussites050724.html (2005).
---------------------------------------------------------------------------
    Although the Madison River case is the only such enforcement action 
by the FCC to date, many commenters have suggested that this is because 
the FCC applied the traditional nondiscrimination obligations of the 
Act to the provision of wireline broadband services until the fall of 
last year.\4\ With the Commission's decision to eliminate the 
safeguards now in effect, there is increasing attention to the plans of 
U.S. broadband providers. In this regard, senior management of the 
largest U.S. broadband providers have expressed an explicit interest in 
changing their business models in ways that might impose new fees on 
applications providers or discriminate against online content and 
services. In its 2006 Report to Congress on Access to Broadband 
Networks, the Congressional Research Service found that broadband 
network providers will have the ability and incentive to build, 
operate, and manage their broadband networks in a fashion that favors 
their own applications over competitors' applications.
---------------------------------------------------------------------------
    \4\ See Appropriate Framework for Broadband Access to the Internet 
over Wireline Facilities, CC Docket No.02-33, FCC 05-150, Report and 
Order (Aug. 5, 2005) (adopting ``a one-year transition period, which 
begins on the effective date of this Order, in order to give both ISPs 
and facilities-based wireline broadband Internet access transmission 
providers sufficient time to adjust to our new framework'').
---------------------------------------------------------------------------
    Given the importance of the Internet as a tool for economic 
opportunity, innovation, and so many forms of civic, democratic, and 
social participation, I believe we must take these proposals seriously 
and consider policy changes to preserve the open character of the 
Internet.

    Question 2. What problem exists today that necessitates government 
intrusion in the market?
    Answer. I believe the Communications Act of 1934, as amended, 
clearly intends to promote the deployment of advanced services to all 
areas of the United States, including rural areas. Until we have 
ubiquitous broadband deployment to all Americans at the speeds and 
prices currently available in other countries, we must do whatever we 
can to promote broadband deployment over all of the networks subject to 
the Commission's oversight. The Act contains a number of tools 
specifically designed to enhance ubiquitous broadband deployment, such 
as promoting competition, advancing universal service, and managing the 
public spectrum. We should use each of these tools in advancing the 
goals of the Act.

    Question 3. Why are anti-trust laws and basic laws of economics 
insufficient to protect consumers?
    Answer. The law requires the Commission to ensure that all mergers 
and changes in policy and regulations are in the public interest. In 
considering the public interest in a merger analysis, for example, the 
Commission has taken a broader look at the impact of the loss of 
competition in comparison to the strict anti-trust approach used by the 
Department of Justice. Moreover, in the context of media policy, the 
public interest requires the Commission to consider the possible impact 
of a decision on competition, localism, and diversity in the media 
marketplace.

    Question 4. Today's media landscape includes ubiquitous options 
that did not exist in 1996: broadband offered by both cable and 
telephone companies, satellite radio, the Internet, and a far more 
mature DBS service. Given the growth of these new media outlets over 
the past decade, do you believe there are any areas where some 
relaxation of ownership limits could be in the public interest?
    Answer. While there is competition from cable, satellite, or online 
content providers, broadcast radio and television continue to have a 
powerful influence over our culture, political system, and the ideas 
that inform our public discourse. Study after study has shown that 
broadcasting is still the dominant source of not just local news and 
information, but also entertainment programming. The broadcast industry 
still produces, disseminates, and ultimately controls the news, 
information, and entertainment programs that most inform the discourse, 
debate, and the free exchange of ideas that is essential to our 
participatory democracy.
    In the 2005-2006 seasons, broadcasters--not cable, satellite or 
Internet programmers--had the top 200 highest rated programs on 
television. And all but a handful of the top 500 programs were on 
broadcast television. On the radio, the two satellite radio companies 
have a total of about 12 million subscribers, while over 230 million 
people listen to terrestrial radio on a weekly basis.
    Media ownership is about the power to control the public's airwaves 
that the Congress has told that the FCC to license to broadcasters to 
serve the ``public interest, convenience and necessity.'' And the FCC 
is thus charged by law to regulate the broadcast industry in order to 
foster diversity and localism, and to prevent undue concentrations of 
power. Nevertheless, in recent years, there has been a wave of 
consolidation, which has led to unprecedented levels of concentration 
in radio and television ownership and program production.
    I believe the Commission could promote the public interest by 
modifying ownership rules to promote diversity of ownership. While 
fewer and fewer companies gain more control over the means of 
distributing ideas, fewer small businesses, fewer members of the 
creative community, and fewer African Americans, Latinos, Asians, and 
Native Americans can use the public airwaves to contribute to our 
national experience. While women make up over half of the U.S. 
population, they own less than 5 percent of all television stations. 
Racial and ethnic minorities make up over 30 percent of the population, 
but yet they own less than 3.3 percent of all television stations. 
African Americans own 1.3 percent; Latino Americans own 1.1 percent, 
and Asians and American Indians only own 0.44 and 0.37 percent, 
respectively, of all television stations.
                                 ______
                                 
    Response to Written Question Submitted by Hon. David Vitter to 
                       Hon. Jonathan S. Adelstein

    Question. I have been alerted to a problem regarding compensation 
to payphone providers for coinless calls made from their phones. 
According to recent FCC statistics, about 6 percent of Louisiana 
households do not have any type of phone in their home. During the 
immediate aftermath of Hurricanes Katrina and Rita, payphones were the 
only way many people--both those without any other phones and also 
those whose mobile phones were not working due to the networks being 
overloaded--could reach emergency personnel or family and loved ones. 
Without being fairly compensated according the rules set forth by the 
Commission, payphone providers will not be able to maintain these 
phones. I have been told that in the last 2 years since the Commission 
most recently revised the payphone compensation rules, a large number 
of carriers have failed to comply with their obligations under these 
rules. I also understand that in December 2006, the FCC issued its 
first sanctions against one of these carriers that violated these 
rules. I would appreciate hearing your comments on whether you think 
the agency has sufficient power and resources under your existing 
authority to continue to enforce these rules and help ensure that 
companies are not able to disregard the Commission's payphone 
compensation rules.
    Answer. Section 276 of the Act directs the Commission to establish 
rules that ensure that all payphone service providers are fairly 
compensated for each and every interstate and intrastate call made 
using their payphones. In 2003, the Commission adopted its current 
rules requiring telecommunications carriers to pay compensation for 
``coinless access code'' calls and ``subscriber toll-free'' calls. The 
Commission has an obligation to enforce these rules, as it acknowledged 
at the time they were adopted. The Commission recently took its first 
enforcement action against a carrier for failure to comply with these 
payphone compensation rules. I supported that December 2006 Notice of 
Apparent Liability and Forfeiture Order and will continue to support 
efforts to encourage compliance by other similarly-situated carriers.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                        Hon. Deborah Taylor Tate

    Question 1. In March, 2005, the FCC allowed a Verizon forbearance 
petition to become effective by operation of law. Because there was a 
vacancy on the Commission at that time and a 2-2 split among 
Commissioners, Verizon was able to gain regulatory relief through 
Commission inaction. Does the current process regarding the disposition 
of forbearance petitions in the absence of a Commission majority 
essentially allow petitioners to write the terms of their relief?
    Answer. Congress included, and section 10 of the Communications Act 
requires, that ``the Commission shall forbear from applying any 
regulation or provision of this Act . . . if the Commission determines 
that'' enforcement of the provision is ``not necessary'' to ensure just 
and reasonable prices and practices or the protection of consumers, and 
that it serves the public interest. Congress set forth in section 10 of 
the Act that any carrier may petition the Commission for forbearance 
and ``[a]ny petition shall be deemed granted if the Commission does not 
deny the petition . . . within 1 year after the Commission receives it, 
unless the one-year period is extended by the Commission.'' 
Accordingly, if the Commission does not deny the petition by the 
statutory deadline, the relief requested is granted by operation of 
law.

    Question 1a. Is it fair in such situations to allow petitioners to 
amend the scope of their requested relief after the period for comment 
on the original petition has concluded?
    Answer. While it is preferable that the Commission address the 
scope of the petitions as filed, some petitioners have narrowed the 
scope of the regulatory relief requested after the official comment 
cycle had closed. Depending on the nature of any proposed changes, and 
the remaining time before deadline that interested parties have to 
weigh in through the ex parte process, such changes may not always be 
objectionable and may provide the needed flexibility to address issues 
that arise as the petition is pending.

    Question 1b. Should forbearance petitions be denied in the absence 
of an order approved by a majority of Commissioners?
    Answer. As I stated above, section 10 of the Communications Act 
states, ``[a]ny petition shall be deemed granted if the Commission does 
not deny the petition . . . within 1 year after the Commission receives 
it, unless the one-year period is extended by the Commission.'' As I 
interpret the Act, in the absence of a majority action by the 
Commission to either grant or deny, the presumption in the statute is 
that the petition is granted.

    Question 2. One of the biggest challenges we face over the next 2 
years is moving our Nation from analog to digital television with 
minimal consumer disruption. I understand that the FCC is currently 
receiving comment on its Proposed Final Table of DTV allotments, 
proposing final digital channels for TV broadcast stations. However, 
even after that is final, additional actions will be needed to complete 
the transition. Given the enormity of the task before us, what action 
is the Commission taking and what action should it take to ensure that 
our country is ready in February 2009?
    Answer. Aside from the more technical aspects of the digital 
transition, which the Commission is addressing expeditiously, consumer 
education looms as the most pressing concern. The Commission has sought 
to increase awareness through a variety of outreach efforts, including 
the creation of a website, www.dtv.gov. In addition, it has requested 
an additional $1.5 million as part of its FY 2008 budget in order to 
continue these efforts. I am also pleased that the major trade 
associations, Consumer Electronics Association, National Association of 
Broadcasters, and National Cable Television Association, have committed 
to a coordinated public information campaign. Finally, the Commission 
will consult with NTIA as it administers the national coupon program 
for over-the-air digital-to-analog converter boxes.

    Question 3. A recent study conducted by Free Press entitled, Out of 
the Picture: Minority & Female TV Station Ownership in the United 
States, contained some sobering statistics.

        Women comprise 51 percent of the entire U.S. population, but 
        own a total of only 67 stations, or 4.97 percent of all 
        stations.

        Minorities comprise 33 percent of the entire U.S. population, 
        but own a total of only 44 stations, or 3.26 percent of all 
        stations.

        Latinos comprise 14 percent of the entire U.S. population, but 
        own a total of only 15 stations, or 1.11 percent of all 
        stations.

        African Americans comprise 13 percent of the entire U.S. 
        population but only own 18 stations, or 1.3 percent of all 
        stations.

        Asians comprise 4 percent of the entire U.S. population but 
        only own a total of 6 stations or 0.44 percent of all stations.

    Do these facts trouble you as they do me, and what action should 
the Commission take to promote greater diversity of ownership?
    Answer. I am troubled by the low levels of broadcast station 
ownership among women and minorities, and I believe that the Commission 
should look for ways in which it can remove barriers to market entry, 
consistent with constitutional guidance from the Supreme Court. In this 
regard, I am very pleased that the Chairman has reinvigorated the 
Advisory Committee on Diversity for Communications in the Digital Age, 
renewing its charter through December 2008. The Committee has adopted a 
number of proposals that I believe we should consider. In addition, I 
am committed to using my time and efforts to champion the issue of 
ownership diversity, to call attention to it and raise the level of 
conversation. We need more diversity in broadcasting at all levels--
behind the microphone and in the production room, as well as in the 
board room. I am doing all that I can to achieve this important goal, 
through formal FCC actions and in reaching out to industry partners to 
offer my help and support.

    Question 4. On November 22, 2006, the day before Thanksgiving, the 
FCC released a list of economic studies to be performed in the media 
ownership proceedings. How did the Commission choose the economic 
studies to be performed in the media ownership proceedings?
    Answer. Chairman Martin's Office solicited input from all of the 
commissioners' offices on media ownership studies to be performed.

    Question 4a. Who at the Commission or elsewhere was consulted for 
input on the topics chosen?
    Answer. Chairman Martin's Office solicited input from all of the 
commissioners' offices on media ownership studies to be performed. As a 
mother of three young adults, I was specifically interested in how our 
younger generation receives its news and information.

    Question 4b. How were parties selected for the studies done outside 
the Commission, and what is the cost of these contracts?
    Answer. In his recent letter to Congressman Maurice D. Hinchey 
(NY), Chairman Martin explained, ``[t]he economists were chosen based 
on academic reputation and expertise either on a particular topic or 
literature or with particular econometric techniques.''
    As for the costs of the contracts, Chairman Martin explained:

        The Commission has contracted for Study 1 (How People Get News 
        and Information) to be performed for $58,000, Study 3 
        (Ownership Effect of Ownership Structure and Robustness on the 
        Quantity and Quality of TV Programming) to be performed for 
        $25,000, Study 5 (Station Ownership and Programming in Radio) 
        to be performed for $60,000, Study 6 (News Coverage of Cross-
        Owned Newspapers and Television Stations) to be performed for 
        $54,500, Study 7 (Minority Ownership) to be performed for 
        $10,000, Study 8 (Minority Ownership) to be performed for 
        $55,000, and Study 9 (Vertical Integration) proposed to be 
        performed for $60,000. Studies 2 (Ownership Structure and 
        Robustness of Media), 4 (News Operations) and 10 (Radio 
        Industry Review: Trends in Ownership, Format, and Finance) will 
        be performed by Commission staff.

    Chairman Martin concluded, ``The Commission has made a total of 
$361,096 of data purchases.''

    Question 4c. Would the Commission consider seeking public comment 
on what other studies might assist the Commission in its review of 
ownership rules?
    Answer. I would certainly consider seeking public comment on what 
other studies might assist the Commission in its review of ownership 
rules. Any expert or member of the public may file in this docket, 
participate in our public hearings, or provide us with additional 
information.

    Question 5. In November 2006, the Government Accountability Office 
(GAO) issued a report concluding that the cost of special access has 
gone up--not down--in many areas where the FCC predicted that 
competition would emerge. To address this error, the report recommended 
that the FCC develop a better definition of ``effective competition'' 
and monitor more closely the effect of competition in the marketplace. 
Do you agree with these findings?
    Answer. I have reviewed the GAO report and take seriously its 
findings. I understand that the Commission has asked for the data upon 
which GAO based its analysis and expect that the Commission will 
undertake a thorough review of the GAO's data and analysis. The 
Commission has an ongoing open proceeding investigating special access 
rates in which it will consider the GAO's report. Certainly, the 
Commission's analysis as it undertakes this review will be 
substantially improved by a factual assessment of the impact that 
competition has on special access prices.

    Question 5a. What action should the Commission take in response?
    Answer. As a part of its open proceeding investigating special 
access rates, the Commission should review the analysis and factual 
basis of the GAO's report. Moreover, if the Commission determines that 
additional information or data is required to make an effective 
determination, the Commission should take steps to obtain that 
information or data.

    Question 6. Last year, Congress passed legislation imposing a ten-
fold increase in the size of maximum fines for indecency violations, to 
a maximum of $325,000 per violation. At the time President Bush signed 
the law, he said ``[t]he problem we have is that the maximum penalty 
that the FCC can impose under current law is just $32,500 per 
violation, and for some broadcasters, this amount is meaningless. It's 
relatively painless for them when they violate decency standards.'' 
Should Congress similarly raise the statutory maximum fine for other 
violations?
    Answer. Indecent programming on radio and television is the issue 
raised most often by the citizens I meet with across the country. No 
other issue elicits remotely the same level of public outrage. I am 
grateful that Congress passed the Broadcast Decency Enforcement Act, 
increasing the maximum fine for violations of decency standards by 
broadcasters. It is my hope that the possibility of higher fines will, 
in fact, deter future violations. While I cannot, based on my first 
year as a commissioner, identify other common violations that require 
similar increases, should Congress determine that such increases are 
necessary for their deterrent effect, I will, of course, faithfully 
seek to use them to enforce Commission rules.

    Question 6a. What other actions should be taken to promote swifter 
and more effective enforcement?
    Answer. I believe the Commission's Enforcement Bureau performs its 
duties well, however, I do believe we could respond more quickly.

    Question 7. Recently, the FCC adopted an order to prohibit certain 
practices by franchising authorities that the Commission finds are 
unreasonable barriers to entry. One issue mentioned in that order, 
which is very important to the State of Hawaii, is the ability of the 
franchise authority to seek appropriate contributions for public, 
educational, and governmental (PEG) and institutional networks (I-
NETS). I understand that some parties have disputed the veracity of 
some claims made in this proceeding. What, if any, efforts did the 
Commission take to independently investigate and verify the claims of 
unfair demands made by many of the carriers in this proceeding?
    Answer. As with all rulemakings, the comments filed in the section 
621 rulemaking proceeding were public documents. Any claims made in 
those comments were subject to dispute by interested parties, who had 
the opportunity to take advantage of a public comment and reply comment 
period.

    Question 8. In 2004, the FCC adopted a plan to move certain 
licenses within the 800 megahertz band in order to eliminate 
interference problems that were being experienced by public safety 
communications systems. What is your assessment of the pace of progress 
in rebanding the 800 MHz band and what steps does the Commission intend 
to take in order to get this process back on track?
    Answer. While the original 800 MHz rebanding item was addressed 
prior to my arrival at the Commission, I am deeply committed to working 
closely with the Association of Public-Safety Communications Officials, 
other public safety entities, the Transition Administrator, Sprint, 
affected foreign governments, and Members of Congress to ensure that 
rebanding in the 800 MHz band is completed in a timely manner while 
ensuring full public safety operability during the transition. In 
addition, while I am a proponent of mediation, it has come to my 
attention that the 800 MHz rebanding may not be moving as swiftly as 
envisioned, and the FCC may need to step in and revisit the process.

    Question 9. A number of wireless carriers have employed the use of 
high ``early termination fees'' to prevent wireless customers from 
switching to other carriers. In some cases these fees may be $200 or 
more, and may apply regardless of whether the subscriber wishes to 
cancel on the first or last date of their wireless contract. Do you 
believe these practices promote or impede competition?
    Answer. The Commission currently has before it an open proceeding 
concerning early termination fees (ETFs) imposed by CMRS providers on 
customers that terminate service prior to the expiration of the 
contract term. The wireless industry contends that ETFs provide 
consumers with numerous benefits, notably lower costs for handsets and 
other wireless services and products. Some consumer and public interest 
groups, on the other hand, contend that ETFs prevent consumers from 
shopping for better or less expensive wireless services. I will work 
with my FCC colleagues to undertake, among other things, whether ETFs 
promote or impede competition and other issues in a timely and 
considerate manner.

    Question 10. Given requirements imposed by General Services 
Administration to promote greater redundancy of communications, how 
would the retirement of copper facilities impact Congress' directive to 
promote the availability of alternate network facilities in federally 
owned and leased buildings?
    Answer. As the tragic events of 9/11 and the gulf coast hurricanes 
have taught us, redundancy in communications networks is important to 
the continuity of essential government operations. When telephone 
companies upgrade loop facilities, often replacing copper facilities 
with fiber optic facilities, the Commission's rules establish a process 
permitting the telephone companies to ``retire'' the copper by 
disconnecting it from the network, or by removing it altogether. See 47 
CFR Sec. 51.319(a)(3); 47 CFR Sec. Sec. 51.325-51.335. Several 
competing carriers recently filed a pair of petitions asking the 
Commission to modify these rules. I plan to carefully evaluate these 
petitions, including any value that modifying these rules might have on 
network redundancy. However, I am also mindful of the policies that led 
to the creation of these rules, including concerns about network 
management and investment incentives.

    Question 11. Given the Commission's policy of promoting broadband 
deployment and eliminating regulations that treat competitors in the 
provision of broadband differently, how is this policy being 
implemented with regard to pole attachment regulations?
    Answer. The Commission's Enforcement Bureau recently issued an 
Order taking action to enforce the Commission's existing pole 
attachment rules. This ruling requires that pole access be made 
available to a new entrant. (See Fiber Technologies Networks, L.L.C. v. 
North Pittsburgh Telephone Company, File No. EB-05-MD-014, Memorandum 
Opinion and Order, DA 07-486 (Enf. Bur. Feb. 23, 2007). Additionally, 
the Commission has before it a Petition for Rulemaking asking the 
Commission to adopt standard practices for pole and conduit access. As 
I evaluate that petition, I plan to review the relationship between 
pole attachment access and broadband deployment.

    Question 12. Recently, a Virginia Federal court referred a matter 
to the FCC for review and clarification as to whether Internet Protocol 
Television or ``IPTV'' service meets the definition of a ``cable 
service'' under the Communications Act--a question that this Committee 
answered affirmatively during consideration of last year's 
telecommunications bill. How does the Commission intend to address this 
matter?
    Answer. This issue has been raised before the Commission in the IP-
Enabled Services rulemaking proceeding. The Commission has heard from 
several parties regarding the merits of this question. The Commission 
expressly declined to address this issue in the section 621 franchising 
reform proceeding.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                        Hon. Deborah Taylor Tate

    Question 1. Eleven years after Congress passed the 1996 
Telecommunications Act that opened the floodgates of media 
consolidation in the radio industry is American radio better or worse 
than it was in 1996 in terms of viewpoint diversity and localism?
    Answer. While a state official, I did not have the opportunity to 
review the effects of, and form an opinion on, consolidation in the 
radio industry. I therefore bring an open and inquiring mind to the 
issue, as the Commission continues to review its broadcast ownership 
rules. Attending the first three of our six planned public field 
hearings, where broadcasters, academics, recording artists, union 
representatives, and hundreds of citizens have spoken passionately 
about the issue, has been an educational experience. I look forward to 
the continuing dialogue with Members of Congress and considering the 
full record in the current proceeding so as to make an informed 
judgment.

    Question 2. How has consolidation impacted the public's ability to 
hear local music and local news on the airwaves?
    Answer. Please see answer to Question 1 above.

    Question 3. Even with the existence of net neutrality conditions on 
AT&T, are there rules in place to ensure that other broadband providers 
do not discriminate against Internet content, services or applications? 
Given the rulings on information services, is it even clear that the 
FCC has authority to act if such discrimination occurs?
    Answer. On August 5, 2005, the Commission adopted four principles 
in its Internet Policy Statement with the intent of ensuring that 
``broadband networks are widely deployed, open, affordable, and 
accessible to all consumers. . . .'' I support the Commission's 
Internet Policy Statement and believe the Commission should establish 
competitively and technologically neutral policies that will foster 
investment in broadband networks and the development of new and 
innovative broadband applications and services. In the Internet Policy 
Statement, the Commission stated it ``has jurisdiction to impose 
additional regulatory obligations under its Title I ancillary 
jurisdiction to regulate interstate and foreign communications'' and 
``[a]s a result . . . to ensure that providers of telecommunications 
for Internet access or Internet Protocol-enabled (IP-enabled) services 
are operated in a neutral manner.'' Based on this authority, the 
Commission is currently considering a proceeding that will investigate 
the need for more formal rules. Also, in addition to the Commission's 
oversight, other antitrust and consumer-oriented arms of our 
government, such as the FTC, are monitoring the market behavior of 
broadband providers.

    Question 4. In an environment of industry consolidation and 
technological integration, what role do you see the FCC playing to 
ensure nondiscriminatory access to infrastructure, content, roaming, 
spectrum and rights of way?
    Answer. The marketplace the Commission oversees continues to 
undergo constant technological and structural change. I prefer to allow 
properly functioning markets to operate. In a period of rapid 
technological change, the Commission must evaluate how these changes 
impact consumers. If there is evidence of harmful discrimination, the 
Commission is well-positioned to correct those problems, either through 
enforcement of existing rules, or the creation or redrafting of rules. 
However, where no evidence of harmful discrimination exists, the 
Commission should allow the marketplace to evolve, while keeping a 
watchful eye as it develops.

    Question 5. Do you think that the current broadband market is 
sufficiently competitive and robust in terms of broadband deployment? 
Does the FCC currently have sufficient tools to even accurately 
determine whether Americans have access to broadband?
    Answer. Nearly 65 million Americans had access to high-speed lines 
by June 2006, over a 50 percent increase in 1 year, with rural 
Americans more than doubling their broadband connections from 2003 to 
2005. This is good news. However, our work is far from complete. I am 
encouraged that we are taking steps to improve our broadband data 
collection to better assess consumer access to broadband to help us 
increase broadband deployment and competition. We must also continue to 
take steps that encourage investment, especially in rural areas. This 
includes our continuing spectrum and auction policies to deploy 
spectrum throughout the country. Moreover, encouraging public-private 
partnerships, like ConnectKentucky, also is an important tool in 
working to deploy broadband. Further, I am pleased that we launched a 
pilot program to explore ways to enhance broadband through our rural 
healthcare program.

    Question 6. How do you envision universal service reform moving 
ahead to keep the fund sustainable? I am concerned about proposals that 
would not require broadband connections to pay into universal service, 
or reverse auction proposals that advocate providing USF support in an 
auction type model to the least cost provider.
    Such proposals bring uncertainty to investment plans, and shift the 
universal service standard from comparable to urban areas, to one that 
would just go to the lower bidder, quality irrelevant. I understand 
that rural providers have expressed concern about both proposals. Can 
you discuss the least cost provider issue, as well as what possible 
distinctions exist to justify excluding broadband from paying into 
USF--why shouldn't a technology that uses and benefits from the network 
pay into universal service?
    Answer. The Federal-State Joint Board on Universal Service issued a 
Public Notice last August seeking comment on the use of reverse 
auctions to evaluate distributions of universal service support to high 
cost areas. In many areas defined as high cost by the Commission's 
rules, multiple service providers receive universal service support. 
Reverse auctions are one way among many to address how to more 
efficiently fund high cost areas. The Joint Board's Notice on this 
issue expressly asks questions about how to address service quality and 
other consumer issues and I think addressing this is essential, if the 
Joint Board chooses to pursue this path. Like any other contract for 
services put out for competitive bid, service quality guarantees and 
enforcement provisions can be employed to ensure that appropriate 
consumer and social policy requirements are met. Any major universal 
service reform measure would necessitate a transition in order for 
providers to adjust to the change in funding.
    You raise a very important question when you ask about assessing 
broadband services with universal service contributions. On the one 
hand, if broadband services are eligible for support, it is reasonable 
to ask that those services contribute to the universal service system. 
On the other hand, it is important to consider the ramifications of 
adding additional cost to broadband Internet access services as we work 
to increase broadband deployment and adoption by more Americans.

    Question 7. What is your view of making the deployment of advanced 
infrastructure that is fully capable of offering the wide array of 
broadband oriented services the hallmark of our national universal 
service policy? Should universal service subsidize broadband?
    Answer. The Communications Act specifies that the universal service 
program should support ``an evolving level of telecommunications 
services.'' Further, the Act provides a list of factors to consider, 
including whether the service is ``subscribed to by a substantial 
majority of residential customers'' or is ``essential to education, 
public health, or public safety.'' However, as one of my Joint Board 
colleagues pointed out, the process for making this determination could 
prove to be lengthy, and Congress may wish to act more quickly. That 
said, the rural high cost universal service program already supports 
network improvements, such as loop upgrades, that also help to support 
the deployment of broadband services.

    Question 8. The FCC recently has been granting incumbent providers 
(ILECs) forbearance from regulations on the premise that sufficient 
competition exists in a specific market to make enforcement of the 
regulations unnecessary. However, a Fall 2006 GAO report indicates that 
the assumptions the FCC uses to determine the existence of competition 
may be flawed and further that prices in Phase II areas--that is, areas 
where competition is theoretically most intense--are going up. Is that 
the case, and if so, are price increases consistent with a competitive 
market?
    Answer. Section 10 of the Communications Act requires that ``the 
Commission shall forbear from applying any regulation or provision of 
this Act . . . if the Commission determines that'' enforcement of the 
provision is ``not necessary'' to ensure just and reasonable prices and 
practices or the protection of consumers, and that it serves the public 
interest. Obviously, each forbearance request must be reviewed on its 
own facts and merits. Regarding special access, the GAO report focused 
its attention on DS1 and DS3 special access prices. The Commission has 
not granted forbearance with respect to DS1 or DS3 facilities. I take 
seriously the GAO's findings. I understand that the Commission has 
asked for the data upon which GAO based its analysis and expect that 
the Commission will undertake a thorough review of the GAO's data and 
analysis as a part of the Commission's open proceeding investigating 
special access rates.

    Question 9. Is forbearance for the ILECs in the public interest?
    Answer. Section 10 of the Communications Act requires that ``the 
Commission shall forbear from applying any regulation or provision of 
this Act . . . if the Commission determines that'' enforcement of the 
provision is ``not necessary'' to ensure just and reasonable prices and 
practices or the protection of consumers, and that it serves the public 
interest. The Commission evaluates each forbearance petition on the 
specific facts and merits of the case. When sustainable competition 
arrives, we must exercise our regulatory humility and transition 
markets away from the constant touch of government regulation, such as 
price-setting. Recently, for example, the Commission took a carefully 
balanced approach, granting in part and denying in part, a forbearance 
petition regarding section 251 unbundling obligations in Anchorage, 
Alaska. The Commission granted regulatory relief in some, but not all, 
of the wire centers in the Anchorage area and conditioned relief on a 
reasonable transition period and other requirements.

    Question 10. A proceeding to investigate the rates, terms and 
conditions for interstate special access services has been pending for 
a number of years. What is the status of the FCC's special access 
proceeding? What steps are being taken to speed resolution of this 
matter?
    Answer. In February 2005, the Commission adopted a Notice of 
Proposed Rulemaking taking a broad examination of price cap incumbent 
LEC special access services and rates. The Commission is reviewing the 
record and is evaluating, among other things, the GAO's recommendations 
on special access rules. Although the Commission has not taken formal 
action in this proceeding, the Commission has addressed special access 
services and pricing in several other contexts. See SBC Communications, 
Inc. and AT&T Corp. Applications for Approval of Transfer of Control, 
WC Docket No. 05-65, Memorandum Opinion and Order, 20 FCC Rcd 18290 
(2005) (SBC/AT&T Order); Verizon Communications, Inc. and MCI, Inc. 
Applications for Approval of Transfer of Control, WC Docket No. 05-75, 
Memorandum Opinion and Order, 20 FCC Rcd 18433 (2005) (Verizon/MCI 
Order); AT&T Inc. and BellSouth Corporation Application for Transfer of 
Control, WC Docket No. 06-74, News Release, (December 29, 2006) 
(BellSouth/AT&T Approval); Petition of Qwest Communications 
International Inc. for Forbearance from Enforcement of the Commission's 
Dominant Carrier Rules As They Apply After Section 272 Sunsets, WC 
Docket No. 05-333, Memorandum Opinion and Order, FCC 07-13 (rel. Mar. 
9, 2007) (Qwest 272 Forbearance Order).

    Question 11. Some say that the dispute between Mediacom and 
Sinclair signals a new period of confrontation between broadcasters and 
distributors. How many complaints involving retransmission consent 
disputes has the Commission received in the last couple of years? Is 
there any trend within that data that may be useful to consider? How 
long does the Commission typically take to resolve those complaints?
    Answer. See Chairman Martin's response.

    Question 12. One issue specifically important for public radio 
stations is the opportunity to file for and receive additional reserved 
FM spectrum. It has been almost 7 years since the FCC provided the 
public with an opportunity to build new noncommercial educational 
stations on reserved FM spectrum. When will the FCC open a filing 
window for new reserved-FM noncommercial stations? Will the FCC provide 
public notice of a filing window sufficiently in advance to permit non-
profit, governmental, and other potential applicants adequate time to 
participate?
    Answer. The lengthy time period between filing windows for 
applications for new stations or major changes to existing stations in 
the reserved band is the result of judicial invalidation of the 
Commission's comparative hearing procedures to resolve conflicts among 
mutually exclusive applicants. Judicial challenges have, for years, 
delayed implementation of new point system procedures. The Commission 
currently is considering an item that employs the point system to 
resolve conflicts among a number of applications that were filed when 
comparative hearing procedures were still in effect. According to the 
information that I have received from the Commission's staff, I 
anticipate that, if the item is adopted, a new filing window could be 
opened expeditiously, with a Public Notice issued sufficiently far in 
advance to allow all potential applicants time to participate.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Maria Cantwell to 
                        Hon. Deborah Taylor Tate

    Question 1. Do you believe those individual and their employers who 
violated the commission's payola rules should be held accountable and 
those who have been injured receive fair compensation?
    Answer. Section 317 of the Act requires broadcasters to disclose to 
viewers or listeners that matter is being broadcast in exchange for 
money, services, or other valuable consideration. The Commission has 
adopted rules, section 73.1212 and section 76.1615, which set forth 
broadcasters' and cable operators' responsibilities for sponsorship 
identification. Violations of these rules are usually punished by 
imposition of a monetary forfeiture, and it is important that the 
Commission enforce its rules.

    Question 2. Should significant fines be part of the penalty?
    Answer. In Section 503 of the Communications Act, Congress has 
authorized the Commission to impose fines for violations of its Rules, 
so fines certainly are a potential penalty where ``payola'' has been 
determined to have occurred.

    Question 3. How do you structure a consent decree so that it 
changes behavior and deters individuals from future violations beyond 
when the consent decree ends?
    Answer. One way to change behavior and prevent future violations is 
to require a consent decree to include a detailed and specific 
compliance plan and other business reforms.

    Question 4. What kind of enforcement mechanism do you envision to 
ensure the consent decree is effective?
    Answer. Once a licensee has entered into a consent decree with the 
Commission in order to conclude an enforcement proceeding, any 
violation of the terms of that consent decree shall be treated the same 
as a violation of a Commission rule. In addition, the Commission 
rule(s), the alleged violation of which led to the enforcement 
proceeding, remain in place.

    Question 5. Given how important music and radio is to many 
Americans, do you believe there should be public comment on any consent 
decree before the Commission adopts it?
    Answer. No. Given that the process of negotiating a consent decree 
is a private, party-specific adjudicatory action, I do not believe that 
a public comment period is necessary.

    Question 6. Commissioner Tate, given your experience as a state 
regulator in Tennessee and at the Commission, you have had some time to 
think about how regulatory responsibilities should be divided between 
the states and the Federal Government. Based on your experience, should 
the States or the Commission be responsible for consumer protection and 
service standards when it comes to information, telecommunications, and 
video services?
    Answer. I believe that the effectiveness of our communications 
regulatory regime depends on the strength of the partnership between 
the FCC, state commissions, other governmental entities, and the 
industry. When allocating responsibilities between Federal and state 
regulatory authorities, policymakers should specifically recognize and 
leverage the core competencies of states: a functional direct line of 
communication with consumers, a wealth of experience in implementing 
consumer protection laws, and a knowledge of the markets within the 
states. There certainly are instances in which it is appropriate to 
have a uniform Federal policy.
    States should remain valuable partners with the Federal Government 
to ensure that ``shared federalism'' remains successful. A strong 
Federal-state partnership can also help us achieve broad national goals 
through improved coordination, such as public safety or educational 
goals. Issues like Do-Not-Call and Do-Not-Fax, as well as slamming and 
cramming, are excellent examples of cooperation between state and 
Federal agencies to protect consumers. Often, states hear about or see 
consumer and other issues first. State agencies, including the 
utilities commissions and attorneys general, have broad consumer 
protections authority that can help enhance vigorous consumer 
protection. Finally, states often serve as ``incubators'' of policy 
concepts that, if effective, may translate into effective tools for 
broader application.

    Question 7. Should federal rules be considered a floor or a 
ceiling? And if the Commission's enforcement doesn't measure up on 
consumer protection, should that responsibility be given to the states 
or local governments? How does you answer apply with respect to the 
consumer protection issues raised in the Report and Order and Further 
Notice of Proposed Rulemaking that establishes rules and provides 
guidance to implement Section 621(a)(1) of the Communications Act of 
1934 issued in December 2006?
    Answer. The Commission tentatively concluded in its Order 
implementing section 621(a) of the Communications Act that it did not 
have the authority to preempt state and local customer service laws 
that exceed Commission standards.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Frank R. Lautenberg to 
                        Hon. Deborah Taylor Tate

    Question. In approximately 2 years, broadcasters will shift to 
digital television. There are over 200,000 homes in New Jersey that 
rely exclusively on over-the-air television. Do you think most 
Americans are educated about this transition today? What role will the 
FCC play in preparing the public for this transition?
    Answer. As I noted in response to a similar question from Chairman 
Inouye, aside from the more technical aspects of the digital 
transition, which the Commission is addressing expeditiously, consumer 
education looms as the most pressing concern. The Commission has sought 
to increase awareness through a variety of outreach efforts, including 
the creation of a website, www.dtv.gov. In addition, it has requested 
an additional $1.5 million as part of its FY 2008 budget in order to 
continue these efforts. I am also pleased that the major trade 
associations, CEA, NAB, and NCTA, have committed to a coordinated 
public information campaign and the Commission will participate or 
provide assistance as appropriate. Finally, the Commission will consult 
with NTIA as it administers the national coupon program for over-the-
air digital-to-analog converter boxes and provide assistance, as 
appropriate.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Mark L. Pryor to 
                        Hon. Deborah Taylor Tate

    Question 1. Over the past 4 years, consumers have enjoyed the 
successful emergence of a number of new players in the audio 
marketplace. Satellite radio and Internet radio now reach tens of 
millions of listeners every week, and portable MP3 players and iPods 
have become common household items. Digital Cable and DBS offer dozens 
of channels of uninterrupted music, and Wi-Max technology is evolving 
that will soon allow Internet-based listening options in automobiles. 
Would the Commissioners agree that the competitive landscape has 
changed dramatically in the audio market over the past few years?
    Answer. Yes. I certainly agree that the audio marketplace has 
witnessed rapid and dramatic changes in recent years. XM and Sirius 
have only offered service for a little over 5 years, but they have 
already signed up millions of subscribers. iPods and other digital 
music players are used by millions more, including 1 in 5 people under 
the age of 30. We must remain cognizant of these developments and 
others that are sure to come as we adopt future regulations.

    Question 1a. And would the Commissioners agree that this trend is 
only likely to continue for the foreseeable future?''
    Answer. Yes.

    Question 2. Consumers in many rural areas currently are not able to 
enjoy the same benefits wireless services offer as their urban 
counterparts enjoy. Due to low user concentration, the cost of 
providing high quality wireless service in rural areas is frequently 
more expensive than is possible in higher-density urban areas. 
Designation of wireless carriers as ETCs, which permits these carriers 
to receive support from the Universal Service Fund (``USF''), can help 
to ensure that all Americans enjoy the benefits of competition and 
high-quality wireless services. What steps has the FCC taken to ensure 
that wireless coverage is extended to all Americans, regardless of 
where they live, and to ensure that Americans living in rural areas 
have the opportunity to subscribe to high-quality wireless services?
    Answer. The Commission has taken a number of steps to encourage the 
deployment of wireless services in rural areas and foster the 
deployment of wireless broadband service offerings to all Americans. 
For example, in the AWS auction, spectrum was made available in smaller 
geographic service areas to provide greater opportunities for small 
providers to obtain access to this spectrum at auction for rural and 
underserved areas. And, recently, the Commission released a Notice of 
Proposed Rulemaking seeking comment on, among other things, the issue 
of buildout requirements in the 700 MHz Band so as to promote service 
to rural areas and the use of small license areas in those portions of 
the 700 MHz Band that have yet to be auctioned.

    Question 3. Following the natural disasters that recently hit the 
Gulf Coast region wireless services provided emergency personnel, 
utility repairmen and residents with the only immediate means for 
communicating. In light of the experience of the Commission from 
Hurricane Katrina and other disasters, please describe the role 
wireless services fill with respect to emergency response and disaster 
recovery during times of crisis?
    Answer. Since coming to the FCC, I have gained a real appreciation 
of how important wireless, satellite, and other technologies are when 
public safety or homeland security concerns become paramount. During 
Hurricane Katrina and other disasters, a variety of wireless, 
satellite, and other services enabled first responders to communicate 
and citizens to reach loved ones.
    Last year, at the second meeting of the FCC Independent Panel 
Reviewing the impact of Hurricane Katrina on communications networks, I 
heard personal accounts of the devastation caused by Hurricane Katrina. 
The one clear message I heard was the need for redundancy in 
communications networks. I applaud the collaborative efforts and 
contributions of the entire communications industry, which has worked 
hard to address the difficult policy and technical issues. The 
Commission, in particular the newly established Public Safety and 
Homeland Security Bureau, must also do its part to facilitate effective 
communications during and after a disaster. I look forward to working 
with my fellow Commissioners, public safety entities, state and local 
officials, and all interested stakeholders regarding what we can do to 
ensure the reliability and interoperability of communications in order 
to better protect all Americans.

    Question 3a. If a petitioner for ETC designation meets the 
statutory criteria and has consistently been the only service provider 
to remain operative in certain areas during natural disasters despite 
the presence of other carriers (including other ETCs) in those areas, 
would you view the designation of the petitioner as an ETC to be in the 
public interest?
    Answer. The Commission has adopted a number of requirements to 
enhance its evaluation and provide guidance to states during the 
competitive ETC designation process. See Federal-State Joint Board on 
Universal Service, CC Docket No. 96-45, Report and Order, 20 FCC Rcd 
6371 (2005). Indeed, the ability to remain functional in emergency 
situations is a factor in the Commission's analysis. Without knowing 
the specifics, there may be other factors that could impact the public 
interest analysis of the Commission.

    Question 3b. Some of the areas hardest hit by recent natural 
disasters were underserved communities. To the extent a petitioner for 
ETC designation that meets the statutory criteria for ETC designation 
has demonstrated a strong commitment to serving rural and underserved 
communities since well before designation as an ETC, would the 
designation of the petitioner as an ETC be in the public interest? If 
not, please explain why.
    Answer. The universal service program has provided a valuable 
benefit to consumers across the nation, connecting homes and businesses 
in high cost, rural, and insular areas that would not otherwise have 
service comparable to urban areas. It is essential that the Commission 
ensure its sustainability to provide consumers in all areas of the 
country have access to an evolving level of communications services.

    Question 4. The FCC has committed to resolve, within 6 months of 
the date filed, all ETC designation requests for non-tribal lands that 
are properly before the FCC. How many petitions for ETC designation are 
currently pending at the FCC?
    Answer. According to information supplied by Commission staff, 
there are 34 petitions pending.

    Question 4a. What is the average length of time that the ETC 
Petitions currently before the FCC have been pending? Of these 
petitions, what is the earliest filing date? How many of these 
petitions were filed in 2004 or earlier?
    Answer. See Chairman Martin's response.

    Question 4b. How many petitions for ETC designation did the FCC act 
on in 2006?
    Answer. According to information supplied by Commission staff, the 
agency acted on 2 petitions in 2006.

    Question 4c. How many petitions for ETC designation did the FCC act 
on in 2005?
    Answer. See Chairman Martin's response. Moreover, I was not a 
member of the Commission in 2005.

    Question 4d. How many petitions for ETC designation did the FCC act 
on in 2004?
    Answer. See Chairman Martin's response. Moreover, I was not a 
member of the Commission in 2004.

    Question 4e. What does the FCC intend to do about the backlog of 
pending ETC petitions?
    Answer. See Chairman Martin's response.

    Question 4f. How soon does the FCC intend to act upon ETC petitions 
that have been pending for more than 6 months?
    Answer. See Chairman Martin's response.

    Question 4g. Do you believe that Americans living in rural areas 
and the carriers who have filed ETC Petitions deserve to have those 
petitions acted upon promptly rather than simply kept pending without a 
yes or no answer? If you do not, please explain why.
    Answer. Yes.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Amy Klobuchar to 
                        Hon. Deborah Taylor Tate

    Question 1. In a September 8, 2005 report, the FCC stated, ``Our 
review of the record does not lead us to recommend any changes to the 
retransmission consent regime at this time.'' What, if any, steps have 
you taken since that time to review and assess the retransmission 
consent regime; what if any additional conclusions have you reached; 
what if any plans do you have for additional formal or informal review; 
and what do you perceive to be the strengths and weaknesses of the 
retransmission consent process?
    Answer. With respect to your first three questions, please see 
Chairman Martin's response. With respect to the strengths and weakness 
of the retransmission consent process, in general, I believe that it is 
working as Congress intended. Market forces encourage broadcasters and 
multichannel video programming distributors to reach agreement for 
carriage of the broadcasters' channels, and the vast majority of 
negotiations result in such agreement, without government involvement. 
In the relatively few cases where agreement remains elusive, either 
party to the negotiation may file a complaint with the Commission if it 
believes that the other is not negotiating in good faith.

    Question 2. Section 10(a) of the Communications Act allows the 
Commission to forbear from applying any regulation or any statutory 
provision to a particular or multiple telecommunications carriers or 
services, in any or some geographic markets, if certain criteria are 
met--most notably that competition exists in the market and that such 
relief is in the public interest. The FCC recently has been granting 
incumbent providers (ILECs) forbearance from regulations on the premise 
that sufficient competition exists in a specific market to make 
enforcement of the regulations unnecessary. What are each of your 
respective positions on the conditions and circumstances under which 
forbearance for ILECs is appropriate?
    Answer. Section 10 of the Communications Act requires that ``the 
Commission shall forbear from applying any regulation or provision of 
this Act . . . if the Commission determines that'' enforcement of the 
provision is ``not necessary'' to ensure just and reasonable prices and 
practices or the protection of consumers, and that it serves the public 
interest. The Commission evaluates each forbearance petition on the 
specific facts and merits of the case. When sustainable competition 
arrives, we must exercise our regulatory humility and transition 
markets away from the constant touch of government regulation, such as 
price-setting. Recently, for example, the Commission took a carefully 
balanced approach, granting in part and denying in part, a forbearance 
petition regarding section 251 unbundling obligations in Anchorage, 
Alaska. The Commission granted regulatory relief in some, but not all, 
of the wire centers in the Anchorage area and conditioned relief on a 
reasonable transition period and other requirements.

    Question 3. From the City of Saint Paul (similar questions were 
raised by Burnsville/Eagan Community Television and the Northern 
Suburban Communications Commission):

        The Order issued by the FCC on December 20, 2006 allows new 
        franchise entrants to ``cherry pick'' the neighborhoods in our 
        communities, rather than bring true competition to all of our 
        businesses and residents. This would allow new entrants to 
        serve or upgrade only the profitable areas of Saint Paul [and 
        other cities and towns], leaving many of our residents on the 
        wrong side of the ``digital divide.''

        The Order authorizes a new entrant to withhold payment of fees 
        that it deems to be in excess of a 5-percent franchise fee cap. 
        This could completely undermine support for both Saint Paul's 
        [and other cities' and towns'] very successful public, 
        educational and government (PEG) operations.

        The Order imposes a 90-day shot clock for new entrants with 
        existing rights of way, opening the potential to reduce Saint 
        Paul's [and other cities' and towns'] ability to manage its 
        rights-of-way.

        The Order authorizes a new entrant to refrain from obtaining a 
        franchise when it is upgrading mixed use facilities that will 
        be used in the delivery of video content.

    Saint Paul believes that the policy goals of the Order are laudable 
but strongly disagrees with the method and substance of the decision 
taken by the FCC. How do you respond to each of these concerns, and how 
do you respond to the claim that the FCC exceeded its authority in 
adopting this order?
    Answer. With respect, the City of Saint Paul raised its concerns 
without the benefit of the text of the Order, which was released on 
March 5, 2007. As a result, I believe that many of its concerns are 
based on a misunderstanding of what the Order does and does not permit. 
The Order does provide guidance on what may constitute ``unreasonable'' 
buildout requirements on new entrants, but it does not, in my opinion, 
permit new entrants to ``cherry pick'' neighborhoods. It does not allow 
new entrants to withhold payment of fees it believes are in excess of 
the 5 percent cap. It does establish a 90-day time period during which 
the franchising authority must act on applications by new entrants that 
already have existing rights-of-way access. This time period is longer 
than that adopted by most states that have reformed the franchising 
process. In Indiana, for example, a new entrant may obtain a franchise 
15 days after filing its application. In Texas, the time period is 16 
business days, and in Kansas, California, New Jersey, and South 
Carolina, the time period ranges from 30 to 80 calendar days. The Order 
does not authorize a new entrant to refrain from obtaining a 
franchising when it is upgrading mixed use facilities. The good news is 
that this will enable consumers to have choice and hopefully encourage 
the deployment of broadband.
    In the absence of congressional action, I believe that the 
Commission's broad and well-recognized authority as the Federal agency 
responsible for administering the Communications Act gives it the 
jurisdictional authority to interpret section 621(a)(1) by determining 
whether certain actions by local franchising authorities constitute an 
unreasonable refusal to award a competitive franchise. See, e.g., 
sections 201(b), 303(r), and 4(i) of the Communications Act of 1934, as 
amended.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Ted Stevens to 
                        Hon. Deborah Taylor Tate

    Question 1. What is the current status of any proposals to use 
auctions to determine universal service support?
    Answer. On August 11, 2006, the Federal-State Joint Board on 
Universal Service (``Joint Board'') issued a Public Notice seeking 
comment from interested parties on the use of auctions to determine 
universal service support. More than 50 parties filed comments and 
reply comments in fall 2006, responding to the Joint Board's request 
for comment. On February 20, 2007, the Joint Board held an en banc 
hearing in Washington, D.C., where it heard, among other issues, from 
experts in support of, and in opposition to, the use of auctions to 
determine universal service support. The Joint Board continues to 
discuss what reforms it should recommend to the Federal Communications 
Commission, and the use of reverse auctions remains just one of the 
many tools being considered. Once the Joint Board issues a Recommended 
Decision to the FCC, the Commission has 1 year to complete its 
proceedings responding to the Recommended Decision. 47 U.S.C. 
Sec. 254(a)(2).

    Question 2. Do you believe any of the proposals submitted to the 
Joint Board are viable alternative approaches to universal service 
support and can adequately support rural carriers like those in Alaska?
    Answer. Yes. The Joint Board has received a number of proposals to 
ensure the long-term sufficiency, stability, and sustainability of the 
universal service fund. I look forward to working with my FCC and state 
colleagues, and Members of this Committee, to ensure that consumers in 
all regions of the country, including those in high-cost areas, have 
affordable, quality communications and advanced services.

    Question 3. When Chairman Powell visited a remote Eskimo village in 
Alaska, his plane got stuck in the mud on the unpaved runway during 
take-off. He and his staff whipped out their cell phones to try to call 
for help, but they didn't work. No roaming agreements. The villages 
call came and pulled his plane out of the mud, but he was not able to 
call his wife to tell her he was running late. I am pleased to report 
that the runway is now being paved, but the roaming problem has yet to 
be resolved. Many small cell phone companies in Alaska have been 
unsuccessful in getting the large national carriers to respond to their 
desires to arrange roaming agreements. As data, video, and other 
services are transmitted to mobile devices this problem will only grow 
more acute. What can you do to address this problem, and what is the 
timeframe for moving forward?
    Answer. In August 2005, the Commission initiated a proceeding 
regarding roaming requirements applicable to Commercial Mobile Radio 
Service (``CMRS'') providers. The record is extensive, with several 
segments of the CMRS industry represented. I look forward to working 
with my FCC colleagues to undertake these issues in a timely and 
considerate manner.

    Question 4. I continue to have concerns that too often domestic 
satellite services do not offer service to Alaska and Hawaii. In last 
year's Senate Communications Bill, a measure was included to require 
satellite operators to make good faith efforts in their satellite 
planning and development to ensure service to the entire United States. 
Are there measures that the FCC could take independent of Congressional 
legislation to ensure better service to Alaska and Hawaii?
    Answer. Section 25.148(c) of the Commission's rules requires Direct 
Broadcast Satellite (DBS) operators to provide service to Alaska and 
Hawaii if ``technically feasible'' or to provide a technical analysis 
showing that such service is not technically feasible. See 47 CFR 
Sec. 25.148(c). I intend to encourage satellite providers to make good 
faith efforts to provide consumer products in Alaska and Hawaii that 
are comparable to those offered in the contiguous United States, to the 
extent technically feasible.

    Question 5. The FCC frequently faces the problem of making tough 
policy decisions that are wrapped in technological debates. There are 
several waivers pending at the FCC that deal with CableCARDs. What is 
the impact on the consumer and the impact on the development and 
deployment of downloadable security? How will these petitions be 
considered and will the full Commission address these issues?
    Answer. The Commission has received a number of requests for waiver 
of the so-called ``integration ban,'' which would preclude cable 
operators from deploying set-top boxes with integrated security and 
navigation functions after July 1, 2007. It is well settled that the 
Commission evaluates waiver requests on a case-by-case basis to 
determine whether an applicant's showing satisfies the waiver 
standard.\1\ Accordingly, the Media Bureau continues to review the 
requests on a case-by-case basis, and it has both granted and denied 
some already. In addition, Comcast has filed an Application for Review 
of the Media Bureau's denial of its waiver request. I will fully 
consider all issues related to enforcement of the ban, balancing the 
congressional directive in Section 629 of the Communications Act to 
assure the commercial availability of multichannel video programming 
navigation devices against the possibility that consumers may face 
additional short-term costs.
---------------------------------------------------------------------------
    \1\ See, e.g., In the matter of Intelsat LLC, Order on 
Reconsideration, 15 FCC Rcd. 25234 (2000) (``waiver request must be 
considered on its own merits'').

    Question 6. Obviously we are all concerned about the new frontiers 
that can be created on the Internet for pedophiles and child 
pornographers. To advance the safety of our children, everyone must do 
their part. Is there more that the Internet service providers can be 
doing to help law enforcement and does the FCC need any additional 
authority from Congress to ensure that entities under the Commission's 
authority are doing their part?
    Answer. As a mother of three children, I believe we all have more 
to do. From educating them about the potential dangers, to providing 
parent's tools, to law enforcement, to speaking out--we each must take 
steps to safeguard our children from the potential dangers of the 
Internet.
    Recently, I participated in the launch of the Family Online Safety 
Institute, which seeks to provide a forum for the exchange of ideas and 
information to make the Internet a safer place for our children. 
Moreover, the wireless industry has voluntarily adopted wireless 
carrier content classification and Internet access control guidelines. 
If voluntary industry efforts and self-regulation are insufficient, 
however, perhaps Congress will consider additional jurisdiction for the 
FCC.
    Congress has addressed this issue, for example, in the context of 
E-Rate funding. Through the Children's Internet Protection Act and the 
Neighborhood Children's Protection Act, Congress requires schools and 
libraries to certify that they have Internet safety policies in place--
and that they use them--before they are eligible to receive funding 
from the E-Rate program administered by the FCC. Thus, even as Congress 
acts to promote access to the Internet, it recognizes the importance of 
protecting the children who use it. It is critically important that, as 
the Internet becomes ever more essential--even indispensable--for our 
children's educational and social development, we continue to ensure 
the safety of our Nation's children.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                        Hon. Deborah Taylor Tate

    Question 1. Is it true that eleven years ago Congress required the 
FCC to adopt a new universal service mechanism that ensures that local 
telephone rates in rural areas are reasonably comparable to rates in 
urban areas?
    Answer. Yes. See 47 U.S.C. Sec. 254.

    Question 2. Is it true that the 10th Circuit Court of Appeals has 
twice remanded the FCC's method of providing universal service support 
for rural customers served by larger carriers?
    Answer. Yes. See Qwest Corp. v. FCC, 398 F.3d 1222 (10th Cir. 2005) 
(Qwest I); Qwest Corp. v. FCC, 258 F.3d 1191 (10th Cir. 2003) (Qwest 
I).

    Question 3. Is it true that the second decision was issued in 
February of 2005 with the court expressing an expectation that the FCC 
would respond expeditiously?
    Answer. Yes. However, I was not a member of the Commission when the 
court issued its decision. Moreover, while the court expected the FCC 
to comply with its decision in an ``expeditious manner,'' it recognized 
the complex tasks before the FCC on remand. I am committed to working 
with my FCC colleagues to address these matters in a timely and 
considerate manner.

    Question 4. What steps will the FCC take now to ensure that it 
meets its obligations to the rural residents of large incumbent 
carriers? Will you commit that the FCC will take action on this remand 
during the next 6 months?
    Answer. The Commission issued a Notice of Proposed Rulemaking on 
December 9, 2005, to address the issues remanded by the Qwest II court. 
I will work with my colleagues to address this issue in a timely and 
considerate manner.

    Question 5. Now that the Antideficiency Act (ADA) exemption has 
expired, what kind of guarantees can you give that there will be no 
further E-Rate program shut downs or delays?
    Answer. Section 20946 of the Revised Continuing Appropriations 
Resolution, 2007 amends Section 302 of the Universal Service 
Antideficiency Temporary Suspension Act (Public Law 108-494; 118 Stat. 
3998) by extending the temporary suspension through December 31, 2007. 
For further discussion of the Commission's work on securing E-Rate 
funding, please see Chairman Martin's response.

    Question 6. Can you tell us how much USAC has in its E-Rate 
accounts currently and whether those reserves will be sufficient to 
cover funding?
    Answer. Please see Chairman Martin's response.

    Question 7. Are you still working with the Office of Management and 
Budget (OMB) on a reinterpretation of the ADA that would exempt 
Universal Service?
    Answer. Please see Chairman Martin's response.

    Question 8. Given that AT&T and BellSouth agreed to abide by a 
definition of ``network neutrality'' as part of there merger 
conditions, do you believe that the argument that it is impossible to 
craft such a definition is false?
    Answer. Yes.

    Question 9. Will you enforce the ``network neutrality'' provision 
agreed to as part of AT&T's and BellSouth's gaining approval for the 
merger?
    Answer. Yes.

    Question 10. Do you consider the U.S. broadband marketplace to be 
competitive?
    Answer. Nearly 65 million Americans had access to high-speed lines 
by June 2006, over a 50 percent increase in 1 year, with rural 
Americans more than doubling their broadband connections from 2003 to 
2005. This is good news. However, our work is far from complete. I am 
encouraged that we are taking steps to improve our broadband data 
collection to better assess consumer access to broadband to help us 
increase broadband deployment and competition. We must also continue to 
take steps that encourage investment, especially in rural areas. This 
includes our continuing spectrum and auction policies to deploy 
spectrum throughout the country. Moreover, encouraging public-private 
partnerships, like ConnectKentucky, also is an important tool in 
working to deploy broadband. Further, I am pleased that we launched a 
pilot program to explore ways to enhance broadband through our rural 
healthcare program.

    Question 11. Do you believe a wireless connection, which is two to 
four times more expensive and two to four times slower than DSL or 
cable, can be a substitute for a wireline connection to the Internet?
    Answer. While speed and price are critical factors in a consumer's 
broadband purchase decision, wireless broadband connections may offer 
mobility, or other features that consumers highly value. In fact, 
according to FCC data, from June 2005 to June 2006, wireless share of 
total broadband lines increased from 1 percent to 17 percent. 
Accordingly, for some consumers, wireless broadband may be a desirable 
substitute.

    Question 12. How can we ensure that a variety of news and 
entertainment outlets will be there if the telephone and cable 
companies are allowed to limit what people can see and do online?
    Answer. I support the four principles contained in the Commission's 
Internet Policy Statement, including the principle that ``consumers are 
entitled to access the lawful Internet content of their choice.'' 
Especially as broadband offerings increase, the market will punish 
service providers that limit consumer access to content. Moreover, the 
Commission has the tools to effectively address these issues if 
evidence of a problem arises.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Gordon H. Smith to 
                        Hon. Deborah Taylor Tate

    Question 1. Under a couple of the conditions, AT&T and BellSouth 
committed that for 42 months, they would continue to offer, and would 
not increase the price of, unbundled network elements. They also 
committed not to seek forbearance with respect to unbundled loops and 
transport. Will these conditions preserve the option for consumers to 
purchase high-speed broadband service from companies that combine an 
AT&T/BellSouth UNE loop with their own electronics and other network 
facilities to offer their own high-speed Internet broadband services?
    Answer. Competitive local exchange carriers (CLECs) that provide 
service using unbundled network elements (UNEs) obtained from AT&T and 
BellSouth asserted in the merger proceeding that a limitation against 
price increases on UNEs and a commitment by AT&T not to seek 
forbearance from UNE rules would provide them stability in offering 
their competing services. Although the Commission did not modify its 
rules, AT&T did make enforceable commitments in the context of the 
merger not to seek any increase in state-approved rates for UNEs or 
collocation and not to seek forbearance from UNE access rules for 42 
months.

    Question 2. Has the Commission concluded that it is in the public 
interest to preserve additional broadband options for consumers through 
these UNE as part of the AT&T/BellSouth merger conditions?
    Answer. The Commission has rules permitting UNE access by CLECs. 
The Commission's access rules for loops and transport have been upheld 
by the D.C. Circuit. These rules remain the general policy of the 
Commission. However, the Commission has, on a very market-specific 
basis, granted relief to incumbent LECs from certain UNE access rules. 
See Petition of ACS of Anchorage, Inc. Pursuant to Section 10 of the 
Communications Act of 1934, as Amended, for Forbearance from Sections 
251(c)(3) and 252(d)(1) in the Anchorage Study Area, WC Docket No. 05-
281, Memorandum Opinion and Order, FCC 06-188 (rel. Jan. 30, 2007); 
Petition of Qwest Corporation for Forbearance Pursuant to 47 U.S.C. 
Sec. 160(c) in the Omaha Metropolitan Statistical Area, WC Docket No. 
04-223, Memorandum Opinion and Order, 20 FCC Rcd 19415 (2005).
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                        Hon. Deborah Taylor Tate

    Question 1. Even as we are strategizing on how to complete the 
deployment of DSL and cable modem broadband networks to the hard to 
reach places of our country, other countries are well on their way to 
deploying next-generation fiber networks. Highspeed fiber will change 
how we use the Internet similar to the change we saw between dial-up 
and broadband. Is there anything Congress can be doing to help speed 
the deployment of our high-speed fiber network here at home, and in 
rural areas particularly?
    Answer. It is important for Federal and state governments to create 
a policy environment that encourages investment and competition. 
Competition is the best way for consumers to get better services and 
lower prices. Coming from a state with large urban markets and a 
significant rural constituency, I understand the need for policies that 
promote competition among all carriers. I am particularly excited by 
the efforts made by several states, like in Kentucky with 
ConnectKentucky, to accelerate the deployment of universal, affordable 
high-speed networks. States and Congress also have tools to evaluate 
tax and other investment incentives to encourage costly network 
deployment. I am committed to working with my FCC and state colleagues, 
and Members of this Committee, to encourage the further deployment of 
new and innovative services to all Americas.

    Question 2. When I speak with some of South Dakota's rural 
telephone cooperatives and other telecommunications providers, I hear 
about the large amount of resources they must put toward legal fees to 
keep pace with the legal and regulatory maneuvers being made by some of 
the larger telecommunications providers with seemingly bottomless 
pockets for such actions. Some of these small providers honestly think 
part of the larger competitors' plan is to beat them through legal fees 
instead of the marketplace. The Commission obviously cannot do anything 
about the fees lawyers are charging, but they can do something about 
the speed at which regulatory decisions are made and the hoops that 
must be jumped through. How can the FCC improve its decisionmaking 
processes so that small telecommunications providers don't bear such an 
imbalanced burden?
    Answer. At the state and now Federal level, I have always 
encouraged the industry to work together voluntarily to settle disputes 
and find solutions to policy concerns. At the same time, I am a 
proponent of swift agency action and will do all I can to encourage 
this at the FCC.

    Question 3. As you know, some media companies and others are 
pushing for the repeal of the newspaper cross-ownership ban. They argue 
that a media outlet owning both the local newspaper and a local 
broadcast station could make better use of scarce resources to gather 
and report the local news. They also argue that the handful of 
``grandfathered'' newspaper-broadcast combinations, which were in place 
before the ban was implemented in 1975, have not shown any gross abuse. 
Some consumer groups and others who support keeping the newspaper 
cross-ownership ban in place alternatively argue that combining 
newspaper and broadcast outlets could reduce competition among media 
outlets. There could be less incentive to get ``the scoop'' or report a 
contradicting viewpoint. What do you believe would happen to local news 
coverage if the newspaper cross-ownership ban was lifted? Do the 1975 
grandfathered combinations really provide us with a good example since 
some of them are currently owned by those media companies who want to 
lift the ban? For example Gannett knows its management of Arizona's 
largest newspaper, the Arizona Republic, and television outlet KPNX-TV 
is under the microscope, so perhaps their behavior would not be 
representative of how news gathering would be conducted if the ban was 
permanently lifted.
    Answer. The Third Circuit Court of Appeals affirmed the 
Commission's conclusion in the last review of its broadcast ownership 
rules that, based on record evidence, the blanket ban on newspaper/
broadcast cross-ownership was no longer necessary in the public 
interest. That conclusion was based on a Commission finding that 
newspaper-owned broadcast stations produce more and better quality 
local news and public affairs programming. The record with respect to 
local news coverage by such combinations is being refreshed as part of 
the Commission's current ownership proceeding, and I will review 
thoroughly the information submitted by all parties.

    Question 4. The closest daily newspaper can be 100 miles away in 
some parts of my state. Do you see any particular challenges in 
providing a diversity of news viewpoints in rural parts of our country 
if further media consolidation is allowed to occur? Some argue local 
cable news channels and local Internet news sites can enhance 
competition and bring out a diversity of viewpoints, but are these 
answers going to work in rural communities?
    Answer. Coming from Tennessee, a state with a significant rural 
population, I understand that residents of rural communities may face 
certain unique challenges in accessing the full diversity of viewpoints 
that most of us take for granted. Even in the absence of a local daily 
newspaper, however, I am encouraged by evidence showing that weeklies, 
``shoppers,'' and other publications provide useful local information. 
In addition, broadband, whether via wireless, DSL, cable, or satellite, 
also promises unprecedented business, educational, and healthcare 
opportunities for all Americans. I hope that by encouraging the 
deployment of broadband to rural areas, citizens can get news and 
information from any source, anywhere in the world.
                                 ______
                                 
    Response to Written Question Submitted by Hon. David Vitter to 
                        Hon. Deborah Taylor Tate

    Question. I have been alerted to a problem regarding compensation 
to payphone providers for coinless calls made from their phones. 
According to recent FCC statistics, about 6 percent of Louisiana 
households do not have any type of phone in their home. During the 
immediate aftermath of Hurricanes Katrina and Rita, payphones were the 
only way many people--both those without any other phones and also 
those whose mobile phones were not working due to the networks being 
overloaded--could reach emergency personnel or family and loved ones. 
Without being fairly compensated according the rules set forth by the 
Commission, payphone providers will not be able to maintain these 
phones. I have been told that in the last 2 years since the Commission 
most recently revised the payphone compensation rules, a large number 
of carriers have failed to comply with their obligations under these 
rules. I also understand that in December 2006, the FCC issued its 
first sanctions against one of these carriers that violated these 
rules. I would appreciate hearing your comments on whether you think 
the agency has sufficient power and resources under your existing 
authority to continue to enforce these rules and help ensure that 
companies are not able to disregard the Commission's payphone 
compensation rules.
    Answer. I was not a member of the FCC when the Commission revised 
its payphone compensation rules. I understand these rules became 
effective in July 2004. See 47 CFR Sec. 64.1300 et seq. As you mention, 
we have just issued our first enforcement action under those new rules. 
Swift and just enforcement of the Commission's rules will curtail 
violations. Moreover, the establishment of Commission precedent should 
enable rapid enforcement by the Enforcement Bureau for additional cases 
involving similar violations of the Commission's rules.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Daniel K. Inouye to 
                        Hon. Robert M. McDowell

    Question 1. In March, 2005, the FCC allowed a Verizon forbearance 
petition to become effective by operation of law. Because there was a 
vacancy on the Commission at that time and a 2-2 split among 
Commissioners, Verizon was able to gain regulatory relief through 
Commission inaction.
    Does the current process regarding the disposition of forbearance 
petitions in the absence of a Commission majority essentially allow 
petitioners to write the terms of their relief?
    Is it fair in such situations to allow petitioners to amend the 
scope of their requested relief after the period for comment on the 
original petition has concluded?
    Should forbearance petitions be denied in the absence of an order 
approved by a majority of Commissioners?
    What effect will government recusal rules have on your ability to 
participate in other pending or future forbearance proceedings in which 
your former employer, Comptel, is a party or otherwise participates?
    Answer. Section 10 of the Communications Act directs the FCC to 
forbear from applying any regulation or provision of the Act to a 
telecommunications carrier or service, or class of carriers or 
services, if the Commission determines that: ``(1) enforcement of such 
regulation or provision is not necessary to ensure that the charges, 
practices, classifications, or regulations by, for, or in connection 
with that telecommunications carrier or telecommunications service are 
just and reasonable and are not unjustly or unreasonably 
discriminatory; (2) enforcement of such regulation or provision is not 
necessary for the protection of consumers; and (3) forbearance from 
applying such provision or regulation is consistent with the public 
interest.'' Section 10 also provides that a telecommunications carrier 
can file a petition for forbearance with the FCC and that such a 
petition is deemed granted unless the Commission does not deny the 
petition within 1 year after it is filed, unless the Commission extends 
that period for an additional 90 days.
    Action on a forbearance petition requires a majority of 
Commissioners to act to deny the request. In the case of recusal of a 
Commissioner by virtue of the Federal conflict of interest statutes \1\ 
and regulations,\2\ three of the four remaining participating 
Commissioners would have to vote to deny the forbearance petition in 
order for it not be granted. The Commission is bound by the statutory 
provisions governing forbearance petitions. If, in the opinion of 
Congress, the operation of this statute is causing an undesired result, 
then it would have to be modified by Congress.
---------------------------------------------------------------------------
    \1\ See 18 U.S.C. Sec. 208 (setting forth acts affecting a personal 
financial interest); 47 U.S.C. Sec. 154 (providing that no member of 
the Commission shall have a financial interest in any company or other 
entity engaged in the manufacture or sale of telecommunications 
equipment, the business of communication by wire or radio, or in the 
use of the electromagnetic spectrum).
    \2\ See 5 C.F.R. Sec. 2635.501 et seq. (containing provisions 
intended to ensure that an employee takes appropriate steps to avoid an 
appearance of loss of impartiality in the performance of official 
duties.
---------------------------------------------------------------------------
    In my case, I have been recused from each of the forbearance 
petitions that the Commission has acted on since my coming to the 
Commission in June 2006, by virtue of my former employer's 
participation in those forbearance proceedings. Therefore, I have no 
experience as a Commissioner upon which to base a position on process 
for considering forbearance petitions.
    The Federal conflict of interest statutes and regulations referred 
to above require my continued recusal from all forbearance petitions in 
which my former employer was a party for a period of 1 year from my 
taking the oath of office.

    Question 2. One of the biggest challenges we face over the next 2 
years is moving our Nation from analog to digital television with 
minimal consumer disruption. I understand that the FCC is currently 
receiving comment on its Proposed Final Table of DTV allotments, 
proposing final digital channels for TV broadcast stations. However, 
even after that is final, additional actions will be needed to complete 
the transition. Given the enormity of the task before us, what action 
is the Commission taking and what action should it take to ensure that 
our country is ready in February 2009?
    Answer. Our Media Bureau and Office of Engineering and Technology 
are working diligently on digital transition issues to make the 
February 17, 2009 transition date a reality. As you know, we are in the 
process of completing a final DTV table of allotments for the 
assignment of digital channels to stations. We are overseeing 
broadcasters' construction of digital facilities and enforcing 
deadlines for that construction. We have established deadlines for all 
TV tuners to be capable of receiving DTV broadcast signals. We have 
launched a consumer education website about the transition, 
www.dtv.gov. Much more work remains to be done, but we are all striving 
to make the transition as smooth as possible for the industry and for 
consumers so that the benefits of digital television technology can be 
enjoyed by the public. Also, we will consult with NTIA as it implements 
the digital-to-analog converter box program, which will enable over-
the-air broadcast television viewers to view DTV programming.

    Question 3. A recent study conducted by Free Press entitled, Out of 
the Picture: Minority & Female TV Station Ownership in the United 
States, contained some sobering statistics.

        Women comprise 51 percent of the entire U.S. population, but 
        own a total of only 67 stations, or 4.97 percent of all 
        stations.

        Minorities comprise 33 percent of the entire U.S. population, 
        but own a total of only 44 stations, or 3.26 percent of all 
        stations.

        Latinos comprise 14 percent of the entire U.S. population, but 
        own a total of only 15 stations, or 1.11 percent of all 
        stations.

        African Americans comprise 13 percent of the entire U.S. 
        population but only own 18 stations, or 1.3 percent of all 
        stations.

        Asians comprise 4 percent of the entire U.S. population but 
        only own a total of 6 stations or 0.44 percent of all stations.

    Do these facts trouble you as they do me, and what action should 
the Commission take to promote greater diversity of ownership?
    Answer. I am particularly concerned about the lack of women and 
minority owners of broadcast properties. At this point in time, I am 
exploring the causes of this situation, especially as compared with 
other industries, and the proposed solutions submitted by participants 
in the media ownership proceeding.

    Question 4. On November 22, 2006, the day before Thanksgiving, the 
FCC released a list of economic studies to be performed in the media 
ownership proceedings.

   How did the Commission choose the economic studies to be 
        performed in the media ownership proceedings?

   Who at the Commission or elsewhere was consulted for input 
        on the topics chosen?

   How were parties selected for the studies done outside the 
        Commission, and what is the cost of these contracts?

   Would the Commission consider seeking public comment on what 
        other studies might assist the Commission in its review of 
        ownership rules?
    Answer. Chairman Martin and his staff, after consulting with all of 
the Commissioners' offices, took the lead on developing the topics for 
the economic studies, selecting Commission personnel and third parties 
to conduct the studies, and contracting with those third parties. The 
details about those contracts, including the costs, are available 
through the Chairman's office. Regarding other studies that might 
assist us in our media ownership review, we have received several 
studies in the comments filed in the proceeding. I will review those 
carefully and consider how they supplement the Commission studies. 
Additionally, please see Chairman Martin's response to this question.

    Question 5. In November 2006, the Government Accountability Office 
(GAO) issued a report concluding that the cost of special access has 
gone up--not down--in many areas where the FCC predicted that 
competition would emerge. To address this error, the report recommended 
that the FCC develop a better definition of ``effective competition'' 
and monitor more closely the effect of competition in the marketplace. 
Do you agree with these findings? What action should the Commission 
take in response?
    Answer. The GAO special access report provided useful analysis of 
the impact of the Commission's pricing flexibility rules on competition 
that had not been undertaken before. The Commission has an outstanding 
rulemaking proceeding to determine what price cap rules should apply to 
special access services after 2005 and whether the pricing flexibility 
rules should be modified or repealed. While I do not have a position on 
the merits of the GAO findings, I believe that the Commission should 
fully consider those findings. I will review the positions of the 
various carriers, user groups and the analysis of GAO as I continue to 
formulate an opinion on special access issues.

    Question 6. Last year, Congress passed legislation imposing a ten-
fold increase in the size of maximum fines for indecency violations, to 
a maximum of $325,000 per violation. At the time President Bush signed 
the law, he said ``[t]he problem we have is that the maximum penalty 
that the FCC can impose under current law is just $32,500 per 
violation, and for some broadcasters, this amount is meaningless. It's 
relatively painless for them when they violate decency standards.'' 
Should Congress similarly raise the statutory maximum fine for other 
violations? What other actions should be taken to promote swifter and 
more effective enforcement?
    Answer. We at the Commission are doing our best to enforce the law, 
while being mindful of First Amendment protections and the prohibitions 
on censorship and interference with broadcasters' freedom of speech. 
Swift and effective enforcement is especially important as we endeavor 
to protect America's children from indecent broadcast content. 
Obviously, ruling on indecency complaints requires a delicate balancing 
of legal rights and a review of the particular facts of a case. The 
context in which the allegedly indecent content appears is always 
critical. I hope that the Commission's decisions will provide some 
measure of guidance for the industry regarding what is appropriate for 
broadcast during hours in which many children are watching television. 
I also look forward to guidance from the courts about whether our 
rulings are providing the guidance that they should.

    Question 7. Recently, the FCC adopted an order to prohibit certain 
practices by franchising authorities that the Commission finds are 
unreasonable barriers to entry. One issue mentioned in that order, 
which is very important to the State of Hawaii, is the ability of the 
franchise authority to seek appropriate contributions for public, 
educational, and governmental (PEG) and institutional networks (I-
NETS). I understand that some parties have disputed the veracity of 
some claims made in this proceeding. What, if any, efforts did the 
Commission take to independently investigate and verify the claims of 
unfair demands made by many of the carriers in this proceeding?
    Answer. My understanding is that nearly all of the claims of unfair 
demands that the Commission cited in the video franchising order and 
that carriers submitted into the record were not contested by other 
parties. Based on the uncontested evidence before us, we were able to 
make a finding that sufficient barriers to competitive entry existed to 
justify our actions in the proceeding. Chairman Martin's office may 
have additional details about the Commission's efforts to investigate 
these claims.

    Question 8. In 2004, the FCC adopted a plan to move certain 
licenses within the 800 megahertz band in order to eliminate 
interference problems that were being experienced by public safety 
communications systems. What is your assessment of the pace of progress 
in rebanding the 800 MHz band and what steps does the Commission intend 
to take in order to get this process back on track?
    Answer. Improving public safety communications within the 800 MHz 
band is a critical undertaking and I can assure you that completing 
this task is a very important priority for the Commission. I share my 
colleagues' deep commitment to provide public safety entities with 
freedom from interference and an improved, more efficient 800 MHz 
spectrum band plan.
    As a preliminary matter, I applaud Chairman Martin's formation of 
the new Public Safety and Homeland Security Bureau (PSHSB), which was 
launched in September 2006. Among other responsibilities, PSHSB is 
specifically tasked with the ongoing work toward improving public 
safety communications within the 800 MHz band. Further, the Chairman 
appointed an associate chief within PSHSB to manage this project on a 
full-time basis. This hands-on management has greatly improved the 
agency's ability to move forward. Specifically, the bureau has issued 
several orders and public notices on delegated authority to resolve 
disputed issues and facilitate negotiations between the parties. In 
fact, as of this month, the bureau has issued six orders resolving 
disputed issues referred from specific mediation cases. Most recently, 
on March 6, 2007, the Bureau directed the project administrator to 
confirm the status of rebanding activities.
    Certainly the added complexity pertaining to areas located near the 
Canadian and Mexican borders is an ongoing challenge for the 
Commission's efforts to full resolve all lingering issues. Given this, 
I traveled to Mexico in late February and met with my counterparts in 
the Mexican government to discuss the importance of moving apace as 
quickly as possible. In those discussions, I stressed the critical 
importance of implementing changes in our bilateral agreements to 
facilitate and conclude band reconfiguration on the Mexican border in 
an expeditious manner.
    Finally, a number of parties filed petitions for reconsideration or 
clarification of the 800 MHz Reconsideration Order. The pleading cycle 
closed on April 3, 2006, therefore, I am hopeful that we will act upon 
these requests as quickly as possible.

    Question 9. A number of wireless carriers have employed the use of 
high ``early termination fees'' to prevent wireless customers from 
switching to other carriers. In some cases these fees may be $200 or 
more, and may apply regardless of whether the subscriber wishes to 
cancel on the first or last date of their wireless contract. Do you 
believe these practices promote or impede competition?
    Answer. I am delighted that the Chairman has indicated that the 
staff is working on a draft order addressing the practice by wireless 
carriers of imposing early termination fees. I am also pleased that the 
market has responded to this issue--in that one company announced a 
policy change in late November. I am hopeful, and I would expect (given 
the competitive nature of the wireless industry) that this action will 
lead to additional carriers following suit. In the meantime, I have 
heard from numerous stakeholders on this matter and I look forward to 
reviewing the draft upon circulation.
    With respect to the substance, I believe that wireless is an 
inherently interstate service. I also believe that the wireless 
industry is a wonderful example of the many consumer benefits that 
arise when a highly competitive industry is regulated with a light 
touch. Wireless subscriber growth has grown exponentially and 
competition among numerous providers has flourished. At the same time, 
prices are decreasing. This is great news for America's consumers. As a 
result, I am hopeful that the Commission would proceed cognizant of the 
importance of the wireless industry to America's continued economic 
competitiveness across the globe.

    Question 10. Given requirements imposed by General Services 
Administration to promote greater redundancy of communications, how 
would the retirement of copper facilities impact Congress' directive to 
promote the availability of alternate network facilities in federally 
owned and leased buildings?
    Answer. The issue of copper loop retirement by incumbent local 
exchange carriers has been raised in two petitions for rulemaking filed 
in January 2007, which are currently pending before the FCC. At such 
time as the comments and reply comments have been filed with the 
Commission, I will review the entire record and consider the merits of 
the relief requested with both the competitive consequences and the 
effect on the Congressional directive for redundancy in Federal 
facilities firmly in mind.

    Question 11. Given the Commission's policy of promoting broadband 
deployment and eliminating regulations that treat competitors in the 
provision of broadband differently, how is this policy being 
implemented this policy with regard to pole attachment regulations?
    Answer. Section 224(b)(1) of the Communications Act requires the 
FCC to regulate the pole attachments of all providers of 
telecommunications services and to ensure that the rates, terms, and 
conditions of pole attachment agreements are just and reasonable. By 
virtue of the current Commission rules, the formula for calculating the 
rates for different categories of providers results in three different 
rates. An outstanding petition for rulemaking to revise those rules is 
pending before the Commission. I believe that the petition for 
rulemaking and the comments filed in that proceeding should be 
evaluated in the context of the directive in Section 224(b)(1) of the 
Act and the effect of the current rules on promoting broadband 
deployment. While I cannot determine when the Commission will consider 
the rulemaking petition, I will fully evaluate the merits of this 
petition when it comes before the Commission for decision.

    Question 12. Recently, a Virginia Federal court referred a matter 
to the FCC for review and clarification as to whether Internet Protocol 
Television or ``IPTV'' service meets the definition of a ``cable 
service'' under the Communications Act--a question that this Committee 
answered affirmatively during consideration of last year's 
telecommunications bill. How does the Commission intend to address this 
matter?
    Answer. The issue of whether a IPTV constitutes a ``cable service'' 
under the Communications Act has been raised in two Commission 
proceedings: (1) the video franchising proceeding, in which we 
explicitly deferred deciding the issue in our order adopted in December 
2006; and (2) the IP-enabled devices proceeding, which was initiated in 
February 2004.
    With respect to the video franchising order, I hope that the 
Commission will extend the same de-regulatory benefits we are providing 
to new entrants in our recently adopted video franchising order to all 
cable providers, specifically incumbents and overbuilders. Many of the 
statutory provisions we interpreted in the proceeding are generally 
applicable to all cable operators. I want to ensure that no 
governmental entities, including those of us at the FCC, have any thumb 
on the scale to give a regulatory advantage to any competitor. 
Accordingly, in this context and others, it is important to resolve the 
question of whether IPTV is a cable service under the statute and our 
rules. Deciding this issue will give regulatory certainty to all market 
players.
    Because the Chairman sets the Commission's agenda, I refer you to 
Chairman Martin's answer regarding when and how he intends to address 
this issue.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Byron L. Dorgan to 
                        Hon. Robert M. McDowell

    Question 1. Eleven years after Congress passed the 1996 
Telecommunications Act that opened the floodgates of media 
consolidation in the radio industry is American radio better or worse 
than it was in 1996 in terms of viewpoint diversity and localism?
    Answer. At this stage in our media ownership proceeding, I am not 
certain whether viewpoint diversity and localism in radio are better or 
worse off than in 1996. Thus far, the evidence on the record in our 
current proceeding is mixed with respect to the quality and quantity of 
local content provided by station groups to their communities of 
license. The evidence also provides varied views regarding whether more 
viewpoints are available, given the drastic increase in audio platforms 
since that time (satellite radio, iPods, low power radio, Internet 
radio stations). I am studying the record carefully and I look forward 
to attending more of the field hearings we are convening around the 
country to learn about specific local experiences from people with 
first-hand knowledge of the realities of the markets in their 
communities. I am pleased that we have a summary of the comments filed 
in our localism inquiry in the media ownership docket so that we will 
have a full record on localism issues. With respect to diversity, I am 
particularly concerned about the decline in female and minority owners 
of broadcast properties. I look forward to learning about the causes of 
this situation, especially as compared with other industries.

    Question 2. How has consolidation impacted the public's ability to 
hear local music and local news on the airwaves?
    Two critical issues in our media ownership inquiry are whether 
licensees of multiple stations supply more or less local music and news 
and whether the explosion of new audio choices for consumers (satellite 
radio, iPods, Internet radio stations, low power radio stations and so 
forth) has resulted in more local music and news on the airwaves. 
Again, the evidence on the record is mixed. I am studying these issues 
carefully and with an open mind.
    The Commission's investigation of four leading radio station groups 
for violations of our sponsorship identification rules may soon be 
concluded in a manner favorable to independent music. As part of the 
voluntary settlement, the radio station groups will likely provide 
hundreds of hours of free air time to local musicians who are 
independent of major record labels. This would be a great resolution of 
the investigation and a creative private sector solution to issues 
underlying payola practices.

    Question 3. Even with the existence of net neutrality conditions on 
AT&T, are there rules in place to ensure that other broadband providers 
do not discriminate against Internet content, services or applications? 
Given the rulings on information services, is it even clear that the 
FCC has authority to act if such discrimination occurs?
    Answer. I believe that the net neutrality debate is healthy and I 
welcome further discussion of the net neutrality issue. The Internet 
already is the communications lifeblood of the world economy and is 
becoming the primary means of communication for American consumers. It 
is absolutely essential that broadband network and service providers 
have the proper incentives to deploy new technologies and retain the 
ability to manage them. However, it is equally as important that 
consumers have the option of pulling, or posting, the content of their 
choice anytime, anywhere and on any device. In the one instance where 
the Commission received allegations that a carrier was blocking ports 
used for VoIP applications, it swiftly launched an investigation and 
entered into a consent decree, thereby resolving the alleged practices 
that affected customers' ability to use VoIP through one or more VoIP 
service providers.\3\ In that situation, we acted swiftly and 
resolutely, sending a clear signal that we will not tolerate anti-
competitive behavior. The Commission has adopted a Policy Statement 
that set forth four broad principles designed ``to encourage broadband 
deployment and preserve and promote the open and interconnected nature 
of the public Internet.'' It specifically stated that consumers are 
entitled to: (1) access to Internet content; (2) run applications and 
use services of their choice; (3) connect legal devices that do not 
harm the network; and (4) competition among network providers, 
application and service providers and content providers. I believe that 
we have the ancillary authority under Title I of the Communications Act 
to enforce these principles.
---------------------------------------------------------------------------
    \3\ In the Matter of Madison River Communications, LLC and 
affiliated companies, File No. EB-05-IH-0110, Order, DA 05-543, rel. 
March 3, 2005.
---------------------------------------------------------------------------
    The Commission will continue to monitor this situation and will 
remain vigilant in protecting the continued availability of all types 
of content over the Internet for consumers. Should we receive evidence 
of additional anticompetitive conduct, I will urge the Commission to 
act swiftly and in the best interest of consumers.

    Question 4. In an environment of industry consolidation and 
technological integration, what role do you see the FCC playing to 
ensure nondiscriminatory access to infrastructure, content, roaming, 
spectrum and rights-of-way?
    Answer. The FCC has jurisdiction under specific provisions of the 
Communications Act to promote competition and prevent anti-competitive 
conduct in each of the areas addressed in this question. The Commission 
is exercising its authority as set forth below.
    With respect to nondiscriminatory access to infrastructure, Section 
251 of the Communications Act requires all telecommunications carriers 
to interconnect with the facilities and equipment of other 
telecommunications carriers. That provision imposes additional 
interconnection obligations on local exchange carriers and incumbent 
local exchange carriers. As more competition develops among different 
types of services, such as wireline, wireless, cable and broadband, 
these obligations work to ensure that those competitors have 
nondiscriminatory access. On the other hand, we should not impose 
legacy regulations that are no longer needed to promote competition 
among different services. As an example of the Commission's ongoing 
enforcement of the nondiscriminatory access provisions of Section 251, 
on March 1, 2007, we granted a request for declaratory ruling filed by 
Time Warner Cable in which we affirmed that wholesale 
telecommunications carriers are entitled to interconnect and exchange 
traffic with incumbent local exchange carriers when providing services 
to other service providers, including VoIP.
    Regarding content, the Commission ensures nondiscriminatory access 
to content through the program access rules, which under the authority 
Congress granted in the 1992 Cable Act, restrict the ability of 
vertically integrated video programmers to favor affiliated over 
nonaffiliated cable operators. We recently released a notice of 
proposed rulemaking to initiate our review of whether the rules 
prohibiting exclusive contracts between cable operators and vertically 
integrated programmers continues to be necessary to preserve 
competition and diversity in video programming distribution. The 
current limitation will expire on October 5 of this year unless the 
Commission acts to extend the prohibition. We are also considering a 
Notice of Proposed Rule Making regarding whether our procedures for 
resolving program access disputes should be modified to increase their 
effectiveness as an avenue for relief.
    With respect to roaming, I have met with a number of parties 
regarding wireless roaming obligations. Certainly it is important that 
all American consumers, no matter where they live, work or travel, have 
the ability to benefit from competitive wireless services. As a result 
of my introduction to this issue, I have come to recognize and 
appreciate the complicated legal and economic factors involved. 
Although I cannot predict the timeframe for moving forward (given that 
the Chairman sets the agenda for the Commission), I will continue to 
work on analyzing this important issue.
    With respect to spectrum management, I believe that, for 
consumers--all types of consumers (residential, government, business, 
wholesale, retail)--to truly reap the rewards of the digital age, 
regulators should not try to keep up with the pace of innovation and 
technology brought forth by the private sector, but should step out of 
the way of technology where possible. Good spectrum management allows 
entrepreneurs, rather than the government, to determine how best to 
maximize our limited spectrum resources. But where the markets may 
fail, the Commission should be poised to use a light regulatory touch 
to protect the public interest. I am pleased, therefore, that the 
Commission has progressively implemented more flexible, market-oriented 
spectrum management policies.
    The new, technology-driven global economy requires the Commission 
to allocate and manage spectrum in an integrated, market-oriented 
manner that provides greater regulatory certainty, while minimizing 
regulatory intervention and fostering flexibility and robust 
competition. This type of dynamic disruption best serves consumers and, 
therefore, the public interest. Given the need to continue to spur the 
development and deployment of advanced wireless and satellite 
technologies, a priority of mine as a commissioner is to encourage the 
creation of new wireless delivery platforms--integrated, interconnected 
and interoperable platforms--that maximize use of our Nation's spectrum 
resources.
    Finally, regarding rights-of-way, the order we recently released in 
the video franchising proceeding takes appropriate steps to ensure 
nondiscriminatory access for cable operators, regardless of delivery 
platform. I have long advocated the Commission doing all that it can to 
open new opportunities for entrepreneurs to have the freedom to 
construct new delivery platforms for innovative new services. More 
delivery platforms mean more competition, which translates into more 
innovative and less costly offerings for consumers. The Commission's 
video franchising order establishes a de-regulatory national framework 
to clear unnecessary underbrush that has hindered competitors to 
incumbent cable companies from gaining access to rights-of-way. At the 
same time, the order preserves local control by allowing localities to 
protect important local interests through meaningful negotiations with 
aspiring video service providers.

    Question 5. Do you think that the current broadband market is 
sufficiently competitive and robust in terms of broadband deployment? 
Does the FCC currently have sufficient tools to even accurately 
determine whether Americans have access to broadband?
    Answer. Broadband deployment is occurring rapidly, although we 
should never become complacent and always strive for faster speeds and 
more ubiquity. Significantly more Americans are adopting broadband 
services each day. The FCC recently released a status report on high-
speed services for Internet access. As of June 30, 2006, high-speed 
lines connecting homes and businesses to the Internet increased by 26 
percent during the first half of 2006; from 51.2 million to 64.6 
million lines in service. In addition, for the full twelve month period 
ending June 30, 2006, high-speed lines increased by 52 percent (or 22.2 
million lines).
    However, it is critical that the regulatory climate in the U.S. 
promotes broadband growth and availability. Our economic future depends 
on it. Accordingly, the Commission is adopting policies to encourage 
increased broadband deployment for the public, pursuant to Section 7 of 
the Communications Act. Current deployment figures, coupled with recent 
and impending FCC actions, suggest that wireless broadband offers great 
opportunities for broadband deployment in all areas of the country, 
including rural communities. For instance, I am optimistic that the 700 
MHz auction and availability of spectrum in the white spaces of the TV 
broadcast bands will help deployment of broadband in rural areas. In 
addition, the Commission's video franchising decision adopted in 
December, 2006 extends benefits to new entrants and should further 
stimulate deployment of fiber. While it is encouraging that America's 
rate of broadband deployment has more than doubled over the past 2 
years,\4\ we must ensure that the Commission takes advantage of all 
opportunities to spur technological innovation and increased access to 
broadband services. Accordingly, we are making it easier for 
entrepreneurs to construct new delivery platforms more quickly and for 
the owners of existing platforms to upgrade their facilities, as 
discussed below. These policies should result in more choices for 
consumers and lead to more competition among different broadband 
platforms and within them, which should, in turn, result in lower 
prices for consumers.
---------------------------------------------------------------------------
    \4\ From March 2004 to March 2005, the broadband adoption rate grew 
at 20 percent. Home Broadband Adoption 2006, Pew Internet & American 
Life Project (May 28, 2006) at 1. From March 2005 to March 2006, it 
accelerated to about a 40 percent penetration rate. Id. The most 
current rate has accelerated even faster to 52 percent. High-Speed 
Services for Internet Access: Status as of June 30, 2006, Industry 
Analysis and Technology Division, Wireline Competition Bureau, FCC 
(January 2007) at 1.

    Question 6. How do you envision universal service reform moving 
ahead to keep the fund sustainable? I am concerned about proposals that 
would not require broadband connections to pay into universal service, 
or reverse auction proposals that advocate providing USF support in an 
auction type model to the least cost provider.
    Such proposals bring uncertainty to investment plans, and shift the 
universal service standard from comparable to urban areas, to one that 
would just go to the lower bidder, quality irrelevant. I understand 
that rural providers have expressed concern about both proposals. Can 
you discuss the least cost provider issue, as well as what possible 
distinctions exist to justify excluding broadband from paying into 
USF--why shouldn't a technology that uses and benefits from the network 
pay into universal service?
    Answer. The Universal Service system has been instrumental in 
keeping Americans connected and improving their quality of life, 
particularly in rural areas. However, this system is in dire need of 
comprehensive reform. Universal Service Fund disbursements have grown 
significantly from approximately $4.4 billion in 2000 to approximately 
$6.5 billion in 2005, almost a 50 percent increase, and are projected 
to continue to rise at similarly exponential rates. This is compared to 
an overall inflation rate of only 13 percent for the same 5 year 
period. We simply cannot afford to continue to let the Fund grow 
unchecked. The future of the Universal Service Fund hangs in the 
balance.
    Last June, the Commission adopted interim changes to the Universal 
Service contribution methodology that were designed to address 
deficiencies in the Universal Service Fund temporarily. The changes 
raised the interim wireless safe harbor for interstate traffic from 
28.5 percent to 37 percent, and required VoIP providers to contribute 
to the Fund for the first time. Their interstate safe harbor was pegged 
at 65 percent. The hope was that by expanding the contribution base, we 
could lower the contribution factor, at least temporarily. However, the 
contribution factor that was supposed to have declined as a result of 
the FCC's action, is back on the rise again. The factor initially 
declined from about 11 percent to 9 percent once we broadened the base. 
But for the First Quarter of 2007 it has risen again to 9.7 percent--
and early indications are that the Second Quarter figure could spike to 
over 11 percent.
    Fundamental reform of the Universal Service system is necessary so 
that it can continue to support rural areas. The Commission is working 
to achieve comprehensive reform to ensure long term sustainability of 
Universal Service. The Commission is considering alternatives to the 
current end-user revenues-based contribution factor. On the 
disbursements side, the Federal-State Joint Board on Universal Service 
is considering proposals on the use of reverse auctions. Some of those 
proposals initially address the growth of the Fund resulting from the 
expansion of funding to the competitive eligible telecommunications 
carriers, which I believe is an appropriate initial focus. This should 
not adversely affect the support to existing rural wireline carriers in 
rural areas. At such time as the Joint Board recommendations are 
forwarded to the Commission, I will fully consider the merits of those 
recommendations and the comments of the parties.

    Question 7. What is your view of making the deployment of advanced 
infrastructure that is fully capable of offering the wide array of 
broadband oriented services the hallmark of our national universal 
service policy? Should universal service subsidize broadband?
    Answer. As I have indicated, the Universal Service system has been 
instrumental in keeping Americans connected and improving their quality 
of life, particularly in rural areas. However, this system is in dire 
need of comprehensive reform. Universal Service Fund disbursements have 
grown significantly from approximately $4.4 billion in 2000 to 
approximately $6.5 billion in 2005, almost a 50 percent increase, and 
are projected to continue to rise at similarly exponential rates. This 
is compared to an overall inflation rate of only 13 percent for the 
same 5 year period. We simply cannot afford to continue to let the Fund 
grow unchecked. Otherwise, the future of the Universal Service Fund 
will be in jeopardy.
    Fundamental reform of the Universal Service system is necessary so 
that it can continue to support rural areas. The Commission is working 
to achieve comprehensive reform to ensure long term sustainability of 
Universal Service. The Commission is considering alternatives to the 
current end-user revenues-based contribution factor. On the 
disbursements side, the Federal-State Joint Board on Universal Service 
is considering proposals on the use of reverse auctions. Some of those 
proposals initially address the growth of the Fund resulting from the 
expansion of funding to the competitive eligible telecommunications 
carriers, which I believe is an appropriate initial focus. This should 
not adversely affect the support to existing rural wireline carriers in 
rural areas. At such time as the Joint Board recommendations are 
forwarded to the Commission, I will fully consider the merits of those 
recommendations and the comments of the parties.

    Question 8. The FCC recently has been granting incumbent providers 
(ILECs) forbearance from regulations on the premise that sufficient 
competition exists in a specific market to make enforcement of the 
regulations unnecessary. However, a Fall 2006 GAO report indicates that 
the assumptions the FCC uses to determine the existence of competition 
may be flawed and further that prices in Phase II areas--that is, areas 
where competition is theoretically most intense--are going up. Is that 
the case, and if so, are price increases consistent with a competitive 
market?
    Answer. In November, 2006, GAO issued a study that assessed the 
effect of the special access rates on competition. The study found that 
the pricing flexibility plan reduced, rather than increased, 
competition in special access services. I look forward to reviewing the 
positions of the various carriers, user groups and the analysis of GAO 
in working out the best approach for assuring that special access rates 
foster competition in the context of the Commission's pending special 
access proceeding, as more fully discussed in response to Question 10., 
below.

    Question 9. Is forbearance for the ILECs in the public interest?
    Answer. Section 10 of the Communications Act provides that the 
Commission must make a determination that a forbearance petition filed 
by a telecommunications carrier is in the public interest before it 
grants the petition. Each petition must be judged based on the criteria 
set forth in Section 10. I have been recused from each of the 
forbearance petitions that the Commission has acted upon since my 
coming to the Commission in June 2006, by virtue of my former 
employer's participation in those forbearance proceedings. Therefore, I 
have had no experience as a Commissioner upon which to base a position 
on the forbearance decision-making process at the Commission. However, 
I will weigh the merits of each forbearance petition that I am 
permitted to participate in against the statutory criteria for granting 
forbearance petitions and act consistently with those criteria.

    Question 10. A proceeding to investigate the rates, terms and 
conditions for interstate special access services has been pending for 
a number of years. What is the status of the FCC's special access 
proceeding? What steps are being taken to speed resolution of this 
matter?
    Answer. The issue of what price cap rules should apply to special 
access services after 2005 and whether the pricing flexibility rules 
should be modified or repealed is the subject of a Commission Notice of 
Proposed Rulemaking. In the meantime, the CALLS plan was intended to 
run until June 30, 2005, but it continues to remain in effect for price 
cap carriers. The November, 2006, GAO special access study, referred to 
in response to Question 8., above, addresses the issues raised in that 
Commission proceeding and the substance of those findings will be 
considered when the Commission reaches a decision on special access 
reforms. As I indicated above, I will review the analysis of GAO, as 
well as the positions of the various carriers, and user groups in 
working out the best approach for assuring that special access rates 
foster competition. With regard to timing of action on the special 
access proceeding, I refer the Committee to the Chairman's office, in 
view of the fact that he sets the Commission's agenda.

    Question 11. Some say that the dispute between Mediacom and 
Sinclair signals a new period of confrontation between broadcasters and 
distributors. How many complaints involving retransmission consent 
disputes has the Commission received in the last couple of years? Is 
there any trend within that data that may be useful to consider? How 
long does the Commission typically take to resolve those complaints?
    Answer. While the dispute between Mediacom and Sinclair was 
particularly contentious, the vast majority of retransmission consent 
disputes are resolved privately between the negotiating parties without 
either party seeking recourse before the Commission. It is clear that 
more broadcasters are seeking compensation for their programming from 
cable operators. What remains to be seen is whether the marketplace 
players will adapt to this change through commercial means or whether 
they will seek regulatory solutions. We will watch these developments 
carefully. I respectfully refer you to Chairman Martin and the Media 
Bureau regarding the specific number of complaints and specific time 
frames for resolution.

    Question 12. One issue specifically important for public radio 
stations is the opportunity to file for and receive additional reserved 
FM spectrum. It has been almost 7 years since the FCC provided the 
public with an opportunity to build new noncommercial educational 
stations on reserved FM spectrum. When will the FCC open a filing 
window for new reserved-FM noncommercial stations? Will the FCC provide 
public notice of a filing window sufficiently in advance to permit non-
profit, governmental, and other potential applicants adequate time to 
participate?
    Answer. The Commission currently has under consideration a 
memorandum opinion and order that will result in the opening of a new 
filing window for noncommercial educational (NCE) FM station 
applications. The comparative point system that the Commission 
developed to resolve mutually exclusive NCE applications has been the 
subject of several judicial challenges that have delayed our 
implementation of the system for several years. In light of recent 
court decisions, the Commission is now prepared to process 
approximately 200 mutually exclusive applications for new or modified 
NCE FM stations. After processing these long-pending applications and 
granting licenses to the winning applicants, we will open a new filing 
window. We are also giving careful consideration to the amount of time 
potential applicants will need to be sufficiently prepared to 
participate in the new filing window.
                                 ______
                                 
 Response to Written Question Submitted by Hon. Frank R. Lautenberg to 
                        Hon. Robert M. McDowell

    Question. In approximately 2 years, broadcasters will shift to 
digital television. There are over 200,000 homes in New Jersey that 
rely exclusively on over-the-air television. Do you think most 
Americans are educated about this transition today? What role will the 
FCC play in preparing the public for this transition?
    Answer. While a foundation has been laid for progress on this 
front, work still needs to be done to educate consumers about the 
digital transition, the February 17, 2009 deadline and consumers' 
options for digital television equipment, whether they be over-the-air, 
cable or satellite customers. In addition to our technical and policy 
work to make the transition date a reality, the Commission has launched 
a consumer education website about the transition, www.dtv.gov, which 
provides a great deal of practical information about the transition. We 
also are consulting with NTIA as it implements the digital-toanalog 
converter box program, which will enable over-the-air broadcast 
television viewers to view DTV programming. I was pleased to hear that 
the National Association of Broadcasters, the National Cable 
Telecommunications Association and the Consumer Electronics Association 
are banding together for a consumer education initiative as well. With 
private and public sector efforts combined, we can ensure as smooth a 
transition for consumers as possible.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Mark L. Pryor to 
                        Hon. Robert M. McDowell

    Question 1. Over the past 4 years, consumers have enjoyed the 
successful emergence of a number of new players in the audio 
marketplace. Satellite radio and Internet radio now reach tens of 
millions of listeners every week, and portable MP3 players and iPods 
have become common household items. Digital Cable and DBS offer dozens 
of channels of uninterrupted music, and Wi-Max technology is evolving 
that will soon allow Internet-based listening options in automobiles.
    Would the Commissioners agree that the competitive landscape has 
changed dramatically in the audio market over the past few years? And 
would the Commissioners agree that this trend is only likely to 
continue for the foreseeable future?''
    Answer. I agree that the competitive landscape in the audio market 
has changed dramatically in recent years and that these changes have 
given consumers an unprecedented amount of choices and control for 
music, news, sports, talk and other entertainment. I am optimistic that 
the trend will continue as entrepreneurs both big and small continue to 
innovate. I hope that the Commission's engineering work will enable 
these new technologies to flourish and that our policies will regulate 
only when the market fails and otherwise will ``get out of the way'' of 
marketplace developments.
    For example, the Commission soon will issue our service rules and 
other licensing and operational requirements in the digital audio 
broadcasting, or in-band on-channel (IBOC), proceeding. I hope these 
rules will provide both the regulatory certainty and the flexibility 
that the industry needs to expedite the transition to digital radio and 
to provide higher quality audio, diverse programming and innovative 
data services to the public. I applaud the ``early adopters'' IBOC 
technology for taking the initiative and embracing the capabilities of 
digital radio, particularly multicasting, to provide their listeners 
with better quality sound and expanded programming options, 
particularly for underserved and niche audiences. Many groups have 
brought the issue of public interest obligations to the fore in this 
proceeding. I think it is appropriate to defer consideration of new 
public interest obligations or other additional regulation of digital 
radio until stations using this nascent technology have had time to 
find their place in the free market. We will of course keep close watch 
over industry developments.

    Question 2. Consumers in many rural areas currently are not able to 
enjoy the same benefits wireless services offer as their urban 
counterparts enjoy. Due to low user concentration, the cost of 
providing high quality wireless service in rural areas is frequently 
more expensive than is possible in higher-density urban areas. 
Designation of wireless carriers as ETCs, which permits these carriers 
to receive support from the Universal Service Fund (``USF''), can help 
to ensure that all Americans enjoy the benefits of competition and 
high-quality wireless services. What steps has the FCC taken to ensure 
that wireless coverage is extended to all Americans, regardless of 
where they live, and to ensure that Americans living in rural areas 
have the opportunity to subscribe to high-quality wireless services?
    Answer. I am pleased that the Commission is adopting policies to 
encourage increased broadband deployment for the benefit of American 
consumers. Current deployment figures, coupled with recent and 
impending FCC actions, suggest that wireless broadband offers great 
opportunities for broadband deployment in all areas of the country, 
including rural communities. I am fully committed to ensuring that the 
Commission takes advantage of all opportunities to spur technological 
innovation and increased access to advanced broadband wireless services 
by all American consumers, businesses and public safety agencies, no 
matter where they live or work.
    There is hope on the horizon for bringing more broadband to rural 
America in particular. Despite notions to the contrary, significantly 
more Americans are adopting broadband services each day. The FCC 
recently released a status report on high-speed services for Internet 
access. As set forth in the January 2007 High-Speed Services Report, as 
of June 30, 2006, high-speed lines connecting homes and businesses to 
the Internet increased by 26 percent during the first half of 2006; 
from 51.2 million to 64.6 million lines in service. And, for the full 
twelve month period ending June 30, 2006, high-speed lines increased by 
52 percent (or 22.2 million lines). The January 2007 High-Speed 
Services Report notes that wireless growth was significant during the 
first 6 months of 2006. Mobile wireless broadband connections showed 
the largest percentage increase: from 83,503 at the end of 2005, to 
1.91 million by mid-2006--an increase of 2,187 percent in just 6 
months. While I acknowledge criticism that the report relies upon the 
relatively slow speed of 200 kbps as a baseline, I find this data 
encouraging nonetheless.
    As indicated by the phenomenal overall growth of broadband 
penetration, especially in the wireless sector, these statistics are 
exciting. I acknowledge, however, that we must continue to build on our 
success and we must never rest. I believe that the Commission must 
continue to move forward to facilitate access in all areas of the 
country, whether urban, suburban, or rural. We must pave the way for 
entrepreneurs who are ready, willing and able to invest and take the 
risks necessary to accelerate the development and roll-out of advanced 
services for an array of customers.
    This year in particular the Commission is in an excellent position 
to ensure that wireless licenses are disseminated among a wide variety 
of applicants, and we have been working hard to open new windows of 
opportunity for as unlicensed operators, as well. I am excited about 
our work to prepare for the 700 MHz auction, as well as future 
deployment in the white spaces, because I am hopeful that the 
competitive opportunities presented by these proceedings will broaden 
the opportunities available to entities seeking to enter the wireless 
marketplace.
    I also want to note that the Commission recently favorably ruled on 
a request for waiver seeking authority to design, build and operate its 
network at higher powers. In granting this request, we enabled this 
entrant to ultimately roll-out an innovative and exciting mobile 
broadband video service to American consumers living in urban, rural, 
insular and tribal areas. This is precisely the type of action the 
Commission must continuously and expeditiously take to provide the 
certainty necessary for our country's entrepreneurs to forge ahead with 
advanced broadband offerings.
    I am hopeful that, by eliminating the barriers that may hinder new 
entrants from constructing new delivery platforms and owners of 
existing platforms to upgrade their facilities, our work will result in 
more choices for consumers and more competition among different 
broadband platforms. This should, in turn, result in lower prices for 
consumers and a corresponding increase in delivery to consumers living 
and working in rural, insular and tribal areas.

    Question 3. Following the natural disasters that recently hit the 
Gulf Coast region wireless services provided emergency personnel, 
utility repairmen and residents with the only immediate means for 
communicating. In light of the experience of the Commission from 
Hurricane Katrina and other disasters, please describe the role 
wireless services fill with respect to emergency response and disaster 
recovery during times of crisis?
    Answer. The destruction wrought by Hurricane Katrina against 
communications companies' facilities in the region, and therefore to 
the services upon which citizens rely, was extraordinary. Local 
wireless networks sustained considerable damage as more than 1,000 cell 
sites were knocked out of service by the hurricane. In January 2006, 
Chairman Martin established the Independent Panel Reviewing the Impact 
of Hurricane Katrina on Communications Networks (Independent Panel). 
The Independent Panel finalized its findings and recommendations and 
submitted its report on June 12, 2006. On June 19, 2006, the Commission 
initiated a comprehensive rulemaking to address and implement the 
recommendations presented by the Independent Panel. This proceeding is 
currently pending.
    With respect to cellular service and personal communications 
service (PCS), the Independent Panel determined that, in general, 
cellular/PCS base stations were not destroyed by Katrina. Rather, the 
majority of the adverse effects and outages encountered by wireless 
providers were due to a lack of commercial power or a lack of transport 
connectivity to the wireless switch (T1 line lost or fixed microwave 
backhaul offline). Within 1 week after Katrina, however, approximately 
80 percent of wireless cell sites were operational. Cellular base 
stations on wheels (``COWs'') were successfully used as needed to 
restore service throughout the affected region. Over 100 COWs were 
delivered to the Gulf Coast region. In addition to voice services, text 
messaging was used successfully during the crisis. Additionally, 
wireless push-to-talk services appeared to be more resilient than 
interconnected voice service inasmuch as this service does not 
necessarily rely upon connectivity to the public-switched telephone 
network.
    In addition, the Independent Panel found that paging systems seemed 
more reliable in some instances than voice/cellular systems because 
paging systems utilize satellite networks, rather than terrestrial 
systems, for backbone infrastructure. The Independent Panel found that 
paging technology is also inherently redundant (messages may still be 
relayed if a single transmitter or group of transmitters in a network 
fails), and reliable (paging signals penetrate buildings very well). 
During the crisis, paging systems were effective at text messaging and 
were equipped to provide broadcast messaging.
    Finally, the Independent Panel found that satellite networks 
appeared to be the communications service least disrupted by Hurricane 
Katrina. As a result, both fixed and mobile satellite systems provided 
a functional, alternative communications path for those with adequate 
training and equipment preparation located within the storm-ravaged 
areas. The Independent Panel noted that mobile satellite operators 
reported large increases in satellite traffic without any particular 
network/infrastructure issues, and that users observed that satellite 
data networks (replacing T1 service) were more robust and had fewer 
difficulties in obtaining and maintaining communications with the 
satellite network than voice services.

    Question 3a. If a petitioner for ETC designation meets the 
statutory criteria and has consistently been the only service provider 
to remain operative in certain areas during natural disasters despite 
the presence of other carriers (including other ETCs) in those areas, 
would you view the designation of the petitioner as an ETC to be in the 
public interest?
    Answer. Based on the hypothetical scenario outlined, and if there 
were no additional mitigating factors, I believe that the designation 
of such a petitioner as an ETC would be in the public interest.

    Question 3b. Some of the areas hardest hit by recent natural 
disasters were underserved communities. To the extent a petitioner for 
ETC designation that meets the statutory criteria for ETC designation 
has demonstrated a strong commitment to serving rural and underserved 
communities since well before designation as an ETC, would the 
designation of the petitioner as an ETC be in the public interest? If 
not, please explain why.
    Answer. Based on the hypothetical scenario outlined, and if there 
were no additional mitigating factors, I believe that the designation 
of such a petitioner as an ETC would be in the public interest.

    Question 4. The FCC has committed to resolve, within 6 months of 
the date filed, all ETC designation requests for non-tribal lands that 
are properly before the FCC. How many petitions for ETC designation are 
currently pending at the FCC?
    Answer. Because the requested information is under the purview of 
the Chairman's office, I refer the Committee to the answer provided by 
Chairman Martin to this question.

    Question 4a. What is the average length of time that the ETC 
Petitions currently before the FCC have been pending? Of these 
petitions, what is the earliest filing date? How many of these 
petitions were filed in 2004 or earlier?
    Answer. Because the requested information is under the purview of 
the Chairman's office, I refer the Committee to the answer provided by 
Chairman Martin to this question.

    Question 4b. How many petitions for ETC designation did the FCC act 
on in 2006?
    Answer. Because the requested information is under the purview of 
the Chairman's office, I refer the Committee to the answer provided by 
Chairman Martin to this question.

    Question 4c. How many petitions for ETC designation did the FCC act 
on in 2005?
    Answer. Because the requested information is under the purview of 
the Chairman's office, I refer the Committee to the answer provided by 
Chairman Martin to this question.

    Question 4d. How many petitions for ETC designation did the FCC act 
on in 2004?
    Answer. Because the requested information is under the purview of 
the Chairman's office, I refer the Committee to the answer provided by 
Chairman Martin to this question.

    Question 4e. What does the FCC intend to do about the backlog of 
pending ETC petitions?
    Answer. Because the Chairman sets the Commission agenda, I refer 
the Committee to his office regarding the status and timing of action 
on pending ETC petitions.

    Question 4f. How soon does the FCC intend to act upon ETC petitions 
that have been pending for more than 6 months?
    Answer. Because the Chairman sets the Commission agenda, I refer 
the Committee to his office regarding the status and timing of action 
on pending ETC petitions.

    Question 4g. Do you believe that Americans living in rural areas 
and the carriers who have filed ETC Petitions deserve to have those 
petitions acted upon promptly rather than simply kept pending without a 
yes or no answer? If you do not, please explain why.
    Answer. Yes. I have consistently held that regulatory expediency 
and certainty are important to the public interest.
                                 ______
                                 
   Response to Written Questions Submitted by Hon. Amy Klobuchar to 
                        Hon. Robert M. McDowell

    Question 1. In a September 8, 2005 report, the FCC stated, ``Our 
review of the record does not lead us to recommend any changes to the 
retransmission consent regime at this time.'' What if any steps have 
you taken since that time to review and assess the retransmission 
consent regime; what if any additional conclusions have you reached; 
what if any plans do you have for additional formal or informal review; 
and what do you perceive to be the strengths and weaknesses of the 
retransmission consent process?
    Answer. The Commission has continued to assess the retransmission 
consent regime through review and investigation of complaints filed 
with us. As you know, the recent dispute between Mediacom and Sinclair 
Broadcasting was particularly contentious. I am pleased that these 
companies were able to reach a retransmission consent agreement on the 
eve of the Super Bowl. We followed their dispute closely and on 
November 26 of last year, had convened a meeting with the principals 
from both companies, in addition to Commissioner Adelstein, in the 
hopes that they would return to the negotiating table and reach an 
agreement for carriage of the Sinclair stations on terms satisfactory 
to both sides.
    Pursuant to statute, the Commission has adopted rules regarding the 
obligations of both broadcasters and cable operators to negotiate 
retransmission consent agreements in good faith. Beyond those rules, 
under current law retransmission consent agreements are privately 
negotiated commercial transactions. I hesitate to have the Commission 
place its thumb on the scale in favor of either side.
    Recently, we have had meetings with a few parties interested in 
changing the retransmission consent regime. Most of those changes would 
have to be made by the Congress. I am listening to these proposals with 
an open mind and look forward to any guidance the Congress may have.

    Question 2. Section 10(a) of the Communications Act allows the 
Commission to forbear from applying any regulation or any statutory 
provision to a particular or multiple telecommunications carriers or 
services, in any or some geographic markets, if certain criteria are 
met--most notably that competition exists in the market and that such 
relief is in the public interest. The FCC recently has been granting 
incumbent providers (ILECs) forbearance from regulations on the premise 
that sufficient competition exists in a specific market to make 
enforcement of the regulations unnecessary. What are each of your 
respective positions on the conditions and circumstances under which 
forbearance for ILECs is appropriate?
    Answer. Section 10 of the Communications Act directs the FCC to 
forbear from applying any regulation or provision of the Act to a 
telecommunications carrier or service, or class of carriers or 
services, if the Commission determines that: ``(1) enforcement of such 
regulation or provision is not necessary to ensure that the charges, 
practices, classifications, or regulations by, for, or in connection 
with that telecommunications carrier or telecommunications service are 
just and reasonable and are not unjustly or unreasonably 
discriminatory; (2) enforcement of such regulation or provision is not 
necessary for the protection of consumers; and (3) forbearance from 
applying such provision or regulation is consistent with the public 
interest.''
    Since I have been recused from each of the forbearance petitions 
voted on by the Commission since coming to the Commission in June 2006 
by virtue of my former employer's participation in those forbearance 
proceedings, I have had no participation in the forbearance decision-
making process as a Commissioner. However, I will weigh the merits of 
each forbearance petition that I am permitted to participate in against 
the statutory criteria for granting forbearance petitions and act 
consistently with those criteria.

    Question 3. From the City of Saint Paul (similar questions were 
raised by Burnsville/Eagan Community Television and the Northern 
Suburban Communications Commission):

        The Order issued by the FCC on December 20, 2006 allows new 
        franchise entrants to ``cherry pick'' the neighborhoods in our 
        communities, rather than bring true competition to all of our 
        businesses and residents. This would allow new entrants to 
        serve or upgrade only the profitable areas of Saint Paul [and 
        other cities and towns], leaving many of our residents on the 
        wrong side of the ``digital divide.''

        The Order authorizes a new entrant to withhold payment of fees 
        that it deems to be in excess of a 5-percent franchise fee cap. 
        This could completely undermine support for both Saint Paul's 
        [and other cities' and towns'] very successful public, 
        educational and government (PEG) operations.

        The Order imposes a 90-day shot clock for new entrants with 
        existing rights of way, opening the potential to reduce Saint 
        Paul's [and other cities' and towns'] ability to manage its 
        rights-of-way.

        The Order authorizes a new entrant to refrain from obtaining a 
        franchise when it is upgrading mixed use facilities that will 
        be used in the delivery of video content.

    Saint Paul believes that the policy goals of the Order are laudable 
but strongly disagrees with the method and substance of the decision 
taken by the FCC. How do you respond to each of these concerns, and how 
do you respond to the claim that the FCC exceeded its authority in 
adopting this order?
    Answer. The order we adopted strikes a careful balance between 
establishing a de-regulatory national framework to clear unnecessary 
regulatory underbrush, while also preserving local control over local 
issues. It guards against localities making unreasonable demands of new 
entrants, while still allowing those same localities to be able to 
protect important local interests through meaningful negotiations with 
aspiring video service providers.
    On the important issue of build-out requirements, we preserve local 
flexibility to implement important public policy objectives, but we 
don't allow localities to require new entrants to serve everybody 
before they serve anybody. By finding that certain specified costs, 
fees and other compensation required by local franchising authorities 
(LFAs) must be counted toward the 5 percent cap on franchise fees, we 
are interpreting the applicable statute, not changing the law. 
Regarding the ``shot clock,'' LFAs remain free to deny deficient 
applications on their own schedule, but are not permitted to 
unreasonably delay decisions on complete applications. Last, should 
communications companies decide to upgrade their existing non-cable 
services networks, localities may not require them to obtain a 
franchise, in accordance with current law.
    Many commenting parties, Members of Congress, and two of my 
distinguished colleagues, have legitimately raised questions regarding 
the Commission's authority to implement many of these initiatives. I 
have raised similar questions. After additional study, I feel that we 
are on safe legal ground. The Commission has ample general and specific 
authority to interpret and implement Section 621 and to issue these 
rules under several sections including, but not limited to, sections: 
151, 4(i), 201, 303(r), 622, 706 and many others. Furthermore, a 
careful reading of applicable case law shows that the courts have 
consistently given the Commission broad discretion in this arena, 
including the authority to grant interim relief to requesting parties.
                                 ______
                                 
    Response to Written Questions Submitted by Hon. Ted Stevens to 
                        Hon. Robert M. McDowell

    Question 1. What is the current status of any proposals to use 
auctions to determine universal service support?
    Answer. The Federal-State Joint Board on Universal Service met on 
February 20, 2007, to consider reverse auctions. Specific reverse 
auction proposals have been advanced by Verizon, the Cellular 
Telecommunications Industry Association, and Alltel, as well as a 
proposal by Embarq to target support to highest cost areas. The Joint 
Board indicated that it intends to make its recommendations to the FCC 
in the next several months. At that time, we will seek comments on the 
merits of the recommendations. The Commission will have up to a year to 
complete any proceedings to implement those recommendations, pursuant 
to Section 254(a)(2) of the Communications Act. Because the Chairman 
sets the Commission's agenda, I refer the Committee to his office 
regarding the status and timing of further action.

    Question 2. Do you believe any of the proposals submitted to the 
Joint Board are viable alternative approaches to universal service 
support and can adequately support rural carriers like those in Alaska?
    Answer. As I have indicated, the Universal Service system has been 
instrumental in keeping Americans connected and improving their quality 
of life, particularly in rural areas such as Alaska. However, this 
system is in dire need of comprehensive reform. Universal Service Fund 
disbursements have grown significantly from approximately $4.4 billion 
in 2000 to approximately $6.5 billion in 2005, almost a 50 percent 
increase, and are projected to continue to rise at similarly 
exponential rates. This is compared to an overall inflation rate of 
only 13 percent for the same 5 year period. We simply cannot afford to 
continue to let the Fund grow unchecked. Otherwise, the future of the 
Universal Service Fund will be in jeopardy.
    Fundamental reform of the Universal Service system is necessary so 
that it can continue to support rural areas such as Alaska. The 
Commission is working to achieve comprehensive reform to ensure long 
term sustainability of Universal Service. The Commission is considering 
alternatives to the current end-user revenues-based contribution 
factor. On the disbursements side, the Federal-State Joint Board on 
Universal Service is considering proposals on the use of reverse 
auctions, as indicated in response to Question 1., above. Some of those 
proposals initially address the growth of the Fund resulting from the 
expansion of funding to the competitive eligible telecommunications 
carriers, which I believe is an appropriate initial focus. This should 
not adversely affect the support to existing rural wireline carriers in 
areas such as Alaska. At such time as the Joint Board recommendations 
are forwarded to the Commission, I will fully consider the merits of 
those recommendations and the comments of the parties.

    Question 3. When Chairman Powell visited a remote Eskimo village in 
Alaska, his plane got stuck in the mud on the unpaved runway during 
take-off. He and his staff whipped out their cell phones to try to call 
for help, but they didn't work. No roaming agreements. The villages 
call came and pulled his plane out of the mud, but he was not able to 
call his wife to tell her he was running late. I am pleased to report 
that the runway is now being paved, but the roaming problem has yet to 
be resolved. Many small cell phone companies in Alaska have been 
unsuccessful in getting the large national carriers to respond to their 
desires to arrange roaming agreements. As data, video, and other 
services are transmitted to mobile devices this problem will only grow 
more acute. What can you do to address this problem, and what is the 
timeframe for moving forward?
    Answer. Over the course of my brief tenure, I have traveled to 
remote areas of Alaska such as those described in this question. I have 
also met with a number of parties regarding wireless roaming 
obligations. Certainly it is important that all American consumers, no 
matter where they live, work or travel, have the ability to benefit 
from competitive wireless services. As a result of my introduction to 
this issue, I have come to recognize and appreciate the complicated 
legal and economic factors involved. Although I cannot predict the 
timeframe for moving forward (given that the Chairman sets the agenda 
for the Commission), I will continue to work on and analyze this 
important issue. In the meantime, I strongly urge the private sector to 
forge a resolution.

    Question 4. I continue to have concerns that too often domestic 
satellite services do not offer service to Alaska and Hawaii. In last 
year's Senate Communications Bill, a measure was included to require 
satellite operators to make good faith efforts in their satellite 
planning and development to ensure service to the entire United States. 
Are there measures that the FCC could take independent of Congressional 
legislation to ensure better service to Alaska and Hawaii?
    Answer. In broad terms, I believe that effective digital broadcast 
services (DBS) are those that are ubiquitous. Therefore, the Commission 
must continuously encourage new entrants and new technologies that 
drive down the cost of services so that all American consumers--no 
matter where they live--will benefit from the resulting economies of 
scale.
    I understand that EchoStar and DIRECTV, the leading DBS providers 
that serve the continental U.S., also offer packages to consumers 
located in Hawaii and Alaska. I understand that DIRECTV offers local 
stations as well. In fact, the Commission's rules require providers to 
serve the entire United States, including Alaska and Hawaii, if 
technically feasible. Last summer, I voted to support the Commission's 
release of a notice of proposed rulemaking to analyze the possibility 
of licensing additional satellites at reduced orbital locations. 
Although that proceeding is pending, it is my hope that, in the long 
term, additional satellite capabilities would improve the ability of 
all American consumers, including those in Alaska and Hawaii, to 
receive additional broadcast content at reasonable prices. In the 
meantime, the Commission will continue to vigilantly enforce its rules 
in this area.

    Question 5. The FCC frequently faces the problem of making tough 
policy decisions that are wrapped in technological debates. There are 
several waivers pending at the FCC that deal with CableCARDs. What is 
the impact on the consumer and the impact on the development and 
deployment of downloadable security? How will these petitions be 
considered and will the full Commission address these issues?
    Answer. As you know, the CableCARD issue presents several extremely 
complicated technological and policy issues. I believe that 
technological innovation and competition will solve most challenges 
eventually and bring consumers more choices. I applaud the Beyond 
Broadband Technology (BBT) group for filing the summary of its 
downloadable security proposal on December 21, 2006, and I look forward 
to learning more about how it is engineered. I hope that innovation, in 
this case developing downloadable security options, and private sector 
negotiation will provide answers that are workable for the cable and 
consumer electronics industries and beneficial to consumers. I strongly 
encourage a speedy private sector resolution to this challenge.
    With respect to the requests for waivers of the integration ban 
filed with the FCC, the three orders issued by the Media Bureau 
(addressing the waiver requests of Comcast, BendBroadband and 
Cablevision) appears to attempt to strike a balance between our 
Congressional mandate to foster competition and consumer choice in the 
market for navigation devices and the development of new digital 
technologies and services by cable companies. These cable operators and 
others contend that waivers of the integration ban for low-cost, 
limited capability set-top boxes are in the public interest because the 
integration ban could retard innovation and increase costs for 
consumers. On the other hand, several members of the consumer 
electronics industry argue that common reliance on CableCARDs must be 
enforced, without granting the waivers requested, to foster competition 
in the market for navigation devices.
    Because the Chairman determines our agenda, I am unsure whether the 
full Commission will address the pending waiver requests. Comcast has 
filed a petition for review by the full Commission of the Media 
Bureau's denial of its waiver request. If called upon to consider these 
issues, I will examine closely the impact of our policy proposals on 
consumers and on the technologies being developed in the marketplace.

    Question 6. Obviously we are all concerned about the new frontiers 
that can be created on the Internet for pedophiles and child 
pornographers. To advance the safety of our children, everyone must do 
their part. Is there more that the Internet service providers can be 
doing to help law enforcement and does the FCC need any additional 
authority from Congress to ensure that entities under the Commission's 
authority are doing their part?
    Answer. Protecting our children from new dangers created by new 
technologies should be among the highest priorities for government. As 
a father of two young children, I am personally concerned about online 
predators. And, I am grateful for the important work undertaken by the 
National Center for Missing & Exploited Children (NCMEC) in Alexandria, 
Virginia. I visited the NCMEC headquarters last fall and I am impressed 
with their extraordinary capabilities and diligence.
    While the Commission has some authority to regulate the Internet 
under Title I, we do not have direct authority to regulate Internet 
content. That rests with the Department of Justice. Accordingly, the 
Commission does not have experience with enforcement actions against 
pedophiles and child pornographers. Thus, from the FCC's perspective, 
it is difficult to evaluate the adequacy of the role that Internet 
Service Providers are playing in cooperating with law enforcement on 
this important matter. I stand ready to support whatever the Commission 
can do within its limited jurisdiction to protect our children against 
the abuses by pedophiles and child pornographers. Furthermore, I look 
forward to working with Congress on this extremely important matter.
                                 ______
                                 
  Response to Written Questions Submitted by Hon. Olympia J. Snowe to 
                        Hon. Robert M. McDowell

    Question 1. Is it true that eleven years ago Congress required the 
FCC to adopt a new universal service mechanism that ensures that local 
telephone rates in rural areas are reasonably comparable to rates in 
urban areas?
    Answer. As amended by the Telecommunications Act of 1996, Section 
254(a) of the Communications Act directed the FCC to institute within 1 
month a Federal-State Joint Board to recommend changes to the Universal 
Service regulations, including the definition of supported services. 
Although I was not a member of the Commission then, the Joint Board was 
required to make its recommendations to the Commission 9 months after 
enactment of the Telecommunications Act of 1996, which it did in 
November 1996. The Commission then was required to complete its 
proceeding to implement the recommendations within fifteen months of 
enactment of the Telecommunications Act of 1996. The Commission 
considered the Joint Board recommendations when it adopted its First 
Report and Order in the Universal Service proceeding, CC Doc. No. 96-
45, 12 FCC Rcd 8776 (1997).

    Question 2. Is it true that the 10th Circuit Court of Appeals has 
twice remanded the FCC's method of providing universal service support 
for rural customers served by larger carriers?
    Answer. Yes, the 10th Circuit Court of Appeals issued its decision 
in Qwest Corp. v. FCC, 258 F.3d 1191 (2001) (Qwest I), in which it 
found that the FCC had not adequately defined the term ``reasonably 
comparable'' and ``sufficient,'' had not explained setting of the 
benchmark at 135 percent of the national average, had not provided 
inducements for state universal service mechanisms, or explained how 
the non-rural funding mechanism would interact with other universal 
service programs. On those findings, the Court remanded the decision to 
the Commission. The 10th Circuit issued its second decision in Qwest 
Corp. v. FCC, 398 F.3d 1222 (2005) (Qwest II), in which it found that 
again the Commission had not defined the terms ``reasonably 
comparable'' and ``sufficient,'' that the support mechanism was 
invalid, and that the Commission had not demonstrated a valid 
relationship between costs and rates. The Court again remanded the 
decision to the FCC.

    Question 3. Is it true that the second decision was issued in 
February of 2005 with the court expressing an expectation that the FCC 
would respond expeditiously?
    Answer. Qwest II was issued in February 2005. In that decision, the 
Court declined to impose an arbitrary deadline for the Commission to 
act on remand, as requested by the petitioners. However, the Court did 
state that it expected the FCC to comply with its decision ``in an 
expeditious manner.'' 398 F.3d at 1239. In response to that 10th 
Circuit decision, the Commission issued a Notice of Proposed Rulemaking 
on December 9, 2005 (Notice) seeking comments on the Universal Service 
support mechanism for non-rural carriers.

    Question 4. What steps will the FCC take now to ensure that it 
meets its obligations to the rural residents of large incumbent 
carriers? Will you commit that the FCC will take action on this remand 
during the next 6 months?
    Answer. As set forth in the FCC's Notice, comments were due by 
March 27, 2006 and reply comments by May 26, 2006. Since the Chairman 
of the FCC determines the Commission's agenda, I refer the Committee to 
his office regarding the status and timing of further action on the 
issues raised in the Notice.

    Question 5. Now that the Antideficiency Act (ADA) exemption has 
expired, what kind of guarantees can you give that there will be no 
further E-Rate program shut downs or delays?
    Answer. The Continuing Resolution adopted by Congress for this 
Fiscal Year includes an Antideficiency Act exemption for the Universal 
Service Fund, including the E-Rate program. This exemption assures that 
the Universal Service Fund is protected during the current Fiscal Year 
from disruption that might have otherwise been caused by the 
Antideficiency Act. In addition, I note that Senator Stevens' Universal 
Service for Americans Act includes a permanent exemption of the Fund 
from the Antideficiency Act, which I support. I know of no attempts to 
shut down the E-Rate program, nor would I support any such efforts 
unless mandated by law.

    Question 6. Can you tell us how much USAC has in its E-Rate 
accounts currently and whether those reserves will be sufficient to 
cover funding?
    Answer. This information is held directly by USAC, which is an 
independent, not-for-profit corporation that the Commission has 
designated as the Universal Service Fund administrator. As such, USAC 
is responsible for billing contributors and collecting contributions to 
the USF support mechanisms. It is my understanding that the requested 
information is being provided by Chairman Martin in response to this 
question. I am committed to taking all steps necessary that are 
available to the Commission to make certain that USAC administers the 
funds in such a way that its annual funding commitments for the Schools 
and Libraries program are adequate.

    Question 7. Are you still working with the Office of Management and 
Budget (OMB) on a reinterpretation of the ADA that would exempt 
Universal Service?
    Answer. I believe that efforts on behalf of the Commission to work 
with OMB have been undertaken directly by Chairman Martin. Now that the 
Continuing Resolution exempts the Universal Service Fund from the 
Antideficiency Act for the current Fiscal Year, I am not certain of the 
need for continuing this effort with OMB.

    Question 8. Given that AT&T and BellSouth agreed to abide by a 
definition of ``network neutrality'' as part of there merger 
conditions, do you believe that the argument that it is impossible to 
craft such a definition is false?
    Answer. I did not participate in the Commission's consideration of 
the merger between AT&T and BellSouth; therefore, I am unable to offer 
an answer to this question.

    Question 9. Will you enforce the ``network neutrality'' provision 
agreed to as part of AT&T's and BellSouth's gaining approval for the 
merger?
    Answer. Given that I did not participate in the Commission's 
consideration of the merger between AT&T and BellSouth, I am unable to 
offer an answer to this question.

    Question 10. Do you consider the U.S. broadband marketplace to be 
competitive?
    Answer. In order to remain competitive, the U.S. must always strive 
for faster broadband speeds and ubiquitous deployment. We should never 
grow complacent or satisfied. Accordingly, the Commission is adopting 
policies to encourage increased broadband deployment for the public, 
pursuant to Section 7 of the Communications Act. Current deployment 
figures, coupled with recent and impending FCC actions, suggest that 
wireless broadband offers great opportunities for broadband deployment 
in all areas of the country, including rural communities. For instance, 
I am optimistic that the 700 MHz auction and availability of spectrum 
in the white spaces of the TV broadcast bands will help deployment of 
broadband in rural areas. In addition, the Commission's video 
franchising decision adopted in December, 2006 extends benefits to new 
entrants and should further stimulate deployment of fiber. While it is 
encouraging that America's rate of broadband deployment has more than 
doubled over the past 2 years,\1\ we must ensure that the Commission 
takes advantage of all opportunities to spur technological innovation 
and increased access to broadband services. Accordingly, we are making 
it easier for entrepreneurs to construct new delivery platforms more 
quickly and for the owners of existing platforms to upgrade their 
facilities, as discussed below. These policies should result in more 
choices for consumers and lead to more competition among different 
broadband platforms and within them, which should, in turn, result in 
lower prices for consumers.
---------------------------------------------------------------------------
    \1\ From March 2004 to March 2005, the broadband adoption rate grew 
at 20 percent. Home Broadband Adoption 2006, Pew Internet & American 
Life Project (May 28, 2006) at 1. From March 2005 to March 2006, it 
accelerated to about a 40 percent penetration rate. Id. The most 
current rate has accelerated even faster to 52 percent. High-Speed 
Services for Internet Access: Status as of June 30, 2006, Industry 
Analysis and Technology Division, Wireline Competition Bureau, FCC 
(January 2007) at 1.

    Question 11. Do you believe a wireless connection, which is two to 
four times more expensive and two to four times slower than DSL or 
cable, can be a substitute for a wireline connection to the Internet?
    Answer. I am pleased that the Commission is adopting policies to 
encourage increased broadband deployment for the benefit of American 
consumers. Current deployment figures, coupled with recent and 
impending FCC actions, suggest that wireless broadband offers great 
opportunities for broadband deployment in all areas of the country, 
including rural communities.
    This year in particular the Commission is in an excellent position 
to ensure that wireless licenses are disseminated among a wide variety 
of applicants, and we have been working hard to open new windows of 
opportunity for unlicensed operators, as well. I am excited about our 
work to prepare for the 700 MHz auction, as well as future deployment 
in the white spaces, because I am hopeful that the competitive 
opportunities presented by these proceedings will broaden the 
opportunities available to entities seeking to enter the wireless 
marketplace.
    I also want to note that the Commission recently favorably ruled on 
a request for waiver seeking authority to design, build and operate its 
network at higher powers. In granting this request, we enabled this 
entrant to ultimately roll-out an innovative and exciting mobile 
broadband video service to American consumers living in urban, rural, 
insular and tribal areas. This is precisely the type of action the 
Commission must continuously and expeditiously take to provide the 
certainty necessary for our country's entrepreneurs to forge ahead with 
advanced broadband offerings.
    I am hopeful that, by eliminating the barriers that may hinder new 
entrants from constructing new delivery platforms and owners of 
existing platforms to upgrade their facilities, our work will result in 
more choices for consumers and more competition among different 
broadband platforms. This should, in turn, result in lower prices and 
faster speeds for consumers.

    Question 12. How can we ensure that a variety of news and 
entertainment outlets will be there if the telephone and cable 
companies are allowed to limit what people can see and do online?
    Answer. The arguments both for and against net neutrality are at 
the heart of this question. I believe this is a healthy debate and I 
welcome further discussion of net neutrality. The Internet already is 
the communications lifeblood of the world economy and is becoming the 
primary means of communication for American consumers. It is absolutely 
essential that broadband network and service providers have the proper 
incentives to deploy new technologies. However, it is equally as 
important that consumers have the option of pulling, or posting, the 
content of their choice anytime, anywhere and on any device. In the one 
instance where the Commission received allegations that a carrier was 
blocking ports used for VoIP applications, it swiftly launched an 
investigation and entered into a consent decree, thereby resolving the 
alleged practices that affected customers' ability to use VoIP through 
one or more VoIP service providers.\2\ In that situation, we acted 
swiftly and resolutely, sending a clear signal that we will not 
tolerate anti-competitive behavior. The Commission has adopted a Policy 
Statement that set forth four broad principles designed ``to encourage 
broadband deployment and preserve and promote the open and 
interconnected nature of the public Internet.'' It specifically stated 
that consumers are entitled to: (1) access to Internet content; (2) run 
applications and use services of their choice; (3) connect legal 
devices that do not harm the network; and (4) competition among network 
providers, application and service providers and content providers. I 
believe that we have the ancillary authority under Title I of the 
Communications Act to enforce these principles.
---------------------------------------------------------------------------
    \2\ In the Matter of Madison River Communications, LLC and 
affiliated companies, File No. EB-05-IH-0110, Order, DA 05-543, rel. 
March 3, 2005.
---------------------------------------------------------------------------
    The Commission will continue to monitor this situation and will 
remain vigilant in protecting the continued availability of all types 
of content over the Internet for consumers. Should we receive evidence 
of additional anticompetitive conduct, I will urge the Commission to 
act swiftly and in the best interest of consumers.
                                 ______
                                 
Response to Written Questions Submitted by Hon. Gordon H. Smith to Hon. 
                           Robert M. McDowell

    Question 1. Under a couple of the conditions, AT&T and BellSouth 
committed that for 42 months, they would continue to offer, and would 
not increase the price of, unbundled network elements. They also 
committed not to seek forbearance with respect to unbundled loops and 
transport. Will these conditions preserve the option for consumers to 
purchase high-speed broadband service from companies that combine an 
AT&T/BellSouth UNE loop with their own electronics and other network 
facilities to offer their own high-speed Internet broadband services?
    Answer. Given that I did not participate in the Commission's 
consideration of the merger between AT&T and BellSouth, I am unable to 
offer an answer to this question.

    Question 2. Has the Commission concluded that it is in the public 
interest to preserve additional broadband options for consumers through 
these UNE the AT&T/BellSouth merger conditions?
    Answer. Given that I did not participate in the Commission's 
consideration of the merger between AT&T and BellSouth, I am unable to 
offer an answer to this question.
                                 ______
                                 
     Response to Written Questions Submitted by Hon. John Thune to 
                        Hon. Robert M. McDowell

    Question 1. Even as we are strategizing on how to complete the 
deployment of DSL and cable modem broadband networks to the hard to 
reach places of our country, other countries are well on their way to 
deploying next-generation fiber networks. High-speed fiber will change 
how we use the Internet similar to the change we saw between dial-up 
and broadband. Is there anything Congress can be doing to help speed 
the deployment of our high-speed fiber network here at home, and in 
rural areas particularly?
    Answer. I believe that broadband deployment, including to rural 
areas, is occurring more rapidly than some recent reports reflect, 
although we should never become complacent and always strive for faster 
speeds and more ubiquity. Significantly more Americans are adopting 
broadband services each day. The FCC recently released a status report 
on high-speed services for Internet access. As of June 30, 2006, high-
speed lines connecting homes and businesses to the Internet increased 
by 26 percent during the first half of 2006; from 51.2 million to 64.6 
million lines in service. And, for the full twelve month period ending 
June 30, 2006, high-speed lines increased by 52 percent (or 22.2 
million lines).
    The report reveals that about 14 million lines of the 64.6 million 
exceed 200 kbps in one direction. But of those 14 million, 4.2 million 
users receive ADSL service which can have download speeds of 1.5 Mbps 
up to 3 Mbps. An even greater number of lines exceed 200 kbps in both 
directions. Specifically, more than 50 million of the 64.6 million 
broadband lines in service across America exceed 200 kbps in both 
directions. As a result, I am hopeful that we will soon discard the 
mediocre benchmark of 200 kbps and focus future analyses on much higher 
speeds.
    The report also notes that wireless growth was significant during 
the first 6 months of 2006. Mobile wireless broadband connections 
showed the largest percentage increase: from a mere 83,503 at the end 
of 2005, to 1.91 million by mid-2006--that is a 2,187 percent increase 
in just 6 months. But we still have far to go. We should never stop 
striving for ubiquitous pipes that are fatter and faster.
    These numbers, coupled with recent FCC actions, with more on the 
way, suggest that wireless broadband is the wave of the future. Clearly 
the Internet is going wireless. Wireless technologies offer an 
additional means to bring advanced, innovative services--and the 
associated benefits--to rural America. For instance, in the 700 MHz 
band and in the white spaces, broadband signals can travel longer 
distances and penetrate buildings.
    Furthermore, the Commission's action in our video franchising 
proceeding in December will help speed the deployment of fiber across 
America. By making it easier for entrepreneurs to gain the necessary 
regulatory approval from local franchising authorities, they will be 
able to invest in competitive fiber-based advanced networks--and deploy 
them--more quickly.
    In sum, I believe that market forces are working to deploy 
broadband to all parts of America, including rural areas. Both Congress 
and the FCC should be vigilant and monitor broadband deployment to make 
sure that rural areas are receiving the benefits of broadband services.

    Question 2. When I speak with some of South Dakota's rural 
telephone cooperatives and other telecommunications providers, I hear 
about the large amount of resources they must put toward legal fees to 
keep pace with the legal and regulatory maneuvers being made by some of 
the larger telecommunications providers with seemingly bottomless 
pockets for such actions. Some of these small providers honestly think 
part of the larger competitors' plan is to beat them through legal fees 
instead of the marketplace. The Commission obviously cannot do anything 
about the fees lawyers are charging, but they can do something about 
the speed at which regulatory decisions are made and the hoops that 
must be jumped through. How can the FCC improve its decisionmaking 
processes so that small telecommunications providers don't bear such an 
imbalanced burden?
    Answer. Rural telephone companies have kept rural America connected 
to the world for over a century. Not only has providing affordable 
connectivity to the far corners of our Nation helped grow America's 
economy and maintain our competitiveness abroad, it has helped improve 
the lives of all Americans. Rural areas, just like the rest of the 
nation, should have available new technologies and telecommunications 
services. This can be best achieved by allowing marketplace forces, 
rather than unnecessary regulation, to satisfy consumers' demands. 
However, there are times when the government should address market 
failure so new entrepreneurial ideas have a chance to compete in the 
market place. In those instances where government regulation is 
necessary, the Commission is bound by the procedural and due process 
requirements of the Administrative Procedures Act, the Communications 
Act and the pro-small business mandates of the Regulatory Flexibility 
Act. That said, we are always looking for ways to expedite proceedings 
rather than to lengthen them unnecessarily.

    Question 3. As you know, some media companies and others are 
pushing for the repeal of the newspaper cross-ownership ban. They argue 
that a media outlet owning both the local newspaper and a local 
broadcast station could make better use of scarce resources to gather 
and report the local news. They also argue that the handful of 
``grandfathered'' newspaper-broadcast combinations, which were in place 
before the ban was implemented in 1975, have not shown any gross abuse. 
Some consumer groups and others who support keeping the newspaper 
cross-ownership ban in place alternatively argue that combining 
newspaper and broadcast outlets could reduce competition among media 
outlets. There could be less incentive to get ``the scoop'' or report a 
contradicting viewpoint. What do you believe would happen to local news 
coverage if the newspaper cross-ownership ban was lifted? Do the 1975 
grandfathered combinations really provide us with a good example since 
some of them are currently owned by those media companies who want to 
lift the ban? For example Gannett knows its management of Arizona's 
largest newspaper, the Arizona Republic, and television outlet KPNX-TV 
is under the microscope, so perhaps their behavior would not be 
representative of how news gathering would be conducted if the ban was 
permanently lifted.
    Answer. This quadrennial review of our broadcast ownership rules is 
my first foray into this area. I am studying the issues with an open 
mind and trying to hear from as many viewpoints as I can. I hope we can 
develop a reasoned approach that resolves the regulatory uncertainty 
that followed the appeal of the order the Commission issued in June 
2003. As you know, the rules must strike a difficult balance between 
taking into account the dramatic changes that have occurred in the 
media landscape in recent years and, at the same time, continuing to 
promote our long-standing values of competition, diversity and 
localism. We must also carefully address the issues presented to us by 
Third Circuit in the Prometheus decision.
    However, the court's decision in Prometheus did not find fault with 
the Commission's lifting of the newspaper-broadcast cross ownership ban 
in 2003. In the current review, I will carefully consider the evidence 
in our record and rely on those facts to decide the issues before us. 
The evidence regarding the news coverage provided by the 1975 
grandfathered combinations and the competition those combinations face 
in their markets will be extremely relevant to our analysis. The 
behavior of those companies in those markets provides concrete 
information about the effect of lifting the ban. Although I understand 
your concerns, because these combinations have been grandfathered for 
over 30 years, I think we can find the information provided by their 
experience to be useful.

    Question 4. The closest daily newspaper can be 100 miles away in 
some parts of my state. Do you see any particular challenges in 
providing a diversity of news viewpoints in rural parts of our country 
if further media consolidation is allowed to occur? Some argue local 
cable news channels and local Internet news sites can enhance 
competition and bring out a diversity of viewpoints, but are these 
answers going to work in rural communities?
    Answer. The size of a market, in terms of both geography and 
population, is of great importance in our consideration of the 
ownership rules. Because the nature of broadcasting has always been 
local, we must weigh the effect of our rules on communities of all 
sizes, whether they be urban, rural or in between. We must also study 
the effect of competition from cable and Internet news on local 
stations. I will do my best to consider what the evidence shows us with 
respect to newspaper-broadcast combinations in rural markets. I hope 
that we will hold at least one of our media ownership field hearings in 
a rural market so that we can hear directly from people in a rural 
community about the challenges they face.
                                 ______
                                 
    Response to Written Question Submitted by Hon. David Vitter to 
                        Hon. Robert M. McDowell

    Question. I have been alerted to a problem regarding compensation 
to payphone providers for coinless calls made from their phones. 
According to recent FCC statistics, about 6 percent of Louisiana 
households do not have any type of phone in their home. During the 
immediate aftermath of Hurricanes Katrina and Rita, payphones were the 
only way many people--both those without any other phones and also 
those whose mobile phones were not working due to the networks being 
overloaded--could reach emergency personnel or family and loved ones. 
Without being fairly compensated according the rules set forth by the 
Commission, payphone providers will not be able to maintain these 
phones. I have been told that in the last 2 years since the Commission 
most recently revised the payphone compensation rules, a large number 
of carriers have failed to comply with their obligations under these 
rules. I also understand that in December 2006, the FCC issued its 
first sanctions against one of these carriers that violated these 
rules. I would appreciate hearing your comments on whether you think 
the agency has sufficient power and resources under your existing 
authority to continue to enforce these rules and help ensure that 
companies are not able to disregard the Commission's payphone 
compensation rules.
    Answer. Yes, I do believe that the Commission has sufficient 
authority to enforce payphone compensation rules. Those rules are very 
complicated and require adequate resources to administer. I am 
committed to acting on those enforcement actions that are brought 
before the Commission in an expeditious manner to ensure that all 
carriers are fairly compensated for use of their facilities while 
protecting the public interest.

                                  
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