[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]
NETWORK NEUTRALITY AND INTERNET
REGULATION: WARRANTED OR MORE
ECONOMIC HARM THAN GOOD?
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED TWELFTH CONGRESS
FIRST SESSION
__________
FEBRUARY 16, 2011
__________
Serial No. 112-8
Printed for the use of the Committee on Energy and Commerce
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan HENRY A. WAXMAN, California
Chairman Ranking Member
JOE BARTON, Texas JOHN D. DINGELL, Michigan
Chairman Emeritus Chairman Emeritus
CLIFF STEARNS, Florida EDWARD J. MARKEY, Massachusetts
ED WHITFIELD, Kentucky EDOLPHUS TOWNS, New York
JOHN SHIMKUS, Illinois FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania BOBBY L. RUSH, Illinois
MARY BONO MACK, California ANNA G. ESHOO, California
GREG WALDEN, Oregon ELIOT L. ENGEL, New York
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
SUE WILKINS MYRICK, North Carolina LOIS CAPPS, California
Vice Chair MICHAEL F. DOYLE, Pennsylvania
JOHN SULLIVAN, Oklahoma JANE HARMAN, California
TIM MURPHY, Pennsylvania JANICE D. SCHAKOWSKY, Illinois
MICHAEL C. BURGESS, Texas CHARLES A. GONZALEZ, Texas
MARSHA BLACKBURN, Tennessee JAY INSLEE, Washington
BRIAN P. BILBRAY, California TAMMY BALDWIN, Wisconsin
CHARLES F. BASS, New Hampshire MIKE ROSS, Arkansas
PHIL GINGREY, Georgia ANTHONY D. WEINER, New York
STEVE SCALISE, Louisiana JIM MATHESON, Utah
ROBERT E. LATTA, Ohio G.K. BUTTERFIELD, North Carolina
CATHY McMORRIS RODGERS, Washington JOHN BARROW, Georgia
GREGG HARPER, Mississippi DORIS O. MATSUI, California
LEONARD LANCE, New Jersey DONNA M. CHRISTENSEN, Virgin
BILL CASSIDY, Louisiana Islands
BRETT GUTHRIE, Kentucky
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia
(ii)
Subcommittee on Communications and Technology
GREG WALDEN, Oregon
Chair
LEE TERRY, ANNA G. ESHOO, California
Vice Chairman EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida MICHAEL F. DOYLE, Pennsylvania
JOHN SHIMKUS, Illinois DORIS O. MATSUI, California
MARY BONO MACK, California JANE HARMAN, California
MIKE ROGERS, Michigan JOHN BARROW, Georgia
BRIAN P. BILBRAY, California EDOLPHUS TOWNS, New York
CHARLES F. BASS, New Hampshire FRANK PALLONE, Jr., New Jersey
MARSHA BLACKBURN, Tennessee BOBBY L. RUSH, Illinois
PHIL GINGREY, Georgia DIANA DeGETTE, Colorado
STEVE SCALISE, Louisiana JOHN D. DINGELL, Michigan
ROBERT E. LATTA, Ohio HENRY A. WAXMAN, California
BRETT GUTHRIE, Kentucky
ADAM KINZINGER, Illinois
JOE BARTON, Texas
FRED UPTON, Michigan
C O N T E N T S
----------
Page
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 1
Prepared statement........................................... 3
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 4
Prepared statement........................................... 5
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 6
Prepared statement........................................... 7
Hon. Joe Barton, a Representative in Congress from the State of
Texas, prepared statement...................................... 8
Hon. John D. Dingell, a Representative in Congress from the State
of Michigan, prepared statement................................ 11
Witnesses
Julius Genachowski, Chairman, Federal Communications Commission.. 12
Prepared statement........................................... 14
Answers to submitted questions............................... 230
Michael J. Copps, Ph.D., Commissioner, Federal Communications
Commission..................................................... 19
Prepared statement........................................... 21
Answers to submitted questions............................... 247
Robert M. McDowell, Commissioner, Federal Communications
Commission..................................................... 28
Prepared statement........................................... 30
Answers to submitted questions............................... 252
Mignon Clyburn, Commissioner, Federal Communications Commission.. 68
Prepared statement........................................... 70
Answers to submitted questions............................... 261
Meredith Attwell Baker, Commissioner, Federal Communications
Commission..................................................... 77
Prepared statement........................................... 79
Answers to submitted questions............................... 265
Submitted Material
Letters of May 28, 2010, May 24, 2010, and December 16, 2010,
submitted by Mr. Terry......................................... 137
Article entitled ``What Net Neutrality Means for You,'' Trend
Micro Consumer Newsletter, submitted by Mr. Terry.............. 158
Letter of December 15, 2010, from Amplex Internet to Mr. Latta,
submitted by Mr. Latta......................................... 159
Report by Seth P. Waxman, submitted by Mr. Bass.................. 161
Phoenix Center Policy Bulletin No. 25, submitted by Mrs.
Blackburn...................................................... 171
Editorial entitled ``Net Neutrality: No One Will Be Satisfied,
Everyone Will Complain,'' by David J. Farber and Gerald R.
Faulhaber, The Atlantic, submitted by Ms. Eshoo................ 194
Letter of February 14, 2011, from the United States Conference of
Catholic Bishops, submitted by Ms. Eshoo....................... 196
Letter of February 16, 2011, from The American Library
Association (ALA), The Association of Research Libraries (ARL),
and EDUCAUSE, submitted by Ms. Eshoo........................... 198
Letter of February 14, 2011, from the American Association of
Independent Music, submitted by Ms. Eshoo...................... 204
Letter of February 15, 2011, from the Asian American Justice
Center, submitted by Ms. Eshoo................................. 206
Letter of February 14, 2011, from Computer & Communications
Industry Association, submitted by Ms. Eshoo................... 208
Letter of February 16, 2011, from the Free Community Paper
Industry, submitted by Ms. Eshoo............................... 210
Letter of February 14, 2011, from the Future of Music Coalition,
submitted by Ms. Eshoo......................................... 212
Letter of February 15, 2011, from the Leadership Conference,
submitted by Ms. Eshoo......................................... 214
Letter of February 15, 2011, from the Economy Corporation,
submitted by Ms. Eshoo......................................... 216
Letter of February 14, 2011, from various members of the music
community, submitted by Ms. Eshoo.............................. 217
Letter of February 15, 2011, from the National Urban League,
submitted by Ms. Eshoo......................................... 219
Letter of February 16, 2011, from various organizations
supporting the Open Internet, submitted by Ms. Eshoo........... 221
Letter of February 15, 2011, from various businesses in support
of the Open Internet, submitted by Ms. Eshoo................... 223
Letter of March 1, 2011, from various faith leaders in support of
the Open Internet, submitted by Ms. Eshoo...................... 225
Letter of April 6, 2011, from Netflix in support of the Open
Internet, submitted by Ms. Eshoo............................... 228
NETWORK NEUTRALITY AND INTERNET
REGULATION: WARRANTED OR MORE
ECONOMIC HARM THAN GOOD?
----------
WEDNESDAY, FEBRUARY 16, 2011
House of Representatives,
Committee on Energy and Commerce,
Subcommittee on Communications and Technology,
Washington, DC.
The subcommittee met, pursuant to call, at 9:33 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Greg
Walden (chairman of the subcommittee) presiding.
Members present: Representatives Walden, Terry, Stearns,
Shimkus, Bono Mack, Rogers, Bilbray, Bass, Blackburn, Gingrey,
Scalise, Latta, Guthrie, Kinzinger, Barton, Upton (ex officio),
Eshoo, Markey, Doyle, Matsui, Harman, Barrow, Towns, Pallone,
Rush, Dingell, Inslee, and Waxman (ex officio).
Staff present: Neil Fried, Majority Chief Counsel; Michael
Beckerman, Majority Deputy Staff Director; David Redl, Majority
Counsel; Jeff Mortier, Majority Professional Staff; Carly
McWilliams, Majority Legislative Clerk; Roger Sherman, Minority
Chief Counsel; Shawn Chang, Minority Counsel; Jeff Cohen,
Minority Counsel; Sarah Fisher, Minority Policy Analyst; Bruce
Wolpe, Minority Advisor; Pat Delgado, Minority Chief of Staff
(Waxman); and Phil Barnett, Minority Staff Director.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. Please take your seats, and the hearing is
about to begin. I call to order the Subcommittee on
Communications and Technology hearing on net neutrality. I want
to welcome our witnesses who are here today, and we look
forward to your testimony and the responses to your questions.
We all want an open and thriving Internet. That Internet
exists today. Consumers can access anything they want with the
click of a mouse, thanks to our historical hands-off approach.
Changing direction now will only harm innovation and the
economy. But before we even get into the harm the network
neutrality rules will cause, it is important to realize the
FCC's underlying theory of authority would allow the Commission
to regulate any interstate communication service on barely more
than a whim and without any additional input from the United
States Congress. In essence, the FCC argues it can regulate
anything if in its opinion doing so would encourage broadband
deployment.
I am relieved, however, the FCC declined, under its
newfound authority, to regulate coffee shops, bookstores,
airlines, and other entities. This of course means the FCC
believes it has the authority that it has so far declined. It
could have subjected these entities to the new rules under its
decision.
If left unchallenged, this claim of authority would allow
the FCC to regulate any matter it discussed in the National
Broadband Plan. Recall that the FCC concluded that consumers'
concerns over privacy are deterring broadband. Does that mean
the FCC can regulate Internet privacy?
The National Broadband Plan also addresses health IT,
distance learning, smart grid, smart homes, smart
transportation. Can the FCC regulate all of these matters too
in the name of promoting broadband? Under the FCC's rationale,
its authority is bounded only by its imagination.
Former FCC Chairman Kevin Martin tried to go down a very
similar path. In the wake of Hurricane Katrina, he claimed that
his authority over wireless services allowed him to require
backup power at cell sites. During oral arguments, the courts
questioned the FCC's logic, asking whether it would grant him
seemingly endless authority over things like electric utilities
and employees of wireless providers. The FCC eventually backed
down. This overreach was problematic with a real disaster like
Hurricane Katrina. I don't see how it is justified here.
From the Internet's inception, we have taken a hands-off
approach. The Internet started as a defense agency project to
connect computers to research facilities. It did not become the
explosive driver of communications and economic growth it is
today until we turned it over to free enterprise. Dating as far
back as 1971, the FCC has consistently treated data services as
unregulated information services and not as regulated
telecommunications services. Congress codified this distinction
in the 1996 Telecommunications Act.
FCC Chairman William Kennard reaffirmed this approach. In
rebuffing requests to regulate cable Internet access service,
Chairman Kennard explained in a 1999 speech, and I quote,
``that the fertile fields of innovation across the
communications sector and around the country are blooming
because from the get-go we have taken a deregulatory
competitive approach to our communications structure,
especially the Internet.'' There is no crisis warranting
departure from this approach.
The FCC hangs almost its entire case for regulating the
Internet on Comcast's past attempt to combat network congestion
by managing peer-to-peer traffic, but Comcast and the peer-to-
peer community resolved that issue by gathering their engineers
and developing alternative solutions that advanced traffic
management techniques to everyone's benefit. No network
neutrality rules were in place, and the D.C. Circuit overturned
the FCC's attempts to regulate Comcast's network management
because the Federal Communications Commission failed to
demonstrate it had the authority to do so. Most everything else
the order discusses is either an unsubstantiated allegation or
speculation of future harm.
The FCC even confesses in its order that it has done no
market analysis, none. It just selectively applied the rules to
broadband providers, shielding web companies. If the mere
threat of Internet discrimination is such a concern and if the
FCC has done no analysis to demonstrate why one company has
more market power than another, why would discrimination by
companies like Google or Skype be any more acceptable than
discrimination by companies like AT&T and Comcast? Instead of
promoting competition, such picking of winners and losers will
stifle the investment needed to perpetuate the Internet's
phenomenal growth, hurting the economy.
Section 230 of the Telecommunications Act makes it the
policy of the United States to ``preserve the vibrant and
competitive free market that presently exists for the Internet
and other interactive computer services unfettered by federal
or state regulation.'' Statutory statements of policy are not
grants of regulatory authority but they can help delineate the
contours of that authority. In light of Congress's statutory
pronouncement that Internet regulation is disfavored, the FCC's
theory of regulation by bank shot stretches too far.
At bottom, this is little more than an end run around the
D.C. Circuit is April 2010 ruling in the Comcast case that the
FCC failed to show it had the ancillary authority to regulate
network management.
[The prepared statement of Mr. Walden follows:]
Prepared Statement of Hon. Greg Walden
We all want an open and thriving Internet. That Internet
exists today. Consumers can access anything they want with the
click of a mouse thanks to our historical hands-off approach.
Changing direction now will only harm innovation and the
economy.
But before we even get into the harm the network neutrality
rules will cause, it's important to realize that the FCC's
underlying theory of authority would allow the commission to
regulate any interstate communication service on barely more
than a whim and without any additional input from Congress. In
essence, the FCC argues it can regulate anything if, in its
opinion, doing so would encourage broadband deployment. I am
relieved, however, that the FCC declined under its new-found
authority to regulate coffee shops, bookstores, airlines and
other entities. This of course means that the FCC believes if
it had not so declined, it could have subjected these entities
to these new rules.
If left unchallenged, this claim of authority would allow
the FCC to regulate any matter it discussed in the national
broadband plan. Recall that the FCC concluded that consumers'
concerns over privacy are deterring broadband. Does that mean
the FCC can regulate Internet privacy? The national broadband
plan also addresses health IT, distance learning, smart grids,
smart homes, and smart transportation. Can the FCC regulate all
these matters, too, in the name of promoting broadband? Under
the FCC's rationale, its authority is bounded only by its
imagination.
Former FCC Chairman Kevin Martin tried to go down a very
similar path. In the wake of Hurricane Katrina, he claimed that
his authority over wireless services allowed him to require
backup power at cell sites. During oral argument, the courts
questioned the FCC's logic, asking whether it would grant him
seemingly endless authority over things like electric utilities
and employees of wireless providers. The FCC eventually backed
down. If this overreach was problematic with a real disaster
like Hurricane Katrina, I don't see how it is justified here.
From the Internet's inception we have taken a hands-off
approach. The internet started as a defense agency project to
connect computers at research facilities. It did not become the
explosive driver of communications and economic growth it is
today until we turned it over to free enterprise. Dating as far
back as 1971, the FCC has consistently treated data services as
unregulated information services and not as regulated
telecommunications services. Congress codified this distinction
in the 1996 Telecommunications Act.
FCC Chairman William Kennard reaffirmed this approach. In
rebuffing requests to regulate cable Internet access service,
Chairman Kennard explained in a 1999 speech that ``[t]he
fertile fields of innovation across the communications sector
and around the country are blooming because from the get-go we
have taken a deregulatory, competitive approach to our
communications structure-especially the Internet.''
There is no crisis warranting departure from this approach.
The FCC hangs almost its entire case for regulating the
Internet on Comcast's past attempt to combat network congestion
by managing peer-to-peer traffic. But Comcast and the peer-to-
peer community resolved that issue by gathering their engineers
and developing alternative solutions that advanced traffic
management techniques to everyone's benefit. No network
neutrality rules were in place, and the D.C. Circuit overturned
the FCC's attempts to regulate Comcast's network management
because the FCC failed to demonstrate it had any authority to
do so. Most everything else the order discusses is either an
unsubstantiated allegation or speculation of future harm.
The FCC even confesses in its order that it has done no
market analysis. It just selectively applied the rules to
broadband providers, shielding web companies. If the mere
threat of Internet discrimination is such a concern, and if the
FCC has done no analysis to demonstrate why one company has
more market power than another, why would discrimination by
companies like Google or Skype be any more acceptable than
discrimination by companies like AT&T and Comcast? Instead of
promoting competition, such picking of winners and losers will
stifle the investment needed to perpetuate the Internet's
phenomenal growth, hurting the economy.
Section 230 of the Communications Act makes it the policy
of the United States ``to preserve the vibrant and competitive
free market that presently exists for the Internet and other
interactive computer services, unfettered by Federal or State
regulation.'' Statutory statements of policy are not grants of
regulatory authority but they can help delineate the contours
of that authority. In light of Congress's statutory
pronouncement that Internet regulation is disfavored, the FCC's
theory of regulation by ``bank shot'' stretches too far.
At bottom this is little more than an end-run around the
D.C. Circuit's April 2010 ruling in the Comcast case that the
FCC failed to show it had ancillary authority to regulate
network management.
Mr. Walden. With that I now turn to the ranking member for
her opening statement.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Good morning, Mr. Chairman, and thank you, and
warm welcome to all of the commissioners of the Federal
Communications Commission. It is very good to see you. I want
to thank Chairman Walden for calling the commissioners before
us early in this Congress. It is vitally important that we hear
from the full Commission to help members make informed
decisions on the key telecommunications issues that will be
before us in this Congress.
Today's hearing is intended to examine the FCC's action to
preserve an open Internet and a proposed mechanism to unravel
these rules. Since being elected to the House in 1992, I have
witnessed my district lead a technology revolution, and the
Nation has prospered as has the world. This success has come in
large part due to the Internet's growth, an open forum where
companies compete online and consumers have a choice in the
content they consume.
In only a few years, innovative companies like Netflix,
Skype, and eBay have flourished. These companies have created
tens of thousands of jobs and new competition in areas like
telephone service, video, and online shopping, not just in my
district but across the Nation. By one estimate, the open
Internet ecosystem has resulted in more than 3 million new
jobs, U.S. jobs, over the past 15 years. To promote the next
Google or Facebook, we must preserve these essential qualities
and ensure that the Internet remains open and free.
While the FCC's open Internet rules are not perfect, they
are an important step forward. Without some clear rules of the
road, large corporations can carve up the Internet into fast
and slow lanes, charging a toll for content and blocking
innovators from entering the information superhighway. I
believe consumers, not corporations, should be in the driver's
seat to pick the content they view, listen and watch over the
Internet.
We are now faced with at least two legal challenges and the
use of legislative maneuvers like the Congressional Review Act
to overturn the FCC's work. These actions will inevitably
create market uncertainty, and I want to repeat that, Mr.
Chairman. These actions will inevitably create market
uncertainty and delay future innovation in broadband
technology.
Each member of this subcommittee has made it clear where
they stand on the issue, and I don't expect this hearing to
change those views. What is important to remember is what the
FCC agreed to is a compromise, a word that a lot of Americans
celebrate. That understand that compromises have to be made,
reflecting the views of both sides of the issue, with more than
100,000 comments from more than 2 million people across the
country, 90 percent of whom were in favor of open Internet
rules. So the American people have really weighed in with the
FCC.
There is broad agreement for the adoption of these rules.
Comcast, the Nation's largest broadband provider, voluntarily
agreed to abide by open Internet conditions for the next 7
years as part of its joint venture with NBC Universal. AT&T has
said it will not engage in efforts to overturn the FCC's order.
If these commonsense rules are good enough for the Nation's two
largest broadband providers, then I think it is time we refocus
our efforts on the next steps needed to promote jobs, broadband
deployment, and new investment.
I think it is time to look forward. That is really what
America is about, and on what we can work on together in a
bipartisan way. We are faced with important issues like
universal service reform, spectrum reform and ensuring that our
country's first responders have a nationwide, interoperable
public safety network. We will be coming up to the 10th
anniversary of the attack on our country and we still do not
have interoperability with our public safety community. That is
what this Congress, this committee and full committee should be
tackling. And when we tackle these issues, we will have an
opportunity to create jobs in our country, grow the economy,
and a platform we can all agree on.
I look forward to hearing from the distinguished chairman
all of the commission, all the distinguished commissioners and
their thoughts on how we can ensure that the Internet remains a
vital resource, an American resource to improve the lives of
every citizen and everyone around the world for generations to
come. Thank you, Mr. Chairman, and I yield back.
[The prepared statement of Ms. Eshoo follows:]
Prepared Statement of Hon. Anna G. Eshoo
Good morning Mr. Chairman and welcome to the FCC
Commissioners.
I commend Chairman Walden for calling the Commissioners
before us early in this Congress. It's vitally important that
we hear from the full Commission to help Members make informed
decisions on key telecommunications issues.
Today's hearing is intended to examine the FCC's action to
preserve an open Internet and a proposed mechanism to unravel
these rules. Since being elected to the House in 1992, I've
witnessed my District lead a technology revolution and the
nation has prospered. This success has come in large part due
to the Internet's growth--an open forum where companies compete
online, and consumers have a choice in the content they
consume.
In only a few years, innovative companies like Netflix,
Skype and eBay have flourished. These companies have created
tens of thousands of jobs and new competition in areas like
telephone service, video and online shopping, not just in my
District, but across the nation. By one estimate, the open
Internet ecosystem has resulted in more than 3 million new U.S.
jobs over the past 15 years. To promote the next Google or
Facebook, we must preserve these essential qualities and ensure
the Internet remains free and open.
While the FCC's open Internet rules are not perfect, a view
I've made very clear, they are an important step forward.
Without some clear rules of the road, large corporations can
carve up the Internet into fast and slow lanes, charging a toll
for content, and blocking innovators from entering the
information superhighway. I believe consumers, not
corporations, should be in the driver's seat to pick the
content they view, listen and watch over the Internet.
We're now faced with at least two legal challenges and the
use of legislative maneuvers like the Congressional Review Act
(CRA) to overturn the FCC's work. These actions will inevitably
create market uncertainty and delay future innovation in
broadband technology.
Each Member of this Subcommittee has made it clear where
they stand on the issue and I don't expect this hearing to
change those views. What's important to remember is what the
FCC agreed to is a compromise, reflecting the views of both
sides of the issue, with more than 100,000 comments from more
than 2 million people, 90 percent of whom were in favor of open
Internet rules.
There is broad agreement for the adoption of these rules.
Comcast, the nation's largest broadband provider, voluntarily
agreed to abide by open Internet conditions for the next seven
years as part of its joint venture with NBC Universal. AT&T has
said it will not engage in efforts to overturn the FCC's order.
If these common sense rules are good enough for the nation's
two largest broadband providers, then I think it's time we
refocus our efforts on the next steps needed to promote jobs,
broadband deployment and new investment.
It's time to look forward and focus on what we can work on
together in a bipartisan way. We're faced with important issues
like universal service reform, spectrum reform and ensuring
that our country's first responders have a nationwide,
interoperable public safety network. By tackling these issues,
we have an opportunity to create jobs and grow the economy -a
platform we can all agree on.
I look forward to hearing the Chairman and the
Commissioners' thoughts on how we can ensure the Internet
remains a vital resource to improve the lives of Americans and
everyone around the world for generations to come.
Mr. Walden. I thank the gentlelady for her comments.
I now yield 2 minutes to the chairman of the full
committee, the gentleman from Michigan, Mr. Upton.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you, Mr. Chairman.
The FCC's recent adoption of network neutrality rules to
regulate the Internet is perhaps the most striking example of a
troubling trend that we have seen at this very important
agency. Rather than serving as an impartial expert and
authority, the Commission seems to be advancing a policy agenda
of its own, often by twisting the arms of those who have come
before it. The activist agenda is particularly embodied in the
network neutrality regulations that are the subject of today's
hearing.
We are pleased to see Chairman Genachowski today alongside
of his fellow commissioners who announced plans in September of
2009 to codify four network neutrality principles as
enforceable rules. However, the history of these principles is
clear. First put forward in 2004, they were intended for all
facets of the industry in lieu of regulations. Even when
adopted as policies in 2005, the FCC made clear that they were
not established as rules nor were they enforceable. The
decision came only 3 months after taking the helm of the FCC
despite the fact that he made no mention of those plans 4 days
earlier during his first appearance before this committee.
I have made it clear that the Energy and Commerce Committee
will be focused on jobs. As we have seen in the first couple
weeks of the 112th Congress, one of the greatest threats to job
creation in our current economy is runaway regulation.
Regulations are not the problem in and of themselves. In fact,
it is regulations that implement the laws passed by Congress.
The problem comes when unelected personnel in the maze of the
federal bureaucracy began using the regulations to impose their
own agendas, and when they do so without congressional
authority or thoughtful consideration of the economic
consequences. Net neutrality is a case in point. The FCC has
done nothing to specifically quantify any harm requiring
intervention or the potential harm to consumers, innovation or
the economy from the proposed rules. Where is the cost-benefit
analysis that President Obama called for in his recent
Executive order?
This hearing is to look into that, and I look forward to
the answers of those that are here, and I ask that the rest of
my statement be included as part of the record.
Mr. Walden. Without objection.
[The prepared statement of Mr. Upton follows:]
Prepared Statement of Hon. Fred Upton
The FCC's recent adoption of network neutrality rules to
regulate the Internet is perhaps the most striking example of a
troubling trend we have seen at this important agency. Rather
than serving as an impartial expert and authority, the
commission seems to be advancing a policy agenda of its own--
often, by twisting the arms of those who come before it. This
activist agenda is particularly embodied in the network
neutrality regulations that are the subject of today's hearing.
Chairman Genachowski--who we are pleased to see today
alongside his fellow commissioners--announced plans in
September 2009 to codify four network neutrality principles as
enforceable rules. However, the history of these principles is
clear: First put forward in 2004, they were intended for ``all
facets of the industry'' in lieu of regulations. Even when
adopted as policies in 2005, the FCC made clear they were not
established as rules, nor were they enforceable.
Chairman Genachowski's decision came only 3 months after he
took the helm at the FCC, despite the fact that he made no
mention of those plans four days earlier during his first
appearance before the House Energy and Commerce Committee.
I have made it clear that the Energy and Commerce Committee
would be focused on jobs. And as we have seen in the first few
weeks of the 112th Congress, one of the greatest threats to job
creation in our current economy is runaway regulation.
Regulations are not the problem in and of themselves--in fact,
it is regulations that implement the laws passed by Congress.
The problem comes when unelected personnel in the maze of the
federal bureaucracy begin using regulations to impose their own
agendas, and when they do so without congressional authority or
thoughtful consideration of the economic consequences.
Net neutrality is a case in point. The FCC has done nothing
to specifically quantify any harm requiring intervention, or
the potential harm to consumers, innovation, or the economy
from the proposed rules. Where is the cost-benefit analysis
that President Obama called for in his recent executive order?
In addition to these economic concerns, there are serious
legal questions. In April 2010, the D.C. Circuit found the FCC
had failed to demonstrate it had the authority to impose these
network neutrality rules against a particular provider. Rather
than re-evaluating the wisdom of regulating the Internet, the
FCC began scrambling to find an alternative legal theory.
The FCC proposed classifying Internet access service for
the first time as a telecommunications service. This rightfully
drew bipartisan alarm from more than 300 members of the House
and Senate, as well as from industry. The FCC pivoted once
more, now claiming it has authority to adopt any rules
regarding information services that might have an impact on
broadband, traditional wireline and wireless phone service, or
broadcast and subscription television.
Chairman Walden and I have made no secret about our
objections to this policy and our plans to overturn it using
the Congressional Review Act. In fact, here in my hand is the
resolution Chairman Walden and I intend to drop in the hopper
down on the House floor. Before we do that, we are giving you
this one last chance to convince us that you have a sound legal
and policy basis for regulating the Internet.
We believe these rules will hurt innovation and the
economy. But we are also concerned that this power grab will do
irreparable harm to the FCC as an institution, and to the role
of Congress as elected representatives of the people to
determine the law of the land. We do not intend to allow either
to occur.
Mr. Walden. And now I think we go to Mr. Barton for a
minute on our side.
Mr. Barton. We have a little high-tech problem getting the
button on over here. It just went off again.
Welcome, our four commissioners and chairmen of the FCC.
You are all great individuals. You are all very bright. I
disagree with the majority of you on your net neutrality
regulations that you put in place but I am impressed by your
intellect.
Mr. Chairman, I will put my statement in the record.
Suffice it to say that I do not see how this Commission with
the intelligence that they have could have adopted the rule
they did on a 3-2 partisan vote knowing that there was probably
going to--in fact, knowing there has been a change in the
Congress and that every candidate who ran on the net neutrality
principle that they tried to establish was defeated and knowing
that the majority of this committee and a majority of the
Congress on both sides of the aisle opposed the rule that they
have now put in place.
We have two hearings going on simultaneously so Mr. Upton
and myself and others will be going up and down and back but I
hope to come back in time to question the Commission and try to
delve into why they did what they did when they did it, knowing
that it was not going to be well reserved. Thank you, Mr.
Chairman.
[The prepared statement of Mr. Barton follows:]
Prepared Statement of Hon. Joe Barton
Thank you, Mr. Chairman, for holding this important
hearing. I would like to welcome our impressive witnesses: all
four commissioners and Chairman Genachowski.
This morning, Mr. Chairman, we are going to hear a familiar
story about federal bureaucrats taking government regulations
too far. The target this time is the Internet. This is the same
Internet that has become a thriving force in this country and
all without any type of formal federal government regulation.
If strict regulation of the internet was warranted,
Congress would have taken appropriate action. However,
Congress, the American people, and those in the industry saw no
looming danger.
To say that I was stunned to see the backhanded tactics of
the FCC when they adopted their network neutrality rules at the
end of last year would be an understatement. The motives of the
FCC on this matter are suspect. It is evident that the FCC's
agenda comes straight out of the Obama Administration's
playbook; destroy the economy without any regard for the
current economic situation and do so without showing an
imminent threat.
The actions taken by the FCC have denied the markets from
policing themselves. The rules for network neutrality serve
only to stifle innovation of the services offered by broadband
providers. I hope through Congressional action we can return to
a mindset where we champion platforms that foster a healthy
environment for competition.
As a Member of Congress, it is my duty to ensure that
actions taken at the federal level are not harmful to citizens
that elected us into office. The Internet has provided users
from all backgrounds with an opportunity to freely explore new
worlds and express new ideas across an unlimited number of
networks. It should be our goal to preserve the vibrant
competitive free market which allows for continued success and
growth of the Internet.
Mr. Walden. I now yield a minute to the gentleman from
Nebraska, the vice chair of the committee, Mr. Terry.
Mr. Terry. Thank you, Mr. Walden.
I believe it is safe to say that everyone in this room
today wants an open and thriving Internet. It is therefore
important to point out that such an Internet exists today. It
is no coincidence that today's Internet users can access
anything they want very quickly and easily. This was made
possible due to our historical hands-off approach to the
Internet. As users demand more-sophisticated content, service
and applications, we must maintain a similar course or face the
inevitable decline in investment, service and overall blow to
our economy.
I am worried that the FCC's adoption of its network
neutrality rules regulating the Internet will do just that, and
I am further concerned that they were adopted strictly on the
speculation of future harm.
On October 5, 2009, my colleagues and I sent a letter
asking that the Commission undertake a full market analysis
prior to any consideration of network neutrality rules. It is
made clear in the order that no such analysis took place.
Instead the order selectively applies the rules to broadband
providers while shielding Web-based companies. I am interested
in learning today why the Commission instead of promoting
competition decided it was more appropriate to pick the winners
and the losers. If the were a mere threat of Internet
discrimination is such a concern and the FCC has done no
analysis to demonstrate why one company has more market power
than another, why would discrimination like companies like
Google or Skype be any more acceptable than discrimination by
companies like Verizon and Cox?
Hopefully these questions will be answered today. I plan on
seeking the answers to these questions and about impact on the
market, and I yield back.
Mr. Walden. I now recognize the gentleman from
Massachusetts, Mr. Markey, for a minute.
Mr. Markey. I thank you, Mr. Chairman.
I just want to speak on behalf of those of us who ran on
net neutrality who are still in Congress, which starts with Ms.
Eshoo to Mr. Waxman, to Mr. Markey, to Mr. Doyle, Ms. Matsui,
all the way down just so the record is clear that we are here
as we have been, and I also want to point out that AT&T was
offered the contract to build the Internet in 1966 and they
turned it town because they said they had a monopoly already
and long lines and they did not want to build a packet switch
network because they had to go to BB&N, a small company up in
Cambridge, Massachusetts, to build the Internet. AT&T didn't
want it.
In 1996, after we passed the Telecom Act, Verizon sued
saying we don't want to open up our network under that law to
competitors, and the story goes on and on that the broadband
barons, any time they have control of something they don't want
competition, but this Internet revolution that created Google
and eBay and Amazon and YouTube and Hulu and all of the rest of
these companies, it is all as a result, not of the policy of
Verizon, the policy of these other large companies, it is that
the government acted.
So here is the interesting thing. The paradox of
competition is that it takes regulations in order to create
deregulation, in order to create a marketplace for small
entrepreneurial companies can get into the marketplace. That is
what has happened over the last 30 years. The government has
acted in order to make sure that a company that had already
invented broadband, already invented digital, that is AT&T, but
had not deployed it so we were all still using black rotary
dial phones 100 years after Alexander Graham Bell in our living
room. You don't go from black rotary dial phones to BlackBerrys
unless the government finally intervenes and says we want these
entrepreneurs, we want these small new companies that are
entering into the marketplace. That is what has happened over
this last generation. That is what this debate is all about.
I wish the FCC had gone further so that we could have
hundreds, thousands of newer companies coming in and not just
relying upon Verizon to innovate because that will be a long
day before you hear about the first new product that comes from
Verizon. That has never happened and it is unlikely to ever
happen in your lifetimes.
I yield back, Mr. Chairman.
Mr. Walden. There is Mr. Waxman. We are waiting for the
chairman emeritus. Mr. Waxman, you have the remaining 2 minutes
and 35 seconds once you are comfortably seated and ready to go.
Mr. Waxman. Thank you very much, Mr. Chairman, and I regret
that this committee has another subcommittee meeting at the
same time.
I am pleased you had this hearing today. This is the first
FCC-related hearing of the subcommittee. I think it is
appropriate that our witnesses are the five members of the
Commission.
Last December, the FCC took landmark action to preserve the
open Internet. These rules are a bill of rights for Internet
users. They contain four key provisions: restore the FCC's
authority to prevent blocking of Internet content applications
and services, which was struck down by the court in the Comcast
decision, prevent phone and cable companies from unreasonably
discriminating against any lawful Internet traffic, prohibit
wireless broadband providers from blocking Web sites as well as
applications that compete with voice or video conferencing
while preserving the FCC's authority to adopt additional
standards and safeguards under existing authorities, and to
direct the FCC to issue transparency regulations so consumers
know the price, performance and network management practices.
We are going to hear about these regulations to protect the
open Internet, and I think that we have to recognize that some
of the claims that are being made and repeated over and over
again are just not accurate. The most vibrant sector of our
economy today is our Internet economy. U.S. companies like
Google, Facebook, Amazon and eBay lead the world in innovation.
They all urged the FCC to act to protect an open Internet
because ``commonsense baseline rules are critical to ensuring
that the Internet remains a key engine of economic growth,
innovation and global competitiveness.''
We need to make sure that the Internet is free and open and
not regulated by anyone who is just simply delivering the
service. Even AT&T and Comcast, which are two of the Nation's
largest network operators, support the rules. AT&T's CEO
stated, ``We didn't get everything we wanted. I wanted no
regulation but we ended at a place where we have a line of
sight and we know can commit to investments.'' And earlier
today we received letters from a broad and diverse coalition of
more than 100 organizations that oppose efforts to use
legislation to block the open Internet regulations.
The American people want us to be focusing on creating jobs
and rebuilding our economy. We have important opportunities in
this subcommittee to contribute to that effort by making more
spectrum available, ensuring universal access to broadband. We
have a lot of things we need to work on together, and I look
forward to that. This issue has been resolved by the FCC, and I
look forward to our following the implementation of it.
I would like to ask unanimous consent to put in the full
statement.
Mr. Walden. Without objection, all members are allowed the
opportunity to put their full statements in the record.
[Additional statement for the record follows:]
Prepared Statement of Hon. John D. Dingell
Thank you, Mr. Chairman, and I commend you for carrying on
the Committee's long tradition of fair and measured oversight.
I would also like to welcome our witnesses this morning,
especially Chairman Genachowski. I am confident he and his
fellow commissioners will answer my questions and those of my
colleagues with unequivocal candor and keen insight.
I understand my Republican colleagues intend to use this
hearing to lay the groundwork for a resolution to nullify the
Commission's recently adopted Open Internet order. While I
agree with them that the Commission lacks the statutory
authority with which to regulate broadband Internet access
services, the fact remains that the order has been finalized,
and its future now resides within the purview of the courts. I
respectfully suggest we not re-litigate the past and instead
focus our attention on matters pending the Commission's
consideration which have the potential to expand our country's
communications infrastructure, enhance U.S. competitiveness,
and, most importantly, create jobs. Chief among these matters
are reform of the Universal Service Fund and spectrum policy.
I look forward to Chairman Genachowski's and his fellow
commissioners' responses to my questions. I also hope they will
affirm anew that the Congress is, as I have said so many times,
the sole progenitor of the Commission's authority and commit to
working with this Committee in advancing that agency's most
important work.
I thank you for your courtesy, Mr. Chairman, and yield the
balance of my time.
Mr. Walden. With that, I thank the folks who have offered
up the opening statements, and I would now like to turn to our
panel of witnesses, the distinguished members of the Federal
Communications Commission, and I will start with that
Commission's chairman, Mr. Genachowski. Thank you for being
here today, and we look forward to your statement.
STATEMENTS OF JULIUS GENACHOWSKI, CHAIRMAN, FEDERAL
COMMUNICATIONS COMMISSION; MICHAEL J. COPPS, PH.D.,
COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION; ROBERT M.
MCDOWELL, COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION;
MIGNON CLYBURN, COMMISSIONER, FEDERAL COMMUNICATIONS
COMMISSION; AND MEREDITH ATTWELL BAKER, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION
STATEMENT OF JULIUS GENACHOWSKI
Mr. Genachowski. Chairman Walden, Chairman Upton, Ranking
Members Eshoo and Waxman, members of the subcommittee, this
committee has jurisdiction over an area of increasing
importance: communications and technology, including the
Internet. I look forward to working with this committee in a
variety of ways to strengthen our economy, promote our global
competitiveness and extend opportunity to all Americans. I have
submitted a written statement on our actions to preserve
Internet freedom and openness. I will be brief here.
As we considered a framework for Internet freedom, I had
three priorities. First, consumers, promoting consumer choice,
making sure that people who use the Internet have the freedom
to say what they want, go where they want and access any legal
content or services on the Internet. Second, innovators, making
sure that the Internet will continue to be a vibrant platform
for American entrepreneurs, that the next inventor in his
garage, the next Mark Zuckerberg in his dorm room, the next
Jeff Bezos traveling across the country in his car can start
and build the next great business on the Internet, creating
jobs, growing our economy and helping us lead the world in
innovation. It is essential that we incentivize billions of
dollars of private investment in Internet content, applications
and services businesses. Now, my third priority is the
networks, promoting wired and wireless Internet networks in the
United States that are the best in the world, fast, robust and
universally available. We have to incentivize billions of
dollars of private investment to the core of the network, to
network infrastructure.
Throughout the history of Internet, innovative online
applications and service have spurred broadband deployment and
adoption which in turn have encouraged new applications and
services. This virtuous cycle of innovation and investment
throughout the broadband economy, that is what we want to
maintain and advance. Why? Because the free and open Internet
has led to the creation of tens of thousands of small
businesses, millions of jobs and billions of dollars of
investment.
Now, since 2005 the FCC on a bipartisan basis has made
clear it would act to enforce open Internet protections. It did
so several times but it did so without an appropriately adopted
framework. That is why we acted to bring some resolution and
certainty to this area, and after an open and participatory
process with published rules, public workshops, extensive
engagement, feedback from over 200,000 commenters, we
established a sensible high-level framework to preserve
Internet freedom and openness. The rules fit on one page and
boil down to four things.
First, transparency so that consumers and innovators can
have basic information to make smart choices about broadband
networks or how to develop and launch the next killer app.
Empowering them with information will reduce the need for
government involvement. Second, no blocking so that consumers
can be free to access lawful content or services and so startup
and other Internet companies can be free to reach Internet
consumers. Third, a level playing field, a fair, non-
discrimination principle so that winners and losers online are
picked by who should pick them: consumers and the market. And
fourth, flexibility for Internet service providers, flexibility
to manage networks, to deal with congestion and harmful
traffic, flexibility to pursue innovation and business models
and get a real return on investment.
Now, I understand that some people think this framework
doesn't go far enough. Others think it goes too far. I believe
it gets it about right: light-touch approach consistent with
the FCC's history of bipartisan action on this issue. Informed
by earlier FCC and Congressional initiatives, supported by the
broadest consensus ever assembled on this challenging topic,
the framework we adopted preserves Internet freedom, preserves
the Internet job creation engine, protects consumer choices and
promotes private investment throughout the broadband economy.
Now, while the Commission was divided on this particular
issue, we resolve over 95 percent of our votes on a bipartisan
basis, and I believe we are united on the need to promote
broadband access, its importance to our 21st century economy
and our global competitiveness and to expanding opportunity
broadly.
So I look forward to working with my colleagues and with
the committee on a series of initiatives including unleashing
spectrum, reforming universal service, and removing barriers to
broadband build-out, to harness the opportunities of
communications technologies for all Americans.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Genachowski follows:]
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Mr. Walden. Chairman, thank you for your testimony. We look
forward to your answers.
I now recognize the distinguished gentleman, the
commissioner, Mr. Copps. We are delighted to have you here this
morning.
STATEMENT OF MICHAEL J. COPPS
Mr. Copps. Thank you, sir. Good morning, Chairman Walden
and Chairman Upton and Ranking Member Eshoo and Ranking Member
Waxman and all friends on the committee. I appreciate your
invitation to participate in this discussion to share with you
my perspectives, and more importantly, to hear yours. I look
forward to your counsel as we begin what I think can be a truly
productive year in tackling many telecommunications challenges
facing Congress, the Commission and the country.
It is my firm belief, first of all, that broadband is key
to America's 21st century prosperity. The President, the
Congress, and the Commission are all looking to this
communications infrastructure as a key tool for ensuring a
better and brighter future for America.
There is much work to be done to be ensured that everyone
in this country has equal opportunity in the Digital Age. I
believe that preserving a free and open Internet, the focus of
today's hearing, is a central part of that challenge. I know
there are disagreements among us about the issue but I have
always been open and candid with you before the subcommittee
and in your personal offices on where I stand, and I believe I
have consistent in what I say both here and at the FCC. Most
Americans have a broadband monopoly or at best, duopoly, from
which to choose. Without adequate competition in the Internet
access service market, allowing these companies to exercise
unfettered control over America's access to the Internet not
only creates risk to technological innovation and economic
growth but also poses a real threat to freedom of speech and
the future of our democracy. This is why I have long advocated
for some limited rules of the road to maintain openness and
freedom on the Internet. It is why the Commission adopted in
2005 on a bipartisan basis an Internet policy statement that
contained the basic rights of Internet consumers. This is not
about government regulating the Internet. It is about ensuring
consumers rather than Big Telephone or Big Cable have maximum
control over their experiences when they go online.
During the FCC's proceeding to examine the need for open
Internet rules, I swung my door open wide so I could hear from
every interested stakeholder. I met with broadband providers,
online entrepreneurs, technology investors, consumer groups and
many individual citizens from across the country. In the end,
given that fewer and fewer places are controlling access to the
Internet, I concluded again that we must make sure a few
gatekeepers cannot favor their own content, throttle certain
types of applications and block access to information at will.
With the adoption of the open Internet order last December, we
have at least some concrete rules to prevent gatekeepers from
circumventing the openness that made the Internet the Internet.
The Commission has acted using the authority I believe it has
and that I lay out in greater length in my formal statement,
and now both Congress and the courts will help to determine
where we go from here.
While we may not always agree on how to proceed on every
policy front, there are so many challenges confronting us where
you and I share common cause and where I think we can make real
progress this year. First and foremost among them is ensuring
that our first responders have the communications tools they
need to protect American lives and property. We are fast
approaching the 10th anniversary year of 9/11. I believe we
must make good on our promise to create a nationwide
interoperable public safety network and make progress in
significant and tangible ways this year.
Another area crying out for attention is spectrum policy as
consumers expect ever-faster speeds and mobility for their
broadband, the demand on our finite spectrum resource
skyrockets. Just last week, the President set an ambitious goal
of getting high-speed wireless coverage to 98 percent of
Americans. This is another area where we can work hand in hand
to find ways to maximize our spectrum resource. In addition, to
help meet our shared broadband goals, the Commission took an
important step last week toward transforming the Universal
Service Fund, an intercarrier compensation system to address
our going-forward communications infrastructure needs.
There are other challenges, privacy, digital literacy, to
name a few, where I believe we can work together to ensure that
our citizens have the tools they need for our increasingly
online world. In addition, while I will not dwell on it here, I
think most members of this subcommittee know of my concerns
about America's current media environment, and this goes to the
question of broadband and online too. A vibrant media
landscape, traditional and online, is critical to providing our
citizens with the news and information they need to participate
in our democracy. There are some huge problems here.
Finally, as I do every time I come up here, I urge you to
take action to modify the closed-meeting rule, which prohibits
more than commissioners from ever talking with one another at
the same time outside of a public meeting. I believe this
prohibition has on many occasions during my 10 years at the
Commission stifled collaborative discussions among colleagues,
delayed timely decision-making and discouraged collegiality.
Removal of this prohibition would, in my mind, constitute as
major a reform of Commission procedures as anything I can
contemplate.
Thank you again for the opportunity to be here today. I
look forward to your comments, your counsel and your questions.
[The prepared statement of Mr. Copps follows:]
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Mr. Walden. Thank you, Commissioner, and that is why we
have you all here so that you can all get along and chat. It is
a good thing. And we have never questioned, Commissioner Copps,
your forthright approach to telling us your opinions, either,
nor has anyone in America, and we appreciate that.
I would like to go now to the commissioner, Mr. McDowell.
Thank for you for being here. We welcome your comments and
testimony as well.
STATEMENT OF ROBERT M. MCDOWELL
Mr. McDowell. Thank you, Mr. Chairman and Ranking Member
Eshoo and Chairman Upton and Ranking Member Waxman, and I also
want to special shout-out to Congresswoman Harman. This is a
sad day for me. This is the last time all of us will testify
before you. I want to thank you for your years of public
service. It is a sad day for the McDowell household. I know my
brother, Kelly, the former mayor of El Segundo, California, is
sad to have you leave the U.S. Congress, but I know the Woodrow
Wilson Center will be in excellent hands with you at the helm,
so thank you for your service.
Mr. Chairman and members of the Committee, the markets
under the purview of the FCC are dynamic and ever evolving.
Both the core and the edge of the Internet are growing at
breakneck speeds, all to the benefit of American consumers. For
instance, the United States leads the world in 4G wireless
deployment and adoption. Wireless broadband is the fastest
growing segment of the American broadband market. The United
States I also the global leader in the creation and use of
mobile apps. In fact, the top 300 free mobile applications in
the U.S. app stores enjoyed an average of more than 300 million
downloads per day last December, and I think most of those were
on the McDowell kids' phones, actually. Not surprisingly,
smartphone sales have outpaced PCs for the first time.
On the other hand, in spite of these positive developments,
last year the private sector invested an estimated $44 billion
in new broadband technologies, which is significantly lower
than years past. I am hopeful that the FCC can work
constructively to increase opportunities for investment and job
growth by bringing regulatory certainty to the broadband
marketplace. With Congress's guidance I look forward to
adopting policies that put the power of more spectrum into the
hands of consumers, help accelerate broadband deployment and
adoption, make our universal service subsidy program more
efficient, and modernize our media ownership rules, among many,
many other endeavors.
In addition, the FCC should also strive to clear away
regulatory underbrush that may have outlived its usefulness and
now only deters constructive risk taking. Congress empowered
the Commission to do just that when it codified section 10s
forbearance mandate more than 15 years ago. Streamlining our
regulations could take significant burdens off the backs of
entrepreneurs and give them more freedom to invest and
innovate. Such deregulatory action could serve as a much-needed
short in the arm for America's economy. President Obama said as
much in his recent Executive order.
And a little secret about the FCC, which the chairman has
already touched on. More than 90 percent of our votes are not
only bipartisan but are unanimous. I have enjoyed working with
my colleagues on many recent initiatives including continuation
of our longstanding work on unlicensed use of the TV white
space, simplifying the process for the construction of cell
towers, spectrum reallocation, and initiating the next step to
perform our universal service subsidy system.
Obviously we have had a few respectful disagreements as
well such as our differences concerning the new regulations of
Internet network management, and I have included for your
convenience a copy of my dissent. Nonetheless, I am confident
that the five of us have the ability and the desire to continue
to find common ground on an array of other issues that touch
the lives of every American every day.
Thank you, Mr. Chairman, and I look forward to the
questions from the committee.
[The prepared statement of Mr. McDowell follows:]
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Mr. Walden. We appreciate your testimony.
Now I'd like to go to the distinguished member of the
Commission, Ms. Clyburn. Thank you for being with us today. We
look forward to your comments.
STATEMENT OF MIGNON CLYBURN
Ms. Clyburn. Thank you very much. Mr. Chairman,
Congresswoman Eshoo, members of the subcommittee, good morning,
and thank you for inviting me to testify.
The current success of the Internet is largely due to this
open architecture. This tremendous technological leap is a
great equalizer. It allows traditionally underrepresented
groups to have an equal voice and equal opportunity. It enables
any connected individual to distribute his or her ideas to a
global network or run a business right from their very own
home. The Internet reduces the barriers to entry for new
players. It is a gateway to success at a low capital cost. That
is why it is so important for me to see that this technological
marvel remains open, accessible and affordable for every
American regardless of where they live, work or play.
There have been strong criticisms over the past several
months regarding the Commission's Open Internet Order. Some say
that nothing was broken so rules aren't needed and that this
will kill job opportunities and stifle innovation and
investment. We have also heard that the order is riddled with
loopholes, provides inadequate protections for wireless
technologies and prioritizes profits over the general public
good.
First, I want to speak to the assertion that the Internet
marketplace is functioning fine and does not need fixing. There
have been formal complaints filed and allegations lodged at the
Commission about Internet service providers' behavior despite
their expressed belief in an open Internet. To that point, the
rules we codified in December will serve to ensure that the
Internet remains open and vibrant and that millions of surfers,
innovators and everyday consumers will have the essential
protections they need so that an open Internet is still there
tomorrow. The action we took in December will allow people to
view photos, sitcoms and full-length movies without deliberate
interruption, distortion or blockage by any ISP which may have
competing economic interests.
I believe one of my primary obligations as an FCC
commissioner is to protect consumers and allow for activities
on the Internet. Our Open Internet Order does just that. I
embrace the position that without clear rules, investment in
new services and applications will be uncertain, overly
cautious and will result in an underperforming marketplace. We
have heard this repeatedly from innovators and small
businesses. A number of companies told me of their difficulty,
sometimes inability to obtain financing because the rules of
the road were unclear or that open Internet protections were
inadequate. Venture capitalists fear that ISPs would
discriminate against their possible competitors, they said.
Small businesses like these are the lifeblood of this Nation
and the uncertainty and lack of investment in this sector will
stifle the full potential of these American enterprises.
Others argue that existing law provides sufficient consumer
protections and safeguards. I disagree. My understanding of
current antitrust law is that violations and harms are
addressed only after an incident has occurred, thus ISPs have
the ability and potentially the incentive to stifle new
competitive businesses. No government action after the fact
could properly address such significant impact. Therefore, I
believe that putting basic protections in place was not a
reckless act. The Commission did this in order to prevent very
real and irreversible harms that could occur in the
marketplace. Hugely effective business models that were not
even in existence 10 years ago have experienced staggering
growth due to their ability to directly offer their services to
consumers on the Internet without ISPs demanding payment for
prioritizing their Web sites. I want to ensure that many more
businesses have those same opportunities in 2021.
Most people rely on the Internet on a regular basis as
indicated in a recent Pew Research Center study, which shows
that 78 percent of American adults sign on daily. The President
has said that the Internet is a vital infrastructure and has
become center to the daily economic life of almost every
American, and you recognize its significance too by charging
the FCC with developing a National Broadband Plan to ensure
that high-speed Internet is available to all Americans no
matter where they live. So I do not think we acted recklessly
nor do I believe that we have harmed the Internet. What we did
was put a policy in place that will ensure access to lawful Web
sites, applications and services so that consumers, not their
Internet service providers, can choose which companies,
products services and ideas will succeed.
Thank you for this opportunity this morning and I look
forward to answering any of your questions.
[The prepared statement of Ms. Clyburn follows:]
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Mr. Walden. And we appreciate your testimony and look
forward to your answers.
Now I would like to recognize Commissioner Baker. We are
delighted to have you here as well. We look forward to your
testimony and your answers. Please go ahead.
STATEMENT OF MEREDITH ATTWELL BAKER
Ms. Baker. Thank you very much. Good morning, Chairman
Walden, Ranking Member Eshoo, Chairman Upton and Ranking Member
Waxman. I could on. Thank you all, distinguished members of the
subcommittee for the opportunity to appear before you.
Today, 95 percent of U.S. households have access to
broadband, and the vast majority of those have broadband
choice. Our regulatory approach has attracted over half a
trillion dollars to build a new network infrastructure since
2000. Billions more have been invested in devices and
applications that ride on those networks. This is an area of
our economy that is clearly working. The Commission's most
significant challenge is how to build on this success. Given
our Nation's significant budgetary constraints, it is clear
that the next generation of networks will be constructed
primarily by private capital just as today's networks were
built. It is through this prism, how do we craft policies to
promote greater investment in our Nation's infrastructure, that
I view all FCC decisions.
With that perspective, I believe that net neutrality was
both the wrong policy and the wrong priority. Further,
establishing a nationwide policy is Congress's role, not the
FCC's. We exceeded our statutory authority. Preserving open
Internet is non-negotiable. It is a bedrock principle shared by
all in the Internet economy. The Internet is open today without
the need for affirmative government regulation.
Lacking an evidentiary record of industry-wide abuses, the
Commission's net neutrality decision was based on speculative
harms. The word ``could'' alone appears over 60 times. By
acting in anticipation of hypothetical harms, the result is
overly broad rules which I fear will force the government into
too prominent a role in shaping tomorrow's Internet.
The genius of the Internet is that there is no central
command to dictate how innovation is to occur. The Commission
has now inserted itself into that role of judging how the
Internet will resolve. Government will be hard pressed to
manage the next generation of the Internet as well as
competition and consumer demand have done for previous
generations. This risk is heightened because the Internet and
our broadband networks are still very much in their infancy.
The Internet will increase fourfold by 2014, and mobile
broadband will more than double each and every year.
To respond to the consumer demands for faster and more-
robust broadband services, operators will have to invest
billions more in their infrastructure. They will need to
experiment and innovate to serve consumers. Decisions about the
future of the Internet will now be managed by the Commission
subject to the uncertainty of government sanction and delay of
government decision-making. The open-ended nature of this
decision both in how it was legally justified and in the number
of issues left undefined or undecided will only breed greater
regulatory uncertainty which necessarily raises the cost of
capital. In too many decisions, this decision was a first step,
not a last.
Congress has given the Commission clear statutorily
mandated responsibilities, and net neutrality is not one of
those. Lacking explicit authority, the Commission twisted the
statute in order to establish a national Internet policy. Under
the same unbounded claim of legal authority, the FCC could
adopt any policies it desires to promote its particular vision
of the Internet. Net neutrality was also the wrong priority for
the Commission. The focus on net neutrality diverted resources
away from the bipartisan reform efforts that could have
directly addressed the core challenge of promoting broadband
deployment. This lost opportunity is one of the gravest
consequences of the net neutrality debate.
While we may disagree on particular details, I welcome the
chairman's renewed focus on universal service, spectrum and
broadband infrastructure. All of these reforms are directly
linked to broadband deployment, and I only regret that we did
not place a higher priority on these efforts sooner. Our
ability to successfully take any of these steps is dependent
upon our strong working relationship with Congress to ensure
that we prioritize and target our efforts appropriately and
that we have sufficient statutory authority to move forward to
promote our shared goals.
I look forward to your questions. Thank you.
[The prepared statement of Ms. Baker follows:]
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Mr. Walden. Thank you very much for your testimony and the
testimony by all the commissioners and the chairman. We
appreciate it.
Just for the Committee as an announcement, we are going to
try and do two rounds at least of questions and we will go in
the order in which you arrived and then by seniority after the
gavel fell, and I want to just point out that in the great
spirit of bipartisanship here on the subcommittee, the
Democrats actually have three witnesses and we only have two.
Mr. Upton. We are looking to change that after 2012.
Mr. Walden. We will try not to let that happen again.
All right. I will start with the first questions.
Commissioner McDowell, you said on page 154 of your dissent
that less than a year ago the Commission in attempting to
defend its Comcast BitTorrent decision in the D.C. Circuit
``acknowledged that it has no express authority over an
Internet service provider's network management practices.''
They rely on section 706 to authorize the FCC in this order to
adopt network neutrality rules. Section 706 also states that
``each State commission'' and Commissioner Clyburn, you will be
interested in this ``with regulatory jurisdiction over
telecommunications services shall encourage the deployment on a
reasonable and timely basis of advanced telecommunications
capabilities to all Americans.'' If the FCC is relying on
section 706 and perhaps B, not A, but you do trigger the entire
statute, I believe, does that not mean that every State
regulatory commission as authorized in 706(a) can also adopt
its own network neutrality rules including price caps as
specified in that statute?
Mr. McDowell. It could absolutely, Mr. Chairman. One of the
concerns is that in the FCC's order, there is no limiting
principle on the FCC's authority so that is not defined or
limited in the FCC order.
Mr. Walden. Commissioner Clyburn, in early January just a
few weeks after the Commission's open meeting, a complaint was
already filed alleging that a wireless provider offering a low-
cost data plan to informed customers is violating the
Commission's rules. The rules still have not taken effect. So
the question is, is Metro PCS's low-cost data plan a violation
of the Commission's order?
Ms. Clyburn. Those type of complaints generally that come
before the Commission, I generally do not comment on before a
decision is rendered, so I don't know if you have a follow-up
but that particular one I am not comfortable in commenting on.
Mr. Walden. Well, I guess the question is not--let me back
off then. Would a complaint like that violate the Commission's
rules in general?
Ms. Clyburn. I can say that in general to answer your
question more broadly, in fact there have been complaints
before the agency and that is why the chair and the
commissioners voted to move in this particular direction. It is
in order to be able to have the dexterity to address those
particular issues as proof that there are some issues in the
market.
Mr. Walden. Commissioner Baker, the order argues that it
can regulate cable Internet access because broadcasters are
increasingly providing video over the Internet. Does that mean
then, taken to an extreme, that the FCC could regulate Netflix
since broadcasters are increasingly offering shows on DVD or
Netflix Web service?
Ms. Baker. Well, I think that is the concern with the
statutory authority the Commission is using for this order and
that we have unbridled access to regulate whatever we want to
do on the Internet ecosystem.
Mr. Walden. It has also been widely reported, Commissioner
Baker, that you and Commissioner McDowell did not receive the
final draft of the order until close to midnight the day before
the vote. Is that correct?
Ms. Baker. Yes, sir.
Mr. Walden. Commissioner McDowell, do you want to speak to
that at all?
Mr. McDowell. That is true. We had received other drafts
prior to that but the final draft that we were to vote on and
base our dissent on didn't come until close to midnight the
night before the meeting.
Mr. Walden. And Commissioner McDowell, while the order does
not explicitly apply Title II to broadband Internet access
services, aren't the rules that were imposed tantamount to
common carriage?
Mr. McDowell. Mr. Chairman, as I point out in my dissent, I
think the rules really is a Title II order in disguise, this
sort of a threadbare Title I disguise, and that is part of the
concern that you were asking Commissioner Clyburn about the
potential for rate regulation. You know, last year, last
January when the FCC argued before the D.C. Circuit in the
Comcast BitTorrent case that the general counsel was cited in
the D.C. Circuit's order from last April. The general counsel
said that the Commission could have the authority to regulate
broadband rates as well, and there is no limiting principle in
the order that would restrain the Commission from regulating
the----
Mr. Walden. I think that the concern some of us have is,
this box has been opened pretty widely. The tether seems to
have been snapped and the authority could be taken clear to the
extreme of where the States now under section 706(a) if it is
read that way, it could trigger the statute and the States
could enter into regulation of the Internet.
Now, Commissioner McDowell, if the FCC has conducted no
market analysis, which it says it has not, is there any
principled reason for excluding companies like Google and Skype
from these rules?
Mr. McDowell. Again, there is no limiting principle in the
order so I think under the logic of the order, the FCC's
jurisdiction is boundless.
Mr. Walden. And after all, Skype blocks access to competing
application providers like fring, right? You have a blockage
going there, and Google and Facebook have had some blocking
issues involving consumer access to their own contacts.
My time is expired. With that, I would recognize the
gentlelady from California, Ms. Eshoo.
Ms. Eshoo. Thank you, Mr. Chairman, and thank you to each
of the commissioners for your excellent opening statements.
Today's hearing is entitled ``Network Neutrality and
Internet Regulation: Warranted or More Economic Harm than
Good?'' The three basic rules that the chairman rolled out,
which is the framework for what the Commission did--
transparency, no blocking, no unreasonable discrimination--I
don't think anyone is against transparency, for blocking and
for unreasonable discrimination. If you are, raise your hand on
the subcommittee. But I want to examine the issue of harm and
what led to the framework that the chairman stated and which I
just restated. What were the harmful things that have arisen at
the FCC that led to rules of the road? I mean, the Republicans
are the ones saying the sky is caving in. Really, life is tidy.
No one has crossed any lines. There isn't any reason to do
this; in fact, it is really going to hurt our country. But I
want to give you the opportunity to state as briefly as you can
what led to this and what examples exist and were brought to
the Commission's attention?
Mr. Genachowski. Thank you. Well, going back to at least
2005, the Commission made clear on a bipartisan basis that it
would enforce open Internet violations. Against that
background, it is surprising that there would be any violations
of Internet freedom at all but there have been. There was a
telephone company called Madison River that blocked access to
competing voice over Internet providers. There was a cable
company last year that became significant litigation that
blocked competing video providers. Last year there was a mobile
company that blocked access to mobile VoIP. There have been
court settlements that are part of the record where as part of
the settlements, Internet service providers agree that they
engaged in conduct that was inconsistent with open Internet
principles. So as against the history of bipartisan intention
to enforce, it is surprising there were any violations at all.
One of the harms that we looked at was, if we for the first
time would be to remove basic open Internet protections, what
we heard repeatedly from startup companies, entrepreneurs,
investors was that without that, they would lose the confidence
to invest in startup companies to develop the kind of
innovative products and services and applications that we are
all so excited about and that we need to lead the world in
innovation in the 21st century.
Ms. Eshoo. Thank you.
I have a question for each one of the commissioners, and a
yes or no will do. The Republican House leaders and members of
this committee are considering using a resolution of
disapproval under the CRA, the Congressional Review Act, to
overturn the FCC's Open Internet Order. Do you support or
oppose Congress using the CRA to overturn the order? Chairman
Genachowski?
Mr. Genachowski. Well, I don't have a vote in the Congress.
I don't think it is the right idea because I think it will
increase uncertainty in this area.
Ms. Eshoo. Commissioner Copps?
Mr. Copps. I would not be for it.
Ms. Eshoo. Commissioner McDowell?
Mr. McDowell. First of all, all the examples cited by
Chairman Genachowski were resolved in favor of consumers under
existing law before the FCC's action. I think that is important
to note. But I also subscribe to the notion that Congress tells
me what to do, I don't tell Congress what to do, so if Congress
wants to overturn an FCC order under the CRA----
Ms. Eshoo. But do you think it is a good idea? Do you
support it?
Mr. McDowell. Well, obviously I dissented so I think the
order isn't founded in law or fact.
Ms. Eshoo. Commissioner Clyburn?
Ms. Clyburn. One of the things that I wanted to point out,
if you will allow me a second, is that the companies that were
cited by the chairman, those companies in fact have millions of
customers who have potential vulnerabilities and who might not
have the ability or the expertise to file a formal complaint.
Ms. Eshoo. About the CRA?
Ms. Clyburn. So in terms of your question, while I respect
the body, I am not embracing of the idea.
Ms. Eshoo. Thank you.
Commissioner Baker?
Ms. Baker. I will be respectful of your time. We take our
orders from Congress so I think it is important for Congress to
tell us what their opinion is.
Ms. Eshoo. I don't know what that means.
Ms. Baker. It means if Congress has------
Ms. Eshoo. Do you think it is a good idea?
Ms. Baker [continuing]. The CRA to tell us that they
disapprove of this action, I think----
Ms. Eshoo. Do you think a CRA is a good idea?
Ms. Baker. I would say I also dissented in the order. I
disagree with that we have statutory authority to do what we
have done.
Mr. Walden. The gentlelady's time has expired.
Ms. Eshoo. Thank you.
Mr. Walden. And just for the record, Ms. Clyburn, we have
two chairmen here. I assumed you were referring to that
chairman, not this chairman in your comments there.
Ms. Clyburn. Yes.
Mr. Walden. So now let us go to the other chairman, Mr.
Upton, for 5 minutes.
Mr. Upton. Thank you, Mr. Chairman.
I know as George Will said not too long ago that most
folks, most Americans are not real fans of how the U.S.
government works. I don't think it works very well. But in fact
the Internet does. Why in the world would you put the
government in charge of the Internet? And as Ranking Member
Eshoo said and also my good friend, Ed Markey, on net
neutrality I think there is no secret that at least this side
of the aisle is not particularly fond of the new net neutrality
rules and I know that some 300 Members of Congress contacted
the FCC in the last year voicing such concerns, and probably
agree that it really isn't the light touch that we were hoping,
which is why in fact a CRA may be introduced in the next couple
of days and the Congress of course then has 60 days,
legislative days, to act in both the House and the Senate.
Commissioner McDowell, you were very outspoken in your
dissent on the need for a market analysis. Would a market
analysis have validated the order, the order's consent?
Mr. McDowell. I don't think so. Each time the government
has examined the broadband Internet access market, whether it
was the Federal Trade Commission in 2005, or 2007, the FCC
itself in 2007, the antirust division when they filed comments
to the FCC a year ago in January, we can debate exactly what
they said but what they did not say, they did not say that
there was a concentration and abuse of market power or any sort
of market failure and that actually in many of those cases
independent government agencies had warned against the
uncertainty and the negative collateral effects of potential
regulation in this area.
Mr. Upton. You mentioned a little bit earlier in response
to the Madison River and the one phone company and a few others
as it related to what the FCC had done. Do you believe that
there are existing FCC remedies that are in place if in fact an
Internet service provider engaged in that type of prospective
conduct that this order is designed to prevent?
Mr. McDowell. I think there are laws already on the books
that would prevent this, whether it is section 2 of the Sherman
Act or section 5 of the Federal Trade Commission Act. There are
general consumer protection powers that the government has here
so if it is refusal to deal or exclusive dealings and things of
that nature, the government has the power to cure that.
Mr. Upton. And that was a little bit of the result of that
debate and that answer came out of the Judiciary Committee
yesterday. Is that not correct?
Mr. McDowell. That is what I read, yes, sir.
Mr. Upton. Chairman Genachowski, wouldn't it have been
prudent for the Commission to do a simple market analysis
before adopting the rules that we hear so much will burden the
industry if in fact the order is pursued?
Mr. Genachowski. Mr. Chairman, the order engages in
extensive market analysis. There is a specific section on costs
and benefits. There is a footnote that points out that the
order doesn't make a specific market power finding which would
put this in the antitrust area but the order extensively
analyzes the market. We received significant input and a record
from market participants, economists and others and so I think
the Commission engaged in extensive market analysis.
Mr. Upton. Now, I know Verizon and others have threatened,
will be taking this to court to look at a legal challenge. Has
your legal team given you an analysis that they think this
order will be able to stand on its two feet and will be
verified by the courts?
Mr. Genachowski. Yes, they have, that it is consistent with
the Communications Act, with Supreme Court precedent in this
area and with the D.C. Circuit Comcast decision last year.
Mr. Upton. Mr. McDowell, do you agree with that?
Mr. McDowell. Well, I disagree obviously. I wrote a very
lengthy dissent with 130 footnotes, mainly focusing on our lack
of legal authority, so I think it will fail on appeal.
Mr. Upton. Thank you. Yield back.
Mr. Walden. The gentleman yields back his time, and now
recognize the chairman emeritus of the committee, Mr. Waxman.
Mr. Waxman. Thank you very much, Mr. Chairman. I think the
American people would be outraged if they had some Internet
carrier or some provider of the service to their home, their
cable or a telephone company blocking what they can get on the
Internet or choosing something that benefited them economically
and then keeping consumers from getting programs. I hope nobody
would think the idea of stopping Internet freedom, allowing the
Web to be treated in a neutral way, giving the consumers the
power to access whatever they want, that is what I think
American people would support. And if they found that this was
happening, they would want it stopped.
Now, Chairman Genachowski, you think you had enough reason
to believe this could happen unless you set some rules in
place. Is that correct?
Mr. Genachowski. That is correct.
Mr. Waxman. Freedom is a strange word. It is overused and
misused a lot, especially around this place. Freedom for the
consumer is to get whatever they hope to access but that
freedom can be curtailed, some people say by government, but it
also can be curtailed by other private interests, and
government sometimes has to regulate hopefully in a light
enough way that they don't discourage investment and
competition and all the good things but the government needs to
set rules of the road, saying you cannot do this. Otherwise we
saw what happened in Wall Street, we see in other places. No
regulation means less freedom for the consumers.
Mr. Copps, is that what your thinking was when you looked
at the Commission regulating in this area?
Mr. Copps. I think that is absolutely correct. That would
reflect the thinking I have, and you know we have talked about
some of the specific problems that have come before the
Commission but there is a historical dimension to this too.
This is such an open and dynamic and opportunity creating
technology and to make sure that it is unfettered as we go down
the road is so important. The history of every other media
generation that we have had shows that it goes from being open,
first being touted as the great new opener and a great new
vista for the American people's freedom and inevitably what you
get is closure and consolidation and tighter and tighter
control. That is happened to radio, that has happened to
television. It happened to the film industry, and I think we
need to be taking some precautionary steps to make sure that
this doesn't happen in this particular technology.
Mr. Waxman. Well, those precautionary steps could be taken
by Congress and we could pass a law. We tried to pass a law. We
even had most of the stakeholders agreeing to a law. We
couldn't get the Republican members to pay attention to it.
Congress could pass a law but evidently the FCC thinks it has
the power, and there is some dissent as to whether you have the
legal authority or not. That will be decided by the courts. But
meanwhile, what you are trying to do is preserve the freedom of
the Internet, and a lot of the complaints we hear about
stopping innovation and investment seem to be quite remarkable
when you look at the fact that most of the groups that are
being regulated feel that this regulation, that there is a
light enough approach that will not have an undue impact on
them, and in fact, it is welcomed by everybody because it
provides some regulatory certainty. Today in Bloomberg, they
said investors so far don't seem to see the new rules as a
threat, and they say that you look at Comcast, Time Warner
cable, AT&T, they are all saving they can live with this. So it
seems to me to sound the alarm over whether this was a good
idea and whether we are hurting some of the industry in the
United States is not accurate.
But I found it interesting that one of the questions that
was raised is how speculative the harm was for the interference
in the Internet, and in order to attack the proposal, they
raised the specter of price controls as a potential for the
FCC. Does the FCC plan to do price controls? They say this is a
slippery slope, opening the road to regulation that is
unfettered. Is that what is happening, Chairman Genachowski?
Mr. Genachowski. Not at all. This is in no way about price
controls.
Mr. Waxman. Does anybody in this group believe there ought
to be price controls? If you think so, just say yes.
Ms. Clyburn. Mr. Chairman, if you say those words inside of
the walls of the FCC, there is trouble.
Mr. Waxman. We don't want price controls either. You don't
want price controls. So to raise that as a specter, it seems to
be unfortunate. Now, this Congressional Review Act not only
repeals this rule but it prevents the FCC from acting at all in
this area, and I would hope that Commissioner McDowell and
Commissioner Baker wouldn't want to take the power away from
the FCC to act when they feel it is appropriate to act if
Congress hasn't passed any legislation. I strongly hope we can
stop that Congressional Review Act attempt to overturn the
FCC's actions.
I yield back my time, Mr. Chairman.
Mr. Walden. The gentleman's time is expired. I now
recognize the other chairman emeritus, Mr. Barton, for 5
minutes.
Mr. Barton. Thank you, Mr. Chairman. And again, nothing but
compliments to the Commission for the intellectual ability that
is assembled here. I am very proud that we have jurisdiction
over the FCC, and on an individual basis, I consider each of
you friends.
Having said that, I am at a loss as I listen to what my
good friend from California, Mr. Waxman, just said that no
regulation means less freedom, that is Orwellian in the extreme
just on the face of it. We are not so opposed, those of you
that oppose this 3-2 ruling, because of what you ruled but the
fact that you established the principle if it goes unchallenged
that you can regulate the Internet. That is what troubles me,
not the light touch that Mr. Waxman refers to, the fact that if
we let this ruling stand, this Commission is not going to do
price controls. I believe the gentlelady from South Carolina
when she says, you know, if you mouth the word price controls
within the walls of the FCC, bad things happen. I understand
that. But a future FCC could. That is why Chairman Upton and
Chairman Walden and others are going to introduce this
Congressional Review Act or a standalone bill to overturn it.
What Chairman Genachowski and the two commissioners that sided
with him have said is, we have got the votes and we are going
to establish the principle that we can regulate the Internet.
Now, we understand how controversial that is so we are not
going to do a lot, we are just going to try to get the nose of
the camel under the tent, and once we have got that
established, in the future some future Commission can come
forward.
I am so appreciative of Commissioner McDowell and his
dissent and all the intellectual footnotes that he put into
that. I am very appreciative of what Commissioner Baker put in
the record in her opening statement and I associate myself 100
percent with that. It just seems to me that this ruling, when
you listen to the answers to my friends on the minority side,
you are concerned about potential harm in the future so you
have to establish the principle now that we can regulate to
protect against some unknown harm in the future.
Now, Commissioner McDowell, you said, I believe in your
dissent and again in your opening statement and again in
response to a question that the existing statutory law and
authority that the FCC has is sufficient to handle any
conceivable potential harm in the future without establishing
these rules. Is that not correct?
Mr. McDowell. I think what I said is that we have--the
government in general under general consumer protection and
antitrust laws has ample authority so there are a lot of
agencies that could intervene.
Mr. Barton. And Commissioner Copps, nobody has asked you a
question yet and you are a bright fellow. Why do you disagree
with what your fellow commissioner, oddly, to your left, just
said?
Mr. Copps. I have a little different take on this than
probably all of my colleagues that the Commission has this
authority, has had this authority for a long time, has had this
authority recognized by Congress and the courts for a long,
long period of time and that the best way for us to express and
exercise that authority is to put advanced telecommunications
transmission back where it belongs and that is in Title II. I
think the Title I road that we went down has a substantially
better chance in court than the previous decision that went on
the Comcast case, but my best reading of the statute and the
legislative history and the court decision is that this belongs
within Title II. I do not know of a court in the land including
the Supreme Court that has said we don't have that authority.
In the Brand X case, I don't think the court could have been
clearer in saying that deference is accorded to the Commission
in these cases where there is ambiguity or difference in the
definition of the statute or the terms of the statute. There
are two or more reasonable ordinary ways to interpret it, that
our choice of one of them was accorded deference and they
accorded deference to the decision that was made on cable
modems in 2005 over my objection but they also made clear that
times change and our classification can change and our
decisions can change, and Justice Thomas and others were
eloquent in pointing out that that is where the expertise to
make a lot of these judgments resides. I am not as much in
search for that authority as some other folks are.
Mr. Barton. Thank you.
And we are going to do another round?
Mr. Walden. Yes, we are, sir.
Mr. Barton. Thank you.
Mr. Walden. We appreciate your response.
I now go to the gentleman from Massachusetts, Mr. Markey,
for 5 minutes.
Mr. Markey. Thank you, Mr. Chairman, very much.
First of all, most of the industry supported the decision.
Comcast has made a commitment to comply with them for 7 years
as part of the Comcast/NBCU merger conditions regardless of the
outcome of any judicial review. Many wished that the Commission
had gone much further, restoring Title II authority as Congress
originally intended in the Telecom Act of 1996. I wish the
Commission had gone much further than they did.
And let me also say that there is a misunderstanding here
about the Commission's role here. When AT&T had 1.2 million
employees and they were the only phone company, it was the
Commission that made the decision that said if you want to go
down to a store and buy another phone other than the black
rotary dial phone, you could do so. AT&T said you are
interfering with the free market if you let people go and buy
another phone other than the black rotary dial phone. In the
1970s when MCI and Sprint were starting up, AT&T said that a
consumer should have to dial 21 additional numbers before you
reached the number that your mother told you to memorize in
case you were ever in an accident. Well, those additional 21
numbers made it very hard to have competition but the FCC made
sure that competition and consumers would be king and queen.
That is what the FCC has been doing over the years.
There is a long history here of AT&T and the Baby Bells of
engaging in anticompetitive, anticonsumer activity. They said a
phone call, a long-distance phone call should cost a dollar a
minute before the government got in. When you were making a
long-distance phone call or you got one, you would say hurry,
grandma is calling from California, it is long distance, and it
was. It was a dollar a minute until we got the competition in
and the FCC ensured that there would be protection of
consumers. Now it is under 10 cents a minute.
So all of this history of light touch, yeah, light touch,
to make sure that a two by four didn't come in from the big
companies and crush the consumers, making them, you know, be
tipped upside down and paying more than they should have to.
So Mr. Chairman, we have fallen in the United States to
15th in broadband ranking in price and accessibility and in
capacity. Is this ruling part of your goal to make sure that
America regains its position as number one and two in the world
before George Bush was sworn in and appointed the FCC that was
chaired by Michael Powell?
Mr. Genachowski. Absolutely, and I would say before
addressing that directly, in response to what you said before,
in each of those cases where the FCC took action to protect
consumers, promote competition and innovation, someone sued and
someone said the sky would fall, and in each case that is not
what happened. Competition was enhanced, innovation was
enhanced and the authority was established.
Mr. Markey. Who sued after we passed the 1996 Telecom Act?
Mr. Genachowski. A number of the carriers.
Mr. Markey. Verizon sued. They said oh, that is
anticompetitive. Pac Bell sued, Bell South sued. They said, oh,
that is anticompetitive, you are going to let more consumers
in. The people who sued are the same companies that right--
actually AT&T and the NCTA and Comcast, they are not saying
that. It is Verizon that is coming in and saying that they are
going to sue but the rest of the industry so far has stayed on
the sidelines. Yes, Mr. Genachowski?
Mr. Genachowski. On your point about U.S. leadership in
innovation, it is so tied to preserving, in my opinion, the
freedom and openness of the Internet. I mentioned before some
of the Internet openness violations that we have seen, even as
protections were in place, one of the things that we heard from
innovators, startup companies, technology companies in terms of
harm that would occur now if we didn't adopt baseline rules is
that without that investment would dry up. Investment in
early----
Mr. Markey. Predictability in the marketplace is very
important to unleash billions of dollars in private sector
investment.
Mr. Genachowski. Exactly. For us to lead the world in
innovation, in my opinion, we need to have rules and a climate
that drive billions of dollars of investment throughout the
broadband economy to technology companies, early-stage startups
and investors and also to our infrastructure, and I think in my
opinion what we have accomplished here, and it is why there is
a broad consensus in favor of this approach, is a framework in
which there is certainty----
Mr. Markey. I agree with you.
Mr. Genachowski [continuing]. And investment is driven
throughout the broadband economy.
Mr. Markey. Does the FCC intend on following through on the
law and launching a set-top box unbundling proceeding and all
video proceeding? Are you intending on doing that?
Mr. Genachowski. Well, that is something that is under
consideration. We haven't announced a timetable for that but
clearly people would like to see more innovation on their TV
sets in their living.
Mr. Markey. That is the language Mr. Bliley and I put in
the 1996 Act, and I really urge you--I think there are 100,000
new jobs that can be created if we give consumers access to new
applications and new hardware out there in the marketplace.
I thank you so much for all your good work. I think it was
a very good decision that you made at the FCC.
Mr. Walden. The gentleman's time is expired. We now go to
the vice chair of the committee, Mr. Terry, for 5 minutes.
Mr. Terry. Thank you, Mr. Chairman.
And let me just start with this observation, is that much
of our side of this dais, our concern is that and what we are
opposed to is an agency, whether it is FCC or EPA, sua sponte
issuing a set of rules without congressional authority or
specific authority from this body, and in fact a majority of
Congress in the past term under Democrat majority signed on to
letters opposing this rule or this procedure. And I would like
to for the record submit unanimous consent, to submit for the
record the three letters dated October 15th, May 28th, and
November 19th.
Mr. Walden. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Terry. I think the signatures on these objecting to the
procedures are over 300 members but yet the FCC continued.
Now, I want to get to another issue that has been hit on
here about price regulation. At home and my campaign, I have
Trend Micro to block all of the viruses and spyware, and I got
as my monthly newsletter, e-mail newsletter from Trend Micro
yesterday coincidentally, and I am just going to read one part
of Trend Micro Trendsetter newsletter here under net neutrality
sent to all of their customers. ``For consumers, deregulation''
which is what we are trying to on this side of the aisle
evidently do ``of the Internet could mean higher Internet
access prices as ISPs institute tiered models that offer
speedier downloads to higher-paying customers.'' Some people
also worry that allowing businesses to choose what content or
sites they will be offer will result in the commoditization of
a formally free and open environment akin to the evolution of
television from an essentially free service to a highly
fragmented and fairly expensive, and like Anna Eshoo said, we
all agree on the blocking and we can get into the issue of the
principle base that seem to be working but obviously Trend
Micro thinks that you have the power now and they want to get
their customers lobbying here to make sure that you have the
power of price setting. Then under 706, section--oh, and by the
way, unanimous consent to submit----
Mr. Walden. Without objection.
Mr. Terry [continuing]. The Trend Micro e-newsletter on net
neutrality.
[The information appears at the conclusion of the hearing.]
Mr. Terry. And in section 706(a) says that this is the
basis for your authority and the order has stated that price
cap regulation is part of this, so obviously if you are saying
that section 706 is the basis for your authority, you have
authority to regulate prices, and there are companies out there
that are now manipulating this rule to see if they can get a
price advantage from the FCC. This seems to me to be
anticompetitive and creates an atmosphere of uncertainty to new
entrants in business operations about what can the FCC do to
them or for them, so I am going to ask Commissioner Baker, has
the FCC in developing this rule made any conclusions about the
cost effect of flattening a tier to a one-price system like
Trend Micro is requesting and saying that you should be doing?
Has that been thought through? Is there an economic analysis of
how that will affect the marketplace?
Ms. Baker. It is a good question and one of the biggest
concerns that I have is where we are going with this in
preserving the status quo of the Internet today where we are
missing what the Internet may offer tomorrow, and so I think
that through the special-interest groups as they push into
tighten the regulations through wireless such as the Metro PCS
complaint that has been mentioned or specialized services or
prioritization eliminating these, they will eliminate what is
going to fund our next generation of broadband networks. So I
worry that we in the rush to put out net neutrality rules, we
are missing--we are flattening to a one-size-fits-all broadband
what may be the next generation of the Internet.
Mr. Walden. The gentleman's time is expired. I now
recognize the gentleman from Michigan, the chairman emeritus of
the committee, Mr. Dingell, for 5 minutes.
Mr. Dingell. Mr. Chairman, I thank you for your courtesy.
To Chairman Genachowski, there is broad agreement that
reform of the Universal Service Fund is necessary. I believe
that if done properly, such reform can support broadband build-
out and create jobs. Will you commit to completing proceedings
to reform USF by the end of the year? Yes or no.
Mr. Genachowski. Yes.
Mr. Dingell. To the remaining commissioners, going across
starting with you, Mr. Copps, do you support the idea that we
should have a completed survey by the end of the year?
Mr. Copps. A completed survey of?
Mr. Dingell. Of the spectrum.
Mr. Copps. Yes, I think it would be most helpful to have a
spectrum, and it is a time-consuming process but the sooner we
can get it, the better it will be.
Mr. Dingell. Thank you.
Mr. McDowell?
Mr. McDowell. Yes.
Mr. Dingell. Commissioner Clyburn?
Ms. Clyburn. Yes, we have already started in that direction
with the Spectrum Dashboard and other initiatives.
Mr. Dingell. And the last of our commissioners?
Ms. Baker. Yes, sir, absolutely.
Mr. Dingell. Again, Chairman Genachowski, I understand that
the Commission is completing a spectrum inventory. Is that
true? Yes or no.
Mr. Genachowski. Yes.
Mr. Dingell. Again to Chairman Genachowski, when will the
Commission have completed this inventory?
Mr. Genachowski. Well, we have already completed the first
phase. Our Spectrum Dashboard is up on our Web site. We will be
proceeding the next phase relatively soon and we want to
provide the public more and more information about how spectrum
is actually being used.
Mr. Dingell. Now, again, Mr. Chairman, will that inventory
be as comprehensive as the one mandated last year in the House-
passed Radio Spectrum Inventory Act? Yes or no.
Mr. Genachowski. Yes, and we have been working with the
committee on that.
Mr. Dingell. Now, again, Mr. Chairman, similarly, will the
results of the Commission's spectrum inventory be made
available to the public? Yes or no.
Mr. Genachowski. Yes, unless there is some compelling
reason for a piece to not be, but yes.
Mr. Dingell. Now, will the Commission also submit a report
to the Congress concerning the inventory?
Mr. Genachowski. Concerning the inventory?
Mr. Dingell. Yes.
Mr. Genachowski. We will make it public and we will provide
Congress and the committee whatever reports it desires.
Mr. Dingell. Good. Now again, Mr. Chairman, with respect to
the spectrum auctions, I note the National Broadband Plan
states on page 79 that the government's ability to reclaim
clear and reauction spectrum is the ultimate backstop against
market failure and is an appropriate tool when the voluntary
process stalls entirely. Does this mean that the Commission
will forcefully take spectrum from broadcasters if too few
participate in voluntary spectrum auctions? Yes or no.
Mr. Genachowski. Well, we haven't addressed the question.
We have proposed a win-win-win incentive auction that will free
up billions of dollars and bring market incentives into
spectrum allocation, helping give this country what it needs, a
lot more spectrum for mobile broadband.
Mr. Dingell. Now, I am just a Polish lawyer from Detroit,
and sometimes I have trouble understanding some of these
things, but you are going to have a voluntary spectrum auction.
How is it going to be voluntary if there is pressure which is
placed on the holders of this spectrum by the Commission?
Mr. Genachowski. Because the auctions themselves would rely
on market incentives, allowing the market to set a price for
existing owners of licenses to make the choice between
continuing what they are doing or transferring the license in
exchange for the offer from the auction.
Mr. Dingell. Sounds kind of like a bank holdup to me. You
hold a gun at the teller's head and say we know that you are
going to voluntarily give me this money, and if you don't, I'm
going to shoot you in the brains.
Mr. Genachowski. Only if the free market is a bank holdup.
Mr. Dingell. Well, I want you to know I have some dark
suspicions on this matter.
Now, Mr. Chairman, do you believe that a broadcaster who
does not participate in voluntary incentive action should be
forced to relinquish its current channel allocation and
spectrum? Yes or no.
Mr. Genachowski. Well, the first thing I would say is that
broadcasting is a very important business in the country and
everything we are doing----
Mr. Dingell. No, no, no. Yes or no.
Mr. Genachowski [continuing]. Recognizes its importance.
That is something we are looking at. It is something that
actually Congress is looking at because----
Mr. Dingell. Would you please go off, contemplate your
navel and come back with us an answer yes or no to this
question? And would the other members of the Commission please
do the same thing because I am having a hard time understanding
this.
Now, to all commissioners, does the Commission possess the
necessary authority with which to engage in voluntary incentive
auctions of a spectrum? Yes or no.
Mr. Genachowski. We would ask Congress for the authority.
Mr. Dingell. I am sorry?
Mr. Genachowski. We would ask Congress for the authority.
Mr. Dingell. All right. Would each of the commissioners
submit to me a yes or no on that?
Mr. Walden. And then the gentleman's time is expired.
Mr. Dingell. I sure would like to have an answer to this
question.
Mr. Walden. Yes, if the commissioners could go ahead and
respond to the chairman emeritus's question.
Mr. Dingell. I do have a few other useful questions that I
would like to get the answer to. I will be submitting a letter
to the Commission and I would ask that the Commission respond,
and Mr. Chairman, I would ask your courtesy and that of my
colleagues on the committee in giving me unanimous consent so
that both my letter and the response may be inserted into the
record.
Mr. Walden. Absolutely, Mr. Chairman, and just for the
record, Mr. Chairman, the committee is going to have a second
round of questions here today if other conflicts in your
schedule don't preclude you----
Mr. Dingell. I don't want you to take my comments as
critical of you. Thank you.
Mr. Walden. No, we are fine.
All right. With that, we will--did the other members of the
Commission want to answer that question the chairman emeritus
asked yes or no?
Mr. Copps. I think the chairman's answer, we have asked
Congress for that authority is correct.
Mr. McDowell. I don't think we have the authority to do the
incentive auctions as many proposals have outlined.
Ms. Clyburn. Right now, no.
Ms. Baker. To do voluntary authority, we need congressional
authority.
Mr. Walden. Thank you.
I am going to go now to Mr. Shimkus for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. It is great to have
the Commission before us. I appreciate all the time. Many of
you have come by to talk in the office one on one, and that
really is appreciated. I learned a new Latin word, sua sponte.
Mr. Copps, I think via sua sponte maybe we can address the
two-member rule and we will legislate and maybe we can do that.
I just think it is ridiculous, and if there needs to be someone
to lead that small change, we might be able to do small things
in this Congress that don't get devolved into too much, but
that is really silly, and you say it every time and many of
agree with you, and we don't seem to do anything on it, so let
me see if I can take that up as a challenge.
You know, this net neutrality debate, one side says it is
going to create jobs, the other says no, it is going to hurt
jobs, and we are focused in this Congress on job creation. The
public is confused who is right and who is wrong. It is he
said, she said. I boil it down to the simplest folks in my
district who, you know, if they can get broadband service--we
don't still have it. High speed, that is mapping and all the
other things. But they really do want jobs. You know, if we are
not going to spend money, we are not going to borrow money in
this Congress to try to create jobs, we think that failed in
the last Congress, plus we are talking about debt and deficit
and job creation.
Mr. Walden. This is government control of the microphones.
Mr. Shimkus. Government control. I am on again. So if we
are going to create jobs without spending money, we have to
ease the regulatory burden. I don't know how because that
provides more certainty. Capital borrowing is lowered when you
have more certainty, ease in regulatory burden. The President
has agreed to that. I think, Mr. Genachowski, you sent out an
e-mail asking your agency to look at ways where regulatory
burden might impinge job creation.
So let me ask Commissioner Baker, had we done a cost-
benefit analysis, if we would have done a cost-benefit analysis
on net neutrality job creation, do you think that would be
something we want to get an answer to? What do you think we
would have come up with?
Ms. Baker. It is a good question. I think had we done a
market analysis, certainly every government--every other
government that has looked at this has come up with the fact
that the hypothetical problem of net neutrality would be better
served--if we are worried about on ramps to the Internet, the
best way to solve that is to create more on ramps. So aside
from the actual authority question, I think the policy would
come up that the market benefit analysis would come out not in
favor of this.
Mr. Shimkus. This is just an interesting debate because we
even heard Chairman Waxman make the statement, and I heard it
yesterday in my Environment and Economy hearing, that
regulations create jobs, and they really believe it, that
regulations create jobs. I guess he also said--I am not sure.
But in a hearing yesterday, the EPA also in their statement
said we are not going to look at job creation, we are not going
to look at effects on the economy. So that is why we think
there should always be at least an analysis of cost-benefit
analysis, and had this been done prior to promulgation of
movement toward net neutrality through the Commission, maybe
there would be more certainty and their side would be pointing
out to your analysis and we would be looking at that analysis
and saying yes, it is legit or--but nothing. Commission
Chairman, do you want to respond?
Mr. Genachowski. As I said before, we did do a market
analysis, and I disagree with my colleague very strongly. I
think the pro-job, pro-investment outcomes of this balanced
framework that we adopted very much outweigh the burdens which
people either say are very small indeed or highly speculative.
Mr. Shimkus. Let me just chime in because I have been on
the committee for a long time and just like Mr. Markey can talk
about going back to the breakup of the Bells, I can talk about
when the cell phone was a mini brick when I got elected and you
had to change the roaming when you got here to now really voice
is really the throwaway service. It has been an unregulated
environment that has moved faster than we can even get there
now. And again, our concern is, if we are not doing cost-
benefit analysis on regulations, the regulations may be
important but the public needs to be able to make the decision
based upon the impact on jobs versus benefits received, and
that is our frustration.
Let me ask one more question on this net neutrality debate,
and it is not to pick on the chairman but recently you are
offering applications to kind of spy on--``spy'' is not a good
word but to patrol the Internet to see if there is abuse of net
neutrality, and prepare to fly the winner out here. Do you
think that is a good use of taxpayers' dollars?
Mr. Genachowski. Promoting transparency, opening up, giving
to consumers and early-stage innovators better information
about how the networks work, I think promoting transparency is
a very important part of this.
Mr. Walden. The gentleman's time is expired. I now turn to
the gentleman from Pennsylvania, Mr. Doyle, for 5 minutes.
Mr. Doyle. Thank you, Mr. Chairman.
Boy, I will tell you, there is probably not two words that
have been more misused and confused than the words net
neutrality, and I would venture to say if you asked the 435
Members of Congress what their definition of net neutrality is,
you would probably get 435 different answers. But let me tell
you what it means to me. I have four kids. Now, my three boys,
they were the first three kids we had all went to Penn State,
my alma mater, but our youngest, who came 7 years after our
youngest son, Ali, she is a free spirit and she decided to
break tradition and go to the University of Dayton, where she
is now finishing up her final semester. But one thing, you
know, Ali growing up with three brothers, it was just obvious
she was going to be a sports fan and she loves the Pittsburgh
Steelers and she loves the Pittsburgh Penguins. Well, one of
the things she discovered right away when she went to the
University of Dayton is that she was being subjected to
watching Cincinnati Bengal football and the Columbus Blue
Jackets hockey team. I felt very badly for her.
She came home one weekend and she had this little device in
her hand, and she said ``Dad, we have to hook up this device in
the house,''and I said ``what is it,'' and she said, ``it is
called a Slingbox.'' I didn't know what a Slingbox was so I
said, you have to be careful, your kids bring things home and
you don't know what they are bringing home, and I said, ``Ali,
what is it,''and her eyes lit up. She says, ``you are not going
to believe this, you hook this to your cable and then you hook
it to the Internet connection and then I can watch Pittsburgh
Steelers and Pittsburgh Penguin games in Dayton, Ohio.'' And so
we hooked it up and she gets to watch Pittsburgh Steelers and
Pittsburgh Penguin games in Dayton, Ohio.
So this is when I decided, this is what open Internet means
to me. It means that one, my family can use any service on the
Internet using any device we choose to use; two, we give
innovators the ability to create new things for us so that we
can use our Internet connections and new gadgets for us to use
that we never dreamed possible; and then three, we provide a
cop on the beat to make sure that all these promises of an open
Internet are kept for us.
Now, Mr. Chairman, that seems to me to roughly be what the
FCC order is. Is that right?
Mr. Genachowski. Well, in fact, Sling was one application
that had been blocked and was an issue that gave rise to the
concerns that led to our order.
Mr. Doyle. So it seems to me that the rules that you
promulgated, they are aimed to protect me, they are aimed to
protect innovation, and I could quote from the companies, and I
think we have heard them before, AT&T or Wall Street analysts
from Bank of America, Merrill Lynch, Citi, Wells Fargo, Raymond
James, who all called the ruling balanced or a light touch and
no undue impact on carriers.
I noticed that some of my friends on the other side of the
aisle and I think also Commissioner Baker spoke to this, that
they said that they believed the FCC should only issue rules
when there is a market failure. I have to tell you, I think
that is a bad model. That is like saying you can only create
rules for mortgages when housing prices plummet or that you
can't ensure new investors aren't being bilked until millions
have lost their nest eggs.
Mr. Chairman, do you think the FCC should only create rules
when the Internet ceases to be useful as it is today or only
when it won't do the things that our constituents expect it to
do?
Mr. Genachowski. No, of course not, and we heard from
people who have been building all the content and services on
the Internet that given the history, if we didn't adopt a
sensible framework, we would see a decline in investment, a
decline in new businesses starting, a decline in jobs being
created. What I am proud of is that we were able to find a way
to provide certainty and confidence to the entrepreneurs and
companies building new businesses on the Internet and also give
certainty and confidence to the infrastructure companies to
increase their level of investment. I am proud of that. It took
a lot of work.
Mr. Doyle. Thank you.
Commissioner Copps and Commissioner McDowell, and these are
just some quick yes or no answers. One of the biggest areas of
controversy in this Open Internet Order is the citation of FCC
authority, but rather than debating whether a specific
provisions of the Communications Act grants FCC direct or
indirect authority to regulate broadband providers, which is
now going to be up to the courts to decide, I want to ask you a
few questions about the way Congress has approached broadband.
In the 2008 Farm Bill, Congress directed the FCC to submit
a comprehensive rural broadband strategy with recommendations
for the rapid build-out of broadband in rural areas. Are you
both familiar with that legislation?
Mr. Copps. I was the acting chairman of the Commission at
the time that helped produce the report.
Mr. Doyle. Thank you. In that same year, Congress also
passed the Broadband Data Improvement Act to improve FCC's data
collection process and promote the deployment of affordable
broadband services to all parts of the Nation. Have you both
heard of that bill?
Mr. Copps. Yes.
Mr. McDowell. Yes.
Mr. Doyle. And in 2009, Congress passed the Recovery and
Reinvestment Act directing the FCC to produce a National
Broadband Plan with a detailed strategy for achieving
affordability of such service and maximum utilization of
broadband infrastructure and service by the public. I know you
are both familiar with that legislation. So given the number of
laws that Congress has passed on broadband that directly
involve the FCC, doesn't it seem logical to you that Congress
assumed the agency would have the ability and the authority to
implement and oversee our Nation's broadband policies?
Mr. Walden. The gentleman's time has expired here. I want
them to have an answer, but if we have a 5-minute answer, we
could have issues.
Mr. Copps. How about yes?
Mr. Doyle. Thank you.
Mr. McDowell. Congressman, you make a good point, which is
Congress had a chance during each of those times to pass net
neutrality legislation, and it did not.
Mr. Doyle. Mr. Chairman?
Mr. Genachowski. I would say yes as well. Congress has
clearly given FCC the authority to look at competition issues
involving voice and video. It is well accepted that the FCC has
authority over Internet access providers, so I am quite
confident in the legal basis of the decision and its
constraints on the FCC.
Mr. Doyle. Thank you, Mr. Chairman. I would yield back.
Mr. Walden. Ms. Baker?
Ms. Baker. Thank you. I have two quick points.
Mr. Walden. Very quickly.
Ms. Baker. The first is that the Slingbox, I am a big fan.
I was one of the first adopters. The problem with Slingbox when
it was blocked was because it was taking so much capacity on
the wireless network that we needed to make it more efficient,
which is why I promote entities like the BTAG, which is a non-
governmental group of engineers who can work to make more
efficient a lot of these problems that are coming up much
faster than the government process can be.
And the other point I would like to say is that certainly
you gave us the broadband plan job to do, which was very
important and a terrific landmark of our tenure at the FCC. Two
hundred of those recommendations came forward. Sixty are those
are within the FCC's jurisdiction. I think this is something
that is going to be multi-jurisdictional and we need to all
work together.
Mr. Walden. Ms. Clyburn, do you have any quick additions?
Ms. Clyburn. My colleagues have amply----
Mr. Walden. Yes, they have. Thank you.
The gentlelady from Tennessee is recognized.
Ms. Blackburn. Thank you, Mr. Chairman. Thank you all for
being here. We indeed have looked forward to this.
Chairman Genachowski, I want to start with you. We have
tried to get together and visit on a few things, and I do have
a couple of questions. Let us go to the Comcast/NBCU merger
which I think was an overreach of power and a mismanagement of
resources and it should have been a very simple straightforward
vertically integrated merger, and it ended up becoming a forum
for groups with complaints and grievances and then regulations
and conditions and open Internet and net neutrality attachments
to that merger. So I have got about three questions, and of
course, you know we need to move quickly on this. Is this how
you are going to approach mergers in the future?
Mr. Genachowski. The Comcast/NBCU transaction was one of
the biggest and most complex that ever came to the agency and
we handled it in a way that was I think the most professional
review process. Completing the process at about the time that
people thought were on the earlier end and making sure that
consumers and competition were protected.
Ms. Blackburn. OK. Do you expect or is it the goal of the
FCC as currently configured to legislate policy for every
merger that comes before the Commission?
Mr. Genachowski. We will continue to exercise the
responsibilities that Congress gave us under the Communications
Act to review mergers and determine that they are in the public
interest.
Ms. Blackburn. OK. Do you think that the review should have
lasted for over a year?
Mr. Genachowski. That was what the companies expected when
they announced their decision. It was on the fast end for
transactions of that size. It was done----
Ms. Blackburn. See, I think it was on the slow end because
you get in the way of jobs creation. We are all about making
certain--the interactive technology sector is one of the few
sectors creating jobs.
Commissioner McDowell, in light of how long the merger
took, have we reached the point that we need to initiate a stop
clock, put that in place to prevent needless dragging on which
hampers job creation?
Mr. McDowell. Of course, the FCC has an 180-day shot clock
but enforcement of that would be helpful.
Ms. Blackburn. Thank you.
Commissioner Baker, what would you like to have seen done
differently in the merger reviews and what would you do
differently in the future when you look at this merger?
Ms. Baker. Well, I think it is clear that we need a
comprehensive review but I agree that it can be timely, and our
internal shot clock of 180 days is a good target and a good
time frame that should be enforced. I think that the breadth,
scope and duration of the restrictions placed on the merging
companies shows sort of the extraordinary leverage that we held
over the parties in front of us merging. I would like to see
the merger conditions have a nexus to the actual merger.
Ms. Blackburn. Excellent. Thank you.
OK. Let us talk about peering and interconnectivity. We
know that these arrangements have never been regulated, and the
FCC net neutrality order says that the rules do not cover
peering. So Mr. Chairman, do you believe the Commission's new
net neutrality order and its underlying rules govern the level
3 Comcast dispute?
Mr. Genachowski. Well, you said the order says that it
doesn't change anything with respect to existing peering
arrangements. It applies to Internet access service provided to
consumers and small businesses. You are referring to a dispute
that is occurring outside the Commission, a commercial dispute.
I hope those parties settle it and resolve it but it is not
something that we have facts and data on. I do think the order
speaks for itself in the way that you suggest.
Ms. Blackburn. All right. Commissioner McDowell, do you
believe the FCC has the authority it is claim to govern
interconnectivity agreements?
Mr. McDowell. Peering?
Ms. Blackburn. Yes.
Mr. McDowell. No, ma'am.
Ms. Blackburn. Thank you, sir. I appreciate that.
Commissioner Clyburn, thank you for coming in and visiting
with me a few weeks ago. You and I discussed a little bit about
market failure at that point, and you believe there has been, I
believe there has not been. So why don't you tell me where you
think the market failure lies and why the Internet is broken
and why we need to look at these burdensome regulations?
Because I am hearing every single day from innovators that are
very concerned about the overreach that they see, what this
might do and open the door for your Commission to regulate
everything from set-top boxes to privacy to you name it.
Ms. Clyburn. There have in fact been formal and informal
complaints lodged at the Commission. There have been persons
who have come to my office, who have called, who have e-mailed,
when I go to different meetings and public forums, you know,
they mention that there are issues, that these issues cause
uncertainty in the market and cause them to have problems with
financing. So there are issues. There have been formal
complaints and a lot of these companies do not have the ability
and technical know-how to come forward.
Ms. Blackburn. My time is expired. Mr. Chairman, I look
forward to the second round.
Mr. Walden. We will now go to the gentlewoman from
California, Ms. Matsui, for 5 minutes.
Ms. Matsui. Thank you, Mr. Chairman, and I thank the
commissioners and chairman for being with us today. I support
the FCC's Open Internet Order because it lays a foundation to
create market certainty that both protects consumers and spurs
innovation and investment in our economy, and I believe that
any attempt to repeal this order should be characterized as
stifling innovation and discouraging job growth in the
technology sectors of our economy.
Now, I am co-chair of the High Tech Caucus, and one of my
priorities is to new innovative sectors like smart grid and
health IT that offer great economic and job growth
opportunities for our Nation. Technology companies are poised
to deploy a range of new technologies to businesses and
residential customers alike to ensure and increase energy
efficiency efforts and modernize our health care system.
Mr. Chairman, I believe broadband will play a key role in
advancing smart grid technologies and health IT. How does the
Open Internet Order promote the advancement of these sectors?
Mr. Genachowski. Well, I agree that those are very
important areas for dramatic private investment in the years
ahead for the United States to build industries that provide
real benefits to the public and devices and products and
applications we can export to the rest of the world. What the
Open Internet Order does is give entrepreneurs, companies
thinking about innovating in that space the confidence that if
they invest the resources and the time to innovate, they will
have access to a free and open market, be able to reach
customers and let consumers and the market pick winners and
losers and so it is a great opportunity for those segments.
Ms. Matsui. OK. Thank you. And I believe one important way
to move our economy forward is to increase access to affordable
broadband service to more Americans, and that is why in the
coming weeks I plan to reintroduce the Broadband Affordability
Act to expand the Universal Service Fund lifeline linkup
services for universal broadband adoption.
Mr. Chairman, do you believe your Open Internet Order will
further lay a foundation that helps increase broadband adoption
rates in this country and further bridge our Nation's digital
divide?
Mr. Genachowski. I do, because it promotes a virtuous cycle
of private investment throughout the broadband economy that
will accelerate the opportunities and benefits of the Internet
for all Americans.
Ms. Matsui. Now, I want to follow up on Ranking Member
Waxman's question earlier on market certainty because I believe
this is an important point. Over the course of this debate, we
kept hearing that industry wanted certainty so they could move
forward with investment and their businesses. Now, it is widely
known that a number of leading economists and financial
institutions have stated that on balance, these rules represent
a light touch that provides regulatory certainty that broadband
providers and our tech community need to attract new
investments and grow so that my sense is that any attempts to
repeal in any form would create uncertainty for investors and
the market, which puts American innovation investment and
growth at risk. So again, what gives here? I mean, we need
certainty, and this is sort of a light regulation and yet we
are saying, the other side is saying that this is going to put
a stranglehold on innovation. So any comments here?
Mr. Genachowski. I am concerned about that. For years there
has been a war in this space between the infrastructure
companies on one side and the innovation technology companies
on the other side. What we worked very hard to do over this
process is to say hey, look, the gap isn't that large, let us
resolve this in a sensible way with light-touch rules, move
forward because we need all the companies in the broadband
economy to work together to grow the broadband economy and to
deal with the global competitive threats that we face. I
believe we achieved that. I believe that injecting new
uncertainty into it now will create more harm than good.
Ms. Matsui. OK. Any other comments on that?
Ms. Baker. All of us would love, we would all love
certainty. Unfortunately, I think the only certainty would
actually be is if Congress would act to give us authority. I
think unfortunately--well, I think the courts will turn this
around. I think we have a complaint process set up in our
rules, that we also have a declaratory ruling process set up in
our rules. I think all of these leave inroads for changes, and
I also think we have a 2-year review that is also set up to
change the rules that exist. So I think that the certainty is
actually more uncertainty with the rule we adopted.
Ms. Matsui. Well, my time is running out but I would just
like to say that this is a debate that continues to go on, and
we understand we must have some regulations. We understand
that. And we are hopeful that in this case, this light touch
will spur innovation which I believe it will. So thank you very
much.
Mr. Walden. The gentlelady's time is now expired, and I
will turn to the gentleman from Georgia, Mr. Gingrey.
Dr. Gingrey. Mr. Chairman, thank you, and let me thank the
chairman and the other four commissioners for being here today.
I associate myself with Mr. Barton's comments earlier, the
gentleman from Texas, in regard to the level of expertise that
you bring.
Obviously we spent a lot of time talking about this, and I
would say that the members on this side of the aisle feel like
this net neutrality ruling, this 3-2 spilt decision, was really
unnecessary, a hammer in search of a nail, if you will, and our
colleagues on the other side of the aisle feel like it is very
much necessary. In fact, my good friend from Pennsylvania
talked about the necessity, I think he put it as the need for a
cop on the beat. I would suggest that if there is no history of
crime on the beat, is it cost effective to put a cop there? In
fact, he went on to talk about his daughter using the Slingbox.
I never heard of the Slingbox but it sounded like a heck of a
good innovation, and I guess that certainly came online at a
time before this 3-2 ruling.
So with that in mind, I am going to ask my first question
to the chairman. Chairman Genachowski, in the National
Broadband Plan that was released by the Commission last March,
page 5 stated that, and I quote ``The role of government is and
should remain limited,'' yet I find the order delivered in the
3-2 vote by the Commission to contradict this very statement.
You say in your testimony that the so-called open Internet
rules will promote innovation, and maybe you can give me a yes
or no answer on this. Has there been a lacking of innovation in
the absence of government regulation over the Internet during
the past decade?
Mr. Genachowski. As I mentioned, there have been Internet
protections in place since at least 2005, and so in the space
people were operating on the assumption that Internet freedom
was assured.
Dr. Gingrey. Well, the question again, yes or no, has there
been a lack of innovation?
Mr. Genachowski. Let me see. There has not been a lack of
innovation because there has been----
Dr. Gingrey. I will take that as a no. And if there has not
been a problem with innovation, then why, why is it necessary
to promulgate regulations that may well stifle innovation at
least according to a December 31, 2010, report from Anna-Marie
Kovacs?
Mr. Genachowski. What we heard from the innovator community
was that in the absence of sensible rules of the road, they
wouldn't have the confidence and certainty they need to invest
their time and resources to raise capital in order to continue
to innovate, and they felt very strongly about it.
Dr. Gingrey. But yet, you know, the innovation that we hear
about like the example of the Slingbox and other things, I
mean, you know, this is sort of speculative, it would seem to
me, and as a result of this order, despite the assurance of
your testimony, will there not be a subsequent drop-off in
innovation due to this unnecessary, as we see it, government
regulation?
Mr. Genachowski. I think this is a spur to innovation both
at the edge and in the infrastructure, and I think the
statements from most of the companies in the space analysts in
the space are consistent with that.
Dr. Gingrey. I don't see how then you can make that sort of
assurance without the proper market analysis which the
Commission today has admitted did not occur.
Mr. Genachowski. With respect, we did do a market analysis
in our order.
Dr. Gingrey. Is my time expired?
Mr. Walden. No, but you might want to ask the chairman if
it is an OIRA standard market analysis as recommended by OMB,
and if so, if you can make it available.
Mr. Genachowski. We will obviously make it available. It is
in the order, and we will get back to you on whether it is
specifically OIRA compliant.
Dr. Gingrey. Mr. Chairman, if I have----
Mr. Walden. You actually have another minute.
Dr. Gingrey. Thank you.
I want to ask Commissioner McDowell, Commissioner, isn't
this order full of double-speak? To me, certainly it is. It
says to keep the Internet free, we need to regulate it. To
ensure no one needs permission to innovate, everyone will need
to ask the FCC for permission to innovate. And it goes on to
say to create certainty, as few as three commissioners now can
decide what types of business arrangements and traffic
management techniques are reasonable. Does that make sense?
Mr. McDowell. It doesn't make sense, and I think what we
are hearing today from the chairman as well as in the order is
that innovation only happens at the edge, and he has referred
to several times about innovators and the technology companies
at the edge and there is just infrastructure on the other side,
the network operators. We want to have innovators everywhere.
You have companies like Microsoft and Google as well as Verizon
and AT&T who have thousands of miles of fiber, have servers and
soft switches. They offer voice, video and data services of all
kinds and all sorts of applications, and you don't want
government tilting the scales while putting its thumb on the
scale to try to distort that market. You want innovation at all
layers, all levels of that environment.
Mr. Walden. The gentleman's time has expired. I will
recognize the gentleman from New Jersey, Mr. Pallone, for 5
minutes.
Mr. Pallone. Thank you, Chairman Walden. I do want to say I
am pleased to see the FCC commissioners here today, and I want
to touch on two topics with Chairman Genachowski, and again, I
have to apologize because I know that some of this is
repetitive. I will try not to be.
The first is the follow-up to a letter I wrote to you last
spring regarding the Title II framework you initially laid out
regarding the Internet principles, and I wanted to reiterate my
concerns regarding agency action. I was the chairman of the
Subcommittee on Health, and I am still the ranking member, and
in that capacity, I am increasingly sensitive about the
tendency of government agencies and in particular independent
agencies to arrogate to themselves policymaking authority that
is properly exercised solely by Congress, in my opinion. Now,
while questions involving an agency exceeding the authority
granted to it by Congress are decided in the courts, I think an
agency ought to be mindful of the limits on its authority. So
far, two companies have questioned your authority and brought
suit against you. Can you tell me--this is sort of repetitive,
so I wanted to ask if you could tell me why you believe the
agency has legal authority to implement network neutrality
rules or provisions of the National Broadband Plan in the order
being examined today? But let me say specifically, because you
have gone into this, where you believe you have the authority,
what would you cite, and why you think you are going to win in
the court. I will say it that way.
Mr. Genachowski. I am glad you asked the question because
it allows me to try to clear up one issue. There were many
Members of Congress who in the course of our proceeding urged
us not to rely on Title II as a basis for any decision in the
area, and after a lot of discussion and input, we listened to
that, we heard that, and in fact we didn't rely on Title II in
adopting a final decision, and instead we adopted a framework
that is consistent with the framework that historically has had
consensus in this space, the light-touch Title I framework tied
to specific provisions in the Communications Act like those
instructing us to promote competition. And so I do remember
getting your letter and it was something that we paid careful
attention to and that we believe we responded directly to in
how we ultimately ruled in this matter.
Mr. Pallone. And why do you think you are going to win?
Mr. Genachowski. Well, we think we are going to win because
we think that the theory we have laid out is very consistent
with Supreme Court precedent in this area, and it is consistent
with the D.C. Circuit decision. The D.C. Circuit was asked to
rule that the FCC had no authority at all with respect to
broadband, and it didn't do that. It set a standard that the
FCC has to reach in order to adopt sensible rules in this area,
and we believe we met that standard. It is in litigation now.
Almost everything that the FCC does ends up in litigation.
There are some areas in which the D.C. Circuit is in tension
with the Supreme Court but we believe we meet the standard of
the D.C. Circuit case and we are certain that we meet the
standards set out by the Supreme Court in this area and that we
are operating well within our authority under the
Communications Act.
Mr. Pallone. All right. Let me get to my second issue. This
was an issue I raised last summer, or I should say last May.
Congress learned that Google had gained access to personal WiFi
and collected information about consumers' Internet activities
and at the time I called on the FCC and the FTC to investigate
out of concern for consumers' privacy. Now, the FTC
investigation was dropped in October without providing
sufficient answers, in my opinion, to how the privacy breach
was allowed to take place and who was affected, but I
understand that the FCC is also investigating. So could you
comment on any progress with that investigation, whether the
FCC is examining the data for itself, what steps are being
taken to avoid situations like this in the future in today's
technology age?
Mr. Genachowski. I can't comment on an open investigation
but I will say that we certainly heard you in that letter, and
any uses of spectrum or technologies that are within the FCC's
purview that violate the privacy statute and the FCC's privacy
rules are actions that we would take very seriously.
Mr. Pallone. OK. As far as you can go, in other words. All
right. Thank you.
I yield back, Mr. Chairman. Thank you.
Mr. Walden. I thank the gentleman for yielding back. I now
go to the gentleman from Louisiana, Mr. Scalise, for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman. I appreciate you
hosting this hearing. I appreciate all of the FCC commissioners
coming to talk about this important issue of net neutrality and
its impact especially on the economy and our ability to
continue to encourage the innovation and the job creation that
I think has been one of the hallmarks of the Internet. I would
actually agree with the commissioner back in 1999, Commissioner
Kennard, who had talked about the innovations and also
encouraged against the dangers of regulating the Internet, and
this was President Clinton's FCC commissioner that talked about
the dangers of regulating the Internet, especially in ways that
it would stifle innovation. When I look at what has been
happening in the industry, I think one of the few real positive
signs in a struggling economy that we have today has been the
technology sector, especially the companies that do operate and
innovate using the Internet and its capabilities to allow
commerce, to allow connectivity of people, of ideas. They are
even talking about what is happening in Egypt being something
that really in many ways came out of Facebook, and of course,
these great innovations happened without net neutrality. These
great innovations happened because there was a certainty and an
ability for industry to go out there and invest, as I think it
was Commissioner Baker who pointed out over $500 billion of
private investment--this isn't Federal Government with stimulus
but private investment coming out over the last 10 years of the
private sector to encourage this innovation. This was again
without net neutrality, without the big hand of the Federal
Government or the big hammer, as you might want to call it.
And so you can see why there is a big concern by many of us
about this imposition of net neutrality, and this is not just a
Republican issue. I know some on the other side have kind of
inferred that this is the way it should be. I was a little bit
surprised to hear the three Democrat commissioners saying that
they don't think that this Congress should pass a resolution of
disapproval because when I go back to the Constitution, which
is of course our overarching document that lays out the
structure, it is article 1, section 1 that talks about the
legislative branch deciding policy, with all due respect, not
the FCC, not the EPA, not all of these bureaucratic agencies
that seem to think that their will is better than those of us
who were actually elected by the people.
And so with that, I want to at least try to get into this a
little bit more, and Chairman Genachowski, starting with you.
When we look at the private sector innovation that has come
with the ability to innovate and then of course the business
models that are built around the things that encourage private
investment, do you have any concern that by changing the rules,
by imposing net neutrality and in some cases opening the door
for retroactive changes, that you are going to discourage that
kind of innovation and investment?
Mr. Genachowski. Well, I actually agree with what
Commissioner McDowell said a few minutes ago about the
importance of the investment and innovation throughout the
broadband economy, both early stage and technology companies
and also our infrastructure companies, wireless and wired. It
is a full broadband economy where innovation and investment in
any part of it fuels investment throughout. We paid very
careful attention to this as we worked on this item, and I
believe this will be a spur to investment and innovation
throughout the broadband economy and overwhelmingly the
analysts who looked at what we did characterized it that way,
as a light-touch action that increases certainty and will
unleash investment.
Mr. Scalise. And I guess we will disagree about whether it
is a light touch and whether it increases certainty versus what
many of us think that it actually decreases certainty.
I will ask Commissioner Baker, because you did make those
comments about the $500 billion of private investment, if you
can just answer that same question and what effects it would
have on future investments.
Ms. Baker. So I think it is important what has brought us
here but I also think what it is important to take us to the
new generation, so updating the networks by 2015, the number is
going to be $182 billion. I think the network providers are
going to have to have a return on that investment. It is a very
tight capital market. I think things like network management,
prioritization, specialized services have been turned into bad
words as opposed to engineering marvels, and I think that we
need to allow--I think the term is called wealth transfer and
so what we are doing is taking away revenue streams from the
providers how are building these networks. They need to have as
much incentive as possible to have a return on their
investment, which will then in turn allow all of the edge
applications to innovate and continue this terrific ecosystem.
Mr. Scalise. And we heard some concerns in a previous
hearing last week about that in relation to the stimulus bill
where the federal government was using taxpayer money to in
essence other companies to compete against private companies
who already made an investment of billions of dollars, hiring
thousands of people, creating good jobs that now will not have
that same ability to make those investments in the future.
So again, we have seen those regulations killing jobs and
that is a big concern. I know we will get into more of it in
the second round. I appreciate it, and I yield back.
Mr. Walden. The gentleman's time is expired. The Chair now
recognizes the gentleman from Illinois, Mr. Rush, for 5
minutes.
Mr. Rush. Thank you, Mr. Chairman, and I want to welcome
the commissioners here again. I want to begin by saying I agree
with you, Chairman Genachowski. I think in essence you said,
your statement was that regulations don't create incentives,
they create certainty, and certainty is a catalyst for
investment and innovation, and I certainly concur with those
sentiments. When the FCC decided to issue a balanced set of
open Internet rules, I for one urged industry not to challenge
these rules in court. These rules largely track an agreement
that this committee helped to negotiate among parties on all
sides of the issue. Now that some of these companies have
decided to take the court route, the question of the FCC's
authority to adopt rules affecting broadband service providers
will unfortunately be left in the hands of the federal
appellate court, and to me, I would have liked to avoid that.
And I would sincerely hope that after today that we in Congress
will move on and move ahead to help you, the FCC, and our
Nation tackle more immediate problems including our looming
spectrum crunch and financing the build-out of and national
interoperable public safety network, reforming universal
service and designing all auctions and licensing opportunities
to ensure that minority and small businesses have just as good
a chance as the large fat cats, the large corporations, the big
boys to become real participants and players in the
communications and technology sector.
As you know, Mr. Chairman, Chairman Genachowski, the
President recently announced that he supports reallocation of
the 700 megahertz D block to public safety. Further, both
Senator Rockefeller and Representative King have reintroduced
bills this year that will reallocate the D block to public
safety. Last year, you testified in front of this subcommittee
that you believe the plan to auction the D block recommended by
the National Broadband Plan provides the best strategy going
forward.
Now, I want to ask each one of you, and I only have a few
more minutes, so if you would quickly answer this question with
a yes or no answer. Do you still support the recommendations
auctioning the D block as laid out by the National Broadband
Plan?
Mr. Genachowski. Yes, and we need to get a mobile broadband
public safety network built and funded.
Mr. Rush. Commissioner Copps?
Mr. Copps. Well, I think that is a viable proposal. I think
we also need to hear from Congress. The central question to me
is which of the options out there are going to provide money to
actually build this infrastructure, and we need to identify
where that is, and I think that will be the route to go.
Mr. McDowell. I think this issue is more one of public
safety needing more money rather than more spectrum. I would
like to see the D block auctioned off cleanly but we need
Congress's help to fund that build-out.
Ms. Clyburn. I look forward to a Congressional engagement.
At the bottom of this, at the core of all this is, we need the
pathway for a truly interoperable public safety network. I
think that is what we all want, and the best way to get that. I
look forward to engagement from you.
Ms. Baker. I think I agree with all my fellow commissioners
and chairman. Last year we testified that an auction was a
terrific way forward. It seems to me that some other ideas have
surfaced from other places, and I think if we are going to look
at reallocation too as a viable alternative, I think the
important is to get the public safety interoperability network
built as soon as possible and we will look to you as to how to
do that best.
Mr. Rush. My next question, when FCC auctioned 52 megahertz
of spectrum in 2008, one of your predecessors, Chairman
Genachowski, said it is also appalling that women and
minorities were virtually shut out of this auction with women-
owned bidders winning no licenses and minority-owned businesses
winning less than 1 percent. We clearly failed to meet our
statutory obligations in 309(j) to expand diversity and the
provision of special base services. In 2008, we raised about
$20 million for the U.S. Treasury. Much of that spectrum has
been now deployed to make 4G services a reality, giving
subscribers faster broadband speeds, supporting more and more
apps and more and more video. Many critics of the auction
contend, however, that the FCC's auction design did not do
enough to allow women, minority and rural phone companies to
women any of the spectrum licenses. If you decide to auction
the D block, what design improvements can FCC make to ensure
that these types of bidders are more successful this time
around?
Mr. Genachowski. Well, you raise an important issue, and we
would look at all possibilities to address those issues in any
auction design that we take up our next auction design, and in
connection with the topic of the day, I will say that one of
the challenges in that area is the amount of capital that is
required to build and launch a wireless business is very high
and it is what makes the issue difficult. On the online area,
the capital requirements to start a business are much lower and
so the new opportunities for new entrants, diverse entrants on
the Internet is something that I think is a promising
opportunity.
Mr. Walden. The gentleman's time has expired. Now I would
like to go the gentleman from Ohio, Mr. Latta, for 5 minutes.
Mr. Latta. Well, thank you, Mr. Chairman. I appreciate the
opportunity. I want to also thank all of you for being here
with us today. It is very, very enlightening, and what I would
like to kind of do is maybe just kind of start off with, I
really believe that we have got to keep government out as much
as we possibly can because if we want to see an invasion of
growth, it is not going to happen.
One of the things, Mr. Chairman, I would like to submit for
the record is a letter from a company doing business in my
district from Amplex Internet, if I could ask unanimous consent
that that be included in the record.
Mr. Walden. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Latta. I appreciate that, Mr. Chairman.
And one of the things that--and just real quickly about
this company. It is in a village in my district and they have
2,100 household and businesses they supply service to and they
employ eight people and they have added three new employees in
the last year, which is how we grow things in America, small
businesses and they grow large.
But in his letter, it is interesting because he states a
couple of things that I think that he might have been in your
own meeting rooms because this letter is dated December 15th of
last year, and he says in the letter, ``The Internet has grown
incredibly rapidly without significant government regulation
and continues to do so. There is no pressing reason for the
government to act at this time.'' He goes on to say, ``In the
limited number of cases to date involving questionable
behavior, the existing consumer protection laws have been
sufficient to address the issue,'' and I find that interesting
because a lot of times I think we--I would like to ask this
question. You know, we have been kind of talking at the 30,000-
foot level here today. What we need to do is talk to the people
back home on main Street. These are the folks that have got to
do this.
And starting with Commissioner McDowell, I think that he
must have been in your computer because when I am looking at
your statement, you said it on December 21, 2010. You state on
page 6, ``And my dissent is based on four primary concerns.
Nothing is broken in the Internet access market that needs
fixing, and existing law and Internet governance structure
provide ample consumer protection in the event a systematic
market failure occurs.'' Those two letters are just 6 days off
but this is somebody from Main Street, again, somebody that is
out there trying to live with this.
And I guess I would like to read something that
Commissioner Baker, you have written in your testimony, saying
again that--you are pretty much saying that our surveys
revealed that 93 percent of subscribers are happy with their
broadband service, and you go into that we need broadband
competition, we need private capital and that the Internet is
open without the need of affirmative government regulation.
So I guess if I could just start with Commissioner
McDowell, what do I tell the folks back home? How do I explain
what we do here in Washington that affects them right off the
bat? Again, we are looking at--you know, we do things at 30,000
feet but we are talking about people right at ground level,
ground zero.
Mr. McDowell. Well, I think you have touched on an
important point which is that we have had wonderful innovation
at the edge. The Twitters, the Facebooks, the eBays, the
Amazons have all developed under the current environment, that
there is no systemic market failure, that nothing is broken,
and when you look around the globe it is not private sector
mischief with the Internet that is the problem, it is state
control of the Internet, and that is the concern here.
But also I would like to sort of take issue with the notion
that has been aired several times, that the December 21st order
was somehow some active consensus because Comcast and AT&T and
NCTA, Comcast Trade Association signed onto it. Comcast was
very vulnerable, had a large merger before the Commission at
that time. AT&T, it ended up was being on Qualcom 700 megahertz
spectrum and was going to need FCC approval of that. And of
course, those two entities are going to want to comply as best
as possible. When you read their statements, they aren't
ringing endorsements, and as we have seen debate over this
peering issue as to whether or not the FCC is going to claim
jurisdiction to regulate peering, NCTA and AT&T have submitted
a joint letter to the Commission expressing grave doubts and
feeling there is a bit of a bait and switch here.
So, you know, there is not great consensus here, and Wall
Street analysts aren't part of that as well. Back in October,
October 1, 2009, we convened a workshop at the FCC on
investment and broadband, and back when Title I was being
discussed and not just Title II, and we had analyst after
analyst and investor after investor of various stripes and
sizes cautioning us against net neutrality regulation. Then
Title II, the specter of Title II was aired last year in the
middle of the year. I think what you saw from Wall Street in
December was more of a sign of relief that it was not an overt
or an explicit Title II reclassification. In reality, what it
is, it is Title II with a Title I disguise, as I have said in
my dissent. So that sign of relief doesn't necessarily equate
to Wall Street's endorsement of what the FCC did.
Mr. Walden. The gentleman's time is expired.
Mr. Latta. I thank you, and yield back.
Mr. Walden. The chair now recognizes the gentlewoman from
California, Ms. Harman, for 5 minutes.
Ms. Harman. Thank you, Mr. Chairman, and thank you to the
subcommittee for years of friendship and partnership. I will
miss this subcommittee very much and had been looking forward
to my return here. I will also miss this Commission very much.
Rob McDowell, thank you for your comments. Others of you, thank
you for your notes, some of them quite blunt and humorous,
which I shall treasure. But I want you to know that the set of
issues that we are addressing this morning are a centerpiece
for what will or won't keep our country safe, innovative and
free--I do like that word--in the future.
And so let me just turn to my top priority for this
subcommittee and the Commission, and I have decided that since
you all want to give me a parting gift, you will act on my top
priority, which Michael Copps said he wanted to act on this
year, that is, to build out in some efficient way a national
interoperable communications network for first responders, and
oh, by the way, while you are at it, I hope you will also
consider some brilliant legislation that Mr. Shimkus and I
introduced last year and that I hope he will take the lead on
reintroducing this year called the Next Generation Public
Safety Device Act, the point of which is to create a real
competition for devices to use in this emergency space that
will provide the users with much better performance at a much
more competitive price.
So having said that, I would like to ask the commissioners
each of you whether you are ready to give me these wonderful
and important national gifts as I depart the Congress.
Mr. Genachowski. Well, we are--if I may, we really are
going to miss your leadership on this committee and in
Congress, particularly on these issues. Getting a mobile
broadband public safety network built, it should be one of the
country's top priorities. Now, it will require funding to build
it and so we are ready as a Commission, I think this is true of
all of us, to work on a bipartisan basis with everyone to
support whatever legislation is necessary to move forward. We
have begun to move forward on the interoperability piece. We
want to be ready. But you are absolutely right that this is a
major challenge for the country.
Ms. Harman. Well, let me just add, Mr. Chairman, that I
tend to favor the auction concept because I think it will
generate funding and it will also push innovation. I think that
the private sector has marvelous ideas to offer the public
safety sector.
Mr. Genachowski. I would just say, there are several
different ideas that are now in circulation, in debate. They
should be discussed, resolved quickly----
Ms. Harman. Hear, hear.
Mr. Genachowski [continuing]. So we can focus on what gets
a mobile broadband public safety built quickly.
Ms. Harman. Mr. Copps?
Mr. Copps. Well, first of all, thank you very much for the
opportunity to respond. Your leadership on this--you and I go
back a long way in fighting for this issue, and I think maybe
the time is nigh when we are actually going to get something
done. I just sense that there is a willingness to move ahead.
We have to be practical and pragmatic how we do that, but I
think this is the year in a bipartisan because it is not a
bipartisan issue to get done. As my old boss, Senator Fritz
Hollings, reminded me many, many times, the safety of the
people is always the first obligation of the public servant,
and you have certainly met that obligation often and well, and
I certainly will miss your leadership on this and a whole range
of other issues but certainly look forward to the great work
you will do at the Wilson Center and to continuing our
friendship after you leave these hallowed halls.
Ms. Harman. Thank you so much.
Mr. McDowell?
Mr. McDowell. I think an auction is the best way to raise
the maximum amount of revenue for the Treasury to help fund
this. In the meantime, the FCC has granted waivers to 20
jurisdiction so the L.A. area, the D.C. area, for instance, are
covered in that regard but great swaths of the country are not.
Ms. Harman. Well, let me just, If I might, on those
waivers, while I favor that and thank you very much, I worry
that we may be building regional interoperable networks that
will not be interoperable nationally and so it is critical, I
think, to have some common rules of the road and also to focus
on the devices that are used in these regions.
Mr. Genachowski. And if I may, we share that concern and it
is why we are working together on interoperability and why we
are moving in that proceeding to make sure that we don't end up
with that problem.
Ms. Harman. Thank you.
Mr. Chairman, can the last two witnesses answer my
question?
Mr. Walden. Absolutely, yes. Of course.
Ms. Clyburn. Again, thank you for your service and I look
forward to more and better to come in your new capacity.
I too, you know, being from a State that is very vulnerable
from a weather perspective, I too think that this is way
overdue, long time coming. While I know you have some concerns
about those waivers, those waivers give us a better pathway
forward. They let us know in very small, relatively small
footprint some of the challenges that will lie ahead. So that
type of flexibility does have its advantages and I am looking
forward to a better and more robust interoperable system.
Ms. Baker. I agree with all my colleagues about the
comments on your leadership and your advocacy, and I very much
hope that your legacy is that we will get this done in the
window of opportunity that we have right now while 4G networks
are being built out, so thank you.
Ms. Harman. Thank you very much. I yield back, Mr.
Chairman, but I will look forward to this giant gift of a
national interoperable network and a competitive system to
develop devices all wrapped up with a bow by December 2011.
Would that be all right with you?
Mr. Walden. As long as you stay here on the committee. I
appreciate your service on the committee, Ms. Harman, and your
service on the Intelligence Committee too. You have been a real
leader and we will miss you.
Ms. Eshoo. If I might, I hope it will be by the anniversary
and not December but by September 2011.
Mr. Walden. We will have some further discussion about D
block and broadband plans and money and the access and where we
go from there before this committee at some point in the not
too distant future but we are going to try and stay on net
neutrality today for the most part.
Mr. Kinzinger, we recognize you now for 5 minutes.
Mr. Kinzinger. Thank you, Mr. Chairman, and thanks for
coming out to see us and all the patience you are having to put
in. I know it is not always overly enjoyable to sit there for
2\1/2\ hours or more and answer questions. Some of them are the
same.
Let me just ask a few, kind of express a few concerns I
have, ask a couple of questions and then we will move because I
don't want to rehash a lot of the old stuff. But let me just
say, in 2003 I think it was 15 percent of Americans had access
to broadband technology. As of 2010, it is 95 percent. So as I
look over the stretch of just 7 years, I see an extreme
flourishing of what we see in technology today in just one
decade. I mean, when you even look through history, you are
going to see that this--I mean, this is a relatively short
period of time. I am glad--you know, I often wonder if I could
go back 15 years or 10 years or whatever to the FCC
commissioners and ask them what do you foresee as challenges
and how can you respond to that right now because of these
potential challenges that are coming. I actually fear what they
might come up with as solutions for what they could potentially
see as a challenge that doesn't fully exist yet.
That is what I see when I look at the net neutrality issue
is, OK, well, we see potentially what could happen so let us
preemptively pass this law without really not passing a law
because Congress isn't even approving of this, and it is that.
I mean, look, I am a pilot. That was my job before this. I
still love flying airplanes. I love the idea that some day we
may have flying cars. I think that would be great. We could get
around all this traffic. But I don't think it is appropriate
for the transportation department to now take a look at when we
have flying cars and go ahead and implement rules for when that
is going to happen. That is a concern I have.
And, you know, beyond the issue, beyond the merits of the
issue and all that, where we have a lot of heartburn and where
again a supermajority of Congressmen in the last Congress, the
111th, not even this one, which significantly looks different
now, but when a supermajority basically stand up and say we
don't want this or we have concerns about this, where I think
the heartburn is not so much in the rule, we can talk about the
rule, you know, I disagree and all that, but is the fact that
three of the five commissioners felt that you had the authority
to go around Congress implementing this rule, knowing very well
if you think it exists on its merits, there can be an effort to
talk to all of us about the importance of net neutrality and we
will be sold on these great merits and we may pass it out of
the House of Representatives and you can do whatever you want,
but that didn't happen. In fact, I have heard from a few
concerned that well, we think it is going to hold up in court.
OK. You ought to be real sure. ``We are pretty sure we have the
authority to do this.'' You ought to be real sure you have the
authority, and if you don't have the authority to do it or you
are even questioning whether you have the authority, why not
come to the people's house and ask for it? If it can stand on
it merits, we will give it to you. So that is my thoughts.
Let me ask, and this will be basically my final question so
I may give you all mercy and not to have to stay here the whole
5 minutes of my questioning. But as I look through these
concerns, and right now on the Floor of the House of
Representatives and for a few weeks going forward we are going
to talk about--actually a few years going forward we are going
to talk about budget issues. We are going to talk about how
much money this government spent that it doesn't have. You are
seeing amendments talking about where we can't spend money and
all this. That is a very big concern.
My question is, how much money--and, Chairman, I will ask
you this. You may not have the number. I would love to get it
if you do eventually. How much money has this already broke
government spent in the Comcast v. FCC case and how much do you
see that you will potentially spend in defending the Verizon
appeal? I will just ask that, if you have a number of how much
money that the government spent that we don't have in defending
something that frankly has been implemented without the
authority of Congress.
Mr. Genachowski. I don't have a number but we will work on
answering your question, and to your larger point, which I
completely respect, we continue to be available as a resource
to work with Congress on legislation that would provide
certainty and address issues around broadband, and so that is
our job and we look forward to being a resource to Congress.
Mr. Kinzinger. And I hope as new issues come up and new
concerns you have, if you are questioning whether or not you
really do have the explicit authority that you would take that
route, and I think all of us on this subcommittee would be
happy to work with you in discussing the pros and cons.
So at that, I will yield back and I thank you for your
time.
Mr. Walden. The gentleman yields back his time. We go now
to Mr. Towns for 5 minutes.
Mr. Towns. Thank you very much, Mr. Chairman and the
ranking member, for holding this hearing.
Also, let me say to my colleague, Ms. Harman, we are
definitely going to miss her, and I have taken this sort of
somewhat personal because I returned to the committee and you
leave the committee, but we will miss you, and it has been
great working with you over the years.
Let me say first of all, Commissioner Genachowski, I heard
your opening statement and you mentioned jobs, and I think that
one thing today more than anything else is that we need to
focus on jobs. I mean, people are unemployed. Many of them
attended the most prestigious universities in this country but
now have no jobs. So let me ask you, how can we bridge the
digital divide and encourage greater access to technology in
economically disadvantaged areas where it is lacking? With the
speed in which technology is developing, what action has the
agency taken or planned to take in the future to make sure
those left behind by our economy are part of this innovation
generation?
Mr. Genachowski. This is a very significant issue. There
are 24 million Americans who don't have any broadband
infrastructure at all and then there are hundred million
Americans, about 33 percent of the population, who haven't
adopted broadband and the number of Americans who don't have
basic digital tools and skills and literacy to participate in a
digital economy is way too high. There is no silver bullet to
solve this. We are working on a series of initiatives, some
together with other agencies, some looking at our programs that
have addressed similar issues in the telephone era. It is an
area where I think there is great opportunity for public-
private partnerships because every new subscriber benefits
these broadband goals and also benefits the infrastructure
companies that are signing people up, so I acknowledge the
importance of this issue and look forward to working with you
on it.
Mr. Towns. Thank you very much, because when we leave
people behind, it does not make us more competitive.
Commissioner Copps?
Mr. Copps. Thank you very much for your question. You know,
there was a time, historically speaking, when one-third of the
Nation was ill-housed and ill-clad and ill-nourished when
Franklin D. Roosevelt was President of the United States and we
all were very concerned about that. Now we have a situation
where one-third of the country are not having access or to
being able to take advantage of access to this liberating
technology. That should certainly put this whole problem at the
top of our list or close to the top of our list of national
priorities and making sure it goes to every American no matter
who they are, where they live, the particular circumstances of
their individual lives, white or black, rich or poor, city or
country. That has got to be the policy. That the universal
service policy we need to design.
Mr. Towns. Thank you very much.
Mr. McDowell, Commissioner McDowell?
Mr. McDowell. Yes, sir. Actually in our work since the
chairmanship of Michael Powell on the unlicensed use of the
television white space is one area where this can be
particularly helpful, and Chairman Genachowski deserves great
credit for continuing to move that ball down the field. But
unlicensed use of this fabulous spectrum will really speed
deployment and make things more affordable. Also, it will help,
a release valve should there ever be sort of anticompetitive
behavior in the last mile, and this is an antidote to the
concerns that net neutrality proponents have.
But as with WiFi, nobody had heard of WiFi on Friday but
Monday it was everywhere practically. So I think with white
spaces, that is going to help tremendously for affordability,
access and adoption.
Mr. Towns. Is there anything here we need to do on this
side of the aisle, as Members of Congress to help move this
forward?
Mr. McDowell. White spaces in particular?
Mr. Towns. Yes.
Mr. McDowell. Well, I think we are good on that as long as
we can move forward. I think the spectrum reallocation
legislation is causing some concern. I was just telling
Congresswoman Eshoo, I was just in Silicon Valley in her
district a few weeks ago and until we know whether or not the
incentive auction legislation is going to pass and become law,
chip makers and software designers are withholding their work
until they can know how to innovate and how the spectrum is
actually going to be used. So the sooner Congress can have
resolution one way or the other on the incentive auction idea,
I think that would be fabulously helpful.
Mr. Towns. Commissioner Clyburn?
Ms. Clyburn. Thank you, Congressman. I think about this. I
wrote down three things that came to mind: affordability,
availability and education. You touched on those. One thing
that was great about the National Broadband Plan is that it has
forced us to concentrate on those challenges, the challenge of
that 5 percent was mentioned that is not served right now, the
challenge of literacy issues which translate into digital
literacy issues that you asked how possibly Congress could
help. When things get better--I know things are a little tight
budgetarily now--we put forward--well, the National Broadband
Plan talked about a digital literacy core. That is something
that these digital navigators could come in these communities
to help educate and augment the experiences of people.
Availability and affordability--I know time is short. Those go
hand and hand, and there are a number of things happening. We
talked about a major transaction that just took place. There
are a couple of things that are being offered that I hope are
replicated: affordable, under $10 a month, high-speed Internet
access. That is coming, that is possible, can be replicated.
Support for equipment, which is another barrier to entry, that
is an important barrier to entry, affordability from that
perspective. That is coming. That can be replicated. And
availability in terms of the infrastructure, the things that we
could put forward to encourage infrastructure development, that
is here now and we look forward to working more with you to
encourage that to continue.
Mr. Towns. I know my time is expired, but being I am new to
the committee, can Ms. Baker answer as well?
Mr. Walden. We will go ahead and do that.
Ms. Baker. I agree with everything that my fellow
commissioners have said. We have done relatively well in
deployment. We want faster, broader, bigger, better networks to
be built but some of the focus we really need to do is on
adoption. The only thing I would add is that we figured how to
reach consumers for the first time during the digital
television transition, and I think if we could revisit some of
those public-private partnerships to focus since it is not a
one-size-fits-all problem that we can really use those
partnerships to focus on bringing more people to the Internet
as it becomes very much critical infrastructure.
Mr. Towns. Thank you, Mr. Chairman, for your generosity.
Mr. Walden. You are welcome, Mr. Towns.
Now we go to Mr. Rogers from Michigan for 5 minutes.
Mr. Rogers. Thank you, Mr. Chairman. Good morning, and
thank you for your time today.
Mr. Chairman, we all know that the Internet regulation in
your order regulates Internet service providers, but how does
this impact content providers from discriminatory actions?
Mr. Genachowski. Are you asking about intellectual property
issues?
Mr. Rogers. Well, companies like Google and Skype and other
companies are not impacted by your order. I am just curious if
you believe that the ISPs are conducting some discriminatory
action, which you claim they are not. Is that correct?
Mr. Genachowski. There have been instances of
discriminatory conduct.
Mr. Rogers. OK. So how do you prevent in this order
discriminatory conduct for content providers?
Mr. Genachowski. Historically, this issue, the open
Internet protections that have been in place since 2005 have
been focused on the Internet service providers, and that is
good reason. That is fundamentally where the Communications Act
points us to companies that----
Mr. Rogers. I understand, but this particular order does
not impact content providers.
Mr. Genachowski. Correct.
Mr. Rogers. Yes? That is correct?
Mr. Genachowski. Yes.
Mr. Rogers. In your December 21st press release, you
describe, and I quote, ``The Internet has thrived because of
its freedom and openness, the absence of any gatekeeper
blocking lawful uses of the network or picking winners and
losers online.'' But I am curious. When I read the order,
aren't you merely making the government the gatekeeper in this
particular case?
Mr. Genachowski. Not at all. With respect, I don't think
that is what we are doing. We are simply saying that certain
conduct by the companies that do control access to the Internet
aren't consistent with Internet freedom and shouldn't be
permitted, and companies have----
Mr. Rogers. Which means you are the gatekeeper because you
are the sole determinant of that.
Mr. McDowell, you wrote a dissenting opinion that
basically, I don't think you used the word ``gatekeeper'' but
can you help me understand? I clearly believe the government is
going to make those decisions about who is and who is not on
access.
Mr. McDowell. It all boils down to the word ``reasonable''
and how three FCC commissioners will define that term on a
case-by-case basis. So when we talk about price tiering, for
instance, there are some advocacy groups who have pushed for
net neutrality rules who are worried about price tiering as
somehow being discriminatory, and it is discriminatory but not
in a bad sense. What this actually does, it allows low-income
users, for instance, to have a price they can afford for, let
us say, wireless services provided by Metro PCS. But is that
reasonable? That is going to be determined by three FCC
commissioners.
Mr. Rogers. It certainly opens the standard. They were
talking about applications and the next generation of Facebook,
but just because nobody wants to buy my particular product or
app, I find it unreasonable that I don't have some unusual
access to the Internet. Could I bring a case like that to the
Commission?
Mr. McDowell. I think under the logic put forward in the
order, the Commission has boundless authority and you could
bring such cases. The Commission basically says it has
authority for direct economic and indirect economic regulation
but is choosing not to go to certain places, but it could, it
said in the order.
Mr. Rogers. I have met no inventor of any application that
didn't think that this was the one that should make it. That is
why we have thousands and thousands of applications, and I am
stunned by these very polite terms of ``light touch,'' of
regulation, but what we are doing is creating the government as
the gatekeeper for the Internet for the first time in its
history after it has exploded with innovation, and you use
Facebook as your term for the future but Facebook was there
before you got there and so was Netscape and so was Google and
so was YouTube and it explodes and it is fantastic, and for the
government to step in and get the keys to the gate scares me to
death.
I will ask you this, Mr. McDowell. Was this a controversial
order, I mean, given the sense that 300 Members of Congress,
yes or no?
Mr. McDowell. Yes.
Mr. Rogers. Have you ever seen in your time--well, actually
I am going to ask Mr. Copps. You have been there 10 years. Have
you ever done such a controversial order the week before
Christmas at the change of a Congress where there was going to
be a power switch in the body? I mean, a lot going on, a lot of
chaos. This is major. It is controversial. Have you ever seen
that in your 10 years on the Commission?
Mr. Copps. Yes, I have.
Mr. Rogers. Oh, really?
Mr. Copps. I have seen it a couple of times with regard to
media ownership, the newspaper broadcast cross-ownership, a
number of other things where----
Mr. Rogers. Where we were in such a hurry that you didn't
feel you needed a full market survey?
Mr. Copps. Yes, sir.
Mr. Rogers. Wow. Interesting.
Ms. Baker, you described that the market surveys before,
the European Union, not known for its bashfulness about
regulating anything if it moves, what was their determination
on regulation of the Internet in relation to this?
Ms. Baker. The European Union took a look at this and
actually said what we need to do is have a transparency, a very
consumer-friendly transparency approach so that if there is a
problem there, we would be able to address it. So in some
regards, we took a much more regulatory approach than the
European Union.
Mr. Rogers. So the French even argued that we have gone too
far. Interesting.
Mr. Walden. The gentleman's----
Mr. Rogers. I see my time is expired. I look forward to
another round of questions, Mr. Chairman.
Mr. Walden. I now turn to the gentleman from Washington,
Mr. Inslee, for 5 minutes.
Mr. Inslee. Thank you, and thank you, Mr. Chair and Ranking
Member Eshoo, to allow me to participate in this. I think this
is very important and I appreciate the Commission's work on
this effort because I really do believe the Internet does run a
risk of becoming the Outernet if we don't protect Americans'
access to it, and I say ``Outernet'' because you will be out of
luck if your service provider decides that they want you to go
to their content provider that they have struck a deal with or
they have struck a merger with rather than what you want to go
to on the Internet. And anyone who doesn't understand that
threat doesn't understand the enormous commercial interests in
cornering lanes of this freeway.
Now, everyone has a metaphor. I will just tell you how I
look at it, and that this is a freeway, and the risk we face is
that individual entrepreneurs out of commercial instinct will
and do the control the on lanes to the freeway. Now, I don't
know how my Republican colleagues think about it but I will
tell you, if some commercial entity today put down gates on I-5
on the Mercer Street entrance to Interstate 5 in Seattle,
Washington, and said you couldn't go past that gate unless you
agreed to go to my favorite shopping center, I will just pick
Walmart for a minute, not that there is anything bad about
Walmart, instead of Costco, which my competitor has a deal
with, and that is the risk we face. We face people putting
gates on this freeway if you don't go to my favorite shopping
center that I have struck a deal with as a service provider.
And I want to thank you for your work on this, but I do
want to ask you about some concerns because I think there are
some things we need to continue to explore, and one of them I
have a principal interest in is how we prevent this from
happening in the wireless space because we know so much is
going to the wireless space, and I guess I do have a concern
that we have acted in the wired space which you can think of a
little bit as yesterday but not in the wireless space, which I
think of as tomorrow, which is going to be the future of this
thing. I hate to think we did the right thing in the wired
space but not in the wireless. I just wondered, Mr. Copps and
Mr. Chairman, and if you could both address that concern, what
the options may be for us, I would appreciate it.
Mr. Copps. Well, for my part, I would agree and express
some concern about that because in many ways I think wireless
is now too where lots of people are cutting their lines and
taking the wireless and accessing broadband that way too. I
understand that there are differences, and when you implement a
network neutrality rule, you have to be cognizant and sensitive
to those differences in how you proceed but I think the
principle should apply and the rule generally should have
applied.
If I can just say one more thing real quickly, I really
appreciated your illustration of the I-5 example that you used
because I was sitting here thinking during much of the
discussion, the last great infrastructure build-out that this
country was the interstate highway system, and we made darn
sure there were on ramps and they were open, and all this talk
about oh, it is prospective and all, we put safety precautions
on there prospectively. We put speed limits on there
prospectively. There is nothing wrong with doing things
prospectively, particularly when you are talking about
safeguarding such a transformative infrastructure as we are
talking about here.
Mr. Genachowski. Well, I would just add that I agree that
the importance of mobile access to the Internet is growing
every day. In the order we adopted, we did take steps to
promote Internet freedom, the transparency provisions, no
blocking. We also wanted to be cognizant about some of the
differences between wireless and fixed and it is something that
we will continue to pay attention to and do what we can to make
sure that Internet freedom is protected on mobile Internet
access as well as fixed.
Mr. Inslee. Well, there may be some challenges in wireless
but I hope you all will consider them because we hate to create
a safety system for the horse-and-buggy day but not for the car
day, and I think that is kind of the transition we are in.
Any of the other commissioners, if you would like to
comment, feel free.
Ms. Clyburn. Yes, Congressman. I too do not want the
development of two separate worlds, one wired and one wireless.
Increasingly, individuals cutting the cord, as my colleague
said, is approaching 30 percent, especially in communities that
might have economic challenges that have to choose which
direction to go, and interestingly enough, certain communities
only access the Internet because this is the only affordable
means with these mobile devices. So it is important that their
experience is as robust as those in the wired world, and I
share your concerns and again, there is no presumption that
these open Internet rules do not apply. They do apply in this
space.
Mr. Walden. The gentleman's time is--go ahead and finish.
Ms. Baker. I was going to say that this isn't really a
question of politics or philosophy, it is actually a question
of physics, and then there are actual technical parameters that
justify this decision. None of us want--you know, consumers are
the ones that don't benefit if their phones don't work. I got
into a cab the other day. He was streaming CNN on his iPhone,
which I thought was really great, and then I thought actually
you are the reason why I can't make a phone call. So I think
there are technical parameters that we need to work with that
actually exist in the wireless world that justify this
distinction.
Mr. Inslee. Thank you.
Mr. Walden. The gentleman's time is expired. We will now go
to the gentleman from New Hampshire, Mr. Bass, for 5 minutes.
Mr. Bass. Thank you very much, Mr. Chairman. I had the
honor of serving in this body for 12 years, and on this
committee for six, and now as a returning Member of Congress, I
am learning a lot as a new freshman. One thing I learned today
is don't be late to the beginning of a subcommittee hearing. We
are hitting exactly 3 hours now, and to the credit of the chair
of the committee and the subcommittee chair, that is without
opening statements.
It is a very interesting debate that we are having here
today. My ancestors lived in southern New Hampshire for many,
many generations. We have correspondence between my great-
grandmother and the Keene Coal Company trying to figure out a
way to run an electric line and a phone line actually later
from Keene over to Peterborough. There was nothing there. And
so when we developed the utilities that we have today, they
were done because there was no other way for that build-out to
occur. We did not get rotary dial in my hometown until 1964,
and you had to sneak another phone into your house hoping that
somehow Ma Bell wouldn't be able to tell that you were doing
this. This was a world of enormous regulation and there was
good justification for that.
And I understand that the nature of this debate basically
surrounds the issue of free markets and differing definitions
of what freedom is and what context it belongs, and I am
solidly on the side of those who believe that is a dangerous
precedent to begin a whole new round of regulation for very
different reasons, in my opinion, from those which we had in
early days when the utility business was just getting
established: rail, electricity and telecommunications.
Now, having said that, Mr. Chairman, if I could ask for
unanimous consent to add to the record a paper I have here by
former Solicitor General Seth Waxman stating that Internet
access service was never regulated as a telecommunications
service.
Mr. Walden. Without objection.
Mr. Bass. Thank you.
[The information appears at the conclusion of the hearing.]
Mr. Bass. Commissioner McDowell, by the way, thank you for
coming to visit me, and also Commissioner Clyburn, and I
believe one of the other ones if you came as well but I was not
here and I am most apologetic for that, and I welcome you all
to come.
Commissioner McDowell, some individuals continue to claim
that the retail provision of Internet access service was once
regulated as a telecommunications service. My understanding is
that the FCC has never regulated such service. Wasn't this the
genius that led to the explosive growth in the Internet as
Chairman Kennard pointed out when he led the Commission?
Mr. McDowell. Absolutely. In fact, if you look at the back
of my dissent, you will see a letter that I filed with this
committee last spring outlining sort of the history of the
regulation of Internet access services and broadband in
particular, and it has never been regulated as a phone company
under Title II.
Mr. Bass. Commissioner McDowell, the order that we have
been debating this morning claims that network neutrality is
needed to protect small upstart Internet companies, but aren't
smart upstarts precisely the companies that might want to enter
into specialized business arrangements with broadband providers
so that they can compete against the great content providers--
we know who they are--and ironically, is it possible that this
order might protect the web incumbents in the end?
Mr. McDowell. It could. I think this order creates a lot of
confusion in the marketplace and we are seeing the market
respond in a lot of confusing ways.
Mr. Bass. And lastly, Commissioner McDowell, the
Commission's jurisdiction seems to be evolving. While the
Commission has deregulated in certain areas--unbundling, cam
armus reporting, cable price regulation--the agency has at
least proposed regulations in new areas which we debated this
morning--network neutrality, all vid, data roaming. What do you
view as the Commission's core responsibilities? And I know this
is a leading question. Has in your view the Commission strayed
from those core responsibilities?
Mr. McDowell. Well, our core responsibility by statute is
given to us by Congress, and that is to protect the public
interest, and I think the public interest is best served
through competition, so as Commissioner Baker pointed out
earlier, the best antidote to regulation is to have more
competition for broadband services, and in my 4\1/2\ years on
the Commission, that is what I have worked toward, whether it
is making easier to get competitive fiber on the ground,
freeing up more of the airwaves for either licensed or
unlicensed use, etc., let us have more competition and that
obviates the need for regulation.
Mr. Bass. Thank you. I yield back, Mr. Chairman.
Mr. Walden. The gentleman's time is expired. We will go
into round two now, and I will lead with that.
Chairman Genachowski, did you or any of your staff or any
senior FCC officials explicitly or implicitly indicate to any
members of industry that if they opposed your order, the FCC
might move back to Title II approach or decide other
proceedings of interest to them differently?
Mr. Genachowski. No.
Mr. Walden. OK. Chairman, have you adopted industry-wide--
you have adopted industry-wide net neutrality rules. Why was it
appropriate to add network neutrality conditions to the
Comcast/NBC Universal order, and if you are so confident of
your authority, which we question obviously, why was it
necessary to make those conditions continue to apply even if
the network neutrality decision is overturned in court?
Mr. Genachowski. All the conditions in the Comcast case,
particularly that one, were transaction-specific. That
particular transaction involved the country's largest Internet
service provider combining with a very large content company.
We certainly had a lot of information in the record of that
transaction about the incentives to favor their own online
content and disfavor others, and so having a condition relating
to open Internet was a transaction-specific condition that I
personally felt was very important.
Mr. Walden. So I go back to something that the chairman
emeritus, Mr. Dingell, referenced, his words, speaking of bank
holdup methods. Look, I was a licensee for 22 years. The last
thing you ever want to do is poke any of you in the eye because
you might have another proceeding coming, and I have spoken to
most of you directly about my concern about agencies that use
that opportunity to effect policy over which they don't have,
we believe, authority, and I find it interesting too that on
the D block discussion, you have chosen to back off on doing
what the law explicitly calls on you to do, which is auction
the D block, because Senator Rockefeller and others have
expressed concern. In this area, roughly 300 Members of the
House said we don't think you have the authority but you chose
move forward on that rather expeditiously at the closure of the
year, so that is a subject that will continue to be of concern
and focus on.
I want to go back to the section 706 issue upon which is my
understanding you based the decision to move forward with the
net neutrality rules, and in 706(b) in the inquiry portion of
that, the question arises, if the Commission shall determine
whether advanced telecommunication capability is being deployed
to all Americans in a reasonable and timely fashion, and I
suppose the debate here is, what is reasonable and what is
timely. In the FCC broadband plan that you put forward, you
indicate that 95 percent of Americans have access to the
Internet. The President now calls for 98 percent. And two-
thirds of Americans choose to subscribe, and we have gone from
8 million subscribers to 200 million subscribers in 10 years. I
can't think of a service in America that has ever exploded with
growth quite like that, and that would seem to be both timely
and reasonable to me. Why isn't it timely and reasonable to you
all?
Mr. Genachowski. Well, I think this is an important
question. I am glad you asked it. There are 24 million
Americans who don't have any access to Internet because there
is no infrastructure in their areas, and as you mentioned,
there are about 100 million Americans who don't subscribe for
various reasons. Our rankings internationally are not where
they should be. There is debate about what exactly the number--
--
Mr. Walden. Right, but we are building out wireless and we
are ahead of some countries on that.
Mr. Genachowski. But I would say I respectfully disagree on
this. I don't think the country is where it should be when it
comes to broadband, and we have a lot of work to do to make
sure our broadband infrastructure and adoption is globally
competitive.
Mr. Walden. But the issue that arises as a result of making
that finding that we are not moving reasonably and in a timely
manner, that is the predicate then that allowed you to trigger
706 and use that as the crutch to get the authority to move
forward with the regulation of net neutrality in part.
Mr. Genachowski. Yes. There are other provisions that we
relied on that I would be happy to address.
Mr. Walden. But then it leads to the discussion because in
706(a) it does talk about allowing State commissions to
actually set price caps and all that. Now, I have heard today,
I believe-correct me if I am wrong--that your order does not
get into setting rates or controlling rates on the Internet.
Mr. Genachowski. Right.
Mr. Walden. And yet on page 39, number 67, and on page 43,
number 76, you do contemplate rate control by saying that you
can't pay for priority. Isn't that a form of rate control?
Mr. Genachowski. I don't see it that way and I don't think
that is how people in the industry see it, but it is the case
that that kind of prioritization is something that the order
said was disfavored.
Mr. Walden. So if you say it is disfavored, that says you
believe you have the authority to control rates on the
Internet, correct?
Mr. Genachowski. I really don't see it that way.
Mr. Walden. Then how could you find that it is----
Mr. Genachowski. I think it is fair to say that any order
in this area that finds certain conduct inconsistent with
Internet freedom principles would have the effect of saying
particular transactions aren't permitted, and one could look at
that and say well, you are saying that transaction----
Mr. Walden. But you are saying a rate of zero. A rate of
zero is the rate.
Mr. Genachowski. Yes. That has been the history of
Internet.
Mr. Walden. And another commission could come back and say
well, we think because all this has been found in part linked
to 706(b) that indeed you have 706(a) authority to set caps,
couldn't they? I mean, you don't have that plan, you tell us,
but----
Mr. Genachowski. If I could make a couple points, one is,
the basis for this decision was both in 706, other sections of
the statute working together and so we didn't address the
question of whether 706 alone would be sufficient authority,
and we didn't address some of the questions that you are
raising because we didn't have to in the context of this
proceeding.
Mr. Walden. And the ranking member explained to me I am
over my time, so I will stop with that even though I have let
other members go over their time to get your responses. I will
now turn to the ranking member, my friend from California.
Ms. Eshoo. You are a gentleman, and I think that I am going
to have to really stay within my time for having whispered that
to you.
First of all, the term ``cops on the beat'' has been used
several times, and I think the best cop on the best is
Commissioner Copps. He has been there for the American people
and the consumer and in the deepest, broadest way understanding
the democratization of the Internet and protecting the American
people from forces that would chip away at it, so I salute you,
sir.
I want to make a couple of observations because now we have
just about concluded the hearing. There are some curious things
that have been advanced during this hearing. My Republican
friends are questioning having any kind of framework. I think
it is a light framework. That has been questioned, but that is
my view. I think it is a light touch. And they don't want any
of that, in fact, I think are going to be introducing the
Congressional Review Act so that there is nothing so that it is
just a flat earth without any on it whatsoever. But they are in
denial about the past. There is a record from the past. There
is a record from the past, and there is a timeline. It goes
from 2005 to this year, to 2011, starting with the Madison
River Communications blocking VoIP on its DSL network, settled
by FCC consent decree that included a $15,000 payment, to 2006
where Cingular blocked PayPal, 2007-2008, Comcast actually
denied imbedded midst after FCC complaint filed that it blocked
peer-to-peer traffic, 2008, issues in a study finding
significant blocking of BitTorrent in the United States
including across Comcast and Cox.
So you can go through the record. These things actually
occurred. This is not in the ether. This is not something that
has been fabricated. There is a record of violations, and you
know who those violations against? All of us. All of us and our
constituents. So our first obligation is to the public, and if
there is some misplay including any company that is in my
district, you know what? There has to be a cop on the beat, not
someone that takes out their stick and clubs someone but there
has to be rules to the road. Now, if you ignore the past, then
you don't have a roadmap for the future, and I think that it is
very important to have these rules.
Now, another curiosity of mine is about our--and you know
how respect and regard I have for you, Commissioners McDowell
and Baker, had the opportunity to remove the open Internet
conditions on the Comcast merger before they voted but they
chose not to dissent or object as far as I know.
Mr. McDowell. Can I clarify that?
Ms. Eshoo. Just a minute. Let me finish. I am going to use
my time. So you essentially voted against them before voting
for them, which is a real curiosity to me.
Now, there is a lot of talk about markets and companies and
whatever here today. A good number of them are my constituents.
I want to ask for a unanimous consent request that all of these
letters representing the companies, the interests, the very
interest that are a part of this decision that have weighed in
and support these rules, and they are also opposed to the CRA,
and in this packet, which I love, the first one is from the
United States Conference of Catholic Bishops. They even quote
the pope. So I might for the record say I think we are on the
side of the angels here. So Mr. Chairman, with all seriousness,
I would really like to ask for a unanimous consent request that
all of these letters be placed in the record. They are Internet
companies, they are small, they are large, they are in between,
and they have weighed in. No one has forced them to come
forward and express any given view. They have offered this, and
I think it is an eloquent statement about how they view it and
that this is something that they agree with, so if you would
grant that request?
Mr. Walden. Without objection.
Ms. Eshoo. And then I have--I think I have run out of time,
so I can't ask any questions, but----
Mr. Walden. But if you want to allow Mr. McDowell to
respond----
Ms. Eshoo [continuing]. Comments remain for the record, and
I am so glad that we are on the side of the angels, and I thank
the Catholic Conference of Bishops along with all the
companies. Thank you.
Mr. Walden. Do you want to allow Mr. McDowell to respond?
Ms. Eshoo. Sure.
Mr. McDowell. Thank you, Congresswoman.
Ms. Eshoo. Why did you vote that way?
Mr. McDowell. We didn't vote for the conditions. Actually
net neutrality is not a condition in the merger. They are part
of a side agreement. They are commitments in the side agreement
between the chairman's office----
Ms. Eshoo. Well, aren't there open Internet rules as part
of the merger?
Mr. McDowell. They are not merger conditions, no, ma'am.
Ms. Eshoo. But they were voluntary. You could have objected
to them----
Ms. Baker. There is a----
Ms. Eshoo [continuing]. If you thought they were so
onerous.
Mr. McDowell. They are in a separate side agreement between
Comcast and the FCC.
Ms. Eshoo. Did you ever ask them why they would, since you
find them to be onerous, why they would find the to be
acceptable? Did you ever question it?
Mr. McDowell. Absolutely. I think they were desperate to
get their merger done and they would have agreed to almost
anything.
Ms. Eshoo. But did you ask them----
Mr. McDowell. Yes.
Ms. Eshoo [continuing]. Why they were--and are you quoting
them?
Mr. McDowell. That is pretty much the answer I got. They
were desperate to get their merger done.
Ms. Eshoo. Are you quoting them?
Mr. McDowell. That is a paraphrase.
Ms. Eshoo. Well, I think there is a difference, with all
due respect, because I don't think that--that is not the way it
was presented to me. Yes, Commissioner Baker?
Ms. Baker. I think that there are--well, there are
absolutely serious legal differences between conditions to the
merger and voluntary commitments that a company can make. There
is a package of voluntary commitments. Some of them have to do
with diversity. This one is a voluntary commitment that a
company can make without regard to what he FCC has jurisdiction
over so by their commitment, it doesn't imply anything to our
statutory authority over net neutrality.
Mr. Walden. I am going to have to----
Ms. Eshoo. Thank you.
Mr. Walden. Well, we are 2\1/2\ minutes over. Let us go now
to the chairman of the oversight committee and the former
chairman of this committee, Mr. Stearns.
Mr. Stearns. Thank you, Mr. Chairman, and I regret I was
prevented from being here. We were chairing an Oversight
Committee looking into Obamacare, and so I just have a
question. I would like to start with the chairman and just go
down the line, if I could.
Mr. Chairman, you obviously succeeded in putting net
neutrality into Title I, but as I understand, the proceedings
are still open for Title II. Is that correct?
Mr. Genachowski. There is a proceeding that is open that
looks at the effect of the Comcast decision on our authority.
Mr. Stearns. OK. But I think in the industry, the
perception is that the proceedings to do this in Title II is
still there, and so my question is, do you think it should be
closed down, this proceeding that you have open in Title II?
Just yes or no.
Mr. Genachowski. I don't think there is any confusion about
where we are. It is Title I----
Mr. Stearns. No, I mean in your opinion do you want to--do
you think it should remain open or not?
Mr. Genachowski. I think a proceeding to continue to have
input our authority is a healthy thing and could benefit----
Mr. Stearns. Mr. Copps, Commissioner Copps, do you think it
should be continued to have the proceedings open for Title II?
Mr. Copps. Yes, I do.
Mr. Stearns. OK. Mr. McDowell?
Mr. McDowell. I think it should be closed because I think
the fact that it is open creates some certainty and shows that
perhaps the Commission wants to move to a full explicit Title
II reclassification.
Mr. Stearns. Commissioner Clyburn?
Ms. Clyburn. I think that we should stay on this pathway
and that there is certainty with the decision that we made.
Mr. Stearns. Commissioner Baker?
Ms. Baker. If the chairman is serious that we are going to
stay with Title I, then he should close Title II proceedings.
Mr. Stearns. Well, I think that is my point, Mr. Chairman.
I think, as you will agree with me, by keeping this open, it is
sort of a veiled threat for industry and creates uncertainty
and gives angst to them because, you know, things could change
in this proceeding and still open. So I think certainly my
position is, if you have made your case for Title I, then the
proceedings should be closed for Title II, and I just think a
lot of us are a little concerned that it is creating angst in
the business environment.
Commissioner McDowell, I think in terms of when they were
talking about issuing it in Title I, there was some language
that we don't want to get involved with regulating coffee shops
and bookstores. But if you actually implement a net neutrality,
aren't you in effect regulating the Internet in Starbucks by
doing that?
Mr. McDowell. Well, as I said before earlier today, there
doesn't seem to be any limiting principle to the FCC's
authority under its rule, under its order from December 21st.
So if there is no limit to its authority, there is no limit to
its authority.
Mr. Stearns. So they could be in bookstores, they could be
in coffee shops, anywhere there is WiFi. Wouldn't you agree?
So let me just go back to this Title II. The chairman has
indicated that this D.C. Circuit ruling in the Comcast case.
Mr. Chairman, is it possible--I mean, you have indicated that
you want to keep it open because of the Comcast case ruling.
You might want to elaborate. I will give you a chance to
elaborate on that to give it more justification because you see
the two Republicans that say we should close it down. In my
opinion, you are creating uncertainty. If you went ahead and
did it in Title I, there is no reason to continue to go
forward. In fact, I think the chairman of this committee would
like you to let this committee have the jurisdiction instead of
you unilaterally doing it, and I think you have indicated to me
you would like to see us provide that direction. Is that true?
Mr. Genachowski. Yes. The single best way to have clarity
and certainty here would be for Congress to look at the
statute, update it in a way that was appropriate. There are
issues that have been raised. We certainly would be a resource
to that. We were supportive of efforts that have occurred over
time to cause that to happen, and I would continue to work with
that.
Mr. Stearns. So under what circumstances would you close
down the open proceedings under Title II?
Mr. Genachowski. I have to think about that and get back to
you, but let me explain. It is not a Title II proceeding. It
was a neutral proceeding that was launched after the Comcast
decision to ask questions about our authority and different
directions that could be gone, all presented in a neutral way.
As the authority issue continues to be debated, having a
proceeding open that is a vehicle for comment seems to me to
make sense. I would be happy to agree to stop debating the
authority issue and put that off to one side. But again, I
think we have made our position very clear. I made my position
very clear in the order in this case that our basis for moving
forward under Title I is strong and that is a preferable way to
proceed.
Mr. Stearns. Would any of the other commissioners like to
comment on this? Mr. Copps?
Mr. Copps. Yes. I would like to keep that proceeding open
while there is uncertainty and there is uncertainty right now
with how the courts are going to decide, so I don't see any
reason why that should be closed. I want to keep it open
because I think there is probably a more solid foundation which
you and I would disagree you on Title II.
The third thing I want to say is, address this issue that a
bunch of bureaucrats has end-run the wishes of the Congress. I
worked in the United States Senate for 15 years. I am kind of a
creature of the Congress. I take great pride in the service
that I had here. I voted as I did on all these things because I
think I am upholding and implementing the laws that Congress
passed, and I passionately believe in what I have said here
today, but I don't want to leave any impression that I am at
odds with the wishes to Congress or at least how I see the
wishes of Congress.
Mr. Walden. The gentleman's time----
Mr. Stearns. Thank you, Mr. Chairman. Unless any one of the
commissioners wants to add something, I am done. Thank you for
your time.
Mr. McDowell. I would just like to add that I think the
Title II docket, call it what you will, given the context of
when it was opened in June of last year in the wake of the
Comcast court case and given the so-called, the announcement of
the so-called third wave proposal, which was a Title II
proposal, that it remains open, it seems, as a contingency plan
should the courts, or in my view, when the courts strike down
the FCC's December 21st order under Title I. And so there was
plenty of certainty in this marketplace until the FCC started
examining regulating it.
Mr. Walden. The gentleman's time is expired. Let us go now
to the gentleman from Pennsylvania, Mr. Doyle, for 5 minutes.
Mr. Doyle. Thanks, Mr. Chairman.
Commissioner McDowell, I just wanted to revisit something
that you said at the end of your comment when we talked about
the stimulus bill and you said if Congress wanted us to
implement these rules, we should have acted, and you know, in
fact, we did in the Recovery Act actually require that. I just
wanted to read a section from it. It says that ``pursuant to
this section, the Assistant Secretary shall in coordination
with the Commission publish non-discrimination and network
interconnection obligations that shall be contractual
conditions of the grants awarded under this section including
at a minimum adherence to the principles contained in the
Commission's broadband policy statement.'' So I think at some
point Congress did indicate that we wanted you to move in that
direction.
But I want to ask Chairman Genachowski, now, we have heard
a lot of our colleagues on the Republican side of the aisle
suggest that the process that you used in the merger and also
in this open Internet proceeding were unusual and perhaps
inappropriate, and I want to give you the opportunity to share
your thoughts on those suggestions. How did the process you
used differ from past proceedings?
Mr. Genachowski. Well, I think in both of those
proceedings, we met or exceeded best practices in the area, and
so to start with our open Internet proceeding, we launched with
a notice last year that published the rules, which was a
positive departure from prior precedent. We received over
200,000 commenters. We held public workshops available offline
and online that a number of commissioners, including those who
disagreed with the direction participated in to make it open.
We issued requests for further comment as we drilled down on
particular issues and ultimately we exercised our judgment and
interpreted the will of Congress and made a decision.
With respect to the Comcast order, we inherited a situation
where in past transactions there were just enormous complaints
about length of time far longer than this took about a
proceeding that was, well, let me just say it in a positive
way. We ran a proceeding that was professional, that was
focused, that specified the issues that we were concerned about
coming out of a complex and large transaction, and for those
who say that the parties acted a certain way in advance, which
I don't believe, and they participated in proceedings up here
in Congress and said similar things and so did other parties.
After the transaction was over and they could have said
anything they wanted, they praised the proceeding as fair,
timely and thorough.
Mr. Doyle. And we heard that two of the commissioners
didn't get the order until 24 hours before. Tell me, how does a
typical FCC order move forward? Are dissenting commissioners
part of the negotiation process and when did Commissioners
McDowell and Baker tell you they would dissent?
Mr. Genachowski. Well, consistent with our practice, which
is also a best practice, 3 weeks in advance of a Commission
meeting, we circulate a draft of an order to be voted on, and
that kicks off a process of deliberation among commissioners,
and certainly it is my hope in that setting that everyone will
reserve judgment until there was a chance for full discussion.
In this case, unfortunately, I think two of the commissioners
decided within 12 hours that there was nothing to deliberate
about or talk about and announced that they would dissent. But
there continued to be ongoing discussions. There were further
drafts circulated. As we got closer to the meeting, obviously
we needed to circulate a draft that had the support of three
members. I would have been happy, as I think all of us would
have been, to circulate that as soon as there was agreement of
at least three members. That agreement occurred on the Monday,
the day before the meeting, and as quickly as possible after
that, we circulated that to the full Commission. We took steps
to make sure that if there were any prejudice from that,
perfecting a dissent, for example, that the commissioners would
have the time that they needed to address any issues that came
up, but there weren't material differences between what was
circulated then and what had been circulated earlier.
Mr. Doyle. Thank you. I don't have any other questions, Mr.
Chairman. Thank you.
Mr. Walden. I would go then to the gentleman from Texas,
the chairman emeritus, Mr. Barton, for 5 minutes.
Mr. Barton. Thank you. I said earlier I was impressed with
the intellect of the Commission. I must also add too, I am
impressed with their bladders. I think you all have been here
for 3-1/2 hours continuously, so that is quite a compliment.
I want to look at the Title II issue a little bit in this
round. My understanding is that Title II regulates hard-line,
monopolistic phone services like we had back in the 1930s
through the 1960s. I am puzzled why we think that that model
would be applied to the Internet where we have multiple
providers. We obviously have a market that functions. We have
multiple options for individuals to choose. The courts have
ruled that it is an information service. I just don't see the
connection.
Commissioner Baker, can you enlighten me on how I am wrong
when I look at Title II and I see a different system entirely
than what we have in terms of the Internet?
Ms. Baker. No, Mr. Chairman, I think you are entirely
right. I think it was a contrived way to construe that we might
have greater authority, which we don't have.
Mr. Barton. What about you, Mr. McDowell, or Commissioner
McDowell, I should say?
Mr. McDowell. As you point out, this was created in 1934
with the old circuit switched analog voice Ma Bell monopoly,
and actually those rules were taken from the 19th century
railroad monopoly regulations. So I don't think it fits the
architecture of the Internet which really defies top-down
authoritarian control, so I think it would be a mismatch.
Mr. Barton. Well, to be fair, I should give the chairman an
opportunity here. Chairman Genachowski, what is wrong with my
analysis of Title II?
Mr. Genachowski. Well, as you know, we decided, and I
believe that proceeding under Title I was the right way to go.
The only note that I would make in this discussion is that no
one at the Commission had suggested a full-blown Title II
approach. There was an approach----
Mr. Barton. The gentleman to your left said----
Mr. Genachowski. Let me--some suggested that the Title II
mechanism that was used and is used for mobile voice could make
sense but we listened, we looked at the record, we got input
from Congress and others and decided to pursue a Title I
direction.
Mr. Barton. And I am not going to ask Commissioner Copps
because he has already pointed out, he spent 15 years in the
Senate and he could certainly filibuster that question for the
next 2 minutes of my time but I will give him an opportunity in
writing to respond.
I want to go to Commissioner Baker for my last question.
This is a question that the staff has prepared. It just goes to
show that sometimes I can take direction here. Commissioner
Baker, the order that we are discussing today, the net
neutrality order, relies on section 706 for authority. Isn't
section 706 about removing barriers to infrastructure
investment and won't network neutrality rules deter investment,
and hasn't the FCC in the past said that section 706 is not an
independent grant of authority?
Ms. Baker. Well done. Yes, Mr. Chairman----
Mr. Barton. I can read.
Ms. Baker. Yes. I think that this is an attempt to twist a
14-year-old deregulatory policy statement into a direct grant
of authority, and 706 does not constitute an independent grant
of authority. Section 706 is about broadband deployment, and
the FCC has no authority to erect obstacles in the name of
removing them, so I think that we have completely misguided
basing our authority here on 706. You have to keep in mind that
section 706 is really the centerpiece of all broadband and
Internet regulation going forward. It was actually a footnote
in the 1996 Act. So this is an odd place for us to hang our hat
on such an important and intrusive regulatory change.
Mr. Walden. Mr. Chairman?
Mr. Barton. I am going to yield the time to the
distinguished----
Mr. Walden. You are kind. I don't know if this even
requires unanimous consent but I will ask for it. We have a
vote on the Floor, and what I was thinking was, if we did two,
two and two, we have three members here, we could get everyone
in who has stayed around. If you can do less than that, do it.
Mr. Terry. One minute for a question and one minute for an
answer, I was thinking.
Mr. Walden. Make it 20 seconds on the question. I recognize
the vice chair.
Mr. Terry. All right. And I am going to read it, but I
actually wrote this question.
Today, the broadband provider's business model offers tiers
based on speed and size, for example, 7 megabits is less costly
than the 10-, 15- or 20-megabit package or tier. So the
question is, is a tiered system of size and speed unreasonable
discrimination?
Mr. Genachowski. The answer is no. We said so in the order
and it was one of the ways that we brought certainty to the
area and will boost investment in infrastructure.
Mr. Terry. Does anyone else want to comment on that?
Mr. McDowell. I think it is contradicted in the order by
the ban on paid prioritization, so if you are consumer and you
want a burst of speed to download a movie, you don't want to
pay 24 by 7 for a big, fat broadband pipe, right? It is not
cost-effective. Would that order prohibit that? Is that a form
of tiering, paid prioritization? It gets confusing very
quickly.
Mr. Terry. OK. Thank you.
Ms. Baker. I would agree. Our regulation was kind of clear
as mud on that, so why don't you bring a declaratory ruling
proceed to the FCC and we can decide. I am being sarcastic
but----
Mr. Terry. Micro Trend----
Ms. Baker [continuing]. An awful lot of applications, what
is the Kindle, what is the Garmin, what is Google voice and the
next generation of the Facebook, what are these items, are they
OK. I think the answer from our ruling is that you can either
bring a complaint process or you can bring a declaratory ruling
and we can tell you whether it is OK.
Mr. Walden. We are going down to the gentlewoman from
Tennessee for no more than 2 minutes.
Ms. Blackburn. Thank you, Mr. Chairman.
And I just want to go back to where I was with Ms. Clyburn
in the first round. It is frustrating to us when you all
mention that you have done market analysis but then there is
not market analysis that would meet the OMB standards. You
cannot point to a market failure. And that is frustrating, so
if there is analysis that you want to submit to show how you
came to these conclusions, I think that it would be important
to do so.
Chairman Genachowski----
Ms. Clyburn. The chairman has committed to do that.
Ms. Blackburn. OK. Thank you.
And I apologize. We have had multiple hearings going on
this morning. Mr. Chairman, you and I were out at CES last
month, and I know you walked the same floor I walked. You
talked to a lot of those innovators and a lot of those guys
were out of Tennessee. They are working on health IT. They are
working on digital music platforms. They are working on content
distribution. AOL is moving their content headquarters into
Nashville. Now, what I am hearing from a lot of these
innovators at home and when I am out and about is hey, what is
this business about having to seek permission from the FCC, are
we going to have to go to them before we innovate, what is the
chairman expecting us to do, are they going to tie our hands,
what is this about anybody can object, they can go file a
complaint while we are in the innovative process. This is the
type uncertainty that stifle job creation.
And Mr. Chairman, I don't know if anybody has submitted
this Phoenix study for the record but I think it is excellent.
When we talk about----
Mr. Walden. Without objection.
[The information appears at the conclusion of the hearing.]
Mrs. Blackburn [continuing]. Models that show how many jobs
are created, indirect job losses, 327,600 jobs. This is serious
because we want to get busy with jobs.
I would like for you, Mr. Chairman, to outline for me and
submit for the record what do our innovators expect? What is
this asking permission process going to be? Are they going to
have to file? You can submit it in writing. I know we are short
on time.
Mr. Walden. Yes, we want to get to----
Ms. Blackburn. And just submit it for the record as a
written statement, and I appreciate that you all have come and
come prepared.
Mr. Genachowski. Thank you. May I have 10 seconds to reply
to that?
Mr. Walden. Yes.
Mr. Genachowski. Very quickly, just to be clear to the
audience, the purpose of the order is to protect innovation
without permission, and so no one has to come to the FCC for
permission, and the Consumer Electronics Association supported
open Internet and supported our order, and I look forward to
continuing this dialog with you because it is very important.
Mr. Walden. Now we go to Mr. Scalise for no more than two.
Mr. Scalise. Thank you, Mr. Chairman. We will hit the
lightning round.
Chairman Genachowski, on the Open Internet Order, the FCC
stated for a number of reasons these rules apply only to the
provision of broadband Internet access service and not to edge
provider activities. Are there no concerns about search engines
or online video provider contents that they are doing anything
improperly?
Mr. Genachowski. Well, the history of this issue has been
focused on Internet service providers, and that makes sense,
particularly given the Communications Act, which focuses our
authority on companies that are providing communication
services by wire or spectrum.
Mr. Scalise. Right, but we have seen, you know, there are
real examples that have been reported widely in the media, for
example, Google Street View where major privacy violations
occurred, and yet they are exempted from this, and you know, it
gives the impression that people feel like you all are picking
winners and losers, and that is another whole set of problems
that----
Mr. Genachowski. I would say that with respect to any
company like that that uses spectrum or infrastructure that is
in our oversight purview, we will investigate, we will act
regardless of company. The point of the proceeding was to make
sure that the market and consumers pick winners and losers.
Mr. Scalise. Commissioner McDowell, when it comes to these
language provisions that were put in prohibiting providers from
taking ``reasonable efforts'' to address things like--or
nothing prohibits providers from taking reasonable efforts to
address copyright infringements or other unlawful activity. A
lot of people are expressing concern that there is no real
definition of reasonable effort and there may be some concern
that as these broadband providers try to protect their network
from things like cyber attacks that they might also be
concerned that the FCC is going to come behind and fine them
because this reasonable effort is undescribed. Can you address
that?
Mr. McDowell. Again, that would have to be addressed
through litigation, and that is part of the concern. The word
``reasonable'' is perhaps the most litigated word in American
history, so that will be determined by three votes.
Mr. Scalise. And I know that creates a lot of uncertainty,
and as we talk about the things that we want to see to
encourage investment, to encourage job creation, it is those
exact types of uncertainty that make it hard for people to make
that investment.
And Mr. Chairman, if I can close on this. I know a lot of
us have conversations about whether or not network neutrality
is good. I think if you at the American people, a bipartisan
majority of Congress has said that they don't want this
government intrusion and government takeover of the Internet
and so I would hope you all would go back and look at that
because ultimately innovation----
Mr. Walden. The gentleman's----
Mr. Scalise [continuing]. Is the great equalizer, and you
know, when you look at today's college dropout can be
tomorrow's billionaire and the dropout of today is able to
compete and in many cases----
Mr. Walden. The gentleman's time has expired.
Mr. Scalise [continuing]. The big phone company or that
other big company that out there that you all seem to have some
concern about. So I would just----
Mr. Walden. The gentleman's time----
Mr. Scalise [continuing]. Ask that you keep that in mind,
and I would yield back the balance of my time----
Mr. Walden [continuing]. Is expired.
Mr. Scalise [continuing]. Whatever that balance is.
Ms. Blackburn. I seek unanimous consent to enter into the
record an editorial by David J. Farber, grandfather of the
Internet, arguing the Internet neutrality rules are bad because
everyone would game the regulations rather than innovate. We
have a couple of other documents that have been pre-cleared
with the minority to also enter those in the record without
objection.
Mr. Walden. Without objection.
[The information appears at the conclusion of the hearing.]
Ms. Eshoo. I think the pope trumps it myself.
Mr. Walden. I would also say as a final closing comment, at
least speaking for some of us on this side of the aisle, the
only entity more skeptical than our side of the aisle on these
net neutrality rules may indeed be the D.C. Circuit Court.
And finally in conclusion, I would like to thank all the
witnesses and members that participated in today's hearing. I
remind members they have 10 business days to submit questions
for the record, and I ask that the witnesses all agree to
respond promptly to these questions, which I know you will
With that, we do appreciate your counsel, your insight and
your hard work, and this hearing stands adjourned.
[Whereupon, at 1:12 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
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