    [House Hearing, 113 Congress]
    [From the U.S. Government Publishing Office]

                         UNLOCKING CONSUMER CHOICE AND

                            WIRELESS COMPETITION ACT
    =======================================================================

                                    HEARING

                                   BEFORE THE

                                SUBCOMMITTEE ON

                         COURTS, INTELLECTUAL PROPERTY,

                                AND THE INTERNET

                                     OF THE

                           COMMITTEE ON THE JUDICIARY

                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 FIRST SESSION

                                       ON

                                   H.R. 1123

                                   __________

                                  JUNE 6, 2013

                                   __________

                               Serial No. 113-27

                                   __________

             Printed for the use of the Committee on the Judiciary

          Available via the World Wide Web: http://judiciary.house.gov

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                           COMMITTEE ON THE JUDICIARY

                       BOB GOODLATTE, Virginia, Chairman
    F. JAMES SENSENBRENNER, Jr.,         JOHN CONYERS, Jr., Michigan
        Wisconsin                        JERROLD NADLER, New York
    HOWARD COBLE, North Carolina         ROBERT C. ``BOBBY'' SCOTT,
    LAMAR SMITH, Texas                       Virginia
    STEVE CHABOT, Ohio                   MELVIN L. WATT, North Carolina
    SPENCER BACHUS, Alabama              ZOE LOFGREN, California
    DARRELL E. ISSA, California          SHEILA JACKSON LEE, Texas
    J. RANDY FORBES, Virginia            STEVE COHEN, Tennessee
    STEVE KING, Iowa                     HENRY C. ``HANK'' JOHNSON, Jr.,
    TRENT FRANKS, Arizona                  Georgia
    LOUIE GOHMERT, Texas                 PEDRO R. PIERLUISI, Puerto Rico
    JIM JORDAN, Ohio                     JUDY CHU, California
    TED POE, Texas                       TED DEUTCH, Florida
    JASON CHAFFETZ, Utah                 LUIS V. GUTIERREZ, Illinois
    TOM MARINO, Pennsylvania             KAREN BASS, California
    TREY GOWDY, South Carolina           CEDRIC RICHMOND, Louisiana
    MARK AMODEI, Nevada                  SUZAN DelBENE, Washington
    RAUL LABRADOR, Idaho                 JOE GARCIA, Florida
    BLAKE FARENTHOLD, Texas              HAKEEM JEFFRIES, New York
    GEORGE HOLDING, North Carolina
    DOUG COLLINS, Georgia
    RON DeSANTIS, Florida
    JASON T. SMITH, Missouri

               Shelley Husband, Chief of Staff & General Counsel
            Perry Apelbaum, Minority Staff Director & Chief Counsel
                                     ------

        Subcommittee on Courts, Intellectual Property, and the Internet

                     HOWARD COBLE, North Carolina, Chairman

                    TOM MARINO, Pennsylvania, Vice-Chairman

    F. JAMES SENSENBRENNER, Jr.,         MELVIN L. WATT, North Carolina
    Wisconsin                            JOHN CONYERS, Jr., Michigan
    LAMAR SMITH, Texas                   HENRY C. ``HANK'' JOHNSON, Jr.,
    STEVE CHABOT, Ohio                     Georgia
    DARRELL E. ISSA, California          JUDY CHU, California
    TED POE, Texas                       TED DEUTCH, Florida
    JASON CHAFFETZ, Utah                 KAREN BASS, California
    MARK AMODEI, Nevada                  CEDRIC RICHMOND, Louisiana
    BLAKE FARENTHOLD, Texas              SUZAN DelBENE, Washington
    GEORGE HOLDING, North Carolina       HAKEEM JEFFRIES, New York
    DOUG COLLINS, Georgia                JERROLD NADLER, New York
    RON DeSANTIS, Florida                ZOE LOFGREN, California
    [Vacant]                             SHEILA JACKSON LEE, Texas

                           Joe Keeley, Chief Counsel

                       Stephanie Moore, Minority Counsel

                                C O N T E N T S

                                  ----------

                                  JUNE 6, 2013

                                                                       Page

                                    THE BILL

    H.R. 1123, the ``Unlocking Consumer Choice and Wireless
      Competition Act''..............................................     3

                               OPENING STATEMENTS

    The Honorable Tom Marino, a Representative in Congress from the
      State of Pennsylvania, and Vice-Chairman, Subcommittee on
      Courts, Intellectual Property, and the Internet................     1

    The Honorable Melvin L. Watt, a Representative in Congress from
      the State of North Carolina, and Ranking Member, Subcommittee
      on Courts, Intellectual Property, and the Internet.............     5

    The Honorable Bob Goodlatte, a Representative in Congress from
      the State of Virginia, and Chairman, Committee on the Judiciary    11

                                   WITNESSES

    Steven K. Berry, President and Chief Executive Officer,
      Competitive Carriers Association
      Oral Testimony.................................................    15
      Prepared Statement.............................................    17

    Michael Altschul, Senior Vice President and General Counsel,
      CTIA--The Wireless Association
      Oral Testimony.................................................    23
      Prepared Statement.............................................    25

    George P. Slover, Senior Policy Counsel, Consumers Union
      Oral Testimony.................................................    29
      Prepared Statement.............................................    31

    Steven J. Metalitz, Partner, Mitchell Silberberg & Knupp LLP
      Oral Testimony.................................................    40
      Prepared Statement.............................................    42

              LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING

    Prepared Statement of the Honorable Melvin L. Watt, a
      Representative in Congress from the State of North Carolina,
      and Ranking Member, Subcommittee on Courts, Intellectual
      Property, and the Internet.....................................     7

    Prepared Statement of the Honorable John Conyers, Jr., a
      Representative in Congress from the State of Michigan, and
      Ranking Member, Committee on the Judiciary, and Member,
      Subcommittee on Courts, Intellectual Property, and the Internet    13

    Material submitted by the Honorable Zoe Lofgren, a Representative
      in Congress from the State of California, and Member,
      Subcommittee on Courts, Intellectual Property, and the Internet    59

                                    APPENDIX
                   Material Submitted for the Hearing Record

    Material submitted by the Honorable Zoe Lofgren, a Representative
      in Congress from the State of California, and Member,
      Subcommittee on Courts, Intellectual Property, and the Internet   100

    Prepared Statement of Derek S. Khanna, Founder, Disruptive
      Innovation, Visiting Fellow, Yale Law School, Information
      Society Project................................................   102

    Prepared Statement of the Library Copyright Alliance.............   119

             UNLOCKING CONSUMER CHOICE AND WIRELESS COMPETITION ACT

                                  ----------

                             THURSDAY, JUNE 6, 2013

                            House of Representatives

                Subcommittee on Courts, Intellectual Property,
                                and the Internet

                           Committee on the Judiciary

                                Washington, DC.

        The Subcommittee met, pursuant to call, at 10 a.m., in room
    2141, Rayburn Office Building, the Honorable Tom Marino (Vice-
    Chairman of the Subcommittee) presiding.
        Present: Representatives Coble, Goodlatte, Marino, Chabot,
    Chaffetz, Holding, Watt, Conyers, Johnson, Chu, Deutch, Bass,
    DelBene, and Lofgren.
        Staff present: (Majority) Joe Keeley, Chief Counsel; Olivia
    Lee, Clerk; and (Minority) Stephanie Moore, Minority Counsel.
        Mr. Marino. Good morning. I want to call the Subcommittee
    hearing to order. The Subcommittee on Courts, Intellectual
    Property, and the Internet will come to order.
        Without objection, the Chair is authorized to declare a
    recess of the Subcommittee at any time, and that is going to
    happen very, very shortly because we are going to be called to
    vote here probably not much after 10 o'clock.
        I want to welcome all of the witnesses here today. Thank
    you so much for being here.
        I think that my friend and Ranking Member and I can get our
    opening statements in, and then we will see where we go from
    there. So if you would allow me to give my opening statement
    and then the Ranking Member, Congressman Watt.
        I would like to begin this hearing by thanking the Members,
    witnesses, and people in the gallery for joining us today for
    this important hearing.
        This morning we will hear testimony on H.R. 1123, the
    ``Unlocking Consumer Choice and Wireless Competition Act,''
    introduced by Chairman Goodlatte, Ranking Member Conyers,
    Subcommittee Chairman Coble, and Subcommittee Ranking Member
    Congressman Watt.
        The bipartisan legislation restores the ability of
    Americans to legally unlock their cell phones, an important
    consumer issue. As everyone knows, cell phones have become
    universal devices that are relied upon by Americans to
    communicate with family, conduct business, and stay in touch
    with friends. Although cell phone companies have subsidized the
    purchase of a cell phone through lower upfront costs, should be
    able to ensure that consumers meet the terms of their contract,
    providing consumers with an easy way to switch to a cellular
    provider of their choosing is important to ensuring a
    competitive marketplace. H.R. 1123 reinstates an earlier
    exemption for consumers to be able to switch their cellular
    providers by unlocking their phones.
        H.R. 1123 also directs the Register to look at other
    similar wireless devices, such as tablets, to determine whether
    an exemption is warranted there as well.
        Testifying before the Subcommittee this morning are four
    participants in the 2012 section 1201 Copyright Office
    rulemaking. Each brings a unique perspective to this issue, and
    the Subcommittee appreciates their making the time available to
    appear today.
        Finally, I recognize that there are other sections in
    interest that may be surfacing throughout the hearing, and a
    few Members and some of the audience may want to hear those
    issues as well. I am sure these issues will be among many
    raised during the Committee's comprehensive review of our
    Nation's copyright laws.
        Again, I thank everyone for being here today and I look
    forward to hearing your testimony.
        Then I hand it over to the Ranking Member, Congressman
    Watt.
        [The bill, H.R. 1123, follows:]

                                   __________
        Mr. Watt. Thank you, Mr. Chairman, and thank you for being
    here substituting for our Chairman from North Carolina, Mr.
    Coble. I hope he is well.
        I am not quite as prepared, I would have to say, as I
    usually am for hearings of this kind, primarily not because of
    my circumstances but there was an explosion down the street
    right across from my staff person's house, and she could not
    quite get out to get my opening statement to me. So I am
    struggling a little bit this morning because I am reading an
    opening statement that I have not had as much opportunity to
    edit and review, as I normally do. So forgive me.
        It did not go unnoticed to me, though, that because of the
    explosion across from her house, the very first sentence in the
    opening statement has the word ``explosion'' in it. [Laughter.]
        Maybe she was a little distracted too. So that is a good
    segue into the statement, however.
        It says individual cell phone use worldwide has exploded
    over the past decade. In the United States, the Pew Research
    Center estimates, as of last month, 91 percent of adults in
    this country own a cell phone. Moreover, the increasing
    popularity of smart phones that enable consumers to access a
    variety of services and perform multiple functions from a
    single device heightens the importance of public policy
    surrounding cell phone use.
        The relevant policy choices, in turn, involve a web of
    communications, competition, and copyright law. Current law
    prohibits the circumvention of access controls that protect
    copyrighted works. Because software contained in cell phones is
    often protected by copyright law, an exemption is required to
    legally circumvent those protections measures. Because Congress
    understood that in the field of technology, there are, quote,
    unknown unknowns, and also to comply with our treaty
    obligations of the 1998 Digital Millennium Copyright Act,
    required a multiple review called the 1201 proceeding to
    provide a process to determine whether exemptions to the
    prohibition against circumvention were warranted for various
    categories of works, that task was assigned to the Copyright
    Office and the Librarian of Congress.
        We appreciate the hard work and dedication of the Copyright
    Office and the Librarian of Congress in this most recent 1201
    rulemaking, the fifth since passage of the DMCA. Our hearing
    today is not designed to call into question any aspect of that
    critically important process but instead to explore the
    specific policy issue of cell phone unlocking, which could not
    be fully addressed through the limited 1201 rulemaking
    proceeding.
        The 1201 proceeding concluded that, for phone purchases
    prior to January 26, 2013, owners could unlock their phones to
    use on another network without fear of penalty. For all phones
    purchased after that date, however, the Librarian of Congress
    concluded that due to changes in the marketplace, namely the
    widespread availability of unlocked phones, and based on the
    evidence submitted in the proceeding, an exemption was not
    warranted. In other words, consumers would not be permitted to
    bypass access controls that protect copyrighted works because
    their choices in the market had expanded. Over 14,000 people
    signed a petition criticizing the decision and demanding that
    unlocking be exempt from the prohibition.
        I am a cosponsor of H.R. 1123 because I support providing
    consumers the freedom to use their cell phones on another
    network after their contracts have expired even though I am a
    strong supporter of protecting copyrights. I do so without
    prejudice to the various business models of wireless carriers,
    including those that provide locked phones at deeply subsidized
    rates. I believe that practice allows many in the underserved
    community access to quality cell phones that they otherwise
    would not have. It also enhances competition. However, because
    not all consumers are world travelers and may be unaware of
    whether a phone is or is not unlocked, I believe that providing
    the exemption to phones purchased beyond January 26 will expand
    consumer options even further beyond what the changing market
    already provides.
        But I also support a process that routinely evaluates the
    options and technological advancements available to consumers
    to ensure a healthy, competitive marketplace and also protects
    copyrights. While it is important that we not be tone deaf to
    the voices of a significant number of American citizens, it is
    equally important that we not allow a fraction of the millions
    of cell phone users to drive policy outcomes or upend the
    process mandated by the DMCA.
        The cell phone unlocking debate raises important issues of
    consumer protection and choice. Although these issues also
    implicate broader copyright law, we should not react
    reflexively on the basis of one of many issues considered in
    the 1201 proceedings. Cell phone unlocking merits more
    immediate attention and should be considered separate and apart
    from our ongoing copyright review work. I believe H.R. 1123 is
    the appropriate response to the issue at hand but that we need
    to continue to work on the other issues involved.
        Mr. Chairman, I will submit my full opening statement for
    the record and I welcome the witnesses and yield back.
        Mr. Marino. Without objection, thank you, Congressman Watt.
        [The prepared statement of Mr. Watt follows:]

                                   __________

        Mr. Marino. I now recognize the full Committee Chairman,
    Mr. Goodlatte of Virginia, for his opening statement.
        Mr. Goodlatte. Thank you, Mr. Chairman.
        Three months ago, I introduced H.R. 1123, the ``Unlocking
    Consumer Choice and Wireless Competition Act,'' to ensure that
    consumers continue to be able to unlock their cell phones.
    Americans who have completed their phone contracts or have
    purchased a used phone want to be able to use their device on
    their network of choice. They have made that preference loud
    and clear, and Congress has listened. H.R. 1123 restores the
    previous authority for cell phone unlocking and adds a new
    rulemaking process for related wireless devices such as tablets
    and other cellular connected devices.
        The witnesses today have indicated their support of
    unlocking. I recognize that there are some who would prefer a
    longer exemption. However, in the interest of helping consumers
    today and not running afoul of several of our Nation's free
    trade agreements, H.R. 1123 reinstates an exemption for cell
    phone unlocking until the next rulemaking process.
        I have often spoken about the need to protect the creator
    and how theft of their works affects not just that creator but
    our Nation's economy as a whole. An important part of helping
    creators is to enable them to protect their works from theft in
    the first place by using technological protection measures. I
    believe that section 1201 is an important tool that helps
    creators protect their works from theft.
        However, an important safeguard, the triennial rulemaking
    process, was built into section 1201 to recognize when
    technological protection measures might adversely affect
    noninfringing uses of copyrighted works. The Register's
    authority to recommend an exemption is limited by the record
    that is presented to her by proponents of any exemption. In
    prior rulemakings, the record was sufficient to justify an
    exemption for cell phone unlocking. That was not the case in
    2012, leaving it to Congress to determine if such an exemption
    was warranted. Today we will hear from several witnesses, all
    of whom participated in the 2012 rulemaking, who do feel such
    an exemption is warranted.
        I also recognize that some may prefer changes to the
    underlying statutory language of section 1201. Whether or not
    such changes would have the support of this Committee is a
    question for another day. I have already announced a
    comprehensive review of our Nation's copyright law, and there
    will, no doubt, be a future opportunity for interested parties
    to discuss section 1201 in more detail.
        I also look forward to hearing the testimony of our
    witnesses.
        And, Mr. Chairman, I yield back. Thank you.
        Mr. Marino. Thank you, Chairman Goodlatte.
        I now recognize the full Committee Ranking Member,
    Congressman Conyers of Michigan, for his opening statement.
        Mr. Conyers. Thank you, Mr. Chairman.
        I am a cosponsor of the bill and I ask unanimous consent to
    insert my statement into the record.
        Mr. Marino. Without objection.
        [The prepared statement of Mr. Conyers follows:]
    Prepared Statement of the Honorable John Conyers, Jr., a Representative
     in Congress from the State of Michigan, Ranking Member, Committee on
        the Judiciary, and Member, Subcommittee on Courts, Intellectual
                           Property, and the Internet
        I am a cosponsor of H.R. 1123, the ``Unlocking Consumer Choice and
    Wireless Competition Act,'' because it would restore the ability of
    consumers to unlock their mobile phones so that they can readily switch
    from one wireless carrier to another.
        There are several reasons why this flexibility that is the heart of
    this legislation is critical.
        First and foremost, this bipartisan legislation enhances consumer
    choice and competition in the cell phone market.
        Unlocked phones should remain affordable and consumer choice should
    not come at too high a price.
        H.R. 1123 ensures that consumers will be able to unlock their cell
    phones without risking criminal or other penalties.
        In addition, this bill would enable consumers to take advantage of
    lower rates if they decide to switch carriers.
        Another reason why I support this legislation is that it
    effectuates a balanced approach.
        For example, the White House and the Federal Communications
    Commission have both urged Congress to overturn the decision by the
    Librarian of the Congress.
        I believe this bill addresses these concerns in an appropriate
    manner that reinstates the previous exemption by repealing the October
    2012 change and reinstating the 2010 exemption.
        In addition, H.R. 1123 directs the Copyright Office to determine
    whether similar treatment should be given to other wireless devices.
        In the past two triennial rulemaking proceedings pursuant to
    section 1201 of the Digital Millennium Copyright Act (DMCA), the
    Librarian of Congress included an exemption for unlocking wireless
    handsets. Unfortunately, the Librarian of Congress did not renew this
    exemption in October 2012.
        Although the Copyright Office argues that cell phone makers offer a
    range of unlocked phones on the market and consumers no longer need an
    exemption to unlock their phones, I want to hear the views of our
    witnesses today about this matter.
        Finally, I support this bill because it will help ensure
    competition in the wireless marketplace, which ultimately will benefit
    consumers.
        The ability of consumers to be able to transfer their cell phone
    services to different wireless carriers will encourage market
    innovation and provide incentives for the industry to develop less
    expensive products.
        Although unlocked mobile devices have become more widely available
    for purchase, the exemption is still warranted because some cell phones
    sold by carriers are permanently locked.
        Additionally, many unlocking policies contain restrictions and may
    not apply to all of a wireless carrier's cell phones.
        This bill provides us with a meaningful opportunity to help
    consumers by leveling the opportunity for competition.
        Accordingly, I urge my colleagues to support this legislation and I
    look forward to hearing from our witnesses today.
                                   __________

        Mr. Marino. That is it? There is some time, Congressman.
    There is some time if you want to make a statement.
        Mr. Conyers. Well, that is all right. It has all been said
    only three times so far. [Laughter.]
        Mr. Marino. I have never known you not to take advantage of
    what we said and then just really put us in our place.
        Mr. Watt. That is because his Ranking Member and his Chair
    are so eloquent. [Laughter.]
        Mr. Marino. Thank you, Chairman.
        Without objection----
        Mr. Watt. And coincidentally I agree with him. [Laughter.]
        Mr. Marino. Without objection, other Members' opening
    statements will be made part of the record.
        At this time, I am going to call a recess. We must go vote.
    We have, I think, five or six votes. It could be anywhere from
    20 to 30 minutes. So I apologize but we will be back and relax.
    Thank you. A recess is called.
        [Recess.]
        Mr. Marino. The Subcommittee on Intellectual Property will
    come to order.
        Thank you so very much for your patience, both our
    witnesses and our audience. I did fail to mention to you that I
    gave you congressional time, 20 minutes. Reality, you just
    multiply that by 2.
        We have a very distinguished panel today. I will be
    swearing in our witnesses before introducing them. If you would
    please all rise and raise your right hand.
        [Witnesses sworn.]
        Mr. Marino. Please let the record reflect that the
    witnesses have answered in the affirmative, and you may be
    seated, gentlemen, thank you.
        Each of the witnesses' written statements will be entered
    into the record in its entirety.
        I ask that each witness summarize his testimony in 5
    minutes or less, and I will politely tap the gavel if you are
    going over the 5 minutes. To help you stay within the time,
    there is a time light on your table. When the light switches
    from green to yellow, you will have 1 minute to conclude your
    testimony. When the light turns red, it signals that the
    witness' 5 minutes have expired.
        Our first witness today is Mr. Steven Berry, President and
    Chief Executive Officer of the Competitive Carriers
    Association. Prior to joining CCA, Mr. Berry was Managing
    Director of Government Affairs at Merrill Lynch and also held
    positions at the National Cable and Telecommunications
    Association and at CTIA. Mr. Berry received his J.D. from
    George Mason University Law School and his B.A. from Emory and
    Henry College.
        Our second witness is Mr. Altschul, Senior Vice President
    and General Counsel at CTIA--The Wireless Association. Mr.
    Altschul joined CTIA in 1990 after having served with the
    Antitrust Division of the United States Department of Justice
    for 10 years. And I served with Justice myself. Mr. Altschul
    received his law degree from New York University School of Law
    and his B.A. from Colgate University. Welcome.
        Our third witness is Mr. George Slover, Senior Policy
    Counsel at Consumers Union where he oversees telecommunications
    antitrust and competition policy issues. Mr. Slover has 3
    decades of Federal service in all three branches of Government,
    including 9 years here at the House Judiciary Committee. Mr.
    Slover received his J.D. from the University of Texas Law
    School and B.A. from Vanderbilt University. It is a pleasure to
    have you back.
        Our fourth and final witness is Steve Metalitz, Partner at
    the Washington, D.C. office of Mitchell Silberberg & Knupp LLP,
    where he counsels clients on domestic and international
    copyright issues. Mr. Metalitz--Metalitz--I will get it right,
    sir, just give me a couple times. I apologize--previously
    served as General Counsel to Information Industry Association
    and as Chief Counsel of the Senate Judiciary Committee on
    Patents, Copyright, and Trademark. He received his J.D. from
    Georgetown University Law Center and his B.A. from the
    University of Chicago.
        Welcome to you all, and we will start with Mr. Berry for
    his opening statement. Thank you, sir.

      TESTIMONY OF STEVEN K. BERRY, PRESIDENT AND CHIEF EXECUTIVE
               OFFICER, COMPETITIVE CARRIERS ASSOCIATION

        Mr. Berry. Thank you. Thank you, Mr. Chairman, Ranking
    Member Watt, and Members of the Subcommittee. Thank you for
    inviting me to testify and thank you for your work to ensure
    that all consumers can unlock their wireless device.
        I am here today on behalf of the Competitive Carriers
    Association, the Nation's leading association of competitive
    wireless carriers with over 100 carrier members ranging from
    small, rural providers to regional and national providers
    serving millions of customers. We also represent almost 200
    associate members, small businesses, vendors, and suppliers
    that support the wireless ecosystem and employer constituents.
        We support the Committee's efforts to remove the barriers
    to competition. Accordingly, we support H.R. 1123, the
    ``Unlocking Consumer Choice and Wireless Competition Act.''
        CCA supports unlocking for every consumer that has met the
    terms and conditions of their contract and/or service
    agreement. A consumer who wishes to switch carriers should be
    allowed to do so if they have met their carrier commitments.
        Unlocking is particularly important for rural and regional
    small carriers that lack the scale to gain access to the latest
    and most iconic devices directly from the equipment
    manufacturer which, in turn, prevents millions of consumers,
    your constituents, from accessing the latest devices.
        Competitive carriers face many challenges gaining access to
    the resources necessary to provide mobile broadband service,
    including interoperable spectrum, interconnection, and roaming
    relationships and, of course, devices. In an industry where the
    largest two carriers control critical inputs, unlocking devices
    and unlocking provides one small, but very important,
    opportunity for the competitive carriers to distinguish
    themselves in the marketplace and provide innovative services
    and rate plans to customers that do not wish to give up
    previously purchased devices, applications, or the associated
    content on those devices.
        I commend your work on H.R. 1123 as a positive first step
    to restore the previous exemption. The Librarian of Congress,
    or the LOC, should have extended the exemption in the first
    place as NTIA had recommended and as CCA testified in support
    of continued exemption. The Librarian just got it wrong. Even
    the FCC Commissioner Ajit Pai today, in the New York Times
    article, indicated he was puzzled by the decision and supported
    the unlocking process before the Committee.
        I also strongly support the bill's direction to the LOC to
    revisit the determination to extend the exemption to other
    wireless devices. Consumers do not differentiate between a
    handset and what is a device, and neither should the Library of
    Congress. Long gone are the days when handsets were used for
    only voice calls, and in an all-IP world, there will no longer
    be a difference between voice and data. There are many forms of
    smart phones now, devices, tablets, and even phablets. Further
    blurring the difference between a handset and a wireless device
    and the potential for consumer confusion is real.
        We support the Goodlatte-Leahy bicameral bill as an
    immediate fix to correct the Librarian of Congress' poor
    decision. CCA welcomes continued discussion on ways authorized
    unlocking will continue to promote consumer choice. The
    Committee must remain vigilant, for there are other ways that
    devices may be impaired, including technologically designing
    devices with particular specifications in order to permanently
    lock the device, making it nonoperable with other carriers just
    because you can, configuring devices so that even when
    unlocked, the device may only work on a particular carrier's
    network, and potential for software updates that might relock
    and unlock the device.
        Finally, while Congress must move forward to enact the H.R.
    1123 with full haste, I would also offer some recommendations
    for further conversation, such as including the consumer's
    agent in the exemption. Consumers should not have to be a
    virtual MacGyver in order to unlock their handsets. Consider
    shifting the burden of proof in the statute to the opponent and
    adding a presumption to extend the existing exemption unless
    shown otherwise. Lastly, the exemption should also change
    ``telecommunications network'' to ``communications network.''
    Consumers do not differentiate between types of access. Neither
    should policy.
        Mr. Chairman, CCA supports your work and encourages swift
    passage of H.R. 1123, and I welcome your questions. Thank you.
        [The prepared statement of Mr. Berry follows:]
             Prepared Statement of Steven K. Berry, President and
           Chief Executive Officer, Competitive Carriers Association

                                   __________
        Mr. Marino. Thank you, Mr. Berry. You came in under the
    wire.
        Mr. Altschul, please.

       TESTIMONY OF MICHAEL ALTSCHUL, SENIOR VICE PRESIDENT AND
            GENERAL COUNSEL, CTIA--THE WIRELESS ASSOCIATION

        Mr. Altschul. Thank you, Chairman Marino, Ranking Member
    Watt, and Members of the Committee, for the opportunity to
    participate in today's hearing on H.R. 1123 and allowing CTIA
    to add its voice to the choir supporting this bill.
        My name is Michael Altschul, and I serve as the Senior Vice
    President and General Counsel of CTIA--The Wireless
    Association. Membership in CTIA includes wireless carriers and
    their suppliers, as well as providers of wireless data
    services.
        When the DMCA was enacted, Congress could not have known
    the technologies and markets that have become commonplace
    today. Accordingly, section 1201 authorizes the Librarian of
    Congress to issue temporary exemptions during a rulemaking
    process that occurs every 3 years. The triennial rulemaking was
    intended to be a safety valve to the anti-circumvention
    provisions of the DMCA and it can serve as an important
    barometer for issues such as this one that may be ripe for
    further discussion. Because the rulemaking process does not
    permit the Librarian to change the terms of the DMCA, only
    Congress, through the legislative process, can address these
    issues.
        In the 2006 triennial rulemaking cycle, the Librarian of
    Congress granted an exemption for cell phone unlocking. This
    exemption was renewed in 2010. However, in the 2012 rulemaking,
    the Librarian determined that the exemption for unlocking was
    not necessary because the largest nationwide carriers have
    liberal publicly available unlocking policies and because
    unlocked phones are freely available from third party
    providers, many at low prices. If you go to our website or Best
    Buy or many other retailers, you can see close to 200
    individual wireless phones that are available unlocked for sale
    to the public.
        While the Librarian's order was clearly justified by the
    market circumstances and the requirements of the DMCA, CTIA in
    its comments stated that we would not oppose a narrowly
    tailored exemption that allows bona fide individual customers
    to use their own phones on a different network. This bill would
    create such a rule.
        We did, however, oppose any broader exemption out of
    concern that broader relief would serve to permit the bulk
    commercial purchase of new phones in order to free ride on
    carrier subsidies and arbitraged sale of these phones, either
    in the United States or abroad. We were pleased that the
    Register recognized this potentiality in its 2010 ruling noting
    that bulk reselling of new mobile phones by commercial ventures
    is a serious matter. There is no justification for the result
    of this rulemaking proceeding to condone, either expressly or
    implicitly, the illegal trafficking of mobile phones. Such
    illicit practices raise the cost of doing business, which in
    turn affects the marketplace for mobile phones and the prices
    consumers pay for such devices.
        Moreover, continuing the prohibition on bulk unlocking
    makes our streets just a little bit safer by making it harder
    for large scale phone trafficking syndicates to operate in the
    open and buy phones, unlock them, and resell them either in the
    U.S. or in foreign markets. Making it illegal to unlock devices
    without carrier consent adds another barrier to these fencing
    operations and may help dry up the demand for stolen phones.
        But because we are not seeking to limit individuals'
    noncommercial ability to unlock their own devices and because
    the bill preserves the important limitations against bulk
    unlocking included in the Librarian's 2010 decision, CTIA
    supports H.R. 1123, which is narrowly tailored and appropriate
    to alleviating consumer confusion that may have arisen as a
    result of the Librarian's most recent decision.
        While enactment of H.R. 1123 should alleviate consumer
    confusion about whether unlocking his or her wireless phone
    will subject them to possible criminal penalties, it is
    important to note that no one should view enactment of this
    legislation as enabling a universal phone that can be easily
    moved from one network to another. Unlocked phones are not the
    same as interoperable phones, and it would be a mistake to
    conflate the two. While there are circumstances in which a
    device can be unlocked and moved from one carrier to another,
    differences in technology and differences in spectrum
    assignments limit or preclude seamless movement of devices
    between most carriers. And even if some features will work on
    another carrier's network, unlocked handsets can result in a
    degraded customer experience since all the carrier's services
    may not be supported by the device.
        And with that, thank you again for the opportunity to
    participate in today's hearing.
        [The prepared statement of Mr. Altschul follows:]

                                   __________
        Mr. Marino. Thank you, sir.
        Mr. Slover, please.

                    TESTIMONY OF GEORGE P. SLOVER,
                 SENIOR POLICY COUNSEL, CONSUMERS UNION

        Mr. Slover. Thank you, Mr. Chairman, Ranking Member Watt,
    Members of the Subcommittee. It is a pleasure to be here on
    behalf of Consumers Union, the policy arm of Consumer Reports,
    the largest independent, not-for-profit product testing
    organization. Our mission is to work for a fair and just
    marketplace for consumers.
        And we believe consumers should have the right to unlock
    their mobile device to use on another network, to switch
    carriers, or to use their device abroad, or to sell or give it
    to someone else. Consumers should be able to use the mobile
    device they bought, as they see fit.
        As wireless takes over as the predominant way of
    communicating, we want consumers to be free to choose service
    and product offerings that suit their needs in a competitive
    marketplace. And being able to switch carriers to get a more
    suitable and affordable plan, without having to start over and
    purchase a new phone, can make a big difference.
        And consumers agree. In a nationwide survey by Consumer
    Reports 2 years ago, 96 percent of those with long-term
    contracts said that, when we change carriers, we should be able
    to keep using the mobile phones we already have.
        Until last October's decision by the Register of Copyrights
    and the Librarian of Congress, consumers had the legal right to
    unlock. Then in one fell swoop, unlocking went from legal right
    to felony.
        But the unlocking we are talking about here has nothing to
    do with copyright infringement in any traditional sense, and
    has no business getting caught up in the dragnet of a law
    intended to help stop copyright infringement. It is far too
    blunt an instrument for protecting material that is actually
    copyright protected from actual infringement. It creates a zone
    of protection far wider than is needed or justified. It is like
    having a cake that you do not want your teenager cutting into
    and devouring with his friends. But instead of just telling him
    not to eat the cake, you tell him he is grounded for life if he
    even sets foot in the kitchen.
        Mobile phone unlocking is a perfect candidate for DMCA
    exemption, as the Register and the Librarian readily concluded
    in 2010. Their reversal this time is hard to reconcile.
    However, if you parse their rationale, the result is a legal
    ruling that impairs competition and consumer choice, and will
    render millions of perfectly good mobile devices useless, left
    to gather dust in a drawer, or to slowly decompose in a
    landfill, or to be discarded into a recycling bin.
        The lock benefits carriers, by propping up the long-term
    bundled contract. And it benefits mobile device manufacturers,
    by artificially inflating demand for new devices through forced
    retirement of used ones.
        But for consumers, it means less competition, less choice,
    more expense, and more waste. That is not a fair tradeoff and
    it does not belong in the copyright laws.
        Pealing this misfit legal armor off the lock is a key step
    on the road to more competition. If consumers could shop for
    the best deal on each of these two purchases separately, they
    would get lower prices, improved quality, and greater
    innovation and variety that more competition would encourage
    among mobile device manufacturers and wireless carriers alike.
    Some carriers now are offering alternatives to the bundled
    contract, a healthy development that would be sped up by
    restoring the right to unlock.
        We are heartened by the interest in Congress, with a number
    of bills taking various approaches to a solution. While we
    would like to see a permanent solution, to make sure mobile
    phones cannot be put on lockdown again, we appreciate that a
    temporary solution can be an effective stopgap while the
    permanent solution is in the works.
        If you opt for the temporary solution expressed in H.R.
    1123, while you work on the permanent solution, we think it
    would be helpful to make a few clarifications now, without
    waiting, to ensure that the DMCA exemption as reinstated works
    in today's world, and to reduce the risk of unnecessary and
    unwarranted legal obstacles. Our recommended clarifications are
    in our written statement and in our comments to the Register.
        For example, consumers should not be denied the right to
    unlock because the device they purchased does not carry with it
    the software inside it, but only carries a license to use the
    software. And consumers who use a tablet as their phone should
    have the same right to unlock as consumers who use a handset.
        Mr. Chairman, thank you for including us in this hearing on
    an issue of great importance to consumers. I would be happy to
    answer any questions.
        [The prepared statement of Mr. Slover follows:]

                                   __________
        Mr. Marino. Thank you, sir.
        Now, for the third time, Mr. Metalitz.

               TESTIMONY OF STEVEN J. METALITZ, PARTNER,
                    MITCHELL SILBERBERG & KNUPP LLP

        Mr. Metalitz. That is right, Mr. Chairman.
        Mr. Marino. Thank you.
        Mr. Metalitz. Good morning and thank you very much for
    inviting me to testify before the Subcommittee.
        In all five rulemaking proceedings that have been held
    under the Digital Millennium Copyright Act, I have represented
    a broad coalition of copyright industry organizations. Because
    the bill before you today addresses a decision made in the most
    recent DMCA rulemaking, I hope I can provide some useful
    context. I am not here to advocate a position on whether the
    Librarian of Congress' decision on the cell phone unlocking
    issue was right or wrong. Our coalition was neutral on that
    during the rulemaking.
        I am here to say that if Congress concludes that the
    Librarian's decision was not the right policy outcome, then
    H.R. 1123 is an appropriate and well considered way to change
    it. It restores the status quo ante without undermining an
    important provision of title 17 that has done so much to
    benefit creators, distributors, and consumers of copyrighted
    works. That provision is section 1201. It protects the
    technological measures that copyright owners use to control
    access to their works. Since it was enacted in 1998, it has
    helped to launch three important trends.
        First, in nearly every industrialized country in the world
    and in many other countries, similar legislation has been
    adopted. Some follow the U.S. model closely, others take a
    somewhat different approach, but they all recognize that access
    control technologies should be encouraged to better serve the
    public.
        Second, responding to this encouragement, copyright owners
    have increasingly launched innovative new services that depend
    on access controls. Everyone in the software world is talking
    about cloud computing today. Cloud computing depends on access
    controls. These controls are also essential in upgrading the
    security of computer networks and reducing their vulnerability
    to attacks. Access controls have also enabled cloud services
    for delivery of all kinds of copyrighted materials--software,
    games, video, books, music, and so forth.
        The third trend is as a result of the rapid proliferation
    of these services, more consumers today enjoy authorized access
    to more copyrighted works in more diverse ways and at more
    affordable price points than ever before. Access control
    measures have been indispensable to achieving this.
        Now, perhaps the best part of the story is this. This
    Committee and the rest of Congress anticipated that this might
    happen. In enacting the DMCA 15 years ago, Congress foresaw
    that technological protection measures could be used not only
    to prevent piracy but also to support new ways of disseminating
    copyrighted materials to users. Congress was also wise enough
    to realize that not all of the consequences of these new legal
    protections could be anticipated. So it created the triennial
    rulemaking process whose purpose is to identify specific
    factual situations in which access controls have had unexpected
    negative consequences.
        Now, again, our copyright industry groups that have
    participated in these rulemakings do not agree with every
    decision that has come out, or everything in the way the
    Copyright Office has approached it, but overall we think the
    rulemaking process has fulfilled the functions that Congress
    intended for it. I point out some of these reasons for saying
    so in my written testimony.
        First, instead of the Copyright Office ranging the field to
    regulate uses of access controls that a government official
    might think are problematic, it relies on private parties to
    step forward to identify exactly where the exemptions are
    needed.
        Second, exemptions are reserved for situations in which
    they are necessary or it is impossible or extremely burdensome
    to make a noninfringing use without circumventing access
    controls.
        Third, all the exemptions expire after 3 years. So the
    Copyright Office and the Librarian take another look at that
    point. That makes sense, given the pace of technology and pace
    of change in market developments.
        And fourth, the Copyright Office has consistently provided
    detailed explanations of its recommendations. We do not always
    agree with them, but they provide a lot of useful guidance.
        Now, H.R. 1123 is tightly focused on changing the decision
    issued by the Librarian of Congress on the single issue of cell
    phone unlocking. It does so without tampering with the
    structure of section 1201 or with the key ingredients for
    success of the rulemaking that I have just summarized. It
    simply restores the status quo ante, the cell phone unlocking
    exemption that the Librarian recognized in 2010 but decided to
    phase out in 2012. It places this restored exemption back into
    the existing rulemaking framework. It directs the Copyright
    Office to initiate a new rulemaking on the question of whether
    that exemption ought to apply to other devices, and both these
    exemptions would be reviewed again after 3 years under the same
    procedures the Copyright Office has developed.
        In short, H.R. 1123, if enacted, would be the most
    effective and focused way for Congress to correct what it
    considers an erroneous outcome of the last DMCA rulemaking, and
    it would inflict the least possible disruption on the
    rulemaking process and keep intact this provision, section
    1201, that has served American creators and consumers so well.
        Thank you very much. I would be ready to answer any
    questions.
        [The prepared statement of Mr. Metalitz follows:]

                                   __________

        Mr. Marino. Thank you, gentlemen, for keeping your initial
    comments to 5 minutes.
        The Chair now recognizes the Chairman of this Subcommittee,
    the gentleman from North Carolina, Congressman Coble.
        Mr. Coble. Thank you, Mr. Chairman. I appreciate you and
    the gentleman from North Carolina covering for me. I apologize
    to the witnesses for my belated arrival. Today was one of those
    days when I had to be at five places simultaneously. You all
    have never had that happened to you before, have you? I am sure
    you have. Thank you, Mr. Chairman. I appreciate that.
        Starting with Mr. Berry, and then including all of the
    witnesses, what is the current state of the unlocked cell phone
    market? And do consumers have a growing number of choices for
    unlocked handsets and providers than ever before, or is the
    marketplace limited?
        Mr. Berry. Hi, Mr. Chairman. You are correct. There are a
    lot of choices for the consumer, but there are also a lot of
    unique circumstances where the phone is a very personal device
    and we believe that consumers should have the choice whether or
    not to continue to use that particular phone. I think it
    actually enhances the competition or competitive elements in
    the market. Many of the small carriers, six or seven of them in
    your congressional district, have a difficult time getting
    access to the iconic devices and unlocking gives them an
    opportunity to retain that customer that may come into their
    area that wants to keep their iconic device. And I think it is
    a choice that consumers enjoy having and gives us, the smaller
    carriers, an opportunity to distinguish themselves in the
    marketplace.
        Mr. Coble. Thank you, sir.
        Mr. Altschul. There are close to 200 different devices
    available on an unlocked basis to consumers in the United
    States. Just one store, Best Buy has on their website as of
    last night 146 different devices from the latest Apple and
    Galaxy phones to very simple feature phones, and Best Buy is
    just one of the retail outlets that are available to customers
    that are interested in buying unlocked phones and being free to
    take the appropriate phone to the carrier of their choice.
        Mr. Coble. Thank you, sir.
        Mr. Slover. I would say that the focus should also be on
    the consumer who has got a phone already, and has a chance to
    get a new one if he wants and to give the old phone to
    somebody, else or to sell it, or he has got a phone that he
    likes, but he wants to switch it to another network. It is not
    just whether there are phones out there in the market that are
    available to consumers who want to buy them. A lot of those
    phones that we have been talking about are new phones. The used
    phones are going to be gradually phased out now--if the
    Register's decision stays in place, that has been phased out
    now. And so over time, there will be fewer and fewer used
    phones available, and they will be older and older used phones
    that are available.
        So I think it is also important to focus on the consumer
    who has got a cell phone in his hand and what his choices are,
    what he can do with that phone.
        Mr. Coble. Thank you, sir.
        Mr. Metalitz. I do not have anything to add, Mr. Chairman,
    on the state of the market, but just to note that if the
    consumer has the phone in his hand, under the current
    exemption, if he bought it prior to January, then he is
    certainly free to exercise the exemption that exists now.
        Mr. Coble. Thank you, sir.
        Let me try one more question before my time expires.
        Gentlemen, how is the unlocking issue dealt with in other
    Nations, and more specifically, is this only a U.S. issue or is
    it an issue elsewhere? Either of you.
        Mr. Berry. I am certainly not an expert on all the markets
    globally, but unlocking is a problem in some countries. I do
    not think it is quite the same in the United States. In the
    United States, we subsidize phones and some of the iconic
    phones are exclusive to a particular carrier, and that carrier
    obviously wants the customer to meet their commitments. Many of
    the countries overseas, Europe, they do not subsidize phones,
    and they have more of a standard technology. So that is a
    little easier to switch out SIM cards and actually use a phone
    across carrier networks. It is a little different than in the
    United States. Again, it is a very personal device, and I think
    having an unlocking opportunity--capability--allows you to do a
    lot of different things with that used phone that you would not
    otherwise be able to do.
        Mr. Coble. I thank you, sir.
        Mr. Metalitz. Mr. Chairman, if I could just add on the
    international dimension. As I mentioned in my statement, many
    countries now have similar laws protecting access controls--and
    as, I believe, Chairman Goodlatte mentioned in his opening
    statement--we have obligations under our free trade agreements
    with regard to these types of protections. But I think the good
    news is that H.R. 1123, as I read it, is consistent with our
    obligations under those free trade agreements. If it were
    enacted, I do not think it would create a problem of compliance
    with the free trade agreements.
        Mr. Coble. I thank you, sir.
        Mr. Chairman, I see my red light is illuminated. I yield
    back.
        Mr. Chabot. Mr. Chairman, could I make a unanimous consent
    request over here on this side?
        Mr. Marino. Yes.
        Mr. Chabot. Thank you, Mr. Chairman.
        I would just like to ask unanimous consent to submit a
    couple of questions in writing for the panel's response at a
    future time.
        Mr. Marino. Without objection.*
    ---------------------------------------------------------------------------
        *The Subcommittee did not submit post-hearing questions to the
    witnesses.
    ---------------------------------------------------------------------------
        Mr. Chabot. Thank you.
        Mr. Marino. The Chair now recognizes the gentleman from
    North Carolina and the Ranking Member, Mr. Watt.
        Mr. Watt. Thank you, Mr. Chairman.
        As has become my policy as the Ranking Member, I generally
    have decided to go last in the questioning so that if any of my
    other colleagues need to leave, they can before the hearing is
    over, especially on the last day of the week when they are
    trying to get out of town. So I am going to defer to Mr.
    Johnson, and I will go last.
        Mr. Marino. The Chair recognizes Mr. Johnson.
        Mr. Johnson. Thank you, Mr. Chairman. I believe Mr. Watt
    just loves to hold back and wait until I ask my questions
    because they are so good, and then he gets to clean up behind
    me. [Laughter.]
        I believe that is what the real deal is.
        But thank you all for coming today.
        Strong copyright protections are the backbone of
    innovation, creativity, and the public good. Copyright theft
    hurts everyone. Song writers and artists depend on royalties
    for their livelihood. Companies depend on protection so that
    they can make new content and products, and consumers want to
    know that when they download an app, it is not counterfeited or
    full of malware.
        As this Committee looks to update areas of copyright law, I
    think it is important to leave room for companies to provide
    innovative solutions while protecting copyright owners. For
    instance, one of the great success stories of copyright law is
    the DMCA intermediary safe harbor. One major example of this
    success story is Google, which receives 17 million takedown
    requests monthly and processes each of these, on average,
    within 6 to 8 hours.
        Today's hearing represents another opportunity for
    innovative solutions in the marketplace. As a cosponsor of the
    bipartisan H.R. 1123, the ``Unlocking Consumer Choice and
    Wireless Competition Act,'' I recognize that we need solutions
    that bolster competition while empowering consumer choice. And
    as a parent who--sometimes I drop my mobile phone and crack the
    screen on it, and I do it every so often. But then my kids tend
    to do it more often. So they end up being the recipients of my
    phone. And both have accounts with other cell phone service
    providers. So it presents a dilemma that I am faced with.
        I look forward to the testimony of our witnesses today.
        I applaud my colleagues from across the aisle for coming
    together on this pro-consumer legislation.
        And, Mr. Slover, in your written testimony you indicate--
    you referred to a nationwide survey of consumer views on
    unlocking mobile phones. Could you share with us the results of
    the survey? And thereafter, I would like for you to explain to
    us how the 1201 exemption for unlocked devices enhances
    consumer choices.
        Mr. Slover. Well, the survey was done 2 years ago, and one
    of the highlights was that 96 percent of those we polled who
    have wireless handheld devices believed that consumers should
    be able to keep their handset when they switch carriers. And
    the figure actually went up to 98 percent for people who had
    smart phones. The margin of error on that survey was 3 percent.
    So that is virtually 100 percent of everybody who we surveyed
    thinks that consumers should have that right. So to them, it is
    just common sense that they should be able to keep their cell
    phone with them as they switch carriers. So that was the
    highlight of the survey.
        There were other figures in there, too. There was one,
    about three-quarters of the people surveyed said that they
    thought that cell phones should be interoperable across all
    networks and that if necessary, Government laws and policies
    should be instituted to require that.
        As to your question about the 1201 process, that is a
    broader issue than just how it applies in the phone unlocking
    context. In the phone unlocking context, we do not think it
    should have gotten caught up in that at all. I think it was a
    surprise to everybody--nobody was planning in 1998 that the
    anti-circumvention restrictions were going to help reinforce
    the long-term bundled package where you get your cell phone as
    part of your long-term contract. That is just how it worked
    out. And what we want to see is for that to be pulled out and
    separated from that.
        The broader issues about 1201 are very interesting and
    certainly deserve attention, and we look forward to being a
    part of that discussion in the months to come.
        Mr. Johnson. Thank you.
        Mr. Marino. Thank you.
        The Chair recognizes the gentleman from North Carolina, Mr.
    Holding.
        Mr. Holding. Thank you, Mr. Chairman.
        Mr. Altschul, you were talking about some of the concerns
    if the rule were overbroad, concerns about the arbitrage of
    phones, the demand for stolen phones, fencing of phones. I am
    curious about what the business model is for the arbitrage of
    phones. If you could, kind of explain how that would work and
    how much are these phones worth if they are completely able to
    be unlocked and so forth.
        Mr. Altschul. Well, we know that the U.S. is unique in
    offering consumers subsidized, very deeply discounted phones
    for those customers that enter into a service contract with
    their carrier. To the extent that the phone is compatible in
    markets overseas or in other countries, the software lock is
    the only thing that keeps somebody from basically gaming the
    system, from obtaining a deeply discounted phone, which the
    carrier is fronting the subsidy for up front out of the
    expectation that over the life of the service agreement, they
    will be able to recover their costs from the customer. Phones
    are small and light and are easily shipped to foreign countries
    where there is no discounting. So the difference between
    getting a modern, top-of-the-line feature phone or a smart
    phone for $199 in the United States that more or less instantly
    can be sold for $600 or $700 in another country creates the
    arbitrage opportunities.
        Mr. Holding. What about on stolen phones? Is there a big
    market for stolen phones?
        Mr. Altschul. Well, there is obviously a huge amount of
    street crime where these phones are being targeted by
    criminals, and it has caught the attention of the police chiefs
    in this city, in New York, and San Francisco, and other cities
    because of how easily fenced these phones are on the street.
    And, of course, with the existing rule, there is now no legal
    reason or basis for a brick and mortar storefronts to be in the
    business of taking a phone that a customer brings in and
    changing its identity, its software, and the ability to operate
    that phone on different networks.
        So one of the concerns about going beyond allowing an
    individual customer known to a carrier to unlock phones
    creating a broad commercial exception would be to legitimize
    the ability of brick and mortar stores to be the first step of
    the fencing operation.
        Mr. Holding. I think we see all the time that technology is
    rapidly changing, evolving, and I will posit this to all of
    you. The business model we have here, as you say, heavily
    subsidizing the phone on the front end--are there changes in
    technology on the horizon or forecasted that would change that
    business model, that would render it obsolete or not
    profitable? And so we try to do something legislatively here
    and before you know it, the business model has changed, and
    what we are doing here is moot and a waste of time.
        Mr. Altschul. Well, the business model is constantly
    changing. Right now, there are the two dominant types of
    service agreements, both of which are popular with consumers:
    no contract phones with no service plan and typically not a
    discounted device and a contract plan where there is a
    discounted device. T-Mobile 2 to 3 months ago announced a
    hybrid plan where they are breaking the tie between their
    service and device. Other carriers said if this is popular,
    they can follow a similar plan. There are prepaid offerings
    that offer some discounted devices. So already the marketplace
    has a mix, and consumers have shown how sophisticated they are
    in selecting and choosing the most attractive combination of
    service and devices that best meets their needs.
        Mr. Holding. All right. Thank you.
        Mr. Chairman, I yield back.
        Mr. Marino. Thank you.
        The Chair recognizes Congresswoman Chu from California.
        Ms. Chu. Mr. Slover, I want to get the basics of cell phone
    unlocking. At the end of my contract term with my wireless
    carrier, how would I be able to unlock my cell phone? Would I
    be able to unlock the phone myself, or do I need to seek out
    the help of my wireless carrier?
        Mr. Slover. Well, there are some people who have figured
    out how to do it themselves. Most people would need to get help
    from somebody else. And you could either get that from your
    wireless carrier, your old wireless carrier; you could get it
    from your new wireless carrier, or you could find one of the
    people who has figured out how to do it and ask them to explain
    it to you, to walk you through the steps, to maybe send you a
    link to an explanation for it. There are a number of ways, and
    we would like to see all those ways available.
        Mr. Altschul. If I may add to Mr. Slover's answer. One of
    the facts that the Librarian of Congress relied on in the
    record before it in this hearing was the fact that carriers
    will unlock their customers' phones once the service terms have
    been fulfilled. Carriers do that. It can be done over the
    phone. It involves codes the customer can follow, and there is
    no charge for it.
        Also, on the Internet, along with a lot of other things,
    there is information how to do this. People should think twice
    because it also could be a back door for malware and viruses
    and other changes to the device that might not be welcome, as
    well as when it is done over the Internet or through third
    parties, there is a charge. If the customer goes to their
    carrier, under the carrier's terms there will be no charge to
    unlock the device.
        Ms. Chu. Yes. Mr. Berry?
        Mr. Berry. I think it is also important to note--and I
    think you hit on a very important aspect, and that is, do you
    have to be MacGyver to unlock your phone? Sometimes you do, and
    some of the locking devices are getting more and more complex.
    And that is why we recommend that an agent be authorized. If
    you have locked yourself out of the house and you need a
    locksmith to come in and help you open the door, I mean, that
    is certainly an acceptable use of your property and it is
    certainly a property right that you have. I think that it
    should be recognized that locking and locking devices are
    getting more complex, and you are absolutely right. The
    wireless carrier sometimes does not have the code. Maybe it is
    an unlocked device that you bought at Best Buy and that
    particular carrier may not have that code to unlock the device
    at the end of your service. So I think it is an important
    question and an important issue to address. Thank you.
        Ms. Chu. Yes. Are you saying then any phone could be
    unlocked by any carrier or are there limits to that?
        Mr. Berry. My understanding is most phones can be unlocked
    by a carrier, an authorized carrier, but there are some devices
    that cannot be unlocked. For example, the Apple phone. If you
    do not have the code, you cannot unlock it. If you buy an Apple
    unlocked phone, it is not necessarily going to work on every
    carriers' network even if the carrier has the same technology
    in their network. And so it can get fairly complicated. Like
    Mr. Altschul said, there is no such thing as one interoperable
    phone. It depends on your network, your technology, and quite
    frankly, the OEM--the manufacturer that built it.
        Ms. Chu. Mr. Slover, or anybody else, the Register of
    Copyrights found out with respect to new wireless handsets,
    there are ample alternatives to circumvention and the
    marketplace has evolved to the point where there is a wide
    array of unlocked phone options available to consumers. Do you
    believe that consumers have meaningful options when purchasing
    new unlocked phones, and why did the National
    Telecommunications and Information Administration support a
    broader exemption?
        Mr. Slover. I think it is incomplete to look at the
    question just from the perspective of what is out there in the
    marketplace for consumers in general who want to buy a new
    phone, and are there enough unlocked phones out there that if
    they want an unlocked phone they could find one. Now, even on
    that question, they may not be able to find the specific kind
    of phone that they want unlocked. So it is more than just
    whether there are enough phones out there in general. But that
    is only one side of the equation.
        And the other side of the equation is what about the person
    who has got a phone, is getting a new one, wants to pass their
    old one along to somebody else or wants to keep their old one
    and pass their new one along to somebody else, or wants to sell
    the one they are getting or the one they are giving up to
    somebody else. So from that side of it, the criminal
    prohibitions against unlocking the cell phone are a big
    hindrance.
        Ms. Chu. Thank you, and I yield back.
        Mr. Marino. Thank you.
        I guess it is my opportunity.
        Mr. Altschul, what do the major carriers think about this
    legislation, and do they have any suggestions on how to tweak
    it?
        And then, Mr. Berry, I am going to ask you about other
    carriers as well. Same question.
        Mr. Altschul. The members of our association support the
    bill and they support it in the way it is narrowly drafted to
    restore the exemption as it was in 2010. That returns the
    situation to the status quo that the industry operated under
    for the prior 3 years.
        Mr. Marino. Mr. Berry?
        Mr. Berry. Yes, Mr. Chairman. Our members support the
    legislation, 1123. I think some of the smaller carriers, the
    rural and regional carriers, would probably see much more
    immediate benefit because they have more difficulty getting
    access to these iconic devices or to the type of smart phone
    that is very difficult for smaller carriers that have less
    scale to be able to purchase. But all our carriers support the
    legislation and think that something should be done
    immediately.
        Mr. Marino. Thank you.
        Mr. Metalitz, do you know of anyone or any entity that
    opposes this?
        Mr. Metalitz. I am not aware of any, Mr. Chairman.
        Mr. Marino. Does anyone on the panel know of any opposition
    to this?
        Mr. Slover, I think you testified initially in your initial
    reading that you want to see this permanently established with
    no time limits. Am I correct on that?
        Mr. Slover. Well, we do not want our consumers to face a
    situation where there is uncertainty every 3 years. I think one
    aspect of that is that the de novo review that has been
    followed is a complete de novo review where you start over
    again, and the people who have proven that an exemption is
    justified, and satisfied that burden once, have to satisfy it
    each time, and you have got different people in the offices
    making the decisions perhaps. I think it would work better if
    there were a presumption at least that once there is an
    exemption in place, the starting point, the default is that it
    stays in place, and then the people who think it should be
    expanded can come in and explain why, and the people who think
    it should be narrowed or not renewed at all can come in and
    explain why.
        Mr. Marino. You are probably aware of this, but we could
    have some trade issues concerning this because of the
    agreements. There could be creative ways to rework those trade
    issues with other countries, but I think at this point it is
    inclined--I cannot imagine other countries having a problem
    with this, but it still would involve some trade issues.
        Mr. Metalitz?
        Mr. Metalitz. Yes. Mr. Marino, if I could just say a word
    about the de novo review. I think that is a positive feature of
    the system. You know, a wise man said long ago you cannot step
    in the same river twice. All of these areas are ones where
    there is a lot of change both in technology and in markets. And
    the Copyright Office and the Librarian have shown the ability
    to look at these and to adjust their recommendations
    accordingly. So I think that is a positive feature.
        Mr. Marino. I am going to play a little devil's advocate
    here based on my experience as a prosecutor. Do any of you
    gentlemen see any complications or down side to this from those
    individuals who just practice, as much as they can, hacking
    into our computers, hacking into our phones? Do you see any
    technical complications here that may make it somewhat more
    easy for these people to get into our phones by unlocking
    these? Anyone.
        Mr. Berry. Mr. Chairman, going back to the bulk--you would
    call bulk reselling--that is a problem. It continues to be a
    problem whether you have the exemption or not, as we have seen.
    And I think you should at least start from the point that this
    statutory language is neither sufficient or necessary to deal
    with the much larger issue of bulk reselling. And there are
    numerous other activities that you--breach of contract,
    infringement, copyright infringement, trademark infringement,
    not to mention the criminal codes to address that. You are
    always going to have those potential problems for those
    nefarious people that would like to break into the device in
    this case. But I do not know that it is so overbearing that the
    consumer should not continue to enjoy this opportunity to
    freely use their property.
        Mr. Marino. Thank you. My time has expired.
        I am going to move on to Congressman Jeffries from New
    York.
        Mr. Jeffries. Well, thank you very much. And let me also
    thank the Ranking Member.
        Mr. Slover, the Librarian came to the conclusion that there
    was adequate consumer choice for unlocked phones on the market.
    Is that correct?
        Mr. Slover. That is correct that that was the conclusion
    that the Register of Copyrights and the Librarian of Congress
    came to, yes.
        Mr. Jeffries. Now, I assume you disagree with that
    conclusion.
        Mr. Slover. I think it is incomplete and it is only one
    side of the question. It is incomplete because not all phones
    are available to all consumers in all situations, but in
    addition to that, the consumer who has got a phone already--it
    is all of the phones that are going to be rendered useless
    because they cannot be unlocked and resold without the
    potential for criminal penalties, which is going to be very
    chilling, I would think. And so over time, they are going to
    end up getting thrown away or left in a drawer someplace rather
    than being put to use where they could be. And the consumer who
    has got those, who would be able to get some benefit, either a
    family member taking over the phone, or being able to sell it
    for a small amount, or giving it away to some charitable
    organization that is collecting phones for their clients, they
    are all wasted.
        Mr. Jeffries. Now, what is the state of play as it relates
    to someone who is coming off contract and will be able to make
    a decision as to whether to move forward with their current
    carrier or switch carriers in terms of the unlocked phone
    market that they would confront?
        Mr. Altschul. Well, as the Librarian of Congress found on
    the record, carriers will unlock a customer's phone upon the
    customer's request, and they publish the requirements. You
    might think it would only be at the end of the contract.
    Different carriers have different policies, including just
    being in good standing and saying you are going to go on a
    trip, say, to Europe and you want the flexibility while
    traveling to use other carriers' networks. So that was in the
    record before the Librarian of Congress.
        And the benefit of having the carrier do the unlocking is
    that you do not go to third party sources on the Internet or
    elsewhere which, in the unlocking process, increases the risk
    of malware and viruses being inserted into the device.
        Mr. Jeffries. Now, currently it is my understanding that
    when carriers sign up a new customer to a contract, often the
    cell phone or certainly in the case of a smart phone, is
    offered to that customer at a very discounted price. To the
    extent that this bill moves forward--and I do support the
    legislation, but to the extent that the bill moves forward and
    becomes law, do you anticipate that that would change in any
    way in terms of perhaps a decrease in the discount that is
    available or its outright elimination?
        Mr. Altschul. Well, we operated under the rule that would
    be restored for the past 3 years, and the choices to consumers
    and the availability of discounted phones was not diminished
    under the prior rule. I do not think any of us have a crystal
    ball. The markets change. Consumers' tastes change. We have
    seen over the past few years, even with the existing rule, the
    greater popularity of no contract plans and the availability of
    unlocked phones with consumers. So I cannot predict what the
    future will bring, but I am fairly confident that this bill is
    not going to change the business practices one way or another.
        Mr. Jeffries. Thank you.
        Mr. Slover, have you done any analysis on this question?
        Mr. Slover. Well, we would like to see greater choices for
    consumers. The idea of getting a contract where you do not have
    to worry about going over your minutes or going over your other
    limits, but not having to take a phone packaged in with that,
    if the two purchases could be considered separately, then there
    would be more transparency, the consumer would know what they
    are paying for. I mean, right now, you walk into one of the
    stores, and they direct you over to the display of phones that
    you can get for free or at a dramatically reduced price as a
    result of signing up for the contract. But it is not, ``here is
    one thing you are buying, here is another thing you are buying,
    do you want to buy both of them from, us or not?''
        And so the greater the choices that are made available--and
    to us, the lock and the penalties for getting around the lock,
    for unlocking to interconnect to another network are part of
    the artificial support system for the bundled contract. We are
    not saying the bundled contract should not be made available.
    We think it will still be made available to consumers who want
    it, but there will be more transparency and consumers will have
    more choices.
        Mr. Jeffries. Thank you, Mr. Chair. I see that my time has
    expired. I thank the witnesses for their participation.
        Mr. Marino. Thank you.
        The Chair recognizes Congressman Chaffetz from Utah.
        Mr. Chaffetz. Thank you, and I thank the Committee for
    taking on this issue. It is one that I think is important to a
    lot of consumers today.
        I want to start with the developers and some of the
    distribution of the potential tools that could be used to help
    unlock these phones. One of the problems, even with a DMCA
    exception, is it does not provide immunity for making or
    distributing the tools to circumvent a lock even for a lawful
    exemption. If we want to make sure people can unlock their
    phones, do we not need to clarify that the DMCA does not apply
    to phone unlocking or somehow provide an exemption to
    developing and distributing the tools in addition to just
    simply using them? Maybe we could start with Mr. Berry, please.
        Mr. Berry. Thank you, Congressman.
        You are correct that there seems to be fewer and fewer apps
    developers that will provide this technology, the coding
    necessary to unlock phones. Again, I mentioned the agent. In
    many instances, it is this individual or the wireless carrier
    that has the unique ability to unlock phones. And I think it
    would be appropriate to consider that capability, that unique
    capability as an agent of the consumer to help ensure that
    consumer can fully utilize their property rights. I think it is
    a good idea.
        Mr. Chaffetz. What is the penalty if you were to not
    comply? Based on the law, the way it is now, if somebody were
    to do this, what is the penalty for that?
        Mr. Berry. Well, my understanding is it could be a fine up
    to $500,000 and it could be criminal prosecution and potential
    incarceration. So it is a felony.
        Mr. Chaffetz. It seems pretty severe for unlocking a phone.
        Does anybody else care to weigh in on this? Yes?
        Mr. Metalitz. Yes, sir. I just wanted to make a couple of
    points.
        First, I know the issue of criminal penalties has come up
    here several times, and I think it is important to bear in mind
    that the act of unlocking a phone, even if you assumed there
    was no exemption at all, would only attract criminal penalties
    if it was done willfully for the purpose of commercial
    advantage or private financial gain. And those are limitations
    that the Congress put in in 1998 when it enacted the DMCA. So
    many of the scenarios we have been hearing about about
    individuals unlocking their own phones or donating a phone to a
    charity, this type of thing could not be reached by that. In
    fact, there have been virtually no prosecutions under section--
    --
        Mr. Chaffetz. Well, and that is a good reason to take it
    off the books, is it not?
        So would you agree, though, with Mr. Berry that the
    developers or distributors of these potential tools, if we were
    to enact something, should also be covered under this?
        Mr. Metalitz. Well, no, I would not agree with that. I
    think that is a separate question. The reason I think Congress
    set up the rulemaking the way it did to only deal with the act
    of circumvention was the concern about developing a marketplace
    for tools to hack through access controls. And very, very few,
    if any, of these tools are specifically limited to one type of
    access control or to one type of use. So the concern would be
    that developing a marketplace for these tools could lead to a
    lot of exposure of other----
        Mr. Chaffetz. But if the law was crafted such that your
    goal is to allow the consumer to unlock their phone, why would
    you not also protect the developer or the distributor of that
    tool or app or whatever it might be and allow that to happen?
        Mr. Metalitz. Well, I think the testimony has----
        Mr. Chaffetz. I mean, who is going to go and develop that
    if they are going, for their own financial gain, be facing a
    $500,000 fine and time in jail?
        Mr. Metalitz. I think the testimony has been that, first of
    all, in many cases this unlocking would be taking place with
    the consent of the copyright owner, which in the situations
    where the carriers are doing it----
        Mr. Chaffetz. What we are talking about is giving consumers
    more ability to do this. So why would you not protect the
    developer too?
        Mr. Metalitz. Well, I think the other thing to look at is
    whether between 2006 and today when this exemption has been in
    place that applies to the act of circumvention have consumers
    been unable to exercise it. I do not know the answer to that.
        Mr. Chaffetz. Well, I do.
        Mr. Chairman, as my time is expiring here, I think to truly
    have an understanding of how the technology works, there need
    to be--everybody in that food chain needs to be protected under
    the law so that they can provide these tools and allow access
    and allow more freedom for the consumers to make these types of
    choices.
        With that, I will yield back. Thank you.
        Mr. Marino. Thank you.
        The Chair recognizes Congresswoman Lofgren from California.
        Ms. Lofgren. Well, thank you very much, Mr. Chairman. It
    was good to hear Mr. Chaffetz's questions because I have a
    similar set of questions.
        First, let me say that I do support Chairman Goodlatte's
    bill. I believe I am a cosponsor of the bill, and I think it is
    a necessary thing.
        I also believe, however, that we ought to do something
    further. Congressman Tom Massie and I have a bipartisan bill,
    H.R. 1892, that would engage a permanent fix in the section
    1201 of the DMCA that would be not instead of the Chairman's
    bill but in addition to it because, as has been noted, we do
    need to amend some of our trade agreements. Sometimes I hear
    colleagues express concern about the role of the Congress in
    many of these trade agreements. I am certainly for trade, but
    they have managed to constrain the role of Congress in amending
    our laws as we see fit, which is a real problem for us. But we
    do direct in this bill the President to negotiate changes so
    that we can, once again, have our proper role as the
    legislative branch.
        I would like to ask unanimous consent to include in the
    record a letter to the Register of Copyrights from the
    Department of Commerce recommending cell phone unlocking.
        And if I could, Mr. Chairman, I would also like to ask
    unanimous consent to include in the record a letter from
    FreedomWorks, as well as a letter from the National Consumers
    League, supporting 1892 and certainly also supporting Mr.
    Goodlatte's bill.
        Mr. Marino. Without objection.
        [The information referred to follows:]

                                   __________

                                   __________

                                   __________

        Ms. Lofgren. I am really sort of in a pro-freedom place on
    this. The use of copyright to preclude people from using the
    phone that they bought with their own good money is just
    inappropriate. It is not the Congress' role to tell people the
    business model they should use. If people want to do a
    subsidized phone and a long contract, fine. If they do not want
    to do it, also fine. That is not our job to say how the market
    should work. But once someone buys something, they should own
    it.
        I just think that if a carrier--you know, you have got a
    contract, for example, and if someone breaks that contract, you
    have a lot of remedies. I mean, you can sue them. You can
    charge them a fee if you can put in your agreement. You can
    brick the phone. But I do not think that using criminal law to
    enforce the contract is appropriate. As a matter of fact, we
    have the same problem in the CFAA and its misuse with the late
    Aaron Swartz where you basically use the criminal law to
    enforce a private contract. That is just a misuse, I think, of
    the law.
        It is good to see you, Mr. Slover, and I remember your many
    years of service here to the Committee.
        It seems to me that--and it has been discussed--if you
    preclude individuals from using third party applications, which
    Mr. Goodlatte's bill does not address--and I do not criticize
    him. I think it is really not possible to do that without
    looking at 1201. You really, in many cases, preclude the owner
    of the phone from actually exercising their property rights,
    don't you? I mean, if I have a phone and I own the phone, I
    want to give it to my son, and the carrier will only unlock it
    for me as the owner, doesn't that constrain my property rights?
        Mr. Slover. Absolutely. We believe that the right to unlock
    should include the right to get help in figuring out how to
    unlock. We would ordinarily assume that that would be implicit
    in the right to unlock. If it is not, we would like to see it
    fixed.
        Ms. Lofgren. Well, I think, you know, I am glad that
    people--you know, our last vote was a while ago, and sometimes
    it is hard to have hearings after the votes are over, but I am
    glad that we all came back. I praise the Chairman for
    scheduling this hearing. As I say, I am a cosponsor and
    supporter of his bill. But I hope that we can go further and
    really address the property rights issue that is present here
    for American consumers and allow full property rights to attach
    to them and this misuse of copyright law to enforce private
    contracts to end. And I would recommend the bill that Mr.
    Massie and I have introduced as a way. And we have got
    tremendous support from not only FreedomWorks but the Consumers
    League, Public Knowledge, and on and on--this bipartisan bill.
        So I see my time is up and I yield back, Mr. Chairman, with
    thanks for recognizing me.
        Mr. Marino. Thank you.
        The Chair recognizes the Ranking Member, the gentleman from
    North Carolina, Congressman Watt.
        Mr. Watt. Thank you, Mr. Chairman.
        I think the Chair actually asked the question that I was
    most interested in hearing the answer to, and that was whether
    is there anybody in the world that is out there opposed to this
    bill. You all seem to think that there is not. At least, that
    was the consensus I got. Anybody in the audience maybe could
    raise their hand if there is anybody opposed to it. So you all
    have answered that, and I think the answer is you do not know
    of anybody. Is that correct?
        So the other question then I would ask is are there any
    suggested revisions to H.R. 1123 that would keep it in its
    current framework and deal with this issue, not the broader
    issues. Are there any revisions to H.R. 1123 that any of the
    panelists would suggest?
        Mr. Slover. Yes, Mr. Watt. We did make a number of
    recommendations in our written statement. They are the same
    recommendations that we made to the Register of Copyrights in
    the last review proceeding. We think those could all be done
    within the framework of reinstating the exemption in the 1201
    process with directives in the legislation to make whatever of
    those clarifications you saw fit.
        Mr. Watt. Wouldn't that put Congress in a more
    micromanaging position if we started going in every time a 1201
    proceeding concluded and saying, well, we agree with this and
    do not agree with that? I mean, it is one thing to do it when
    you have broad-based support without any opposition. It is an
    entirely different thing to go in--I mean, one of the reasons
    we punted that to the Librarian of Congress and set up this
    process was to take into account more technical issues and give
    it more expertise. So you are not suggesting that we do
    legislatively now go back and change that.
        Mr. Slover. Not as a larger matter. I am talking about
    specifically with this one. The proposals that we made to the
    Register we think are well considered and are warranted, and we
    had hoped to see them implemented by the Register of
    Copyrights.
        Mr. Watt. And this bill gives you a shot to do that because
    it requires further review of this in a fairly expeditious
    time, in fact, in a shortened time frame from the 3-year time
    frame.
        Mr. Slover. If you are talking about the further review
    that is directed as part of the legislation as introduced, I
    think that just goes to one of our recommendations, which was
    to include other devices----
        Mr. Watt. So I take it that there are some things that you
    would like for them to have done that they did not do other
    than this unlocking provision that we put in this bill that
    would have us second guess even other parts of what they did or
    did not do.
        Mr. Slover. Yes.
        Mr. Watt. Okay. I got you.
        Anybody else have any technical concerns about the content
    of H.R. 1123, things that you would suggest we might change?
        Mr. Berry. In short answer, no. I think that the bill needs
    to be enacted as quickly as possible.
        I think in all fairness I should mention that I too made
    recommendations to the Librarian of Congress on three areas.
        One is that it should be a wireless device, not a cell
    phone or a handheld phone. I think that is a recognition of
    where the economy has gone.
        Also, I suggested changing the burden of proof in the
    process itself. If you change the burden of proof so that there
    is some precedential value to a previous decision of the
    Librarian, then you give this opportunity to continue whatever
    the process was going forward. It is hard to prove a negative,
    and if you had an exemption in effect at the time that you are
    trying to prove what was the harm, then I think you have sort
    of a dilemma there. So we suggested, at some further discussion
    and at some other time, maybe you might want to address the
    burden of proof.
        I do not think it gets into the problem with WTO or the
    international treaties. In a previous life, I was chief counsel
    of the Senate Foreign Relations Committee. We looked at every
    treaty and every trade agreement that came through the Senate
    to ratify it, and I do not think that changing the burden of
    proof would be a significant international issue.
        The de novo issue is not a statutory issue. It is a
    requirement that the Committee put in via Committee reference
    in the report. So it is not really addressed. What gets me
    probably the most is the NTIA, specifically from this
    Committee, the Committee said that the Librarian of Congress
    shall consult NTIA. NTIA found that we had met the burden of
    proof to continue the exemption, but the Librarian of Congress
    made a decision to the contrary notwithstanding. And I would
    think that the Congress put ``shall'' in there for a reason.
    They did not put ``should.'' And the Librarian of Congress did
    not appreciate the NTIA's recommendation, and I think that
    there are some adjustments that could probably benefit
    everybody 3 years from now.
        Mr. Watt. I got you. But ``shall consult'' does not mean
    ``shall abdicate your responsibility.''
        I assume you are content to have those other issues.
    Hopefully we can address some of the ones Mr. Slover has
    suggested in a broader copyright context.
        Mr. Berry. I would like to see the Chairman's bill acted on
    immediately, yes, sir.
        Mr. Watt. But in this bill, you think we have found the
    sweet spot.
        Mr. Altschul. Well, if I could say the reason CTIA is able
    to support H.R. 1123 is because it is narrow and it does not
    reopen these issues, which have been fully aired in the past
    and I predict will be fully aired in the next triennial review
    and other bills as well.
        Mr. Watt. Mr. Chairman, I am well over my time. I
    appreciate your indulgence, but I want to express my sincere
    appreciation to the witnesses for being here. I know a number
    of them traveled distances. So we thank them for doing so.
        Mr. Marino. Thank you.
        I do too want to thank you for being here. Your insight and
    your knowledge is very helpful.
        I want to thank the citizens in the gallery for sitting
    here and listening to this and having an interest in it.
        And I thank my colleagues for being here because today they
    are headed back to work in their district, and I am sure some
    flights have been delayed because of this.
        So, again, thanks to all of you.
        This concludes today's hearing.
        Without objection, all Members will have 5 legislative days
    to submit additional written questions for the witnesses or
    additional materials for the record.
        This hearing is adjourned.
        [Whereupon, at 12:32 p.m., the Subcommittee was adjourned.]
                                A P P E N D I X

                                  ----------

                   Material Submitted for the Hearing Record

     Material submitted by the Honorable Zoe Lofgren, a Representative in
      Congress from the State of California, and Member, Subcommittee on
                Courts, Intellectual Property, and the Internet

                                   __________

    Prepared Statement of Derek S. Khanna, Founder, Disruptive Innovation,
         Visiting Fellow, Yale Law School, Information Society Project

              Prepared Statement of the Library Copyright Alliance