[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.*
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    *The Subcommittee did not submit post-hearing questions to the 
witnesses.
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    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.
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    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

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               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


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




































                                

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