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

             #CommActUpdate: PERSPECTIVES FROM FORMER FCC CHAIRMEN

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

                                    HEARING

                                   BEFORE THE

                 SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED THIRTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                JANUARY 15, 2014

                                   __________

                               Serial No. 113-112

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

                                        ______

                          U.S. GOVERNMENT PUBLISHING OFFICE

    88-469 PDF                     WASHINGTON : 2015
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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

    RALPH M. HALL, Texas                 HENRY A. WAXMAN, California
    JOE BARTON, Texas                      Ranking Member
      Chairman Emeritus                  JOHN D. DINGELL, Michigan
    ED WHITFIELD, Kentucky               FRANK PALLONE, Jr., New Jersey
    JOHN SHIMKUS, Illinois               BOBBY L. RUSH, Illinois
    JOSEPH R. PITTS, Pennsylvania        ANNA G. ESHOO, California
    GREG WALDEN, Oregon                  ELIOT L. ENGEL, New York
    LEE TERRY, Nebraska                  GENE GREEN, Texas
    MIKE ROGERS, Michigan                DIANA DeGETTE, Colorado
    TIM MURPHY, Pennsylvania             LOIS CAPPS, California
    MICHAEL C. BURGESS, Texas            MICHAEL F. DOYLE, Pennsylvania
    MARSHA BLACKBURN, Tennessee          JANICE D. SCHAKOWSKY, Illinois
      Vice Chairman                      JIM MATHESON, Utah
    PHIL GINGREY, Georgia                G.K. BUTTERFIELD, North Carolina
    STEVE SCALISE, Louisiana             JOHN BARROW, Georgia
    ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
    CATHY McMORRIS RODGERS, Washington   DONNA M. CHRISTENSEN, Virgin
    GREGG HARPER, Mississippi            Islands
    LEONARD LANCE, New Jersey            KATHY CASTOR, Florida
    BILL CASSIDY, Louisiana              JOHN P. SARBANES, Maryland
    BRETT GUTHRIE, Kentucky              JERRY McNERNEY, California
    PETE OLSON, Texas                    BRUCE L. BRALEY, Iowa
    DAVID B. McKINLEY, West Virginia     PETER WELCH, Vermont
    CORY GARDNER, Colorado               BEN RAY LUJAN, New Mexico
    MIKE POMPEO, Kansas                  PAUL TONKO, New York
    ADAM KINZINGER, Illinois             JOHN A. YARMUTH, Kentucky
    H. MORGAN GRIFFITH, Virginia
    GUS M. BILIRAKIS, Florida
    BILL JOHNSON, Ohio
    BILLY LONG, Missouri
    RENEE L. ELLMERS, North Carolina

                                     7_____

                 Subcommittee on Communications and Technology

                              GREG WALDEN, Oregon
                                     Chairman
    ROBERT E. LATTA, Ohio                ANNA G. ESHOO, California
      Vice Chairman                        Ranking Member
    JOHN SHIMKUS, Illinois               MICHAEL F. DOYLE, Pennsylvania
    LEE TERRY, Nebraska                  DORIS O. MATSUI, California
    MIKE ROGERS, Michigan                BRUCE L. BRALEY, Iowa
    MARSHA BLACKBURN, Tennessee          PETER WELCH, Vermont
    STEVE SCALISE, Louisiana             BEN RAY LUJAN, New Mexico
    LEONARD LANCE, New Jersey            JOHN D. DINGELL, Michigan
    BRETT GUTHRIE, Kentucky              FRANK PALLONE, Jr., New Jersey
    CORY GARDNER, Colorado               BOBBY L. RUSH, Illinois
    MIKE POMPEO, Kansas                  DIANA DeGETTE, Colorado
    ADAM KINZINGER, Illinois             JIM MATHESON, Utah
    BILLY LONG, Missouri                 G.K. BUTTERFIELD, North Carolina
    RENEE L. ELLMERS, North Carolina     HENRY A. WAXMAN, California (ex
    JOE BARTON, Texas                        officio)
    FRED UPTON, Michigan (ex officio)

                                      (ii)
                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, opening statement......................................     1
        Prepared statement...........................................     3
    Hon. Robert E. Latta, a Representative in Congress from the State
      of Ohio, opening statement.....................................     4
    Hon. Anna G. Eshoo, a Representative in Congress from the State
      of California, opening statement...............................     4
    Hon. Doris O. Matsui, a Representative in Congress from the State
      of California, opening statement...............................     5
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................     6
        Prepared statement...........................................     6
    Hon. Marsha Blackburn, a Representative in Congress from the
      State of Tennessee, opening statement..........................     7
    Hon. Joe Barton, a Representative in Congress from the State of
      Texas, opening statement.......................................     7
    Hon. Henry A. Waxman, a Representative in Congress from the State
      of California, opening statement...............................     8
    Hon. Michael F. Doyle, a Representative in Congress from the
      Commonwealth of Pennsylvania, opening statement................     9

                                   Witnesses

    Richard E. Wiley, Chairman, Wiley Rein LLP.......................     9
        Prepared statement...........................................    12
        Answers to submitted questions...............................    77
    Reed E. Hundt, Principal, REH Advisors...........................    16
        Prepared statement...........................................    18
    Michael K. Powell, President and Chief Executive Officer,
      National Cable and Telecommunications Association..............    30
        Prepared statement...........................................    33
    Michael J. Copps, Special Advisor, Media and Democracy Reform
      Initiative, Common Cause.......................................    43
        Prepared statement...........................................    47

             #CommActUpdate: PERSPECTIVES FROM FORMER FCC CHAIRMEN

                                  ----------

                          WEDNESDAY, JANUARY 15, 2014

                      House of Representatives,
         Subcommittee on Communications and Technology,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:03 a.m., in
    room 2123 of the Rayburn House Office Building, Hon. Greg
    Walden (chairman of the subcommittee) presiding.
        Members present: Representatives Walden, Latta, Shimkus,
    Terry, Rogers, Blackburn, Scalise, Lance, Guthrie, Gardner,
    Pompeo, Kinzinger, Long, Barton, Upton (ex officio), Eshoo,
    Doyle, Matsui, Braley, Lujan, Dingell, Pallone, Matheson, and
    Waxman (ex officio).
        Staff present: Gary Andres, Staff Director; Ray Baum,
    Senior Policy Advisor/Director of Coalitions; Sean Bonyun,
    Communications Director; Matt Bravo, Professional Staff Member;
    Andy Duberstein, Deputy Press Secretary; Gene Fullano, FCC
    Detailee; Kelsey Guyselman, Counsel, Communications and
    Technology; Sean Hayes, Counsel, Oversight and Investigations;
    Grace Koh, Counsel, Communications and Technology; Gib Mullan,
    Chief Counsel, Communications and Technology; David Redl,
    Counsel, Communications and Technology; Charlotte Savercool,
    Legislative Coordinator; Tom Wilbur, Digital Media Advisor;
    Jessica Wilkerson, Staff Assistant; Shawn Chang, Chief Counsel,
    Communications and Technology; Margaret McCarthy, Professional
    Staff Member; Kara van Stralen, Policy Analyst; and Patrick
    Donovan, FCC Detailee.

      OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
                   CONGRESS FROM THE STATE OF OREGON

        Mr. Walden. I will call to order the Subcommittee on
    Communications and Technology and thank our witnesses for being
    here for this first of what will be many hearings as we look to
    update the Communications Act. Few sectors of our economy are
    equal to the communications and technology sector when it comes
    to innovation, investment in the American economy, and job
    creation. In these tough economic times, we as policy makers
    should be committed to fostering this critical sector of the
    economy. Yet, the laws that regulate the industry are outdated
    at best, and some are affirmatively damaging. This is why
    Chairman Upton and I, along with members of this subcommittee,
    have decided to undertake the difficult task of updating the
    Communications Act of 1934. In the eight decades since its
    passage, Congress' have come and gone. Some have even made
    substantial though targeted changes to the law. But none have
    undertaken to rethink the act for the environment of
    convergence and innovation in which we live today. It is time
    for our laws to reflect our modern technological landscape, one
    grounded in the networks and services of our past and driven by
    our IP and mobile future.
        Just yesterday, the DC Circuit issued its decision in the
    net neutrality case, striking down the rules ordered by the
    Federal Communications Commission. I for one was pleased to see
    the Court remove the Government from the business of making
    management judgments and give providers the freedom to make
    decisions that are pro-competitive and pro-consumer. While this
    decision benefits consumers and providers alike by keeping the
    Internet free from Government interference, the rationale
    highlights the ongoing confusion regarding regulation of
    different services. This is yet another example of why it is
    vital that we take a hard look at the laws in this space and
    reconcile them with the realities of technology. The answer is
    not to subject new technology to outdated regulations, but
    rather to craft laws appropriate to innovative services and
    platforms.
        As we embark on this effort, it should come as no surprise
    that I am focused on ensuring that we engage in a transparent
    and collaborative process, not just with our colleagues here in
    the Congress but also with the many stakeholders outside of
    these halls. All we want is a dialogue.
        Last week, the committee released the first of what will be
    a series of white papers seeking input from the public. And I
    hope that interested parties will take the opportunity to make
    their voices heard to us.
        Today's witnesses provide a unique and valuable perspective
    on the Communications Act. As Chairmen of the agency tasked
    with carrying out Congress' will in implementing the act, the
    four witnesses today have had a front row seat to witness the
    act in the real world to see where it works and where it
    doesn't. These Chairmen have varied experiences and viewpoints
    that in many ways represent the evolution of modern
    communications.
        When Chairman Wiley led the agency, telephone service was a
    Government-regulated monopoly. Consumers got their news from
    broadcast television and print newspapers, and the Internet was
    still years away. Sixteen years later, when Reed Hundt took the
    reins, the Internet was coming into full force and mobility was
    beginning to take off. Chairman Powell's tenure saw the
    convergence of services towards the bundled offerings we see
    today, as well as the deployment of broadband to Americans. And
    in the 4 years since Michael Copps served as Acting Chairman,
    there have been dramatic changes to the way we communicate and
    the technology that powers our lives. For example, the title of
    today's hearing contains a hashtag. Twitter, then with no
    vowels in its name, had yet to be ``discovered'' by--at South
    by Southwest.
        Neither we nor the august panel before us can predict the
    future and what technological changes it will bring. But by
    learning the lessons of the past, we can do our best to create
    a legal and regulatory environment that will foster innovation
    and competition, encourage consumer choice and optimum
    services.
        So again, I want to thank you for--to our witnesses for
    this impressive panel. We look forward to hearing your
    testimony. And we appreciate your public service.
        [The prepared statement of Mr. Walden follows:]

                     Prepared statement of Hon. Greg Walden

        Few sectors of our economy are equal to the communications
    and technology sector when it comes to innovation, investment
    in the American economy, and job creation. In these tough
    economic times, we as policymakers should be committed to
    fostering this critical sector of the economy. Yet the laws
    that regulate this industry are outdated at best and some are
    affirmatively damaging. This is why Chairman Upton and I, along
    with the members of this subcommittee, have decided to
    undertake the difficult task of updating the Communications Act
    of 1934. In the eight decades since its passage, Congresses
    have come and gone. Some have even made substantial, though
    targeted, changes to the law. But none have undertaken to
    rethink the act for the environment of convergence and
    innovation we live in today. It's time for our laws to reflect
    our modern technological landscape--one grounded in the
    networks and services of our past and driven by our IP and
    mobile future.
        Just yesterday, the DC Circuit issued its decision in the
    net neutrality case, striking down the rules ordered by the
    FCC. I was pleased to see the court remove the Government from
    the business of making management judgments, and give providers
    the freedom to make decisions that are pro-competitive and pro-
    consumer.
        While this decision benefits consumers and providers alike
    by keeping the Internet free from Government interference, the
    rationale highlights the ongoing confusion regarding regulation
    of different services. This is yet another example of why it is
    vital that we take a hard look at the laws in this space and
    reconcile them with the realities of technology. The answer is
    not to subject new technology to outdated regulations, but
    rather to craft laws appropriate to innovative services and
    platforms
        As we embark on this effort, it should come as no surprise
    that I am focused on ensuring that we engage in a transparent
    and collaborative process, not just with our colleagues here in
    Congress, but also with the many stakeholders outside these
    halls. What we want is a dialogue. Last week, the committee
    released the first of a series of white papers seeking input
    from the public, and I hope that interested parties will take
    the opportunity to make their voices heard.
        Today's witnesses provide a unique and valuable perspective
    on the Communications Act. As Chairmen of the agency tasked
    with carrying out Congress's will and implementing the act, the
    four witnesses today have had a front row seat to witness the
    act in the real world; to see where it works and where it
    doesn't. These Chairmen have varied experiences that in many
    ways represent the evolution of modern communications. When
    Chairman Wiley led the agency, telephone service was a
    Government-regulated monopoly, consumers got their news from
    broadcast television and print newspapers, and the Internet was
    still years away. Sixteen years later, when Reed Hundt took the
    reins, the Internet was coming into full force, and mobility
    was beginning to take off. Chairman Powell's tenure saw the
    convergence of services towards the bundled offerings we see
    today, as well as the deployment of broadband to Americans. And
    in the 4 years since Michael Copps served as Acting Chairman,
    there have been drastic changes to the way we communicate and
    the technology that powers our lives. For example, the title of
    today's hearing contains a hashtag. Twitter, then with no
    vowels in its name, had yet to be ``discovered'' at South by
    Southwest.
        Neither we nor the august panel before us can predict the
    future and what technological changes it will bring. But by
    learning the lessons of the past, we can do our best to create
    a legal and regulatory environment that will foster innovation
    and competition, encourage consumer choice, and optimum
    services. Again, thank you to our impressive panel of witnesses
    today--we look forward to hearing your testimony and we
    appreciate your public service.

        Mr. Walden. With that, I would yield to the vice chair of
    the subcommittee, Mr. Latta, for any opening comments he may
    have.

    OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF OHIO

        Mr. Latta. Well, thank you very much, Mr. Chairman, and
    thank you very much to our panel of distinguished witnesses for
    testifying before us today. I appreciate you all being here.
        Since 1996, we have witnessed an unprecedented
    technological evolution in the communications industry. The
    rapid emergence of new and innovative technologies has fostered
    increased investment throughout the industry and the
    development of a vibrant, competitive communications
    marketplace. As we move into the future, it is important to
    examine the Communications Act to ensure that our public policy
    continues to encourage this kind of growth and innovation that
    is essential to fueling our economy. Reforms to current law
    should reflect the technology we enjoy today and be able to
    adapt to the technology of tomorrow without further Government
    intervention. Our efforts should be dedicated to ensure that
    the laws governing the communications marketplace do not stifle
    current and future investment, innovation, economic growth and
    consumer choice in this dynamic and converging digital age of
    communications.
        I look forward to the testimony from our witnesses today.
    And again, Mr. Chairman, I thank you very much for holding this
    hearing.
        Mr. Walden. I thank the gentleman for his comments. Now, I
    turn to the gentlelady from California, Ms. Eshoo, the ranking
    member of the subcommittee, for her opening comments. Good
    morning.

     OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Ms. Eshoo. Thank you, Mr. Chairman, and good morning to
    you, to all of the members and the warmest welcome to each of
    the witnesses that are at the table. Your combined public
    service is--really stands as a hallmark of devoted service to
    our country, but also to move the country forward in one of its
    most important economic sectors. So welcome to you. It is
    wonderful to see all of you at the same time at the table.
        With news of the Court's net neutrality decision, today's
    hearing I think is a timely opportunity to hear from each one
    of you who have led the expert agency, the FCC. And combined,
    it represents over 4 decades of services. That is nothing short
    of extraordinary. And each of you have had a hand in really I
    think changing our Nation's communications and technology
    landscape. So not only kudos to you, thank you to you, but a
    recognition of what each one of you accomplished.
        When Congress passed the Telecommunications Act of 1996, it
    was my second term in Congress, my first term on the committee.
    And there were just 11 references to the Internet--the word
    Internet, and only one mention of broadband across a 128 page
    bill. Many proponents of updating the act have cited this as
    evidence that the act is outdated and unable to keep up with
    changes in technology.
        But as Chairman Wheeler affirmed last week, the
    Communications Act continues to provide the FCC with ample
    authority to exercise its role in this new environment. The
    Court's decision yesterday I believe furthers this argument by
    upholding the FCC's existing authority to oversee broadband
    services. And I think that is very important for consumers
    across the country.
        I make these points not to discourage the subcommittee's
    review of the act. I join with the chairman to review this. I
    think that it is a worthy exercise. But rather, we need to
    ensure that we know what problems we are trying to fix before
    undertaking a multi-year examination that include hearings,
    stakeholder meetings, white papers, and such.
        Since the '96 act was enacted, hundreds of new entrants of
    emerged, and more than $1.2 trillion has been invested by U.S.
    telecommunications companies. I want this success story to be
    an unending one. And I think that is the goal of everyone on
    this wonderful subcommittee.
        So to that end, my goal throughout the subcommittee's
    review will be to see more competition, greater consumer choice
    and more innovation. I am so proud, as the Chairman was making
    his opening remarks, that so much of this has been born in my
    congressional district. And so, innovation, innovation,
    innovation. And these goals were imbedded in the '96 Act, and
    they remain just as important today.
        At the same time, our process of examining the
    Communications Act should not derail, in my view, a more
    immediate update of our video laws, a view shared by a majority
    of the witnesses at a September subcommittee hearing. Recurring
    TV blackouts, coupled with the rising cost of broadcast
    television programming with limited choice has left consumers
    frustrated and looking to Congress and the FCC for answers. I
    believe that working together on a bipartisan basis, we can
    make this happen in 2014.
        So, Chairman Walden, thank you for holding today's hearing
    on the Communications Act. I welcome the review, and I look
    forward to hearing the unique insights from the top experts
    from our country who have given so much in terms of their
    leadership in leading the expert agency. And with that, I have
    34 seconds to yield to Congresswoman Matsui.

    OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Ms. Matsui. Thank you, Ranking Member. And I want to
    welcome all the former Chairmen. We welcome you here for your
    ideas and experience that provide a basis for discussions
    moving forward.
        As technology evolves, I believe it is important that we
    consider appropriate updates to the Communications Act that
    with goals that promote competition and innovation in the
    marketplace. To that point, I am pleased that yesterday, the DC
    Circuit affirmed the FCC's authority to oversee broadband
    services. In my opinion, that was the crux of the debate, and
    the FCC's argument prevailed on the question of authority over
    broadband. The FCC will need to exert its authority to ensure
    now that all Americans have access to a free and open Internet.
    A competitive marketplace with checks and balances will fare
    well for all Americans.
        I look forward to the hearing today, and I yield back the
    balance of my time.
        Mr. Walden. The gentlelady yields back the balance of her
    time. The Chair now recognizes the distinguished member from
    Michigan, the chairman of the full committee, Mr. Upton, for
    opening comments.

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

        Mr. Upton. Thank you, Mr. Chairman.
        Last month, you and I announced our plans for a
    comprehensive update to the Communications Act of 1934. And the
    changes in technology since the last update in '96 have been
    dramatic, and existing laws have failed to keep pace with the
    vibrant and dynamic telecommunication industry.
        Communications and technology sectors have consistently
    been areas of American leadership, innovated--innovation and
    job creation, certainly. But the Communications Act is showing
    its age, and our continued international leadership is indeed
    at stake.
        Yesterday's net neutrality decision, while a victory for
    consumers in the economy, illustrates the uncertainty flowing
    from the current statutory scheme and the need for this action.
    It is time to revamp these laws to reflect the new competitive
    landscape and changing consumer expectations. And as we begin
    the open process leading to a Comm Act Update, we are looking
    for input--yes, we are--from all of the stakeholders in the
    communications and technology world. Where better to start than
    with our distinguished panel of former leaders of the FCC?
    These leaders served during diverse times in the evolution of
    the communications sector, and they have seen the market
    operate under the strong hand of the U.S. Government and the
    challenges with them divorcing the Government from its heavy
    regulation of the communications sector from times before. They
    have seen cable grow from its stages of struggling startup.
    They have seen satellite services succeed in bringing
    competition to the video market, and failed to find success as
    a competitor to mobile phone service. And they have seen the
    Internet grow from a DOD project to a tool for research
    universities, and now as the commercial economic force that we
    know today.
        Throughout the many nuanced iterations of Communications
    Act, today's witnesses have firsthand seen the act at its
    finest, and also when its inability to keep pace with
    technological innovation has impacted those vital economic
    issues. So I want to thank the witnesses for taking their time
    to share their experiences with us. We value indeed their
    expertise and welcome their thoughts on how we can ensure the
    Communications Act fosters our communications and technology
    sectors well into this century.

        [The prepared statement of Mr. Upton follows:]

                     Prepared statement of Hon. Fred Upton

        In December, Chairman Walden and I announced our plans for
    a comprehensive update to the Communications Act of 1934. The
    changes in technology since the last update in 1996 have been
    dramatic and existing laws have failed to keep pace with the
    vibrant and dynamic telecommunications industry. The
    communications and technology sectors have consistently been
    areas of American leadership, innovation, and job creation, but
    the Communications Act is showing its age and our continued
    international leadership is at stake. Yesterday's net
    neutrality decision, while a victory for consumers and the
    economy, illustrates the uncertainty flowing from the current
    statutory scheme and the need for this action. It's time to
    revamp these laws to reflect the new competitive landscape and
    changing consumer expectations.
        As we begin the open process leading to a #CommActUpdate,
    we are looking for input from all of the stakeholders in the
    communications and technology world. Where better to start than
    with our distinguished panel of former leaders of the Federal
    Communications Commission. These leaders served during diverse
    times in the evolution of the communications sector. They've
    seen the market operate under the strong hand of the U.S.
    Government and the challenges with then divorcing the
    Government from its heavy regulation of the communications
    sector. They've seen cable grow from its days as a struggling
    startup. They've seen satellite services succeed in bringing
    competition to the video market--and fail to find success as a
    competitor to mobile phone service. And, they've seen the
    Internet grow from a DoD project, to a tool for research
    universities, and now as the commercial economic force that we
    know today. Throughout the many nuanced iterations of the
    Communications Act, today's witnesses have seen firsthand the
    act at its finest and also when its inability to keep pace with
    technological innovation has impacted these vital economic
    sectors.
        I thank the witnesses for taking time to share their
    experiences with us. We value their expertise and welcome their
    thoughts on how we can ensure that the Communications Act
    fosters our communications and technology sectors well into the
    21st century.

        Mr. Upton. And I yield the balance of my time to the vice
    chair.

    OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
                  CONGRESS FROM THE STATE OF TENNESSEE

        Mrs. Blackburn. And thank you, Mr. Chairman. And if I had
    my iPhone in my hand, I would hit re-tweet for everything that
    he has just said.
        We do appreciate that you all are here. We do want to take
    advantage of the perspective that you have had. Think about
    what has happened in the past 17 years since '96 and the
    changes that we have seen, not only in how we communicate but
    the rapidity of those communications and entertainment and how
    we access that, how we take it with us, how we consume it. So
    we know that the pace of change means that we have to be very
    judicious and careful as we look at a rewrite. We know that
    there are issues that are going to come on the plate that we
    are going to have to discuss also as we look at not only the
    telecom rewrite but at the use of the virtual space, privacy,
    data security, the way the virtual marketplace is used and the
    way our constituents want to have a toolbox to protect, as I
    call it, their virtual you online.
        So we appreciate your time, your willingness to be with us
    this morning. And I yield back to the chairman of the
    committee.
        Mr. Upton. Yield back.
        Mr. Walden. The gentleman from Texas, Mr. Barton, will use
    some of that time.

       OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
                    CONGRESS FROM THE STATE OF TEXAS

        Mr. Barton. Thank you. Thank you, Mr. Chairman. I have
    served on this committee since 1986. I have served with three
    of the four former Chairmen. Mr. Wiley preceded me. We have had
    some agreements. We have had some disagreements. So it is good
    to have all four of you gentlemen here today.
        When I was chairman of the full committee back in 1996, my
    committee introduced a bill we call the COPE Bill, the
    Communication Opportunity Promotion Enhancement Act of 2006. It
    dealt with national franchising, net neutrality, public
    educational and governmental access, E911 and what we now call
    VOIP. It passed this committee 42 to 12, and passed the House
    321 to 101. But it didn't come up for a vote in the Senate. I
    voted for the Telecommunications Act of '96 and the Cable Act
    of '92. And I hope this year to get to vote for another major
    bill that comes from the leadership of Mr. Upton, Mr. Walden,
    Mr. Waxman and Ms. Eshoo. This is a good thing to be doing. And
    we are going to get some good information from you gentleman.
    And we appreciate you being here.
        Mr. Walden. The gentleman's time has expired. I appreciate
    his comments. We will now go to the former chairman of the
    committee, Mr. Waxman, for opening comments.

    OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
                 CONGRESS FROM THE STATE OF CALIFORNIA

        Mr. Waxman. Thank you very much, Mr. Chairman. I appreciate
    your convening this morning's hearing and launching the
    subcommittee's examination of potential updates to the
    Communications Act. And I want to thank our distinguished panel
    for being here to help us think through these ideas. And I
    think I have been in Congress during the time that all of you
    have been the heads of the FCC.
        Technology has changed at a blistering pace since the
    enactment of the 1996 Telecommunications Act, 18 years ago. The
    communications and technology industries are a thriving sector
    of our economy. As broadband plays an increasingly central role
    in the daily life of our Nation, having a strong Federal
    Communications Commission to oversee its successful growth is
    more critical than ever.
        Yesterday, the DC Court affirmed what never should have
    been in question. The FCC is the expert agency charged by
    Congress to oversee broadband networks. In doing so, the Court
    reaffirmed that the FCC has broad, flexible authority to
    regulate in the broadband and digital age. However, while the
    Court recognized the FCC's jurisdiction, it also overturned the
    specific rules the Commission had adopted in the open Internet
    order. I believe the FCC now has an opportunity, as well as a
    duty, to exercise the authority the Court recognized yesterday
    and reinstate the no-blocking and nondiscrimination rules. An
    open Internet is critical to the continuing growth of this
    economic sector.
        The Internet is a vibrant platform for commerce, innovation
    and free speech. Having enforceable, open Internet rules of the
    road means that consumers are in control of their experience
    online. I am pleased that Chairman Wheeler has stated his
    intention to expeditiously adopt a new set of rules following
    the Court's guidance. And I look forward to working with the
    chairman and my colleagues in Congress to make sure these pro-
    consumer, pro-competition policies will continue to guide the
    expansion of broadband services.
        This subcommittee is now embarking on a journey to update
    the Communications Act. And regardless of the advancements in
    network architecture or transmission protocol, the principles
    of competition and consumer protection remain as sound today as
    they were in 1934. I know Chairman Wheeler recognizes the
    importance of these values and the action of the FCC that plans
    to take later this month to initiate technology transitions
    trials reflects that.
        I look forward to hearing from our witnesses about what
    Congress can do to help the FCC meet the challenges of the
    broadband and digital age.
        Thank you, Mr. Chairman. I want to yield the balance of my
    time to Mr. Doyle.

    OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN
             CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA

        Mr. Doyle. Thank you, Mr. Waxman. Mr. Chairman, thank you
    for holding this hearing. And thank you to this distinguished
    panel. It is good to see all of you here in front of the
    committee.
        I just want to briefly concur with Mr. Waxman in light of
    yesterday's decision by the DC Circuit that I want to encourage
    Chairman Wheeler to work quickly to ensure that the Internet
    remains an open platform for innovation, competition and
    economic growth, which the FCC now clearly has the authority to
    do. I look forward to working with the Commission and the
    stakeholders to put in place a robust framework that sustains
    an open Internet.
        Mr. Waxman, I thank you for your courtesy. And I would
    yield back to you if someone else needs some more time.
        Mr. Waxman. Would--like a minute? If not, I yield it back,
    Mr. Chairman.
        Mr. Walden. The gentleman yields back the balance of his
    time. We will proceed now to our distinguished panel of
    witnesses and begin with Chairman Richard Wiley who was
    nominated by President Nixon and served as Chairman of the
    Federal Communications Commission from 1970 to 1977. As
    Chairman for most of the '70s, Chairman Wiley's tenure at the
    Commission predates many of the major changes in the
    communications sector. Chairman, we are glad to have you here
    today. Pull that microphone up close, and then we are good to
    go. Thank you for being here. You need to push the button on
    the microphone there one time.

    STATEMENTS OF RICHARD E. WILEY, CHAIRMAN, WILEY REIN LLP; REED
    E. HUNDT, PRINCIPAL, REH ADVISORS; MICHAEL K. POWELL, PRESIDENT
            AND CHIEF EXECUTIVE OFFICER, NATIONAL CABLE AND
     TELECOMMUNICATIONS ASSOCIATION; AND MICHAEL J. COPPS, SPECIAL
      ADVISOR, MEDIA AND DEMOCRACY REFORM INITIATIVE, COMMON CAUSE

                     STATEMENT OF RICHARD E. WILEY

        Mr. Wiley. Thank you very much, Chairman Walden, Ranking
    Member Eshoo and other subcommittee members. Thank you for the
    invitation to testify today.
        While I know it is not going to be self-evident due to my
    youthful appearance, I have been involved for nearly 45 years
    in Federal telecommunications policy. And from my own
    standpoint, what has occurred during that period is simply
    amazing. When I was at the FCC in the 1970s, the average
    American enjoyed just three broadcast television stations, and
    one local and long distance telephone provider. And the
    Department of Defense had just begun to explore a revolutionary
    computer project known as ARPANET. But today, our citizens have
    access to hundreds of video channels delivered by countless
    providers and transmission technologies, dozens of voice and
    tech services, numerous wire line and wireless companies. And,
    of course, ARPANET has morphed into the Internet, which has
    become a universal medium of communications.
        Interestingly, the bulk of this stunning technological
    metamorphosis has emerged since the 1996 Telecommunications Act
    was passed. That legislation significantly altered the rules
    governing virtually every aspect of communications. The act's
    purpose was as simple in theory as it was complex in
    implementation. That is to provide for a pro-competitive,
    deregulatory national policy framework designed to accelerate
    the deployment of advanced services and open all telecom
    markets to competition.
        To this end, the statute sought to eliminate cross-platform
    barriers and to encourage competition among service suppliers,
    previously treated as monopolies or oligopolies. Now to the
    credit of the drafters, the 1996 act helped to bring about the
    vibrant competition that consumers enjoy today in a variety of
    communication sectors, be it voice, data or video. Whether
    delivered by twisted pair coaxial cable, optical fiber or the
    electromagnetic spectrum, myriad providers today are offering
    their customers suites of advanced services in a marketplace
    that really could not have been imagined 18 years ago.
        In my view, where the statute and indeed FCC implementation
    has succeeded is when a lighter regulatory touch has been
    applied to markets such as mobile and information services. The
    result has been that these sectors have thrived. For example,
    in the robustly competitive wireless marketplace, there are now
    more wireless subscriber connections than the population of the
    United States. Just think of that. And mobile broadband has
    spawned an entirely new industry. Mobile apps, one that is
    estimated to employ more than 500,000 developers and related
    jobs, and contributes billions to the economy.
        A similar success story is unfolding in the delivery of
    digital content where seemingly unlimited video streaming Web
    sites have developed to compete against traditional MVPDs
    offering an eagerly waiting public new ways to consume video.
    This marketplace, I would suggest, is emerging because of
    innovation and competition and not because of Government
    regulation.
        Conversely, where the Government has been less effective in
    maintaining is in maintaining highly restrictive regulations on
    traditional industries like, for example, wire line telephony
    and broadcasting. The end result has been to disadvantage these
    sectors, even though they may be providing services that are
    often equivalent to those offered by their less regulated
    competitors. In the developing IP centric world, all types of
    providers should be able to market all kinds of services,
    employing the same computer oriented language that defines
    digital communications.
        And yet, the 1996 act continues to regulate communications
    markets differently based on the conduit used to reach the
    customer, as well as the geographic location where traffic
    originates and terminates. Now, the underlying problem is not a
    failure of Congressional or FCC vision. Instead, the reality is
    that the Government has great difficulty in writing laws or
    promulgating regulations that can keep pace with advancing
    technology, and especially so in a dynamic and ever changing
    industry like communications.
        Thus, I would suggest that the objective of a statutory
    rewrite should not be to legislate premised on the current
    state of the marketplace, or even on predictions of what it may
    look like in the future. Instead, Congress may want to consider
    a flexible and technologically neutral framework that will be
    capable of adapting to technical invention and innovation,
    whatever that may prove to be.
        In this regard, let me close by setting forth a few
    principles that might guide the drafting of a new statue.
    First, the industry's silos embedded in the 1996 act should be
    abolished. And, instead, functionally equivalent services
    should be treated in the same manner, regardless of who
    provides them or how they are delivered to consumers. Second,
    the traditional dichotomy between interstate and intrastate
    services should be eliminated, because regulatory
    classifications based on geographical end points no longer
    makes sense in an IP environment. Third, legislation should be
    focused on maintaining consumer protection and public safety
    regulations. Conversely, economic regulations should be
    considered in the case of noncompetitive markets or in the
    event of demonstrated market failure. And, fourth, new
    regulations should be instituted with a lighter touch, as I
    said, accompanied by sunset provisions so that the rational for
    continued Government intervention can be reviewed on a regular
    basis.
        Thank you once again for the opportunity to testify.
        [The prepared statement of Mr. Wiley follows:]

        [GRAPHIC] [TIFF OMITTED]

        Mr. Walden. Chairman Wiley, thank you very much for your
    learned comments. We appreciate your counsel. We go now to
    Chairman Reed Hundt who was nominated by President Clinton and
    served as Chairman of the FCC from 1993 to 1997. Chairman
    Hundt's tenure at the Commission saw the passage of the Omnibus
    Budget Reconciliation of '93, which granted the Commission the
    authority to auction spectrum licenses, and the
    Telecommunications Act of '96. So, Chairman Hundt, thanks for
    joining us today. We look forward to your comments as well.

                       STATEMENT OF REED E. HUNDT

        Mr. Hundt. Thank you, Chairman Walden. Thank you for
    inviting me. Good morning to Ranking Member Eshoo and to all
    the other members of this distinguished committee. I am very
    proud that many of you have become lifelong friends. And it is
    a pleasure to be here with you.
        I also want to thank the DC Circuit for giving me a
    flashback to law school so that I was late last night
    scrambling to read the key case right before this class. I have
    a feeling I am not the only person here who did that, but I
    also want to note I didn't have any staff or classmates. So I
    apologize if I haven't read it correctly, but I thought that I
    would throw away my remarks and, for whatever it is worth,
    offer you my reading of the case.
        In my view, the DC Circuit has written, first, a very, very
    well-reasoned and very important case. There is no question
    that this reflects that Circuit's experience in these topic
    areas, and that they have brought that experience to bear in a
    bipartisan way to express a view about how the United States
    looked to grant the authority to create the legal culture that
    governs broadband.
        What have they said? I believe the Court has vindicated the
    wisdom of Congress in the 1996 act. Specifically, the Court has
    said that when Congress, in that act in Section 706 conveyed to
    its expert agency the ``authority to enact measures encouraging
    the deployment of broadband infrastructure.'' In doing that,
    according to the DC Circuit, Congress said the FCC, you will be
    our instrument for creating a flexible and a supple legal
    culture that will change over time as the market changes and as
    technology changes, but that can always be used to protect
    competition, to protect consumers and, fundamentally, to make
    sure that absolutely everybody in America is participating in
    the common medium of the Internet, and that absolutely
    everybody in America is able to use it to publish their views
    and to review all the views of everyone else. Not all those
    words are in this decision, but almost all those words are
    actually in this decision.
        Section 1706, of course, is just one part of the 1996 act.
    But I know I don't have to remind many of the Members here.
    Maybe I don't have to remind any of the Members here. That was
    passed by a very large bipartisan vote in the Senate and in the
    House. We all were--those of us who were in public service then
    remember being in the Library of Congress when President
    Clinton, the Democratic President, passed this law that was
    passed by a Senate controlled by the Republicans and a House
    controlled by the Republicans. And all came together and said
    we have a common vision. And that is that there will be
    networks. We did not know technically speaking what they would
    all exactly look like, but that there would be networks that
    would connect all of us to each other and to all of the
    resources of information that in fact would be utilized for
    entrepreneurship, for innovation and for learning. And I have
    to say, this is what has happened.
        Now, no one here thinks the Government built these
    networks. No one thinks the FCC built these networks. But
    everyone should know that the legal culture that was created by
    Congress and its expert agency, through the terms of Republican
    and Democratic Chairs, the legal culture is the legal culture
    that is regarded all around the world as the absolute best
    legal culture for governing the Internet. Any one of us knows
    12 things that we think should be done differently, or maybe
    two dozen. But we ought to recognize, just for a little while,
    that we as a country should pat our country on the back and
    say, for the last 20 years, the legal culture that has been
    created that has governed the Internet has really created the
    best possible environment for innovation, for entrepreneurship
    for consumers. That is what has actually happened. And this
    Court has said and that law still exists. This Court has said,
    already, Congress has enacted the law that gives the FCC the
    authority to protect competition and consumers. And that
    authority, according to this Court, lies in Section 1706. And
    the Court also said that Congress can--that the FCC can, if it
    choose, classify broadband as a common carrier. It could use
    either of these methods. It could use one of these methods. But
    it can accomplish the goals that are stated in the act and that
    have repeatedly been restated by this Congress.
        The only thing the Court said is if you are going to pass
    rules that look like common carrier rules, and you are going to
    classify broadband as an information service, then you are
    going to be creating a contradiction that we won't permit. You
    can't call it an information service and then pass rules that
    look like common carrier rules, because if it quacks like a
    duck, it is a duck. So that is why it was sent back.
        I read a lot of articles that said that this was a victory
    for Verizon. This is a victory for Congress. If it was a
    victory for Verizon, it was a Pyrrhic victory. It was the most
    perfect example of a Pyrrhic victory since Pyrrhus. So I just
    want to compliment this Congress on passing a supple law that
    has worked well, and this Court has just said still will permit
    you to achieve your goals through the expert agency. Thank you.
        [The prepared statement of Mr. Hundt follows:]

        [GRAPHIC] [TIFF OMITTED]

        Voice. Thank you.
        Mr. Walden. Thank you, Chairman Hundt. We appreciate your
    comments and your staying up all night to cram for our hearing.
    We will now turn to Chairman Michael Powell who was nominated
    by George W. Bush and served as Chairman of the FCC from 2001
    to 2005. During Mr. Powell's Chairmanship, they saw a
    significant increase in the deployment of broadband to American
    homes, as well as convergence of services toward the bundles of
    services that are common today, among many other things.
    Chairman Powell, thank you for joining us today. And please, go
    ahead.

                     STATEMENT OF MICHAEL K. POWELL

        Mr. Powell. Thank you, Mr. Chairman. And as a former
    Chairman, I am happy to be sitting around with a bunch of these
    other Chairmen offering, as best we can, our historic
    perspectives on how to prudently go about rewriting the act,
    should that be your intention. And I am pleased to be with
    Ranking Member Eshoo again and all the distinguished members of
    the committee.
        I think it goes without saying, and all of us will say it
    in different ways that the world has changed quite radically
    from 20 years ago in terms of markets and services. But don't
    ask us, ask your kids. Ask them to name three broadcast
    networks, if you will. Ask them to do without the Internet for
    a week. And for God sakes, ask them to put their phone down at
    dinner and see what reaction you get. I think you will be
    convinced.
        That transformation has taken place largely because of an
    enormous revolution in network architecture in the form of the
    Internet, which has unleashed a form of intermodal competition
    that heretofore wasn't really possible. And it has really
    introduced an exciting world. And we should remember, gave
    birth to a host of companies and opportunities that never were
    envisioned before, the companies that aren't here--Google,
    Facebook, Amazon, eBay, Twitter, Instagram, you name it--all
    able to be born and flourish because of this transformation.
        I would say that any consideration of the act should start
    with not only cataloging its ills but cataloging its success,
    as much as Reed was alluding to. I think it is really important
    to note that over this period, we have seen the most stunning
    amount of investment in infrastructure and architecture that we
    have ever seen. We have reached 90 percent of Americans faster
    than any other technology in world history. Innovation and
    growth have continued at exponential rates with broadband
    increasing over 19 times just in the last decade, doubling
    basically, increasing about 50 percent annually. That is a
    stunning achievement and something we should make sure we keep
    going. So I think, you know, being guided by the old maxim of
    do no harm is an important cautionary tale.
        As I thought about how you might think about architecting a
    new regime, I am guided by the idea of the Internet itself,
    which is the fundamental principle of simplicity as a design
    principle. It has been a very, very powerful one in the
    Internet. And I think it offers some guidance in this space as
    well.
        So I would like to, toward that end, offer--I am going to
    see Mr. Wiley's four principles and do them three better and
    offer you seven as briefly as I can. The first is we have heard
    a lot about innovation. I do think the principle goal of the
    Government should be to nurture that innovation. This is the
    kind of formenting change we have never been able to harness as
    fully as we are today. Innovation has allowed us to bring
    completely new products and services and network changes to the
    market. It has created a form of creative destruction that
    keeps the market energetic and keeps a monopoly in check. And I
    think it has created new kinds of transparency for the American
    consumer through crowdsourcing and visibility. And we should
    study the conditions that go into innovation and make sure we
    harness them. I think three are critical. Innovations really do
    require freer markets. And a market that moves at Moore's Law
    speed, the pace of adaptation, transformation and change are
    incredibly fast. And there needs to be a constant and intense
    dialogue between producers and consumers. And we should be
    careful to protect that.
        Innovation requires risk taking. And ask we know, most new
    adventures fail. There has to be room in Government policy for
    failure. There has to be room in Government policy for
    encouraging taking those risks. And innovation requires
    stability. Investing more than a trillion dollars, as
    Congressman Eshoo was talking about earlier, since 1996 is
    stunning. But it requires a stable regulatory environment to
    provide that uncertainty. Because if investment slows,
    innovation will slow with it.
        The second rule of simplicity I think is once you have
    created a lighter regulatory environment by trying to pursue
    the maxim of less is more, organize it better. We certainly
    have heard about the challenges of silos and buckets. Clearly,
    that had its place in another time when these technologies,
    applications and type of companies were deeply intertwined,
    were not able to provide alternative services in other spaces.
    That day has moved on, and we certainly crave a more unified,
    integrated kind of legal regime that doesn't make those sorts
    of distinctions. In fact, as I have heard mentioned today, I
    think yesterday's court decision in the multi-year debate on
    net neutrality that illustrates the almost torturous
    challenges, sometimes, of addressing a modern circumstance in
    using provisions of last century's rules. I think there is
    certainly widespread agreement on core principles around an
    open Internet. After somewhat kludge past we have had to follow
    in an effort to implement them has made the matter, I believe,
    infinitely more complex and controversial than necessary. And
    the threat of radically upending the longstanding light
    regulatory foundation of broadband on which massive investment
    and growth have been built with good effect, to implement one
    set of rules seems distressing. Any shift of that magnitude, I
    do think would require Congress'--the people's representatives
    to weigh in on.
        A third principle, give regulators the ability and
    obligation to address changing markets. As we have said, the
    markets move drastically. And the FCC often has limited ability
    to make those migrations. Yes, in places they have. There are
    other instances in which they have not been able to, even when
    they concede that the fundamental circumstances are changed.
        Fourth, the law should ensure competitive parity and
    technical neutrality. There is a hodgepodge of applications of
    statutes I could point out in which certain rules apply to one
    sector of a service and not to other sectors. This has just
    really been an outgrowth of the passage of years and the
    changing nature of companies. But there are many rules that
    apply to cable, for example, that don't apply to DBS for no
    discernible reason. One very valuable thing for the committee
    to do is prune through the statute to try to harmonize those
    differentiated treatments as best as possible.
        Fifth, the FCC should police markets, not create them. I
    think this is genuinely well understood. But there is a role
    for a cop on the beat. What I don't think there should be is a
    master chef who believes it is the Commission's objective to
    make markets or create the conditions and circumstances for
    them.
        And, finally, the last two, timeliness. If you are working
    in Moore's Law, you need timely and prompt decisions from the
    Government.
        Lastly and most importantly, the law still needs to
    preserve important societal values and protect consumers from
    harm. And the FCC and the Government will always have a sacred
    responsibility in that regard.
        Thank you for your time.
        [The prepared statement of Mr. Powell follows:]

        [GRAPHIC] [TIFF OMITTED]

        Mr. Walden. Chairman, thank you. Speaking of cops on the
    beat----
        Mr. Copps. Here I am.
        Mr. Walden. We will now go to Michael Copps, served as
    Acting Chairman of the Federal Communications Commission from
    January to June of 2009, and served as Commissioner from 2001
    to 2011. Prior to joining the Commission, Commissioner Copps
    worked right here on Capitol Hill and the U.S. Department of
    Commerce. Commissioner Copps, Chairman Copps, thank you for
    being with us. And we look forward to your comments to round
    out our panel.

                     STATEMENT OF MICHAEL J. COPPS

        Mr. Copps. Thank you, Chairman Walden, Chairman Upton, Ms.
    Eshoo, Mr. Waxman, vice chairmen, former chairmen, and all the
    members of the committee. I am delighted to be here.
        We are here today to review whether the Communications Act
    needs to be updated or otherwise reformed. I have heard some
    say that simply because the act is old, it must be obsolete,
    that no matter how well it has served us, an act written 18
    years ago cannot have relevance in today's altered world. Now,
    as someone only a little younger than the original act of 1934,
    I would raise a caution flag or two. The Declaration of
    Independence and the Constitution were written long ago, too.
    Yet, we still find them critically relevant in our lives. While
    it is praiseworthy to ponder changes to the law, I would
    suggest firstly that the framework of the current statute
    remains in many ways strong, and secondly that the current
    act's provisions can still do much to improve our
    communications landscape to enlarge economic and social
    opportunity for all of us and nourish the kind of civic
    dialogue upon which successful self-government inevitably
    rests.
        In an ideal world, most of us would welcome an up-to-the-
    minute rewrite of the law to reflect how we believe it could be
    improved. The last such revision in 1996 was born of a unique
    political moment that aligned a sufficient and sundry number of
    stakeholders across sectors and constituencies who were able to
    negotiate a compromised statute that, while far from perfect,
    at least envisioned delivering to every American, no matter who
    they are, where they live or the particular circumstances of
    their individual lives, the most advanced communications,
    technologies and services feasible at reasonable and comparable
    prices, replete with consumer protections, rights of privacy,
    assurances of public safety and utilizing competition to help
    achieve these goals. Putting the statute to work to deliver
    these benefits was my mission at the FCC, working with some of
    the most amazing public servants anywhere. Nowadays, I carry
    out my public interest mission in the nonprofit sector at
    Common Cause.
        In the immediate wake of the new law's passage, the
    Commission indeed made important strides to carry out these
    congressional mandates. But, alas, things changed. Some of the
    very interests who helped negotiate the new Communications Act
    spend more time undermining the statute than implementing it.
    Such efforts continue to this day, as we saw in yesterday's
    court decision that, left unaddressed, will seriously
    jeopardize the future of the open Internet.
        I appeared in front of this panel many times over the years
    to voice my dissent on Commission decisions involving the
    reclassification of communication services, industry
    consolidation across both our telecom and media sectors, the
    elimination of policies that had long safeguarded the public
    interest, and the heavy toll thereby exacted on consumer
    choices, consumer prices, and slowing the deployment of
    competitive, low-cost, high-speed broadband--this century's
    most important infrastructure.
        We can I know debate for hours, but a record of these
    hearings needs to show that many people do not share the easy
    optimism that others express about the state of America's
    communications readiness. As you consider legislation in the
    coming months, some will tell you that America is a veritable
    broadband wonderland, a triumph of free market entrepreneurship
    that puts us at the front of high-tech nations. But there are
    stubborn facts we must never avoid. The United States,
    originator of so much of the technology behind the Internet,
    has fallen from leader to laggard in broadband penetration.
    According to the OACD, our country is 16th in wired broadband
    connections for 100 residents. Worse, comparative research
    shows that Americans are paying more and getting less than
    wired broadband consumers in competitor countries. The
    Department of Justice has noted that the local wireless
    marketplace offers consumers little in the way of choice, even
    as mobile data plans are saddled with data caps that harm
    consumption and innovation alike. And once again, for the third
    time, the FCC found itself unable to certify that we enjoy a
    competitive wireless marketplace. Surely, the time is now for
    proactive and pro-consumer measures to make quality broadband
    universally affordable once and for all.
        While we are not gathered here this morning to rehash those
    decisions, I do think it is important to understand that many
    of the faults attributed to the current statute are more the
    result of powerful industry efforts to undermine it and of
    Commission decisions that too often aid and abet the effort. So
    while we open discussions on revising communications law, let
    us recognize that our present statute has been interpreted and
    implemented in ways not originally intended, and that many of
    its constituent parts are still relevant, workable and
    consumer-friendly. There is a statute to enforce, and putting
    that job on hold while we consider changing it is not a good
    option.
        Additionally, I think most of us here this morning
    understand that finding a new correlation of interest that can
    come together to forge the Communications Act of 2015 or 2020
    would be even more challenging than the jockeying that gave
    birth to the current law.
        As the world races ahead, we have a duty to make the best
    possible use of the laws we have in order to achieve the
    ongoing goals that Congress laid out. These remain powerful
    interests. A statute that invokes the public interest over 100
    times, that highlights the universality of service,
    competition, and consumer protection, and that underlines the
    necessity for media that informs communities and engages
    citizens cannot be all bad. Would I have some preferences for a
    reworked statute? Of course, although a good part of it would
    be making sure the Commission and the industry follow through
    on what is already on the books, to foster competition and
    consumer protection, to deliver on public safety, to preserve
    privacy in this age of massive intrusion, to avoid never-ending
    industry consolidation, to put the brakes in gatekeeping in our
    media, both traditional and new, and to provide the FCC with
    the resources it needs to discharge its responsibilities.
        My greatest disappointment at the Commission is that we
    didn't do enough to encourage media that truly reflects the
    diversity of our people. Can you believe that today there is no
    African-American-owned full-power commercial television station
    anywhere in the land? America is diversity. And if our media
    fails to represent diversity--diversity of providers and
    content and viewpoint and ownership--it fails us. The sad
    plight of communications across our native lands needs to be
    addressed with renewed urgency and additional resources.
    Imagine that there are still areas where the majority of first
    Americans cannot access even plain old telephone service, let
    alone the kind of high-speed broadband that is the most
    powerful tool they could have to create opportunity where there
    is so little opportunity now.
        I would hope we could find ways to stimulate basic
    communications research by private-public partnerships. I am
    not talking about the next glitzy app, but the basic
    fundamental research that will determine who wins and loses in
    the global sweepstakes.
        I am for making the Commission more efficient, like doing
    away with the closed-meeting rule that prevents more than two
    Commissioners from even talking to one another. And I hope that
    reform needs to go forward, whether or not it is accompanied by
    more far-reaching revisions. And I believe that when three
    Commissioners have something they want to do at the FCC, that
    item should go on the agenda.
        My list could go on, and I welcome the opportunity to
    discuss such things today. But I always come back to democracy,
    because that is what concerns me most. Our country is in
    trouble, reminiscent in many ways of the severity of the
    economic, global, and social crises it faced in the 1930s, and
    there are no guaranteed happy outcomes. I just do not see how
    citizens can be expected to navigate through all these issues
    and come out with smart decisions for our Nation's future when
    the telecommunications tools we need are not available to all
    and in a media environment where community outlets have been
    short-circuited, investigative journalism hangs by a thread,
    and wherein we expect some invisible hand to produce those
    things that the market itself no longer produces and which in
    fact the market alone has never produced.
        Communications are vital to our economy, but they are the
    lifeblood--the lifeblood of our democracy. They must be
    available to all, open to all, never the exclusive province of
    the affluent or the few, always alive to the common good. We
    shouldn't see our communications world as part telecom, part
    media or part traditional media, part new media. We have one
    communications ecosystem. And our job is to make it work for
    everyone. And I know of no greater challenge that confronts the
    Congress, the Commission or the country.
        Thank you for holding this hearing today and for inviting
    me to be a part of it, and I look forward to our discussion.
        [The prepared statement of Mr. Copps follows:]

        [GRAPHIC] [TIFF OMITTED]

        Mr. Walden. Chairman Copps, thank you for your thoughtful
    presentation. We appreciate it. And as you know, our
    subcommittee has moved forward on some of these initiatives,
    and we welcome encouragement over on the other side of the
    building on Sunshine Act and a few other things.
        So I would like to open up the questioning process now with
    the questioning of Chairman Powell. Since you have presided
    over the Federal Communications proceedings that classified
    cable and telco-delivered broadband services as information
    services, do you think we would have seen the same level of
    broadband investment during the past decade had the FCC
    classified these services as common carrier communication
    services?
        Mr. Powell. I think in short, my judgment is no. I think
    the Internet at the time that that classification decision was
    made was more unknown than known. I think it was a period of
    rampant experimentation. I think the capital required to drive
    and produce the broadband networks that were not in place
    needed conditions that allowed them the flexibility to make
    those choices without the risk that they would be put back into
    kind of the monopoly era regulatory model. So I think it was an
    important component, disbursing that investment.
        Mr. Walden. Chairman Wiley, does the Federal Communications
    Commission need to continue to have broad discretion over
    mergers and acquisitions, or should the Department of Justice
    anti-trust review be enough?
        Mr. Wiley. Well, I think there has been duplication from
    time to time. Although I would point out that the Justice
    Department is looking at anti-trust aspects, and the FCC has
    got a broader public interest standpoint. I think the two
    agencies need to work together, and I think they have worked
    together through the years. So I think the process is
    appropriately developing. But I do worry sometime that we see
    great delays in the handling of these consolidations and
    mergers, which I think is contrary to the best interest of the
    companies involved, and also contrary I think to the public
    interest and consumers.
        Mr. Walden. And to both Chairman Powell and Chairman Wiley,
    can the FCC ever really future proof regulations given how
    rapidly technology is changing? And are elements of the
    Communications Act holding the Commission back from flexibly
    addressing new technologies?
        Mr. Powell. No, I don't think any agency can future proof
    the regular environment, no more than Congress could write a
    statute that wouldn't overtime fray in its relevancy in a
    market that is driven by technological change. I do believe
    though that there are tools to give greater flexibility and not
    more prescriptive constraints that we have seen in some
    regulatory vehicles. So no, they can't future predict. And I
    thought--I think the other guidance is I think asking the
    Commission to engage in anything that requires predictive
    judgment about future outcomes should be avoided where
    possible.
        Mr. Wiley. Yes, and that is why I suggested in my prepared
    testimony that we ought to have an opportunity to have a light
    touch here and have the Government--in your statute, have a
    very flexible technology-neutral type of approach to this,
    because it is very hard to predict. And the 1996 drafters did
    not really foresee the development of the Internet to become a
    universal medium. And I don't think they predicted broadband to
    be what it is today. So I think you have to step back a little
    bit and I think allow the technology to develop and to allow
    innovation--invention to occur without stifling it.
        Mr. Walden. OK. I am going to start with Chairman Powell,
    and then each of you can take this one in the minute and a half
    I have left. Should the Internet be regulated as a common
    carrier under Title II?
        Mr. Powell. Well, for me, that is easy. No. I think one of
    the things I would like to say about that though is that people
    should fully understand what that means. Even if that were able
    to give you a better basis for recovering these two components
    of the rules, it would be the instant application of thousands
    of pages of decades old regulations instantly to the Internet
    where they heretofore have not been, both through--on a
    bipartisan basis, we have had a much more regulatory
    environment. The shatter to investment backed expectations that
    would result I think would be exceedingly damaging and more
    than most people realize.
        Mr. Walden. Chairman Hundt, do you care to comment on that?
        Mr. Hundt. Just two points. The 1996 act was shorter than
    the rules for Little League Baseball, meaning Congress does not
    necessarily have to write thousands of pages. And in its
    wisdom, it did not do so in 1996. And that act now has given
    the FCC the ability to achieve the fundamental goals. As I
    mentioned earlier, it can choose to use the specific methods
    that are dictated by the Common Carrier Treatment. But it
    absolutely does not have to use very many of these methods to
    accomplish its goals. In fact, the Court on page 61 outlined
    its view of what the FCC should do----
        Mr. Walden. Right.
        Mr. Hundt [continuing]. And said you can treat it as common
    carrier and have about 30 words that establish the principles.
    I am not saying they should do that. I am saying they can do
    that.
        Mr. Walden. Do you think they should?
        Mr. Hundt. I think what they should do--and I hesitate to
    say to the current Chairman what he ought to do, but since you
    asked, I think they ought to take a fresh look at all the facts
    and law as exist right now, and they also ought to be down here
    listening to you all and having a robust discussion. But the
    key point is they have the authority.
        Mr. Walden. Got it. Real quickly, the two remaining,
    because I have gone over my time--violated the rule. Conclude.
        Mr. Wiley. I think--OK.
        Mr. Walden. No, go ahead.
        Mr. Wiley. All right. I think it would be a big mistake to
    turn away from the information service pathway that we have
    started and go back to common carrier regulation however that
    might be defined. I think we want to provide an environment
    where there is I think opportunities for investment,
    encouraging innovation, allowing businessmen to try to
    experiment and try to find ways to serve the customer. And I
    think to go back to a 1934 style common carrier regulation,
    which was really based on regulating the railroads, I think
    doesn't make any sense at all.
        Mr. Walden. All right. Mr. Copps, real quick?
        Mr. Copps. My answer is yes, I do. The Court says we have
    the authority to do that. Whatever we do, we need to do it
    quickly, promptly and provide some certainty in the
    marketplace.
        Mr. Walden. OK.
        Mr. Copps. I have always stressed the importance of that
    reclassification. People talk about Section 706. I have always
    said that there is authority there to do a lot of things. But
    what--we don't need now to get into months of third ways and
    fourth ways and fifth ways to thread this needle. We need some
    clarity. Business needs clarity.
        Mr. Walden. Right.
        Mr. Copps. Consumers need clarity.
        Mr. Walden. Yes----
        Mr. Copps. The Commission needs clarity, too. And we have
    to make sure whatever we do that things like interconnection
    and those things, consumer protections, are provided.
        Mr. Walden. Appreciate that. I thank the indulgence of the
    committee. I turn now to the Ranking Member, Ms. Eshoo, for 5
    minutes.
        Ms. Eshoo. Thank you, Mr. Chairman, and to each one of our
    distinguished witnesses. What a rich, rich hearing with your
    testimony. Thank you very, very much. To Chairman Hundt, thank
    you for your eloquent summation, without any staff or other
    counsel to assist you late last night.
        In your testimony, you discussed the importance of the
    decision that this country made to allow Internet service
    providers full use of the existing telephone network without
    paying the owners anything. It was a very, very--I mean one of
    the essential platforms in the success of the Internet. So,
    essentially, we said the incumbents could not be gate keepers
    that charge a toll for getting online. In your view, does
    yesterday's circuit decision reverse that longstanding policy?
        Mr. Hundt. No, it doesn't. And I think, Congresswoman, that
    you have put your finger on the central issue, if I may say.
    Yes, Internet service providers are gate keepers. And they also
    are two-sided networks--or two-sided gate keepers, like any
    gate keepers.
        Ms. Eshoo. Um-hum.
        Mr. Hundt. There is somebody on one side and somebody on
    the other side.
        Ms. Eshoo. On the other--um-hum.
        Mr. Hundt. And so the situation then is very similar to the
    credit card industry. So we all have credit cards. And then
    there is the credit card company. And then on the other side of
    that, there is the restaurant. And it is very useful for
    restaurants that we all have credit cards. And it is useful for
    us that all the restaurants will take them. But it is not so
    useful if the gate keeper says now, some of these restaurants,
    we are not going to allow them to participate in the system.
        Ms. Eshoo. Um-hum.
        Mr. Hundt. Translating that to the present, if the Internet
    service provider were to say, you know, not all the people that
    are putting the content on their computers, we don't want all
    of them to be able to have access to all of the users.
        Ms. Eshoo. Um-hum.
        Mr. Hundt. That is a problem if the gate keeper behaves
    that way.
        Ms. Eshoo. Um-hum. Thank you very much.
        Mr. Hundt. That is the central issue.
        Ms. Eshoo. Yes, thank you very much. To Chairman Powell, it
    is wonderful to see you again. As you know, under current law,
    cable subscribers are required to buy the so called broadcast
    basic tier as a condition of getting access to any other cable
    programming. As we transmission consent fees continue to rise
    and are inevitably being passed on to consumers in the form of
    below the line fees--I mean, I don't think it is a sustainable
    business model, most frankly. I just don't think that it can
    continue to work this way. Do you think that the so called must
    buy requirement makes any sense? Shouldn't consumers have the
    ability to lower their bills by electing to receive broadcast
    channels over the air?
        Mr. Powell. I don't. I think it should be an extraordinary
    circumstance in which the Government tells the consumer you
    have to buy a television package as a prerequisite of buying
    more of what you want, which is essentially what the rule does.
        Ms. Eshoo. Um-hum.
        Mr. Powell. The other grounds on which I think it is
    fatally flawed is only cable subscribers have that obligation.
    DISH and direct satellite subscribers do not have that
    obligation. And they are the second and third largest MVPDs in
    the United States. Yet, a consumer who subscribes to DirecTV
    does not have to, under a must-buy rule, purchase those
    programming. But if they switch to Comcast or Time Warner
    Cable, they do. That is the parity point that I was making, and
    I think is a perfect place for harmonization.
        Ms. Eshoo. Um-hum. Thank you very much. Chairman Copps,
    thank you for being here today, the man with real wisdom, the
    man that we always count on to put--place Democracy front and
    center of everything.
        Mr. Copps. Thank you.
        Ms. Eshoo. You know so well that since Citizens United, the
    last two election cycles that have set records for money spent,
    including hundreds of millions of dollars from undisclosed
    sources, the bulk of this so called dark money spending by
    outside groups that hide their donors go toward negative TV
    ads. We all know that. Would you recommend changes to the
    Communications Act to ensure that voters are informed about who
    exactly is behind these anonymous TV ads, and is there anything
    in your view that the FCC can do on its own without
    Congressional intervention?
        Mr. Copps. I would recommend enforcing the statute that we
    already have. And if you take a close look at Section 317,
    which has to do with sponsorship identification, and which goes
    back even before the Telecommunications Act of 1934 was
    written. It goes back to 1927--ensuring that listeners and
    viewers, more recently, know by whom they are trying to be
    persuaded, whether it is a commercial product or a political
    product. Those rules were last revisited in a meaningful way by
    the FCC in the 1960s, which repeated that people have a right
    to know by whom they are being persuaded. Since then, we have
    all these new avenues of dark money and super PACs and all of
    the rest. But we also have the authority, recently reemphasized
    by the Government Accountability Office, the recommendation
    that the Commission update those rules and get on with the job.
    So we can have this kind of information available to consumers
    so that when you see that negative ad, and it says brought to
    you by citizens for Purple Mountain Majesties and Amber Waves
    of Grain, and it is really a chemical company dumping sludge
    into the Chesapeake Bay, potential voters--citizens have a
    right to know that and will know that. That is basic
    information that you need to have if you are going to have a
    viable civic dialogue. So this is something the FCC can do. It
    doesn't await a President to making a proposal to do this. It
    doesn't involve Congress having to pass a law. It involves the
    Federal Communications Commission doing its job. And it could
    do this within 90 to 120 days and update the rules to take mind
    of the new dark money avenues that I was talking about earlier.
    So this would be a real way to shine a little bit of sunlight
    on the dark world of TV political advertising.
        Ms. Eshoo. Thank you very much. And, Mr. Wiley, thank you
    for your wonderful distinguished public service. I will submit
    my questions to you in writing. All right?
        Mr. Wiley. All right. Thank you.
        Ms. Eshoo. Thank you. Thank you, Mr. Chairman.
        Mr. Walden. Thank you. We will now turn to the vice chair
    of the full committee, the gentlelady from Tennessee, Mrs.
    Blackburn, for 5 minutes.
        Mrs. Blackburn. Thank you, Mr. Chairman. And thank you all
    for the time this morning. I want to pick up where the
    subcommittee chairman left off talking about the responsibility
    of the FCC and what it would look like going forward. I think
    that it is fair to say--and, Mr. Powell, I will address this to
    you, because I have heard you say, you know, AOL was on top at
    one point when you were on top of the game. And where are they
    now I think was the comment. But anyway, looking at what the
    FCC would be, and as we look at the Telecom Act, should be
    begin to think in terms of the FCC being more as enforcement
    rather than regulatory in its scope? Mr. Powell, and then Mr.
    Wiley, I would like to hear from you.
        Mr. Powell. I think some aspects of that deserves a fresh
    examination. You know, the FCC, which I am a huge supporter of.
    I have served there with great people, and I think it does an
    enormously great public service and that we functions that are
    critical to it in spectrum management and many other things.
    But it is one of the last of the New Deal era agencies that
    actually has affirmative economic regulatory power, that is the
    ability to set the prices, terms and conditions of market
    activity as opposed to having a more significant enforcement,
    policing or consumer protection role. Not to say that some of
    that may or may not still be warranted, but I do think that is
    a kind of holdover from judgments of different administrative
    eras. And I would recommend, you should look at the dichotomy
    and the balance of that role.
        Mrs. Blackburn. Look at the balance?
        Mr. Powell. I do think good leaders, and many of the
    sitting at this table have migrated more toward that more
    defensible role. But many of those provisions still remain. And
    I think they are worthy of second consideration.
        Mrs. Blackburn. OK. Mr. Wiley?
        Mr. Wiley. Yes. I would agree with--largely with what
    Chairman Powell has suggested. I think the Commission does have
    strong enforcement efforts today. And some would say almost too
    strong in some instances. But I think frankly a lighter touch
    is the way to go in this area.
        Mrs. Blackburn. OK. Let me ask you this, privacy data
    security, it is front-page news right now. It is going to be.
    Do you think that now is the time for the FCC to focus on its
    core competencies, or should it move over and look at privacy
    data security, or leave that to the FTC, Mr. Wiley?
        Mr. Wiley. I didn't hear that one. I didn't hear it. I am
    sorry.
        Mrs. Blackburn. Oh, privacy data security, leave it to the
    FTC and the FCC focus on its core mission, or what is your
    thought on that?
        Mr. Wiley. I think so.
        Ms. Blackburn. You think so.
        Mr. Wiley. I would agree with that.
        Mrs. Blackburn. OK. Mr. Powell, coming back to you, 706, we
    are hearing a lot about that today. And you may have had others
    who think that, you know, the FCC--that 706 is an invitation to
    come in and regulate Internet services. So as you look at 706,
    do you agree that the provision was intended to give the FCC
    the ability to forebear from regulations that would stifle
    broadband investment and innovation?
        Mr. Powell. I agree that the decision certainly gives them
    the power to forebear. And for many years, many people
    interpreted 706 as principally deregulatory. It speaks of
    removing barriers and removing obstacles, less so than
    introducing them. I certainly was serving at a time where the
    Commissions had held that that was not a separate basis of
    authority. And in fairness to the facts, every Commission had
    so held until recently. So that was the position of the law
    when I was there at least. I will say though that I think if
    the Commission is going to have a role in broadband, I highly
    would prefer that be under the construct of the light
    regulatory information services definitions that reside around
    with 706 than to make a radical transformation to Title II as a
    regulatory framework for those questions.
        Mrs. Blackburn. OK. Thank you very much. Mr. Chairman, I
    will yield back the balance of my time.
        Mr. Walden. The gentlelady yields back, and the Chair now
    recognizes the gentleman from California, the ranking member of
    the committee on the Democrat side, Mr. Waxman.
        Mr. Waxman. Thank you very much, Mr. Chairman. My
    colleague, Ms. Blackburn, suggested the FCC needs to act more
    like the Federal Trade Commission. The FTC does important
    consumer protection work, but I believe we need an agency like
    the FCC that can write forward-looking rules of the road for
    industry and consumers. Chairmen Hundt and Copps, do you agree
    with that?
        Mr. Hundt. Absolutely, Mr. Waxman. Forward looking is--here
    is the best example of a useful forward looking law. It is in
    the incentive auction legislation that you passed where this
    Congress said we want the FCC to establish, before the auction,
    a generally applicable rule about how much spectrum anybody can
    buy. That has to be forward looking. You don't want to go into
    the auction with your money and not know whether or not you are
    going to be permitted to win in the--keep the license that you
    thought you were the high bidder on. That has to be forward
    looking. So that is a great example of you all asking for a
    forward looking rule and really deserving a forward looking
    rule.
        Mr. Waxman. Um-hum. And, Mr. Copps?
        Mr. Copps. Absolutely. I concur. We all talk about how
    rapidly the telecommunications, technology and services are
    changing. The Commission has to be aware of that, have the
    flexibility to react to that, and certainly to fulfill its
    responsibilities to look into the future and try to determine
    how best to fulfill its mission, which includes consumer
    protection, includes privacy and includes ubiquity of services.
        Mr. Waxman. Um-hum. Mr. Powell, in light of yesterday's
    decision, the DC Court circuit recognized the authority granted
    by Congress to the FCC in the '96 act. Do you believe that the
    Agency can properly oversee the growth of broadband
    infrastructure services?
        Mr. Powell. I do. For a matter of record, as Chairman of
    the FCC and the Commission that classified broadband the way
    that it is today, we quite pointedly recognized that the
    importance of that continuing role to a degree. And we believe
    that the authority existed within that Title I framework to
    take care of those circumstances. Whether you agree or
    disagree, the Court certainly validated yesterday, from a
    judicial standpoint, that Title I and 706 do provide that
    flexible authority.
        Mr. Waxman. Um-hum. And, Mr. Wiley----
        Mr. Wiley. Yes.
        Mr. Waxman [continuing]. If you agree the FCC has the
    authority, do you think it ought to use it?
        Mr. Wiley. Well, the Court said that the Commission could
    have authority in this area. I would strongly advise, in my own
    view, the Commission to let the marketplace develop and if
    problems do exist, then to step in. There are avenues--if we
    find blocking, if we find discrimination, there are avenues
    that can be taken. I think the problem is sometimes we are in
    search of a problem here that may not exist. I think if you
    look at all the suggestions of the carriers that have come out
    of the decision from yesterday, all want to keep the
    marketplace open, all want to give consumers access to various
    kind of content. And I take them at their word. I think that is
    going to develop.
        Mr. Waxman. Um-hum. Mr. Hundt, if we want to keep the
    marketplace open, isn't it reasonable to anticipate that some
    of the players will not want it to be so open if it is to their
    financial advantage? Shouldn't the FCC play a role to make sure
    prospectively that we have an open, competitive market with the
    consumers being in charge?
        Mr. Hundt. I completely agree. And if I might, I think it
    is important--well, let me say this. I have the view that the
    case and the statute have the following meaning. Section 1706
    gives the FCC the authority to accomplish the goals you just
    stated, without also requiring the FCC to make a classification
    decision.
        Mr. Waxman. Um-hum.
        Mr. Hundt. That is to say it can make a classification
    decision and act with the authority that would come from that,
    but it doesn't need to do that in order to pass rules that are
    authorized under Section 1706. Meaning 1706 and the common
    carrier provision are two independent bases for FCC action.
    That is why the FCC can choose both or either in order to have
    a--making that would accomplish the goals you described.
        Mr. Waxman. Didn't the Court say that the FCC made the
    wrong choice and they have two titles they can rely on? You are
    saying they don't need either title, they can just go ahead and
    think about regulation?
        Mr. Hundt. Yes, I think what the Court said is if you do
    choose the information services classification, then you are
    bound by the restrictions in that.
        Mr. Waxman. Um-hum.
        Mr. Hundt. But you don't need to make that choice in order
    to accomplish the goals that you are desiring, which the Court
    has said that it approves of the goals.
        Mr. Waxman. Um-hum. And you don't need to be a--regulate as
    a common carrier either?
        Mr. Hundt. Beg your pardon?
        Mr. Waxman. You don't have to regulate it as a common
    carrier either?
        Mr. Hundt. The Court has said you can choose that, or you
    can choose 706 or you could choose both. The only thing you
    can't do is choose information services classification and pass
    common carrier like rules.
        Mr. Waxman. Um-hum. I see. Thank you. That is very helpful.
    Thank you, Mr. Chairman. Yield back my time.
        Mr. Walden. The gentleman yields back. And the Chair now
    recognizes for 5 minutes the former chairman of the full
    committee, the gentleman from Texas, Mr. Barton.
        Mr. Barton. Thank you, Mr. Chairman. I have listened to our
    testimony and our questions so far. I am going to make a brief
    statement before I ask a question.
        I was here in 1996. And that act was a philosophical change
    from where the committee had been and, to some extent, where
    the country had been in terms of telecommunications policy. You
    had a Republican Congress, House and Senate for the first time
    in over 50 years, maybe 60 years. You had a Democratic
    President, Mr. Clinton, who came from a kind of conservative
    pro-business background down in Arkansas. And the former
    chairman of the committee, Mr. Dingell, and Mr. Waxman and Mr.
    Markey and some of those folks, had a very regulatory approach,
    although not totally so, and the Telco Act of '96, Mr. Bliley
    and Mr. Fields, we went--we decided to go with a market
    approach. And, Mr. Copps, as he has pointed out, markets don't
    always work. But, generically, if they are open and
    transparent, unless there is a natural monopoly, they do give a
    lot more choice to people. And that is what the Telco Act of
    '96 did. It rejected the philosophy that the Government knows
    best, that the regulatory knows best, that people can't--if
    they have access to appropriate information, can't make choices
    that are good choices. And we see reflected today in some of
    the questions that Mr. Waxman especially just asked, you know,
    that some of my friends on the Democrat side just don't like a
    market approach. You know, how dare it be possible that under
    Title I, Informational Services, you can have an open,
    transparent Internet, and you don't need the FCC to tell you
    what to do? My God, that is scary. We better get that FCC back
    on the job. They just maybe--you know, if they can't do it
    under Title II as a common carrier, well, they are just going
    to have to figure out how to regulate under Title I.
        Well, you know, if you look at the explosion and what has
    happened, I mean, I had a young person, a very young person
    about 9 years old, come into my office down in Texas and
    apparently did not know there was such a thing as a hard line
    telephone--did not know what that was on my desk. This young
    lady thought a phone was just something you carried around with
    you. And her parents were very young, and they didn't have hard
    line phones in their home. And they worked out of his truck
    doing contracting and stuff. She didn't know what it was.
        So, you know, this thing that Mr. Upton and Mr. Walden are
    starting to take a real comprehensive review, and working with
    Mr. Waxman and Ms. Eshoo, it is a good thing. But
    philosophically, I don't want to go back to where I have to
    depend on the intelligence of Mr. Copps or Mr. Powell or Mr.
    Hundt or Mr. Wiley and the three or four other wise people at
    the FCC to know what is best for me in telecommunications
    policy. You know, I think if we set the ground rules--and I
    agree that you have to have a traffic cop. But I don't agree
    that you got to be so prescriptive that the market just flat
    gets strangled before it even has a chance to get underway.
        So my question, and I throw it open to the panel: Is there
    still a need for a Title II in the telecommunication
    marketplace today, could we deregulate the telephone companies
    in totality because, you know, there really is no such thing as
    a natural monopoly anymore?
        Mr. Copps. If we can find a way to assure that some of the
    qualities that people fought for long and hard in terms of
    privacy and public safety and consumer protection do not
    accompany the new tools of broadband and the Internet as the
    accompanied telephone, then I think we are in trouble. I like
    the market approach, too. And it was decided long ago that the
    telecommunications industry, the media industries would operate
    on the capitalistic system. And you don't blame business for
    trying to seize market control or capture the market, or even
    to have gate keeping. But we have always, since very early in
    the last century, had protections against untrammeled building
    toward monopoly and duopoloy.
        I read the '96 act, and I wasn't as intimately involved
    with it as you were. But I followed it with some degree of
    interest. As being somewhat more proactive, I read that act as
    instructing the Federal Communications Commission to do what it
    needs to do to encourage bringing the most advanced
    telecommunications feasible to all of our citizens, no matter
    where they live at reasonably comparable prices, reasonably
    comparable services, allowing them to access media that serves
    communities and provides information that are necessary to
    exercise a citizen's responsibilities in a Democratic society.
    So I think yes, a light touch where possible. But, you know, we
    set here and talk about well, we have to do away with these
    stove pipes and all. And I agree to that with some extent. But
    we have--in trying that--I mean, if we are going to say we are
    going to treat a telephone call you make in the Internet
    entirely different than we make a telephone call somewhere
    else, that is not functional equivalent. That is not treating
    technologies alike. So I think----
        Mr. Barton. I know my time is way over. But it is something
    to think about, because we have got a real chance in the rest
    of this Congress and the next Congress to build on what we
    started in '96.
        Mr. Wiley. I would just like to say that I agree with much
    of what you say. I think in a competitive marketplace that we
    see today with the kind of IP centric world, I think economic
    regulation has to be considered with some skepticism. Because
    if the markets are competitive, if you don't have market
    failure, then the question is why should the Government be
    stepping in? Consumer protection, E911, you know, those kinds
    of things, that is a different story.
        Mr. Barton. Right.
        Mr. Wiley. But we are talking about economic regulation
    here. And I think it is more questionable. And I certainly
    wouldn't be thinking about going back to common carrier world
    in an information services environment. I don't think that
    makes sense.
        Mr. Walden. Well, thank you. The gentleman's time has
    expired. And the Chair recognizes for 5 minutes the gentleman
    from Pennsylvania, Mr. Doyle.
        Mr. Doyle. Thank you, Mr. Chairman. Once again, thank you
    to our witnesses for your testimony today. We have talked a lot
    about net neutrality in the court decision. So I would like to
    maybe go to a couple different topics and ask Chairman Hundt
    and Chairman Copps about special access. How can the FCC
    enhance competition in the special access marketplace? And is
    new statutory authority necessary, or do you think the
    Commission has the sufficient authority to ensure that the
    markets are competitive?
        Mr. Copps. On a special access, I think what needs to
    happen, yes, I think the Commission has the authorities for the
    FCC to make up its mind. I was before this committee, and I
    think you were here too. And perhaps it was Mr. Markey or
    somebody who asked us all back in 2007 to sign a letter saying
    we would have this problem resolved by September. And we all
    said whoopee, let us do that. And it hasn't been done yet. All
    these 7 years have gone by. Enormous amounts of money are at
    stake here. The ability of competitors to enter the business
    and to compete is at stake here. I am pleased to--at some signs
    now that the FCC is beginning to move. And I want to especially
    commend you, because I know you were a big proponent of getting
    this data collection process going. And that is the
    prerequisite of doing something final on this. The Commission
    also has to look at allegations of anti-competitive practices
    in special access, such things as loyalty mandates and
    excessive early termination and shortfall penalties. But
    getting this right is important. And each year that goes on is
    billions of dollars going to maybe where they should go or
    maybe where they shouldn't be going.
        Mr. Doyle. Thank you. Commissioner Hundt?
        Mr. Hundt. I echo Commissioner Copps' remarks and would
    just add this is another example of a very useful forward
    looking rule. Or to put it another way, we could all use a
    forward looking rule on this topic.
        Mr. Doyle. Thank you. Yes. And, Commissioner Copps, we have
    been waiting years and years and years. And I hope before my
    tenure in Congress is over that we will see the FCC do
    something on special access.
        Mr. Copps. Yes.
        Mr. Doyle. And I intend to be here a little bit longer.
    Commissioner Copps, the FCC recently closed a very successful
    low power FM application process, and is currently considering
    thousands of LPFM applications. And I want to personally thank
    you for your efforts in that regards, and ask you what other
    opportunities you see for the FCC to further empower
    communities in innovative ways?
        Mr. Copps. Well, first of all, I want to thank you, because
    without you and the leadership of your colleagues here, this
    would not have happened. We wouldn't have had that window, the
    first one opened since 2000. And it is a window of enormous
    potential. So number one, we want that to move forward with all
    dispatch and maybe go from 800 low power stations to maybe
    thousands of them.
        Going beyond that though, we just have to look at whatever
    kind of options we can think of to encourage community radio,
    to revivify the peg channels and make sure that they are not
    just cast aside as some of the big companies seem to want to
    do, look at new models for noncommercial media, nonprofit
    media. And that applies not just to media companies but to
    telecom companies, newspapers and so many other things. And
    there is a lot of potential here in a market that doesn't seem
    to be able to provide all the tools that we need for media and
    for news for nonprofit media to step in. But they are also
    dragging its feet on making a lot of these determinations that
    it should be making. So low power, yes, looking at channels
    five and six are all sorts of options out there, put some
    special emphasis on using community radio and diversity in
    communities and native lands. It is just a field that is rife
    with potential if we can just step up to the plate and realize
    our responsibility to do it.
        Mr. Doyle. Thank you. Gentlemen, thank you for your insight
    today. We appreciate it here on the committee. And I will yield
    back, Mr. Chairman.
        Mr. Latta [presiding]. Thank you very much. The gentleman
    yields back the balance of his time. And the Chair now
    recognizes himself for 5 minutes.
        And, Mr. Powell, thanks again for you being here today. And
    if I could just start with some questions to you?
        Mr. Powell. Yes, sir.
        Mr. Latta. Yes, it is kind of interesting, because I am
    reviewing your testimony and also Mr. Wiley's. You both used
    very similar language in spots. And in your opening statement,
    you said that this market requires a greater degree of business
    flexibility, fewer prescriptive rules and an assurance that any
    Government involvement is applied on a technology-neutral basis
    and creates a better investment climate. And I also saw that
    Mr. Wiley said in his testimony that the Government can't keep
    up, and there is a need for flexibility and a technology-
    neutral framework in his testimony, as well. So, very similar
    language.
        But in your testimony, when you go through it--and I found
    it interesting, because when you are going through your seven
    points--and for simplicity--one of the things that you bring
    out--because you were also talking about flexibility and having
    a better business climate--you state in your testimony that
    since 1996, we have seen a trillion dollars invested in an
    Internet infrastructure. And then you also laid out that the
    simplicity has to be there. But in that simplicity, you said
    that practicing simplicity can be scary.
        Mr. Powell. Yes.
        Mr. Latta. And it takes courage to discourage--discard old
    ideas and rules that are no longer needed. Could you give a
    couple examples of those?
        Mr. Powell. Yes. It is a great, challenging question. I
    think I might actually go back to some of what Mr. Barton was
    talking about. If you think about one of the wisest things that
    was done in the 1996 act, it has nothing to do with the
    individual rules. It was the fundamental judgment that the
    Government rejected the natural monopoly thesis and believed
    instead that competition was the more fruitful approach. But
    common carriage law inherently is about a Government-sanctioned
    monopoly. It is essentially the queen of the realm who grants
    an exclusive license to a ferry boat captain to go across the
    river and in exchange for all the privileges of that monopoly,
    they agree to be bound to serve all the citizens in a
    nondiscriminatory way and other things that the sovereign
    wishes to have as part of that exclusive benefit--mutual in
    some regards: The monopolist gets the exclusive profits, and
    the realm gets the benefits of serving all the citizens.
        In some ways, in 1996, the Government sued for divorce from
    companies through, you know, the notion of an exclusive
    monopoly and instead said, ``Go compete, raise your own
    capital, no guaranteed return on investment, no guaranteed
    success.'' But yet, the lingering notions of common carriage,
    which are still in the statute and, by the way, still being
    raised in the context of the net neutrality debate, still hover
    around our regulatory questions. To me, whether the country
    comes to some committed conclusion that even with its
    challenges and the need for oversight that we are really about
    competition and are really ready to let go of common carriage
    is a great example, a fundamental one, of how to make that
    decision.
        Mr. Latta. Thank you. And let me follow up with another
    question. When you are looking at assessing the competition in
    the communications industry, do you think updating the
    Communications Act should modify how the FCC currently conducts
    its competitive analysis?
        Mr. Powell. I think so, only because I think there is some
    ambiguity there that when managed in responsible hands works
    fine. At times, it doesn't. I am worried about the FCC merger
    review process in part because it professes to do a competitive
    analysis following essentially anti-trust guidelines
    administered by other departments. But under the public
    interest standard, which I do think is valuable, it turns into
    a competition of conditions. And as an anti-trust lawyer, I
    used to believe that the FCC, if they are doing something bad,
    shoot them. If they are not, don't let them cure harm by how
    many good jelly beans you can put on the scale and to make the
    thing go away. And then by doing it in a way that it extracts
    these concessions as a voluntary proffer, you make sure that
    the case can't be appealed to the courts, because you no longer
    have standing. I think insulating the review process from
    judicial review through the conditioning mechanism, and
    allowing the commissioning mechanism to be a vehicle by which
    the Commission can legislate beyond its authority can get
    companies to do things in the context of that proceeding it
    couldn't pass laws about, borders on kind of administrative
    improbability. So does that happen every time? No. Do I think
    it happens sometimes? Yes. And I think Congress should at least
    examine the review process and see if whether better controls
    could be in place.
        Mr. Latta. Thank you very much. And I see my time has
    expired. And the Chair now recognizes for 5 minutes the
    gentlelady from California, Ms. Matsui.
        Ms. Matsui. Thank you, Mr. Chairman. And I want to thank
    all of the former Chairmen for being here. This has been really
    an interesting and formative discussion.
        Under Section 254, carriers have certain obligations to
    provide universal access. In the DC Circuit's decision
    yesterday, the Court made clear the FCC has a similar charge
    under 706 to ensure that all Americans have access to broadband
    and that the FCC has authority over broadband providers to meet
    that mandate from Congress. I have two questions for all of the
    Chairmen relating to the Court's decision yesterday.
        The first, do you agree the FCC should and must promote
    universal access to broadband for all Americans, Mr. Wiley?
        Mr. Wiley. Yes, I would agree with that.
        Ms. Matsui. Sir?
        Mr. Hundt. Yes.
        Ms. Matsui. Mr. Powell?
        Mr. Powell. Yes.
        Mr. Copps. Absolutely. There is no way you can be a
    functioning member of society without access to this
    technology.
        Ms. Matsui. OK. Then does the Court's decision yesterday
    affirm the FCC's authority to transition the universal service
    fund to broadband, Chairman Wiley?
        Mr. Wiley. Yes, I think the FCC has done a good job in
    looking at that. I am concerned somewhat with the size and the
    growth of the universal service fund, and I think the
    Commission has got to look at the competency, the pay and the
    covering that and some issue that has got to be looked at, I
    think.
        Ms. Matsui. But it is generally yes. Chairman Hundt?
        Mr. Hundt. Yes.
        Mr. Powell. Yes, I would commend Chairman Genachowski for
    migrating the fund toward broadband, and he did it on a theory
    of 706. So in that extent, I think seven--the ruling yesterday
    only strengthens the Commission moving in that direction.
        Ms. Matsui. Good.
        Mr. Copps. Yes.
        Ms. Matsui. Chairman Copps? That is great. I appreciate
    your views, because I believe that it is one of the potentially
    biggest unintended consequences avoided by the Court's
    decision, because transitioning a USF to broadband is really a
    critical step toward achieving universal access and adoption in
    this country.
        Chairman Hundt, you said that yesterday's circuit decision
    is a victory for Congress and the smart flexible approach of
    the 1996 Telecom Act. How can we continue that success? Are
    there any unintended consequences we should watch out for as
    this committee starts the process of updating the
    Communications Act?
        Mr. Hundt. Well, I think as a number of you have mentioned,
    of course the FCC on remand needs to commence a new proceeding,
    which I believe Chairman Wheeler has already said that he
    intends to do.
        Ms. Matsui. Um-hum.
        Mr. Hundt. And, naturally, that should be and will be an
    open proceeding. I am sure this committee will have an ample
    opportunity to express its views. I don't myself have the
    ability to forecast where that will come out or should come
    out, because I think it is really, really important to examine
    all the new facts about emerging network architectures and
    about competition problems on both sides of the two-sided
    network. I would just say that is why it is so useful that the
    Court has said that the FCC's authority is broad and powerful,
    because the technologies in the network architectures and the
    competition problems are constantly changing. And the FCC, in
    rulemaking, has the ability to adapt to those changes,
    sometimes eliminating rules, sometimes writing new rules. So
    this is a very, very workable process that we have here. And,
    as I said before, congratulations to this committee for the
    1996 act, which did create this legal culture.
        Ms. Matsui. Um-hum. Chairman Powell, would you like to
    comment?
        Mr. Powell. I am sorry. Can you refresh the question?
        Ms. Matsui. Well, I really----
        Mr. Powell. Sorry.
        Ms. Matsui. You know, we--as Chairman Hundt commenting that
    the Court decision he felt was a victory for Congress and for
    the smart flexible approach of the '96 act, are there any
    unintended consequences that we should watch out for as we
    reexamine and update the Communications Act moving forward?
        Mr. Powell. Yes. Yes, I more or less would agree with
    Chairman Hundt.
        Ms. Matsui. Oh.
        Mr. Powell. I mean, I think to the degree that, you know,
    in some ways I saw a quote the other day that I thought summed
    it up great, which is it is not a victory for any side, but it
    might have been a victory for the debate. And that is that the
    Commission continues to have a meaningful role in the oversight
    and protection of broadband without crossing the line into the
    more dangerous concerns around common carriage. And if that is
    ultimately the outcome, maybe that is workable. Unintended
    consequences, I do think the Court even struggled with them
    itself, which is 706 is an extraordinarily broad, unconstrained
    provision. How it is interpreted, and how responsibly it is
    interpreted and applied, I think is important, because I think,
    you know, Congress hasn't spoken with much specificity about
    broadband regulation. And to take a provision as open-ended as
    vague as 706 and see that as the foundation for everything
    broadband going forward has potential risks and dangers, but I
    think that will be worked out over time through the--through
    its application and through dialogue with Congress.
        Ms. Matsui. Thank you very much. Chairman Copps?
        Mr. Copps. While I am pleased that the Court recognized the
    authority of the Commission, I don't know that I am ready to
    declare victory yet. If it is a victory for the debate, that is
    not necessarily a good thing, because we have had so many years
    of debate while the evolution of the Internet continues and
    gate keeping shows the rise of its ugly head. So it is a
    victory if the Commission reacts and reacts promptly and
    provides some certainty and some guarantees. But we have lost a
    couple of years looking for third ways and other ways, and I
    don't want to lose a couple more years going down that road.
        Ms. Matsui. Well, I think it is an opportunity here.
        Mr. Wiley. Well, I was just going to say----
        Ms. Matsui. Yes?
        Mr. Wiley [continuing]. I think if it is a victory, I think
    it is a victory for technical innovation, a victory for
    investment, and ultimately a victory for the consumer. And I
    think that we ought to see how the marketplace develops in this
    area, and see where the problems, as I said earlier, really
    come about as some people predict.
        Ms. Matsui. Well, I think this is an interesting moment in
    time. And we have to provide a thoughtful way as we move
    forward. And I appreciate all your comments. Thank you very
    much, and I yield back.
        Mr. Walden [presiding]. The gentlelady yields back. The
    chairman now recognizes the gentleman from Illinois, Mr.
    Shimkus.
        Mr. Shimkus. Thank you, Mr. Chairman. Welcome you all. It
    is good to have you. And I think it would be safe to say that
    no one envisioned this world in which we live in
    technologically, no one envisioned in '96. So really, the basic
    first question is, in a rewrite for public policy elected
    officials, or even folks in a Commission to envision what the
    world will be like 10 years after a rewrite, that is going to
    be--that is impossible to do, is that--most people view that as
    correct? No one knew what '96 would come. So that talks about
    what these basic premises that I enjoy, Democracy, freedom,
    marketplace, capitalism. The one thing that hasn't really been
    addressed is consumer choice, and how that really does drive
    innovation and drives--and it is that marketplace that--and I
    remember going to the consumer electronics show, and the MP3
    was being unveiled. And I just was amazed at how much capital
    flowed for just music in this space, in the technology space.
    And that is the same thing now with Internet, broadband,
    downloads, Pandora, you name it. It has all migrated to that.
    So we don't ever want to lose the aspect of the power of the
    individual consumer in this debate, you know, versus what some
    people would say would be the power of a governmental
    regulatory arena or agency. And, Mr. Copps, I think that is
    true for these segments of society that feel they don't have
    access. I think that you can pull together, based upon
    technology, ability to get the word out through broadband
    information, newsletters and the like. I mean, the technology
    has allowed us to really--there is really no excuse for people
    not to have access to information flow today, even if they go
    through a universal service fund or they go to the library,
    they get on broadband through what we have been able to do
    through the E-Rates and all that other stuff, which we talked
    about a lot in your day, Mr. Hundt. So here is the basic
    question I have, because I--and a couple of you, in your
    opening statements, talk about silos. You were all members of
    the Commission, and you all were Chairmen, which is a different
    position than just being a standard Commissioner, because you
    had the responsibility for the whole body of workers within the
    FCC. So we have got consumer--we have got the bureaus and other
    things other than the bureaus. I only talk about bureaus. But
    you go on the Web site, you see all these other little offices
    and stuff, consumer and government affairs, enforcement,
    international media, public safety, wireless and wire line. So
    in a rewrite of the '96 act, should there not be some
    discussion on how we reform the Commission itself based upon
    what current technology is today? And I think, Mr. Wiley, you
    kind of talked about this a little bit. And just a guess at
    where it might head in the future? I mean, there is a future
    look, right, Mr. Copps? There is a future. But how do we reform
    the FCC itself and start tearing down some of these silos,
    which some of you have addressed are a problem? And if we can
    go from left to right? Mr. Wiley, if you want to go first? And
    that will be the end of my questions.
        Mr. Wiley. Yes. I think what has changed in the Internet
    world is that you find different parties doing the same kinds
    of services, providing the same kind of activities that you
    wouldn't have thought of before.
        Mr. Shimkus. Right.
        Mr. Wiley. You wouldn't have thought of broadcasters being
    in the technology end, or cable being in the wire line field.
    But this is happening now. And I think therefore the Commission
    probably does have to change its internal structure. In a
    digital world, if you have functionally equivalent services
    being provided by different parties, I think they should be
    regulated in a functionally equivalent way. And that is not the
    way the Commission has done it through the years. It is not the
    way they are organized. It is going to take some change. I----
        Mr. Shimkus. Thank you. Mr. Hundt?
        Mr. Hundt. You know, the French say well, that works in
    practice, but, you know, maybe it doesn't really work in
    theory. And I think it is really, really important to focus on
    practice. The current structure allows the FCC Chair, in what I
    will definitely describe as an open process, to reorganize the
    FCC to meet the objectives that are set by any particular
    Congress in any particular situation. And that is a good thing.
    So when this Congress had the wisdom to ask the FCC to auction
    spectrum in 1993, I was allowed--thanks to you--but not because
    of a statutory mandate, but because of flexibility, I was
    allowed to create a wireless bureau which previously did not
    exist. At any given moment, it is hard to say exactly what the
    administrative structure ought to be. And I think the current
    system, which tells the Chair, ``Figure it out, tell us what it
    is, you are held accountable.'' That is a good system.
        Mr. Powell. I do think form follows function. And I think
    certainly when I was Chairman, we merged few bureaus. Cable was
    a separate bureau from broadcasting. Today, it is the media
    bureau now with changes we made to try to reflect. I think a
    common principle is organize around the way it is seen through
    the eyes and the ears of consumers. And, you know, to me, at
    the time, television was television to most Americans. And
    making sure you had cross- pollenization of the bureaucrats,
    professionals who--the bureaucracy and the professionals who
    manage that I thought was important so that they saw their
    functions through the same eyes of our constituents. And I
    think that is one principle you can follow. I do agree with
    Reed. I think the Chairman is also CEO. The statute assigns
    them that responsibility. I don't think we talk enough about
    the CEO role and the management of that operation. But I think
    there is plenty of flexibility to respond to that, if it is
    clear what it is we are trying to execute.
        Mr. Copps. I don't think there is any magic formula.
    Certainly, there have been times when the stove pipe approach
    has been too much in presence. I think Michael tried to work
    against that and go towards a little more holistic type of
    view. So did Chairman Genachowski. That being said though, you
    need the experts in these specific bureaus. There is a specific
    telecom expertise in the wire line and the wireless and all the
    details of that, and special access and everything else we are
    talking about. So I think you still have to have those bureaus.
    But if you can have--I think Chairman Genachowski established a
    consumer taskforce whose job it was to go across those agencies
    and look at whatever--or those bureaus--at whatever those
    bureaus were doing to assess the impact on consumer wellbeing.
    So I think that is a good approach. But it is a management thin
    and something that I think is the product of good leadership at
    the Commission and good oversight by the committee.
        Voice. Mr.----
        Mr. Walden. We need to move on to Mr. Dingell, I think, for
    the next 5 minutes. Mr. Chairman?
        Mr. Dingell. I want to commend you for this hearing. I
    think this has been an important hearing. In the events of this
    week, you tell us that it is time that the committee is going
    to have to start looking at what we are going to do about
    bringing the '96 act up to date. I have enjoyed the comments
    that my dear friend, Mr. Barton, made in announcing my position
    as being strongly regulatory. Sometimes I have a hard time
    recognizing my position when it is set forth by other members.
    In any event, that is not important. But I would just like to
    remind everybody that this business of the '96 act started when
    we began to try and get Judge Greene out of the business of
    regulating the telecommunications industry. It also started
    when we started trying to get the amount of spectrum that was
    held out of use by industry and business and government, and
    get that available to people, and to see to it that we had a
    fair program for dealing with our legislation and a fair
    program for dealing with these matters. I would like to welcome
    our friends, the Chairmen here for their appearance and for
    their assistance to us, and for what it is that they have done
    with us over the years.
        If there is an attempt made to update the Communications
    Act, I will offer my support. Yesterday's court decision
    vacating the anti-discrimination and anti-blocking rules of the
    Federal Communications Commission open Internet order is proof
    that the Congress needs to bring our communication laws into
    the 21st century. Only clear direction from Congress will
    strengthen consumer protections, promote competition and give
    industry the regulatory certainty it needs to innovate in the
    future.
        Now, as we go about this important work, I caution that we
    do so with great care, and on the benefit of a carefully
    collected and substantial body of evidence. This is going to
    require a rigorous oversight by the committee and considerable
    work to get the information that we have need of so that we can
    legislate properly. And I hope that the undertaking will be
    bipartisan in order so that any final product that we complete
    here moves through the Senate and to the President's desk for
    signature.
        We have to resolve a number of very important high line and
    hard questions to inform our work as we move forward. I
    respectfully suggest that these questions included--or rather
    include but are not limited to the following. First, how do we
    improve and protect American's access to content, while also
    preserving the ability of private companies to monetize their
    investments for future growth? Likewise, how do we best foster
    the ongoing development of future technologies that will ensure
    American leadership in the fields of technology and
    communications? And then we have to decide how we are to
    promote the more efficient and fair use of value and
    increasingly scarce commodities like spectrum, which we have
    not administered too well of late, and if administered at off
    times on the basis of perhaps the amount that we could get for
    it in money rather than how it would serve the Nation to
    allocate this spectrum? Lastly, we are going to have to decide
    how we will ensure that the Federal Communications Commission,
    the National Telecommunications and Information Administration,
    and other related bodies function smoothly, protect consumers
    and promote growth rather than hindering it. Regardless of
    these answers, and the answers to these questions and others, I
    submit that our work should proceed from the conviction that
    the public interest is still and always going to remain the
    central concern that we have with regard to the Communications
    Act.
        I have had the good fortune to be one of the authors of
    almost every major piece of telecommunications legislation
    passed by the Congress in the past three decades. And the
    public interest is in the heart of each, going back to the '33
    and '34 act. I see no reason why that should be any different
    this time around. The only issue here worth exploring is what
    that standard has meant in years past, and whether there is any
    reason to give the Commission different guidance for the future
    in interpreting it as we address the other questions I have
    just outlined.
        Mr. Chairman, I wish you Godspeed in this endeavor. And I
    offer you my support. And I am delighted that the Chairmen of
    the Commission who have been here this morning to assist us in
    beginning this process, which I hope will go forward with
    reasonable speed, with great care and again, with great
    attention to the public interest. I thank you all for listening
    to me.
        Mr. Walden. Chairman Dingell, thank you for your kind
    comments and your always generous words and willingness to work
    to improve our communication and other laws. We look forward to
    working with you. My only disappointment is you did not have a
    list of yes-or-no questions for this panel.
        Voice. Yes.
        Mr. Walden. Now, with that, we will turn to Mr. Terry from
    Nebraska. And we look forward to your comments and questions,
    sir.
        Mr. Terry. Yes, you do. Thank you. And I just, for our
    esteemed guests here today, I want to follow-up on what my
    friend from California, Ms. Matsui, began. And that is with
    high cost areas. But I want to take it from a little bit
    different angle and get your input.
        As kind of mentioned here, we have seen a convergence of
    technologies and services that are all kind of being wrapped
    into one anymore. And the same as--we talked about it in my
    early days on this committee in voice, and Barton brought that
    up. Well, now, it is in video. And so when we talk about a
    rural telecom and the Internet as a basis of delivering video
    today, it is kind of making--well, it is altering the way that
    rural telecoms used to work. And so we have a current legal
    structure with this QRA, and a mindset of--on treating rural
    telecoms like old copper wires, which a lot of them still are
    using. So I just want to ask your opinions about in Reform 4--
    or within the FCC, should rural and high cost areas--so, Mr.
    Copps, it even comes back to inner-city where you have low-take
    by high-cost. How do we think about this differently in making
    sure that if you live in rural America, or you are setting up a
    wind farm where you want to continuously oversee but remotely,
    thereby requiring broad broadband for all of that data? Do we
    need to think about things differently than high-cost, rural
    high-cost, inner city? Mr. Wiley, why don't we start with you?
        Mr. Wiley. Well, I am not an expert in the rural telephone
    area. But I still think there is a concern that is different
    than in the big cities. And I think, therefore, high-cost funds
    still are something that have to be part of the full equation,
    in my opinion. And you know that better than anybody in
    Nebraska.
        Mr. Terry. Yes.
        Mr. Wiley. So I don't have any huge input to you today as
    to how to change the system.
        Mr. Terry. Yes. And later, I guess to clarify, since video
    and Internet are becoming the same, and your telecom is really
    maybe your sole provider of that, it is all meshed together.
    Does that change anything, Mr. Hundt?
        Mr. Hundt. I think that many people have said we really
    want broadband to be the network for everyone in the country.
    In rural areas, as I am sure you know, Congressman, there are
    many places where the cable broadband penetration is as low as
    15 and 20 percent, not anything nearly as high as it is in
    Washington DC or in the suburbs. Now, that is a problem that
    the FCC really does need to think about in conjunction with the
    industry that Michael represents so ably. And in particular,
    not to touch too many other buttons, the recent increases in
    the prices of the content have a disproportionate impact in
    rural America. Because when those content price increases are
    passed on by the cable industry, they are taking a lot of money
    out of the wallets of the people in those areas, and those are
    the same areas where broadband is expensive. And so as people
    are paying more for the broadcast content and the cable channel
    content, they have less available to purchase broadband. This
    is a problem that is real and existing right now. And this also
    gives me a chance to pass the solution over to Chairman Powell.
        Mr. Powell. Congressman, I think you make a couple of
    important points that we should just put top of mind, which is
    the challenge of reaching that last five to seven percent is
    because under traditional market fundamentals, they are
    uneconomic. And if they are uneconomic, the only way to cure
    something is you have to change the economic equation. This is
    why I have always had no problem understanding and respecting
    the Government has a meaningful and significant role in terms
    of our ubiquity objectives in universal service, of
    universality and affordability, to play a role through either
    the universal service program or any other properly constructed
    program to try to change the economic equation that attracts
    the infrastructure that those communities deserve.
        I think it is a more optimistic scenario in the modern
    world than it was before. Because in the old world, we had a
    single technology that tried to string twisted copper wire
    between two farms 300 miles apart, and that was enormously and
    hideously expensive. One of the things I think really opens up
    an opportunity today is because of a common IP platform, we can
    essentially deliver almost any kind of service over almost any
    kind of network. So that means that wireless and probably its
    companion of satellite available services have real hope and
    promise for rural America. That is they have very dynamically
    different cost characteristics. A satellite at 28,000 feet sees
    rural Nebraska no differently than it sees Manhattan. Wireless
    has a much lower cost infrastructure for some of those areas.
    So I think that isn't a complete answer. But putting a lot of
    energy and investment into how those services will solve those
    problems is useful. And I think as the Chairman of the FCC is
    moving toward and IP network common regulatory proceeding, that
    convergence you are talking about also can get harmonized and
    the universal service program get harmonized along with it.
        Mr. Terry. Thank you. Agree.
        Mr. Copps. I have a little different answer. Reasonably
    comparable services at reasonably comparable prices is the
    injunction and the charge of the Telecommunications Act.
    Reforming USF, which the Commission is in the process of doing
    with lots of wrinkles and problems to work out, no question
    about that, is certainly an important part of the equation. But
    anybody who thinks that the universal service fund alone is
    going to bring this country the kind of high speed low-cost
    broadband that we need to have to be competitive in the world
    arena in the 21st century, I think is not looking at the
    situation as it is. This has to be an infrastructure mission.
    Our country has had infrastructure missions before when we came
    together to build highways and railroads and rural electricity,
    and so on and so forth. And that is what we need now. We are
    not going to be competitive. We are not going to get out of the
    holes that we are in unless every citizen in this country has
    that access. And, yes, it is reaching that last five to seven
    percent. That is extremely important. But way more than half of
    our homes don't have the kind of high speed, low-cost
    broadband, fiber broadband, that we are going to really need to
    be competitive. So we need to look at that, not just as an FCC
    problem but as a problem confronting our Government and our
    society, and act upon it and figure out whether we are really
    serious of being competitive in the global sweepstakes.
        Mr. Terry. Thank you.
        Mr. Walden. The gentleman yields back. I look to the
    gentleman from New Mexico, Mr. Lujan, for 5----
        Mr. Lujan. Mr. Chairman, thank you very much. And I must
    say, I was concerned with some of the approach that was being
    taken in the line of questioning leading up to those last
    responses to my colleague where for the first time I heard the
    importance of rural America. Coming from a western State, a
    congressional district that represents 17 of New Mexico's 22
    tribes and the sprawling nature associated with what the west
    brings us, many parts of rural America where our food is grown,
    where energy is generated, critically important to be able to
    get coverage to these areas. And as I joked with Chairman
    Wheeler when we had him in front of us a couple of weeks ago, I
    explained to him that, you know, these last flights home, it
    has been great to see the TSA debating whether we can make
    phone calls at 30,000 feet. I know that I have streaming video
    content at 30,000 feet. I can communicate with my office and
    anyone else that I so choose to. So if I can communicate with
    constituents and get the video content that I want at 30,000
    feet, why can't I do it on the ground in rural America? The
    technology is here. And there is no reason that we can't push
    it out. To the three responses, I just can't say thanks enough
    for that.
        Chairman Copps, with the response associated with the very
    aggressive push to infrastructure investment in America, it is
    absolutely needed. And we shouldn't forget, especially as we
    talk about different ideals and philosophies that we have on
    this committee, and even in this Congress and across the
    country, that it was in many conservative and rural parts of
    America that benefited from Government investment with rural
    electrification, with major water projects that provide us
    power now that could be in question because of water flows--a
    whole other topic of conversation, but nonetheless that we need
    to make sure that we are addressing.
        So, Chairman Powell, you talked about twisted pairs and
    what that brought us, decisions that were made as a result of
    the '96 act. And looking at Section 706(a), I am not certain
    what we are arguing about with concerns in that particular
    area. It is encouraging deployment of reasonable and timely
    basis on advanced telecom, especially for educational purposes.
    There may be some concerns with some of my colleagues on a
    price cap regulation. But regulatory for bands, measures that
    promote competition in local markets. This could be read by any
    member on this committee, encouraging ideals that I think that
    we all share.
        But one thing that hasn't been talked about very much--and
    even given the fact that there was a huge data breach with
    Target, 70 million customers that were impacted, is the
    security of this network. I would hope that--and I would like
    to get your opinion if 706(a) provides us the necessary
    standards to be able to bring safeguards, or if you think that
    that is something that needs to be addressed? And I would like
    to invite comments from each of you. Mr. Hundt?
        Mr. Hundt. As Chairman Powell said, Section 1706 is very
    broad. And I think that it is an opportunity and a duty for the
    FCC to dig into it and to create an appropriate framework, with
    the help of this committee and its counterpart in the Senate.
    If I might continue your point--your theme of rural America,
    there are a number of other provisions as well in the '96 act
    that the FCC can use to try to achieve the goal of completely
    widespread broadband, even in rural and high cost areas. And
    one that I would identify is the current proceeding to re-
    imagine the E-Rate.
        The E-Rate, if we went--I just recently met with the chief
    librarian in Pima County, Arizona, which isn't very far away
    from you. And you know the geography is not dissimilar. They
    have a fantastic system of broadband for not just the central
    library in Tucson, but all the branch libraries. All over this
    very, very sparsely populated geography, the library is the
    number one public Internet access point in southern Arizona.
    Therefore, it is the proper focus of extra E-Rate support, and
    the proper focus of the combination of network architectures
    that might well resemble what Chairman Powell was talking
    about. We shouldn't decide that part. But we should decide that
    is a very flexible tool, also, that can be used to deliver the
    right participation in the American community to rural America.
        Mr. Lujan. Chairman Powell?
        Mr. Powell. Congressman, I really would like to put a
    punctuation on what you raise. Because I think it goes to the
    committee's desire, I hope, to try to harmonize and see the
    communication landscape as a single ecosystem. All the
    wonderful benefits we are bragging and celebrating are
    continuously and daily at risk. I think cyber threat, data
    retention, breach are all issues that are the Achilles Heel of
    all the promise of the network that we are celebrating. But
    they require very complex solutions that look through an entire
    ecosystem. 706 is no more--is not particularly up to that job.
    Why? Even for no other reason that you can't have a discussion
    without software involved. The cyber security question on a
    global--ecosystem basis means a conversation with every element
    of that massive connective chain. And that is the web
    companies, the infrastructure companies, wireless companies,
    content companies, there is just no way, in my opinion, even
    with its breadth that one could look hopefully to that as the
    single point of authority to make the most meaningful impact on
    this issue, mostly because 50 percent of that ecosystem aren't
    even implicated by that provision.
        Mr. Lujan. Chairman?
        Mr. Copps. I hope 706 is up to the job. I think it does
    confer a lot of authority. But I don't want this to become just
    a solution de jure and we talk about 706 for the next 2 years.
    And then another court somewhere strikes that down or whatever.
    I do want to highlight one thing that you mentioned in terms of
    getting broadband out. And I commend you for your interest and
    your work with native lands and Native Americans. And one area
    where I think maybe a rewrite would help would be to more
    formally institutionalize--put some flesh on the bones of the
    trust relationship and the consulted--consultative mechanisms
    that we have between the Commission and Native Americans. It is
    not--it is working better than it has. I think there has been
    more emphasis in recent years. Obviously, back in Chairman
    Kennard's time, who is not here today, there was an interest in
    moving us forward and getting us into a new trust relationship.
    But that is 13 or 14 years ago. And the situation, as you point
    out, is so dire when one member of a tribe can't call somebody
    else, but you can make the call from 30,000 feet. That is
    something wrong there. But that might be a concrete area where
    the Commission can--or where the Congress can actually lend a
    hand.
        Mr. Lujan. Appreciate that.
        Mr. Walden. Appreciate that. The gentleman's time has
    expired. We will now go to the gentleman from New Jersey, Mr.
    Lance, for 5 minutes.
        Mr. Lance. Thank you, Mr. Chairman. And to the
    distinguished panel, this is among the most interesting
    hearings in which I have ever participated. And it is my honor
    to be able to meet all of you.
        I gather there is a consensus from the distinguished panel
    that the 1996 legislation needs, to some extent, statutory
    update and revision, is that accurate, from the panel?
        Voice. I would agree.
        Mr. Hundt. I don't agree.
        Mr. Lance. And, Chairman Hundt, if you would indicate why
    you do not agree there needs to be statutory update?
        Mr. Hundt. I think that the DC Circuit has made it very
    clear that the '96 act has given the authority to the FCC to
    address all the economic and social problems that this
    committee, in recent years and in past years, has asked the FCC
    to address.
        Mr. Lance. Other distinguished members----
        Mr. Copps. I basically concur and agree with what Chairman
    Hundt has said.
        Mr. Lance. Um-hum.
        Mr. Copps. Sure, it is always nice to have some additional
    clarity. But time is of the essence here. We have a statute
    that I think can deliver on a lot of the things that need to be
    delivered, and we should be about that job. I just--it is so
    difficult to see the correlation of forces coming together to
    give birth to an act after what we went through in 1996. And I
    don't think it is going to be any easier in 2014 to do that
    than it was 18 years ago.
        Mr. Lance. Chairman Powell?
        Mr. Powell. I think, by any measure, a deliberative process
    in the legislature would take a meaningful number of years, as
    the chairman--as Chairman Walden himself has recognized in
    setting out a multi-year process. I do think there are
    sufficient conditions to justify the institution of that kind
    of examination over that period of time, because I think the
    market is radically different and the relevancy of law as
    applied to reality should be a core principle of governance.
        Mr. Lance. Thank you.
        Mr. Wiley. I think the very fact that you didn't have the
    Internet really developed, you didn't have broadband, you
    didn't have all the technological changes that have occurred
    since 1996, really gives I think substance to taking another
    look. And I think that gives Congress an opportunity I think to
    perhaps make some suggestions to the regulatory body that I
    think would be very helpful.
        Mr. Lance. Thank you, Chairman Wiley. Am I accurate--I have
    not read the decision. I have reviewed its consequences, but I
    have not read it. And I certainly will read yesterday's
    decision. Am I accurate that the FCC decided in 2004 that
    Internet access services would not be classified as
    telecommunications services? Is that true, Chairman Powell?
        Mr. Powell. Yes, sir. That is correct.
        Mr. Lance. And if that decision were to be revisited, that
    could be revisited by the administrative agency, is that
    accurate as to how it could proceed?
        Mr. Powell. It is accurate. It could.
        Mr. Lance. And if there were to be a revisiting of the 2004
    decision that this is not classified as telecommunications
    services, then there would have to be an extensive period of
    review, and there would have to be some sort of high level
    determination as to why a different decision were to be made.
    Is that the way it would work?
        Mr. Powell. Yes. Under administrative law, even with
    deference, the Agency has to provide a reasoned explanation for
    its change in policy. It would require a notice and comment
    proceeding, which is open.
        Mr. Lance. Yes.
        Mr. Powell. And I wouldn't--you know, the suggestion has
    been made that somehow that would lead to instant clarity. It
    would lead to another 3-to-4-year period of conflict and
    litigation----
        Mr. Lance. And litigation. And, Chairman Copps?
        Mr. Copps. But I would just say I don't think it would take
    forever to compile that record. I and a lot of other people I
    know would be happy to contribute to the rational for that sort
    of action. So it is not really starting at--on the tabula rasa.
    I think a lot of that information is out there. It was just a
    route not taken. And now we need to go back and look at it.
        Mr. Lance. And the FCC's reclassification would be
    considered arbitrary and capricious unless there were a period
    of comment and refreshing the record, and some sort of
    heightened standard, is that accurate legally?
        Mr. Powell. Yes, sir. They have to follow the
    Administrative Procedure Act obligations.
        Voice. And I am certain they would.
        Mr. Lance. I would presume that would be the case. And,
    finally, the decision that yesterday possibly could be appealed
    to the Supreme Court, but it is not clear whether or not either
    side is likely to do that.
        Voice. That is correct.
        Mr. Lance. Thank you very much. My time has expired, Mr.
    Chairman.
        Mr. Walden. I thank the gentleman. Now, I turn to Mr. Long
    from Missouri. I think our last member to ask questions. Please
    go ahead.
        Mr. Long. Thank you, Chairman. And, Chairman Hundt, last
    night you said that you spent quite a bit of time trying to go
    through the court ruling of yesterday. And most of the
    congressmen were home trying to read through a 1,562 page bill
    that we are going to be voting on this afternoon. So I have
    ordered my staff to bring a copy of that to you. And if you
    could peruse that over your lunch hour and kind of decipher it
    for me, I would appreciate it.
        Earlier in your testimony, Chairman Hundt, you said that--
    and I didn't get--understand your point, I don't think,
    concerning the auction. You said, if I remember right, that we
    need a cap so people know what they are buying. Can you kind of
    tell me what you were--in full disclosure, I come from a 30-
    year career as an auctioneer before I came to Congress a few
    years ago. So I have got a lot of interest in how an auction
    operates and try and make it operate the best it can for the
    public and the taxpayers.
        Mr. Hundt. I remember very well that in our first auction,
    we had Senator Burns who had a----
        Mr. Long. Conrad Burns, you are right.
        Mr. Hundt [continuing]. Come and conduct the very first
    auction.
        Mr. Long. He is from Missouri. Now, he served from Montana,
    but he is originally from Missouri. So that is two of us.
        Mr. Hundt. He did claim that particular heritage. And he
    did a great job. And I would recommend to Chairman Wheeler that
    he should come and ask you to conduct the next auction.
        Mr. Long. I am not worried about conducting as much as I am
    the--you know, how it is put together. And that is what I have
    been trying to drill down on.
        Mr. Hundt. Well----
        Mr. Long. But what was your comment? I didn't understand
    you said that we need a cap so people know what they are
    buying. What exactly did you mean?
        Mr. Hundt. So in any auction, when folks come in, you want
    the high bidder to be able to walk away with whatever was
    auctioned. And the way to do that I believe is to make sure
    that everybody bidding in that auction knows the following,
    what are the rules about how much you can buy. It doesn't have
    to be a cap. It could be--some people think it should be an
    aggregation level. There is many different ways to define it.
    But people ought to know as they are about to take the money
    out of the wallet, as they are about to raise the hand and say
    that they are putting in the high bid, they ought to know that
    they can walk away with whatever they can buy, instead of
    having to have another proceeding where they ask the FCC or the
    Department of Justice later, am I permitted to walk away with
    this, because I don't know whether or not I have violated any
    of your aggregation rules. So this Congress, in the Incentive
    Auction Rule, did say that the FCC should create a generally
    applicable aggregation rule. And I think that was a very wise
    thing to do, that way everybody going into the auction can
    estimate in advance whether or not what they buy is what they--
    what they bid on and win on is what they can walk away with.
        Mr. Long. OK. Talking to the interested parties that are
    interested in buying this spectrum, they have told me--and this
    is probably a topic for another day. But they said if they can
    buy A, B and C spectrum, then maybe they want to buy L, M, N,
    O, P later in the auction. Or if they can't buy A, B and C, L,
    M, N, O, P doesn't--if they can't but that too, then the first
    three things that they bought--so it is a very confusing
    situation. So do you any of you have any staff--anybody you
    want to get with my staff that we can talk about to kind of
    sort that out, I would appreciate it.
        I want to move to Chairman Wiley for a minute. If you turn
    on the TV at night, the only reason it is not 100 percent phone
    company ads and the cellular companies and things is because it
    is interspersed with auto insurance ads. So there would be
    more--so it seems like there is quite a bit of competition out
    there now. And as far as the auction that I was talking about
    with Chairman Hundt, the wireless market I think appears to be
    extremely competitive. And you do have larger companies, AT&T,
    Verizon, T-Mobile, Sprint. And given that, doesn't it make
    sense that the FCC--why will they--should they not--they
    shouldn't handicap bidders, should they, to get the most money
    for the taxpayers and have the best auction they can where
    either some people are wanting to limit who can buy what? Can
    you kind of walk me through that?
        Mr. Wiley. Well, my view is that the auction ought to be
    available, open to all. I think if Congress really wants to see
    the maximum amount of revenue derived in order to support the
    public safety network we are going to have to pay the
    broadcasters, it is a very complex process. And I do--I am
    concerned about the fact that we start to begin to limit people
    in this that you are going to find you are going to have less
    revenue than might be otherwise anticipated. I think a free
    auction ought to be open to all.
        Mr. Long. All right. When people would attend my auction, I
    was always interested in having the most people there and
    having them spend the most money that they could. And if they
    didn't want to bid, I would bid for them. I would tell them
    just to hold their hand up in the air. And when they paid
    enough, I would tell them to take it down. So with that, Mr.
    Chairman, I yield back.
        Voice. That is quite an auction.
        Mr. Walden. I want to thank our distinguished panel of
    witnessed, both for your prior Government service and your
    continuing involvement and interest in public policy to assist
    us in our mission and goals in updating the Communications Act.
    I draw attention to those who are observing our hearing. They
    can go to our hashtag at CommsActUpdate. I think it is right in
    front here--and give us your information. A lot of people have
    been doing that during the hearing. We appreciate that. Another
    reflection of how technology is changing the world, and we need
    to keep up with it. So thank you for your participation. Our
    subcommittee stands adjourned.

        [Whereupon, at 12:25 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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