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


                     OVERSIGHT OF THE FEDERAL COMMUNICATIONS 
                                   COMMISSION

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

                                HEARING

                               BEFORE THE

             SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED THIRTEENTH CONGRESS

                             SECOND SESSION

                               __________

                              MAY 20, 2014

                               __________

                           Serial No. 113-146
                           
                           
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]                           


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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                 Chairman Emeritus
JOHN SHIMKUS, Illinois               FRANK PALLONE, Jr., New Jersey
JOSEPH R. PITTS, Pennsylvania        BOBBY L. RUSH, Illinois
GREG WALDEN, Oregon                  ANNA G. ESHOO, California
LEE TERRY, Nebraska                  ELIOT L. ENGEL, New York
MIKE ROGERS, Michigan                GENE GREEN, Texas
TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
  Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
PHIL GINGREY, Georgia                JIM MATHESON, Utah
STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio                JOHN BARROW, Georgia
CATHY McMORRIS RODGERS, Washington   DORIS O. MATSUI, California
GREGG HARPER, Mississippi            DONNA M. CHRISTENSEN, Virgin 
LEONARD LANCE, New Jersey                Islands
BILL CASSIDY, Louisiana              KATHY CASTOR, Florida
BRETT GUTHRIE, Kentucky              JOHN P. SARBANES, Maryland
PETE OLSON, Texas                    JERRY McNERNEY, California
DAVID B. McKINLEY, West Virginia     BRUCE L. BRALEY, Iowa
CORY GARDNER, Colorado               PETER WELCH, Vermont
MIKE POMPEO, Kansas                  BEN RAY LUJAN, New Mexico
ADAM KINZINGER, Illinois             PAUL TONKO, New York
H. MORGAN GRIFFITH, Virginia         JOHN A. YARMUTH, Kentucky
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Missouri
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
             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
  
                             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...........................................     4
Hon. Anna G. Eshoo, 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....................................     7
    Prepared statement...........................................     8
Hon. Henry A. Waxman, a Representative in Congress from the State 
  of California, opening statement...............................    10
Hon. Lee Terry, a Representative in Congress from the State of 
  Nebraska, prepared statement...................................    59

                               Witnesses

Tom Wheeler, Chairman, Federal Communications Commission.........    11
    Prepared statement...........................................    14
    Answers to submitted questions...............................    70

                           Submitted Material

Letter of May 7, 2014, from 100+ venture capitalists to the 
  Federal Communications Commission, submitted by Ms. Eshoo......    60
Letter of May 8, 2014, from 100+ Internet Companies to the 
  Federal Communications Commission, submitted by Ms. Eshoo......    63

 
           OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION

                              ----------                              


                         TUESDAY, MAY 20, 2014

                  House of Representatives,
     Subcommittee on Communications and Technology,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:30 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, Ellmers, Barton, Upton (ex officio) 
Eshoo, Matsui, Braley, Welch, Lujan, Dingell, DeGette, 
Matheson, Butterfield, and Waxman (ex officio).
    Also present: Representative Yarmuth.
    Staff present: Gary Andres, Staff Director; Ray Baum, 
Senior Policy Advisor/Director of Coalitions; Matt Bravo, 
Professional Staff Member; Leighton Brown, Press Assistant; 
Andy Duberstein, Deputy Press Secretary; Gene Fullano, 
Detailee, Telecom; Kelsey Guyselman, Counsel, Telecom; Sean 
Hayes, Deputy Chief Counsel, Oversight & Investigations; Grace 
Koh, Counsel, Telecom; David Redl, Counsel, Telecom; Charlotte 
Savercool, Legislative Coordinator; Macey Sevcik, Press 
Assistant; Tom Wilbur, Digital Media Advisor; Phil Barnett, 
Democratic Staff Director; Shawn Chang, Democratic Chief 
Counsel for Communications and Technology Subcommittee; 
Margaret McCarthy, Democratic Professional Staff Member; Ryan 
Skukowski, Democratic Staff Assistant; and Patrick Donovan, 
Democratic FCC Detailee.

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

    Mr. Walden. We will call to order the subcommittee on 
Communications and Technology, and I certainly want to welcome 
our Members and our witness, the Chairman of the Federal 
Communications Commission. Mr. Wheeler, we are delighted that 
you would make time to come and spend with us on this important 
day with so much going on in the telecommunications world.
    Six months ago, this subcommittee met for the very first 
time with the current complement of FCC Commissioners and 
welcomed Mr. Wheeler as the new chairman. Today--and let me 
welcome Mr. Wheeler back--we meet to review the record of 
action and selective inaction that the Commission has taken 
under the first 6 months of your leadership. Unfortunately, 
given some of the most recent actions out of the Commission, I 
fear that we may be heading into rough waters.
    When we last met I offered two pieces of advice to Chairman 
Wheeler and his colleagues. First, I urged them to heed the 
words of Congress where it has spoken and reject calls to act 
in ways contrary to Congressional intent. Second, I urged them 
to bear in mind that even seemingly small changes in the 
Federal Communications Commission's rules can have significant 
impact on the marketplace. I called upon all the members of the 
Commission to discharge their duties with transparency, 
accountability, and a long view of the technological landscape. 
In sum, my advice was that they must approach their duties with 
humility and restraint.
    Unfortunately, recent actions have hinted that my advice 
was ignored. In December we had yet to know that the D.C. 
Circuit Court of Appeals would once again reject the 
Commission's attempt to regulate the Internet and could only 
speculate as to whether the Commission under Chairman Wheeler's 
lead would mount a third attempt. Sadly, we now know the 
answer. Not only is Chairman Wheeler leading us down this path 
again, the item the Commission adopted last week tees up the 
long-dead idea that the Internet is a common carrier. This 
reinvigorated willingness to consider regulating the Internet 
under Title II of the Communications Act, rules that find their 
roots in 19th Century railroad regulation and were designed to 
regulate the world of a telephone monopoly, harken back to a 
world in which a twisted copper was the only portal for 
consumers to the communications network and voice, the only 
service.
    The modern communications landscape bears no resemblance to 
the world Title II was meant to regulate, and application of 
Title II to the Internet is, at best, a poor fit. Worse still, 
the practical consequences of reclassification are to give the 
bureaucrats at the FCC the authority to second-guess business 
decisions and to regulate every possible aspect of the 
Internet. We should all pause and consider the prospect of the 
FCC as a rate-setting authority over Internet access and what 
that meant for innovation in the telephone network of 
yesteryear. We should also be aware that this path opens the 
door for states to regulate the Internet.
    Contrary to any intended effect, the reclassification of 
broadband service under Title II will harm consumers, halt job 
creation, curtail innovation and stifle investment. In sum, at 
a time when the Commission, at Congress's direction, is taking 
steps toward even greater growth and innovation across Internet 
access platforms, the Commission is simultaneously 
contemplating rules that undermine those very efforts and 
compromise the fundamental approaches of both the Clinton and 
Bush administrations that laid the foundation for the Internet 
we know today.
    As troubling as some of the actions taken under Chairman 
Wheeler's watch, the selective inaction of the FCC is equally 
troubling. Although required under the Telecommunications Act, 
the Federal Communications Commission has failed to complete 
its quadrennial review of the limitations on ownership of 
broadcast properties. It has been 6 years--6 years--since the 
Commission last fulfilled this statutory mandate. Rather than 
focus on ensuring that the rules reflect reality, however, the 
chairman has now announced that the Commission would 
essentially scrap the 2010 quadrennial review, and begin in 
earnest its 2014 quadrennial review.
    Notwithstanding this stale record, the FCC also moved 
forward to make major changes to the regulations that govern 
media ownership anyway, the adopted changes to its attribution 
rules that determine how to count stations toward the local 
television ownership rule. The FCC also stated that it would 
begin counting certain shared service arrangements toward the 
local ownership cap. In order to comply with local ownership 
rules, these pronouncements will likely force broadcasters to 
divest stations and unwind shared service agreements that are 
beneficial to ensuring local content in the smaller markets. 
These changes do not bring benefits to the communities served 
by these broadcasters drawing into question how this change 
could serve the public interest.
    Finally, FCC process reform has been an ongoing priority of 
our Subcommittee. It is an issue my colleagues and I are deeply 
invested in as demonstrated by the unanimous passage in the 
House of the bipartisan Federal Communications Commission 
Process Reform Act on March 11 of this year. Unfortunately, 
after the events of the past few months, I am sad to say I 
continue to be troubled by the FCC's seemingly flawed 
processes.
    In March, the FCC chose to restrict license transfers 
involving certain shared service agreements, which had long 
been implicitly blessed by the Commission. This action was not 
debated by the commissioners, nor is it subject to any kind of 
vote. Rather, it was announced by the Chief of the Media Bureau 
as a fait accompli.
    Recent press reports also allege that the chairman's office 
withheld presentation of revisions to the Open Internet Notice 
of Proposed Rulemaking from Republicans for as long as 24 hours 
after having provided the material to the Democratic 
commissioners and to the press during the run up to the May 
15th FCC Open Meeting. The concern raised by these reports is 
only compounded by revelations that a substantially revised 
draft of another item scheduled for vote at the Open Meeting 
was not presented to other offices until the closing minutes of 
the evening before. According to Commissioner Pai's dissent 
from the commission's Mobile Spectrum Holdings item, his office 
received the revised item fewer than 12 hours before the Open 
Meeting, and the item contained more than 3,000 revisions.
    So I find myself channeling Commissioner Rosenworcel who 
said of the Open Internet NPRM that the ``process that got us 
to this rulemaking today is flawed.'' The committee has opined 
in the past that withholding of a revised draft item from other 
members of the commission until the eleventh hour precludes the 
scrutiny and analysis necessary for reasoned decision-making. 
It is my hope that these occurrences were anomalies. Perhaps 
Chairman Wheeler will want to commit today to providing his 
fellow commissioners with adequate and equal time to review 
proposed orders and rules.
    The transformative impact of the evolution of technology 
from analog to digital, from narrowband to broadband, has 
forever altered our lives. The evolution continues and the 
Commission has before it the issues I just mentioned and many 
more, all significant in their impacts on our lives and the 
economy. You stated in your written testimony that you are 
eager to build on the progress of the last 6 months going 
forward. And I hope working together we can move forward in a 
direction that protects the success this critical sector of the 
economy has enjoyed and facilitates its continued growth and 
job creation unencumbered by regulatory overreach.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    Six month ago, this subcommittee met for the first time 
with the current complement of FCC Commissioners and welcomed 
Mr. Wheeler as the new chairman. Today--and let me welcome 
Chairman Wheeler back--we meet to review the record of action 
and selective inaction that the commission has taken under the 
first six months of his leadership. Unfortunately, given some 
of the most recent actions out of the commission, I fear that 
we may be heading into rough waters.
    When we last met I offered two pieces of advice to Chairman 
Wheeler and his colleagues. First, I urged them to heed the 
words of Congress where it has spoken and reject calls to act 
in ways contrary to Congressional intent. Second, I urged them 
to bear in mind that even seemingly small changes in the FCC's 
rules can have significant impact on the market. I called upon 
all the members of the commission to discharge their duties 
with transparency, accountability, and a long view of the 
technological landscape. In sum, my advice was that they must 
approach their duties with humility and restraint.
    Unfortunately, recent actions have hinted that my advice 
was ignored. In December we had yet to know that the D.C. 
Circuit Court of Appeals would once again reject the 
commission's attempt to regulate the Internet; and could only 
speculate as to whether the commission under Chairman Wheeler's 
lead would mount a third attempt. Sadly, we now know the 
answer. Not only is Chairman Wheeler leading us down this path 
again, the item the commission adopted last week tees up the 
long dead idea that the Internet is a common carrier. This 
reinvigorated willingness to consider regulating the Internet 
under Title II of the Communications Act--rules that find their 
roots in 19th century railroad regulation and were designed to 
regulate the world of a telephone monopoly--harken back to a 
world in which a twisted copper was the only portal for 
consumers to the communications network and voice was the only 
service.
    The modern communications landscape bears no resemblance to 
the world Title II was meant to regulate and application of 
Title II to the Internet is, at best, a poor fit. Worse still, 
the practical consequences of reclassification are to give the 
bureaucrats at the FCC the authority to second-guess business 
decisions and to regulate every possible aspect of the 
Internet. We should all pause and consider the prospect of the 
FCC as a rate-setting authority over Internet access and what 
that meant for innovation in the telephone network of 
yesteryear. We should also be aware that this path opens the 
door for states to regulate the Internet.
    Contrary to any intended effect, the reclassification of 
broadband service under Title II will harm consumers, halt job 
creation, curtail innovation, and stifle investment. In sum, at 
a time when the commission--at Congress's direction--is taking 
steps toward even greater growth and innovation across Internet 
access platforms, the commission is simultaneously 
contemplating rules that undermine those very efforts and 
compromise the fundamental approaches of both the Clinton and 
Bush administration that laid the foundation for the Internet 
we know today.
    As troubling as some of the actions taken under Chairman 
Wheeler's watch, the selective inaction of the FCC is equally 
troubling. Although required under the Telecommunications Act, 
the FCC has failed to complete its quadrennial review of the 
limitations on ownership of broadcast properties. It has been 6 
years since the commission last fulfilled this statutory 
mandate. Rather than focus on ensuring that the rules reflect 
reality, however, Chairman Wheeler announced that the 
commission would essentially scrap the 2010 quadrennial review, 
and ``begin in earnest'' its 2014 quadrennial review. 
Notwithstanding this stale record, the FCC also moved forward 
to make major changes to the regulations that govern media 
ownership anyway. The adopted changes to its ``attribution 
rules'' that determine how to count stations toward the local 
television ownership rule. The FCC also stated that it would 
begin counting certain shared service arrangements toward the 
local ownership cap. In order to comply with local ownership 
rules, these pronouncements will likely force broadcasters to 
divest stations and unwind shared service agreements that are 
beneficial to ensuring local content in smaller markets. These 
changes do not bring benefits to the communities served by 
these broadcasters drawing into question how this change could 
serve the public interest.
    Finally, FCC process reform has been an ongoing priority of 
the subcommittee. It is an issue that my colleagues and I are 
deeply invested in as demonstrated by the unanimous passage in 
the House of the bipartisan Federal Communications Commission 
Process Reform Act on March 11th of this year. Unfortunately, 
after the events of the past few months, I am sad to say I 
continue to be troubled by the FCC's seemingly flawed 
processes.
    In March, the FCC chose to restrict license transfers 
involving certain shared service agreements, which had long 
been blessed implicitly by the commission. This action was not 
debated by the commissioners, nor was it subject to a vote of 
any kind. Rather, it was announced by the Chief of the Media 
Bureau as a fait accompli.
    Recent press reports also allege that the Chairman's Office 
withheld presentation of revisions to the Open Internet Notice 
of Proposed Rulemaking from Republicans for as long as 24 hours 
after providing the material to the Democratic commissioners 
and to the press during the run up to the May 15th FCC Open 
Meeting. The concern raised by these reports is only compounded 
by revelations that a substantially revised draft of another 
item scheduled for vote at the Open Meeting was not presented 
to other offices until the closing minutes of the evening 
before. According to Commissioner Pai's dissent from the 
commission's Mobile Spectrum Holdings item, his office received 
the revised item fewer than 12 hours before the Open Meeting 
and the item contained more than 3,000 revisions.
    I find myself channeling commissioner Rosenworcel who said 
of the Open Internet NPRM that ``the process that got us to 
this rulemaking today is flawed.'' The committee has opined in 
the past that withholding of a revised draft item from other 
members of the commission until the eleventh hour precludes the 
scrutiny and analysis necessary for reasoned decision-making. 
It is my hope that these occurrences were anomalies. Perhaps 
Chairman Wheeler will commit today to providing his fellow 
commissioners with adequate and equal time to review proposed 
orders and rules.
    The transformative impact of the evolution of technology 
from analog to digital, from narrowband to broadband has 
forever altered our lives. That evolution continues and the 
commission has before it the issues I just mentioned and many 
more, all significant in their impacts on our lives and the 
economy. You stated in your written testimony that you are 
eager to build on the progress of the last 6 months going 
forward. I hope, working together, we can move forward in a 
direction that protects the success this critical sector of the 
economy has enjoyed and facilitates its continued growth and 
job creation unencumbered by regulatory overreach.

                                #  #  #

    Mr. Walden. With that I yield back, and I recognize my 
friend and colleague from California, Ms. Eshoo, the Ranking 
Member of the Subcommittee, for her opening statement.

 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 all 
of my colleagues, and welcome back to the committee, Chairman 
Wheeler.
    Before we do a deep dive into the specifics of the 
chairman's proposal as well as so many other major issues that 
are before the FCC, I think that it would be well for us to 
step back and appreciate what I believe is one of the most 
consequential inventions in human history. This was dreamed of 
and built by disruptors. It is an American story. It is a 
product of American genius--the Internet, one word but it 
really takes one's breath away in terms of the arc of history.
    It is not only an invention, it has reshaped lives, 
economies here and around the world, and our thinking and our 
debate today really should be viewed, I think, through the 
prism of a critical step that we are taking now in the 21st 
Century. The Internet is a continuum of change. It is 
accessible, it is open and its innovations continue. They 
empower individuals, entire fields of learning, growing not 
only our economy but economies around the world and serving 
humanity in countless ways.
    All of this has taken place, and here we are in the second 
decade of the 21st Century. So this is huge. This is huge. This 
is not what is behind door number one, door number two, door 
number three, where the price is right. This is not some 
guessing game. This is huge. This is something--these decisions 
are going to affect every single American going forward just as 
it has in the past, and it will continue to.
    So all of us--regulators, innovators, consumers, 
legislators--we have to get this right. The stakes are very 
high, and America cannot lose. It has been our leadership that 
has advanced the digital age, and now is not the time, and 
actually I don't think there should be ever a time, to unravel 
the values that have really been the hallmarks and the bulwarks 
of the Internet.
    So the question is, how do we seize the future? At least in 
my view, that is what the question is. I know what I want to 
see continue, openness, free, accessible. These are also the 
hallmarks of our democracy, and that is why this has been such 
an extraordinary export of our country.
    I know what I don't want. I don't want this to become an 
auction, selling off the best in bits and pieces where some pay 
for faster lanes, others can't pay. They get stuck in a slow 
lane--some giant company blocking content and others 
discriminating so that they can sell their stuff to keep the 
other guy's stuff stymied. That is not a very pretty 
description, but it is a street description of what can be at 
hand.
    I want every day to be essentially the 4th of July for 
American innovation so that it just keeps bursting, it just 
keeps bursting. And I see it every day in my Congressional 
district. Looking forward 10 years, 25 years, 50 years, I want 
this to continue, and we should all be thinking on a grand 
scale because this growth and this economic driver should be 
for everyone. We need smart, savvy regulations, regulatory 
decisions. We need a Congress that is engaged in this and a 
Congress that is vigilant, and I plan to be.
    So what should the FCC do? I think in all the articles you 
read, there is a debate. Should it be 706 or should it be Title 
II? I think that we have to have a clear understanding of what 
has made the Internet what it is today and what basic values 
need to be protected and preserved and then what that is going 
to look like.
    And there is more on top of all of this. Can anyone here 
today piece together the effects of a Comcast/Time Warner 
merger and an AT&T/DirecTV merger on consumers and a free and 
open Internet? These are massive decisions and massive pieces 
that are moving forward. And what is going to happen to 
innovation?
    Mr. Chairman, Chairman Walden, I urge you to convene a 
hearing to examine these issues here. I think they deserve to 
be examined and to be debated and questions asked. So as I said 
earlier, every person in the country will be affected by the 
outcome of these decisions that are before the Commission and 
before us. And so I look forward to questioning Chairman 
Wheeler today. I also ask for unanimous consent to two letters, 
two very important letters, be entered into the record, one 
signed by more than 100 venture capitalists and angel investors 
who support simple, strong, enforceable rules against online 
discrimination and access fees, and the other signed by more 
than 100 Internet companies, small and large, mostly small, 
that support a free and open Internet.
    Mr. Walden. Without objection.
    [The information appears at the conclusion of the hearing.]
    Ms. Eshoo. And I don't know if I have any time remaining. 
No, I think I have gone over. With that, I will yield back what 
I don't have.
    Mr. Walden. Thank the gentlelady for her opening statement 
and the letters. I will now turn to the Full Committee 
Chairman, Mr. Fred Upton from Michigan, for opening comments.

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

    Mr. Upton. Well, thank you, Mr. Chairman. Oversight is a 
critical part of this committee's work to foster a smaller, 
more nimble government for the innovation age. We have held 
lots of hearings with all of the FCC's commissioners to address 
issues of national importance, to keep a close eye on the 
budget, and to ensure that Commission process focuses on 
promoting jobs and innovation, and today's oversight hearing 
with Chairman Wheeler will continue that discussion to ensure 
that the FCC works in a way that benefits consumers, industry, 
and certainly the economy, and I thank you for coming today.
    There is a lot to discuss. In the 6 months since Mr. 
Wheeler was confirmed as chair, he has addressed a number of 
items including media ownership, the IP transition, universal 
service, and just this past week, of course, the incentive 
auctions and net neutrality. While I appreciate the chairman's 
leadership on some of these, I have serious concerns with some 
others.
    As an initial matter, Chairman Wheeler started off his 
chairmanship with the review of FCC procedure, an issue that 
this Subcommittee has spent lots of time working to reform in a 
bipartisan manner. But I was disappointed to see some of the 
process failures that occurred last week. Media reports of open 
meeting items being circulated to commissioners as late as 
midnight the evening before the vote on one item and what seems 
to be partisan sharing of items with Democrats as much as 24 
hours before sharing them with Republicans on another is 
particularly concerning. Regardless of political affiliation, 
commissioners must be given adequate and equal time to consider 
the items on which they are going to vote. Let us all hope that 
such incidents of favoritism and selective sharing are isolated 
and not emblematic of the Chairman's new operating procedure.
    Additionally, I continue to be concerned with the 
Commission's ongoing defiance of its statutory obligations to 
complete the 2010 quadrennial review of media ownership rules. 
Despite the commission's woefully outdated record on this 
issue, it has nonetheless moved forward with changes that 
effectively bar joint sales agreements and change Commission 
treatment of shared service agreements under its media 
attribution rules. These actions, in the absence of the 
statutorily required media ownership review, do raise 
significant questions about the Commission's commitment to 
making decisions informed by facts and utilizing sound process.
    And lastly, I am troubled by the chairman's insistence on 
attempting to regulate the Internet under rules that were 
informed by 19th century railroad regulations and adopted to 
regulate the monopoly telephone network of the past. The 
Internet has indeed flourished under the current light-touch 
regulatory scheme, and subjecting it to burdensome regulations 
is a leap in the wrong direction. Title II is inappropriate for 
the Internet, and attempting to reclassify it would be harmful 
to consumers, businesses, and the future of the Internet as we 
know it. Nobody wants telephone service to look like it did in 
1984, and we certainly shouldn't wish for our Internet access 
to return to that rotary phone era, either.
    The communications sector is vital to our national economy, 
and Commission action on even small items can have broad 
impact. I thank Chairman Wheeler for being here today and look 
forward to working together toward a bipartisan, measured, 
transparent, and responsible actions that do benefit consumers, 
job creation and our economy.
    [The prepared statement of Mr. Upton follows:]

                 Prepared statement of Hon. Fred Upton

    Oversight is a critical part of this committee's work to 
foster a smaller, more nimble government for the innovation 
age. We have held multiple hearings with all of the FCC's 
commissioners to address issues of national importance, to keep 
a close eye on its budget, and to ensure that commission 
process focuses on promoting jobs and innovation. Today's 
oversight hearing with Chairman Tom Wheeler will continue this 
discussion to ensure that the FCC works in a way that benefits 
consumers, industry, and the American economy. I thank Chairman 
Wheeler for joining us today.
    There is much to discuss. In the 6 months since Mr. Wheeler 
was confirmed as chairman, he has addressed a number of items--
including media ownership, the IP transition, universal 
service, and just this past week, the incentive auctions and 
net neutrality. While I appreciate the Chairman's leadership on 
some of these items, I have serious concerns with others.
    As an initial matter, Chairman Wheeler started off his 
chairmanship with a review of FCC procedure--an issue this 
subcommittee has spent considerable time working to reform in a 
bipartisan manner. But I was especially disappointed to see 
some of the process failures that occurred last week. Media 
reports of open meeting items being circulated to commissioners 
as late as midnight the evening before the vote on one item and 
what seems to be partisan sharing of items with Democrats as 
much as 24 hours before sharing them with Republicans on 
another is particular concerning. Regardless of political 
affiliation, commissioners must be given adequate and equal 
time to consider items on which they will vote. Let us all hope 
that such incidents of favoritism and selective sharing are 
isolated and not emblematic of the chairman's new operating 
procedure.
    Additionally, I continue to be concerned with the 
commission's ongoing defiance of its statutory obligation to 
complete the 2010 quadrennial review of media ownership rules. 
Despite the commission's woefully outdated record on this 
issue, it has nonetheless moved forward with changes that 
effectively bar joint sales agreements and change commission 
treatment of shared service agreements under its media 
attribution rules. These actions, in the absence of the 
statutorily required media ownership review, raise significant 
questions about the commission's commitment to making decisions 
informed by facts and utilizing sound process.
    Lastly, I am troubled by the chairman's insistence on 
attempting to regulate the Internet under rules that were 
informed by 19th century railroad regulations and adopted to 
regulate the monopoly telephone network of the past. The 
Internet has flourished under the current light-touch 
regulatory scheme, and subjecting it to burdensome regulations 
is a leap in the wrong direction. Title II is inappropriate for 
the Internet and attempting to reclassify it would be harmful 
to consumers, businesses, and the future of the Internet as we 
know it. Nobody wants telephone service to look like it did in 
1984, and we certainly shouldn't wish for our Internet access 
to return to that rotary phone era, either.
    The communications sector is vital to our national economy 
and commission action on even small items can have broad 
impact. I thank Chairman Wheeler for being here today and look 
forward to working together toward bipartisan, measured, 
transparent, and responsible actions that benefit consumers, 
job creation, and our economy.

                                #  #  #

    Mr. Upton. And I yield the balance of my time be split 
between Mr. Latta and Mr. Barton.
    Mr. Latta. Well, thank you, Chairman, for yielding, and 
Chairman Walden, I appreciate you holding this hearing today, 
and welcome Chairman Wheeler. Thanks for being here.
    The communications and technology industry is hailed as a 
vibrant, dynamic, and productive sector of our economy. This is 
not by accident. As networks and services transition to IP-
based platforms, they have had the flexibility to grow, advance 
and evolve in large part because they have not been subjected 
to the stifling hand of legacy government regulations.
    We have pursued a light-touch regulatory approach to the 
Internet ecosystem because we have seen time and again that it 
serves as a catalyst for increased investment, innovation, job 
creation, and competition. As we look forward to develop 
policies that would further this growth, we would be remiss to 
overlook the significance of how regulatory restraint has been 
a fundamental component of the industry's success. That is why 
I am concerned with some of the proposals emerging from the 
FCC, particularly in consideration of reclassifying broadband 
Internet access services, as a telecommunications service, 
under Title II of the Communications Act. This policy would be 
an extreme exercise of government overreach and likely result 
in failed Web sites, downgraded and poor customer service, less 
choice and flexibility for consumers, businesses and the 
stifling of innovation through regulation. Unwarranted attempts 
to manufacture and shape markets' outcome, propose solutions in 
search of problems and impose antiquated regulations will 
frustrate future progress and innovation.
    I intend to introduce legislation that prevents the FCC 
from following through on this misguided regulatory proposal.
    Mr. Walden. Mr. Chairman, with that I yield back the 
balance of my time, and I yield to Mr. Barton.
    Mr. Barton. We just welcome Chairman Wheeler, and the 
question before the committee today is are we soon going to be 
calling him Mr. Wheeler Dealer? And with that, I will put my 
statement in the record and in the interest of time yield back 
to the chairman.
    Mr. Walden. I thank the chairman. The gentleman yields 
back. I now turn the gentleman from California, 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, Mr. Chairman, and I want to welcome 
back Chairman Wheeler. Federal Communications Commission had an 
historic week last week. You are tackling some of the most 
complex and pressing issues in the communications sector today. 
In 2012, Congress gave the FCC a big job, create the world's 
first incentive auction to ensure that each front low-band 
spectrum is put to its highest economic value, and you 
established the ground rules for this crucial auction last 
week. You had a hard job because you needed to balance four 
potentially conflicting objectives: one, maximizing the amount 
of spectrum made available for auction; two, promote 
competition; three, create bands of unlicensed spectrum to spur 
innovation; and four, raise money. It appears you hit this one 
out of the ballpark.
    I particularly want to commend you for your work to advance 
unlicensed spectrum. Your plan will create three channels of 
each front unlicensed spectrum throughout the Nation. The 
vision of new super Wi-Fi can now become a reality. I also want 
to commend you for promoting competition by reserving spectrum 
for competitive carriers. It would be an enormous setback for 
innovation and consumers if the incentive auction turns the 
wireless market into a duopoly, dominated by Verizon and AT&T. 
This auction is the best and possibly the last chance the FCC 
has to invigorate competition.
    I would have preferred if you reserved even more spectrum 
for competitive carriers, but I recognize the pressures you are 
under and your need to secure three votes.
    By the way, you may hear arguments today from Republicans 
on this committee that you lack the authority to promote 
competition. These claims are nonsense and contradict the 
express language of the statute.
    Last week you also launched the FCC's third attempt in 8 
years to protect the open Internet. You didn't hit this one out 
of the park, but you didn't need to, either. You made a wise 
decision to solicit comment on a wide range of options. As I 
wrote you, the time has come to end the legal gymnastics and 
stop the lobbying games being paid by the big broadband 
providers. In 2010, Verizon, AT&T, and Comcast pled with the 
FCC not to use its undisputed authority under Title II of the 
Communications Act, and then after FCC did what they wanted, 
Verizon sued the agency for lacking authority when the FCC 
agreed with the company. This time, you need a different 
approach. You should use your Title II authority as a backstop 
authority to protect the open Internet. If you want to proceed 
under Section 706 as your main legal theory, that is fine, but 
you shouldn't water down the open Internet rules to fit Section 
706. Instead, you should get the substance right and invoke 
Title II as an independent basis of authority.
    The FCC has already lost two rulings in court over the open 
Internet. You don't have to choose between weak rules and a 
weak legal case. You can issue strong rules and have a strong 
legal case if you use a belt-and-suspenders approach to the 
next rule-making.
    I look forward to exploring this issue with you further in 
the question period.
    In the meantime, I would yield the balance of my time to my 
friend and colleague, Congresswoman Matsui.
    Ms. Matsui. Thank you very much, Ranking Member Waxman, for 
yielding me time, and welcome, Chairman Wheeler. The FCC 
certainly has a lot on its plate. The Commission is considering 
net neutrality rules, rules on the broadcast incentive auction, 
the AWS-3 auction, USF and E-Rate reforms and two very 
significant mergers. I am confident the FCC will be able to 
demonstrate that it can walk and chew gum at the same time.
    This Subcommittee should also do its part. For one, I join 
in calling for the chairman to hold oversight hearings on the 
two proposed mergers between Comcast and Time Warner and on 
AT&T and DirecTV. Those are some of the largest mergers in our 
Nation's telecommunications history.
    Americans, including many in my district of Sacramento are 
seeing the trends toward consolidation, content impairing deals 
and how they hear phrases like paid prioritization and 
wondering what is going on. What does all this mean for them, 
for competition and for the economy? It has been encouraging 
that so many Americans are speaking up in support of protecting 
an open Internet. I was one who thought the FCC should have 
taken more time to deliberate on what net neutrality rules the 
Commission should propose. But we are where we are. The 
proposal has certainly proved over the last few weeks it is 
still far from perfect. I support a ban on paid prioritization 
deals. We can't afford a two-tiered Internet system.
    I look forward to hearing from you today, and I yield back 
the balance of my time.
    Mr. Walden. The gentlelady yields back the balance of her 
time, and with that, you have heard from us or at least a few 
of us up here, Mr. Chairman. And now we are delighted to have 
you here, and we look forward to your opening statement and 
comments. And thank you again for the work you are doing. Go 
ahead.

STATEMENT OF HON. TOM WHEELER, CHAIRMAN, FEDERAL COMMUNICATIONS 
                           COMMISSION

    Mr. Wheeler. Thank you, Mr. Chairman, and members of the 
committee. As you have pointed out, it has been about 6 months 
since we last sat down, and what I wanted to do was to 
highlight some of the things we have done in that period and 
then engage in a dialogue with you with whatever topics that 
you would like to address.
    As has been evidenced by a lot of these comments up here, 
one of the principal responsibilities of the Commission is 
dealing with the spectrum crunch, and we have taken a 
significant step forward in terms of getting more spectrum out 
to the market. We had the H-Block auction which raised $1.5 
billion for 10 megahertz spectrum. We have opened a new, 100 
megahertz swath in the 5 gigahertz band which is already being 
referred to as ``gigabit-Wi-Fi'' because of the incredible 
through-put that it enables. We have begun a proceeding on 
spectrum sharing at 3.5 gigahertz, and we announced yesterday 
that in accord with the mandate of this Committee and Congress 
to auction off AWS-3 spectrum, that we will begin the auction 
on November 13, and we will finish as per your mandate 
February--we will license by February 22, 2015.
    We have also, as some of the Committee had noted, 
established a new set of mobile spectrum holding rules which 
have been praised by everybody from public interest groups to 
small operators to large operators, as was commented on by Mr. 
Waxman, ``Hitting the ball out of the park.'' And we have begun 
the incentive auction process. You mandated us, as you have 
said, with a non-trivial task, and we have taken the first 
important steps to that.
    On the question of Universal Service and what is going on 
there, we have fulfilled the pledge that I made to this 
Committee last time we were together to eliminate the infamous 
Quantile Regression Analysis, and we are seeking comments on 
what its replacement should be.
    We have funded the Connect America Fund to provide 
connectivity to 5 million more Americans who do not have access 
to broadband today. That is about \1/3\ of the total, and a 
significant bite out of that. And we are seeking input on 
multiple additional issues, a through-put standard. Should we--
as technology increases and bandwidth increases, do we need to 
think about higher bandwidth that is supported by the Connect 
America Fund? How do we best deal with the mobile component of 
broadband delivery in Connect America and how best to support 
broadband for rate-of-return carriers? Those are all 
proceedings that we have under way.
    We have made some significant strides also in the area of 
public safety. We took a good chunk out of the FirstNet $7.5 
billion with the H-band auction. I expect, obviously, that the 
AWS-3 auction will do more, and I wouldn't be surprised if we 
show up at the incentive auction having met the requirement, or 
at least taken a huge bite out of the requirement, for funding 
FirstNet.
    We had rule-making on text-to-911. You know, phones aren't 
used just for talking anymore but also texting. And so, if you 
want to text to an emergency service provider, we had a rule-
making on that. The major carriers stepped up and literally in 
the last couple of days, they all met their goals for the 
implementation on that, which is a terrific step forward. And 
we have also issued a Further Notice on location accuracy, 
because as wireless usage increases, and particularly, as it 
replaces wire line connections inside and as GPS usage has 
increased, there has been a fascinating reality that location 
accuracy has actually declined. And we have got a Notice going 
on, how do we address that, because that is literally a matter 
of life and death.
    As you mentioned, we began the 2014 Quadrennial Review on 
media issues with an expedited delivery date. We closed a 
loophole that was being exploited to get around the ownership 
rules using Joint Services Agreements, and we brought 
competition back to the retransmission consent negotiations.
    We have also continued to press on the reform issues that 
so many of you and I share in common as being important. Last 
time we were together I told you we stood up a task force to 
deal with this. That task force came back with 154 
recommendations. About \3/4\ of those are now well along their 
way to being in process. They kind of break into two parts: 
there are procedural issues that you might associate with the 
Administrative Procedure Act and things like this, and there is 
also just how you make the agency more efficient.
    And last week, as many have discussed, we opened a Notice 
of Proposed Rulemaking on preserving and protecting the open 
Internet. It is important to recognize that there are no 
protections for an open Internet in place today. The January 
court decision affirmed the Commission's authority under 
Section 706 to deal with the open Internet and identified what 
I call a ``roadmap'' for how to achieve that. And what I 
proposed is a method that follows that roadmap.
    I understand that there is a great debate on this issue. I 
heard the debate here this morning between those who say there 
is no need and those who say it ought to be a regulated 
utility. What we have tried to do is to follow the court's 
direction, the roadmap, the blueprint, and to come up with a 
proposal that stops blocking, that prohibits anything that 
degrades a consumer's access, including prioritization, that 
asks a broader question about prioritization as to whether it 
should be banned outright, and if so, how, and then engages in 
the discussion that we have heard already this morning about 
Title II versus 706 and collecting a broad scope of learned 
information on that.
    I have consistently said that there is only one Internet. 
There is not a fast Internet and a slow Internet. There is not 
a special services Internet. There is one Internet, and when 
the consumer buys access to the Internet, they are buying 
access to the full Internet. And that is what our rules attempt 
to protect.
    This has become a debate about legal approaches. It is a 
healthy debate. It is a debate that our Notice of Proposed 
Rulemaking furthers with multiple requests for input. But my 
position has been similar to that of the Consumer Federation of 
America and that is that we ought to explore the powers that 
are granted in the '96 Act, specifically Section 706, keep 
asking how Title II fits in, but develop a regulatory policy 
that looks forward, not backward, because what we need is a 
regulatory plan for the 21st Century. And I look forward to 
discussing that with you, Mr. Chairman, and members of the 
Committee.
    [The prepared statement of Mr. Wheeler follows:]
    [GRAPHICS NOT AVAILABLE IN TIFF FORMAT] 
    
    Mr. Walden. Mr. Wheeler, Chairman, thank you for being 
here. We appreciate your work and your willingness to come and 
spend some time with us and respond to our questions.
    I want to pick up on the Middle Class Tax Relief Act which, 
as you know, was designed to create a forum where broadcasters 
could volunteer their spectrum up for auction for mobile 
broadband use. It has never been done quite like proposed, and 
we all knew that going in. But it seemed like a good balance. 
The critical term in all of this was that the broadcasters 
would volunteer to put their spectrum up. They wouldn't be 
forced into it. That was the agreement. Yet many of the actions 
that we have seen coming out of the Commission would lead some 
to believe that the FCC might be bullying broadcasters into 
giving up spectrum without providing hard data and clear models 
so that the broadcasters can thoroughly and thoughtfully 
deliberate and choose to participate or not in this first-of-a-
kind auction.
    Let me tell you what I am thinking here--for example, the 
joint sales agreements that are now outlawed. These agreements 
essentially offer broadcasters a viable business model in small 
markets that would otherwise suffer from lack of service. You 
are considering increasing the attribution value of UHF 
stations such that more broadcasters could end up in violation 
of the national cap under the Broadcast Ownership Rule. And the 
FCC has failed to process broadcasters' petitions for 
allocation changes from VHF to UHF even though the petitions 
were filed prior to the Middle Class Tax Relief Act.
    And finally, you are seeking to use the modified version of 
OET-69. I am hearing about this to repack broadcasters. This 
will likely result in reduced coverage for broadcasters that 
choose to stay in the business, making the business itself less 
viable. So the very people you are trying to incentive--to put 
spectrum up so that it would be available for auction, I think 
are concerned about where the Commission is headed in a number 
of areas.
    Can you explain to me how these actions will actually 
encourage broadcasters to participate in this auction?
    Mr. Wheeler. Thank you, Mr. Chairman. You know, I think the 
goal here that we have been trying to follow is not to 
discourage or to encourage but to follow through with our 
responsibilities, and that means enforcing and updating our 
rule----
    Mr. Walden. Do you think any of the things I have just 
cited encourage broadcasters to participate more? If you don't 
have broadcasters showing up with spectrum----
    Mr. Wheeler. So as I said, Mr. Chairman, I don't think 
that--we have an important, as you said, an important and 
historic role. This is an incentive auction.
    Mr. Walden. I am aware of that, yes.
    Mr. Wheeler. What we have tried to do in the Mobile 
Spectrum Holdings Rule, for instance, is to encourage 
broadcasters--encourage, I am sorry, wireless carriers to buy 
which creates the incentive. The interesting thing, there was a 
report by one of the Wall Street analysts last week who said we 
expect the greatest risk to this auction, broadcasters not 
showing up, just dropped. Because the fact that AT&T suggested 
that they are ready to bid between $9 and $18----
    Mr. Walden. Right.
    Mr. Wheeler [continuing]. Billion for 20 to 40 megahertz, 
this analyst said should send positive signals to broadcasters. 
So our----
    Mr. Walden. All right but----
    Mr. Wheeler [continuing]. Goal is to create this 
marketplace, and we are not trying to take regulatory action--
--
    Mr. Walden. All right. Well----
    Mr. Wheeler [continuing]. In unrelated areas that would----
    Mr. Walden. But you are taking lots of regulatory actions, 
and it does have an effect on the marketplace. I mean those two 
are fact, the quadrennial review not complete, new decisions 
being made on ownership. Without these things are out there. If 
we don't have these broadcasters coming to the table 
voluntarily, there won't be spectrum available.
    So I want to steal a line from the distinguished gentleman 
from Michigan, and this one I refer to as Mr. Dingell, to see 
if I can get to sort of some yes or noes here. Will you commit 
that the FCC will not score television stations based on their 
enterprise value?
    Mr. Wheeler. On their enterprise value? That is not our 
intention, sir.
    Mr. Walden. So that is a no. Or that is a yes, actually, 
that you will commit that you will not score. Is that correct?
    Mr. Wheeler. Yes.
    Mr. Walden. Yes. You will commit the FCC will ensure that 
broadcasters' costs to reallocate are covered by the $1.75 
billion relocation fund?
    Mr. Wheeler. We believe that that fund will be adequate.
    Mr. Walden. OK.
    Mr. Wheeler. That is what Congress told us to spend, 
period.
    Mr. Walden. And will you commit to completing frequency 
coordination with Canada and Mexico before the auction?
    Mr. Wheeler. I think the issue there is what is the term 
``complete?'' As you know, on the DTV transition, it never came 
down to actual signing on paper, but we understood where each 
other was. And I am very confident that we will be at that kind 
of a point.
    Mr. Walden. Because that is critical. And will you commit 
to revoking only those low-powered TV and translator licenses 
that are necessary to complete the auction?
    Mr. Wheeler. Yes.
    Mr. Walden. Thank you. And I think I am out of time. So 
with that, I will now yield to the gentlelady, my friend from 
California, Ms. Eshoo.
    Ms. Eshoo. Thank you, Mr. Chairman. A lot of things to 
discuss, but I want to bore down or bore into some of the 
particulars on your recent proposal relative to the Internet on 
net neutrality.
    I have argued, many advocates for net neutrality have 
argued, that paid prioritization represents a fundamental 
departure from the Internet as we know it, just kind of 
restating what is obvious. But I think that when you have 
hundreds of thousands of people communicating from across the 
country to you on it, that it is important to raise.
    Now, as a policy, not as a legal question, do you think 
that paid prioritization should be blocked outright?
    Mr. Wheeler. So I have said, Congresswoman, that I don't 
believe there ought to be haves and have-nots----
    Ms. Eshoo. No, no, just answer my question.
    Mr. Wheeler [continuing]. That----
    Ms. Eshoo. Just tell me. Do you think that it should be 
blocked outright?
    Mr. Wheeler. We have asked that question in the rulemaking, 
and what I have said is that I believe that under Section 706, 
anything that is anti-competitive or anti-consumer is 
competitively unreasonable and therefore can, and should be, 
blocked. And that becomes the trigger with how you deal with 
paid prioritization.
    Ms. Eshoo. Yes. Now, what happens----
    Mr. Wheeler. And on the question, per se, that you have 
asked, we specifically asked, how and whether.
    Ms. Eshoo. Now, what happens if the FCC determines if there 
is no way to create an outright ban on these paid agreements 
under 706? Where does that leave you? Where does that leave the 
country?
    Mr. Wheeler. So when the court gave us our instructions, 
they talked about what they called a ``virtuous cycle,'' and 
that is that that content drives the need for conduit which 
then creates the opportunity for content and that this cycle is 
what is our responsibility to protect. And that's what 706 
authorizes us to protect.
    And so what my proposal is is that we take them up on that 
and we say if there is something that interferes with that 
virtuous cycle, which I believe paid prioritization does, then 
we can move against it.
    Ms. Eshoo. All right. But now let us move over to Title II. 
Title II is described--it depends on who is describing it. It 
is either a scourge--it has been compared to the early railroad 
regulations in our country--to being the flip side, the savior 
title. I talked about in my opening statement about one of the 
imprimaturs of the Internet has been consistent innovation, and 
while there are those that--and I understand why people would 
move to Title II because they want the Internet protected and 
these values, they are worth protecting. But I also believe 
that there is room in Title II for heavy-handed regulation. And 
I don't think that--well, let me put it this way. I think that 
we need a light but strengthful legal touch in this because the 
values are so essential, and people across the country and in 
the world--I mean, I am hearing from people from different 
parts of the world as well--are calling for these protections.
    How would you envision, how would you handle constraint 
under Title II----
    Mr. Wheeler. Well----
    Ms. Eshoo [continuing]. In terms of being the chief 
regulator?
    Mr. Wheeler. So as you know----
    Ms. Eshoo. Have you give thought to this?
    Mr. Wheeler. Pardon me?
    Ms. Eshoo. Have you given thought to this?
    Mr. Wheeler. Yes, ma'am.
    Ms. Eshoo. OK. Go ahead.
    Mr. Wheeler. And as you know----
    Ms. Eshoo. As some people say, share it with me.
    Mr. Wheeler. As you know, Title II--there is nothing in 
Title II that prohibits paid prioritization. As a matter of 
fact, we have all kinds of paid prioritization----
    Ms. Eshoo. You are worrying me by bringing that up first. 
But anyway, go ahead.
    Mr. Wheeler. So the question, because it goes to your--I 
think the root question of yours, which is, ``How do you 
forebear from that,'' OK? And so it is possible to go through 
and say, ``Yes, we will not do this, we will not do this, we 
will not do this.'' In the wireless context, interestingly 
enough, Congress created wireless as a common carrier, but then 
specifically said, ``But this doesn't apply, and this doesn't 
apply, and this doesn't apply, and this doesn't apply.'' We can 
do that as a Commission as well. It has been proposed that that 
is an approach to take.
    There are also those who throw up their hands in great 
concern over that because they say, ``OK, well, this Commission 
may do this but what about the next Commission?'' And you can't 
bind a future of Commission by making those kinds of 
determinations.
    So what we have done in this NPRM is to ask the specific 
question about ``Here is Section 706, here is Title II, let us 
compare them and contrast them with each other and tell us what 
the pluses and minuses and the best ways to get through this 
are.'' And I think that leads us to the kind of answer that you 
are asking for today.
    Mr. Walden. The gentlelady's time is expired. We will go 
now to the gentlelady from Tennessee, Ms. Blackburn, the Vice 
Chair of the Full Committee, for her questions.
    Mrs. Blackburn. Thank you, Mr. Chairman, and Mr. Wheeler, 
we thank you for taking the time to come and be with us.
    Mr. Wheeler. Thank you.
    Mrs. Blackburn. You have got a feisty term going over there 
at the FCC, and in Tennessee we would say you are kicking up a 
little dust, and it is causing concern. Many of our content 
creators have a tremendous amount of concern about your 
approach, and many of our healthcare innovators who are looking 
at apps and telemedicine concepts and things of that nature are 
also expressing concern. And I think that probably your actions 
have inserted a good bit of uncertainty into the innovation 
sector that is looking at how we best utilize all things 
Internet for quality of life and access for economic 
development, for healthcare, for innovation.
    And I have got just a couple of simple questions for you. 
First of all, on cost-benefit analysis--and I thank you that 
last night your team sent a letter over to us on that question. 
But what concerned me was that in the letter you say that this 
is just a tool. Cost-benefit analysis is just one of many tools 
that would go into your decision, and your NPRM does not 
include an initial cost-benefit analysis. And your predecessor, 
Mr. Genachowski, in this committee, came before us and assured 
us he was going to use this, and I am actually going to read 
you his statement that he gave to us. He said, ``During my 
tenure, I brought particular focus to this process including by 
directing the early involvement of our chief economist in the 
analytical process of rule-making and by having FCC staff 
consult with the staff of the Office of Information and 
Regulatory Affairs on best practices in conducting cost-benefit 
analysis.''
    And I think that it is an incredibly important component of 
this to look at what the cost of net neutrality rules would be 
to the consumer and also to industry. So I want to know from 
you, are you going to give us a commitment right now that you 
will conduct a thorough and extensive cost-benefit analysis of 
the actual cost to the consumer and to industry on these rules?
    Mr. Wheeler. Thank you, Ms. Blackburn. I agree that cost-
benefit analyses are crucial to decisionmaking, and in this 
rule-making, we specifically ask what are the costs of one 
approach or another and what are the benefits, one or another, 
so that we can collect that information and have that kind of 
analysis. I agree with the importance of cost-benefit analysis.
    Mrs. Blackburn. OK. Let me ask you this also. You know, the 
Commission's funding really comes from those that are regulated 
by the FCC, but we have some that are not--they are impacted by 
this but they are not regulated in paying those fees.
    So in the net neutrality context, for example, companies 
like Google and Netflix want the FCC to act on their behalf and 
petition or visit the agency, if you will, in support of those 
efforts, but they free-ride because they are not paying the 
fees and bearing that part of the regulatory burden. So since 
they seem so ready and willing to rely on regulation to help 
them with their business models, how would you recommend that 
those entities share in the cost, pay their part of the cost of 
funding the agency?
    Mr. Wheeler. With all respect, that is above my pay grade. 
That is a decision that this Committee and the Congress can 
make and setting those rules as to----
    Mrs. Blackburn. I am asking what your----
    Mr. Wheeler [continuing]. Who we can collect from.
    Mrs. Blackburn [continuing]. Recommendation would be. They 
come and they lobby you, and they are pushing the net 
neutrality rules. And while they may like what you are saying 
because they want you to step in, we have a lot of people out 
there who are paying the fees that are not in favor of what you 
are doing, and we have a lot of innovators who are not in favor 
of what you are doing. And your door has the name chairman on 
it. So I am asking, what is your perspective?
    Mr. Wheeler. So our effort in all of this is to represent 
the American people, not Company A or Company B. We have been 
told by the Congress from whom we can collect regulatory fees, 
and we do. If there is a decision that we should collect 
regulatory fees from somebody else, that is something we 
obviously will take. If there is a decision that we should 
expand regulatory authority over other entities, that is 
obviously something we should do. But that is a decision that 
is out of our hands.
    Mrs. Blackburn. I yield back.
    Mr. Walden. The gentlelady yields back. The chairman 
recognizes the gentlelady from California, Ms. Matsui, for her 
questions.
    Ms. Matsui. Thank you, Mr. Chairman. Mr. Chairman, I would 
like to understand, given the success of the Internet in the 
absence of prioritization, precisely what types of paid 
prioritization you believe would speed the deployment and 
adoption of broadband Internet access services? Given that paid 
prioritization agreements would be used as a barrier of entry 
to start-ups and small business, what prioritization 
arrangements specifically would be better for the Internet than 
the no prioritization norm we have today?
    Mr. Wheeler. What we are trying to do in this item is to 
say that anything that affects that virtuous cycle that the 
court talked about and I talked about before, is not 
appropriate, is unlawful, and that would include paid 
prioritization. Now, the court told us to look at this on a 
case-by-case basis. We have asked the question in the rule-
making as to whether we should look at it generically and say 
it is all out, and we are soliciting comments on that.
    But you know, the concept of paid prioritization, when I 
buy Internet access, I am buying the full pipe. I am buying 
access to everything that is out there. And if somebody comes 
along and says, ``oh, no, you can't get this unless you pay 
more,'' that is unreasonable, and should be banned. If somebody 
comes along and says to a content provider, ``You can't get on 
unless you pay more,'' that is unreasonable, and that would not 
be permitted.
    Ms. Matsui. OK. Well, as for my part, other than public 
safety, I believe paid prioritization should be banned.
    I also think another concern here is a last-mile equivalent 
we are seeing appearing. The fact that there is so much 
uncertainty with paid prioritization is troublesome. If this 
concept moves forward, we could inadvertently block the next 
Google or Amazon from the market without even knowing it. I am 
concerned that your hands may be tied here. Even if the 
Commission wanted to ban anti-competitive paid prioritization 
deals, you may not have the authority or the tools to do so.
    Chairman Wheeler, if you were to explain to my constituents 
what is occurring in the market right now with the two mergers, 
content peering agreements and now paid prioritization could be 
legitimized under a commercially reasonable standard, what 
would you tell them, not just what it means for them but also 
for competition and for economy as a whole?
    Mr. Wheeler. I would tell them that I felt that paid 
prioritization was commercially unreasonable and therefore 
could be dealt with. And on the question of peering, that that 
is a separate issue that the Commission needs to look at and 
will be looking at. But I would emphasize that I am a strong 
supporter of the open Internet, and I would also tell them a 
story that when I was an entrepreneur, I was shut out of cable 
systems because they were closed networks. And I would come 
with a new product and couldn't get on. And then when I was a 
venture capitalist before taking this job, that the companies 
that I was backing, had to have access to the Internet, could 
only succeed if they had access to the Internet.
    So I would say to them that I believe in an open Internet. 
I have experienced closed networks and the harm they cause to 
innovation and that I want to protect and preserve an open 
Internet.
    Ms. Matsui. You know, I think this is a very critical time. 
When I have ordinary people practically off the street coming 
to me and asking me about all these things they have heard 
because people today really depend on the Internet, ordinary 
citizens, the entrepreneurs who are concerned about this and 
who else we might not know out there. So it is very concerning 
to all of us that there is a potential that we may have a 
situation where we won't have an open Internet.
    And I would also like you to consider some of these 
mergers. I mean, we feel like we are kind of in the Wild West 
of the digital economy now, and now with mergers coming 
forward--but can you commit to us these large mergers that are 
before us, they may be different from each other, but can you 
commit to us here that the FCC will carefully scrutinize these 
deals with a focus toward public interest?
    Mr. Wheeler. Without hesitation and with complete 
affirmation.
    Ms. Matsui. OK. Thank you. Mr. Chairman?
    Mr. Walden. The chair now recognizes the former chairman of 
the Full Committee, Mr. Barton, for his questions.
    Mr. Barton. Thank you, Mr. Chairman, and I want to echo the 
last question you lasted, Chairman Wheeler, about low-power 
television. You and I are working on a bill hopefully to give 
them some protection. We understand under current law they 
don't have standing when they repackage, but we hope to give 
them some at least priority or help if and when we do do these 
repackaging of the spectrums. So I want to commend you for that 
last question.
    I have listened, Chairman Wheeler, to my friends on the 
Democratic side repeatedly talk about the open Internet and 
whether you should try to regulate it under Section 706 or 
Title II. I think you are asking a false question. The Internet 
is open. The question is what does the FCC do in terms of 
monitoring to make sure that it stays open?
    And the analogy I am going to use is not perfect, but I 
think it is instructive and educational. The airways that we 
fly back and forth from Washington to our districts are open, 
but they are regulated and monitored for a number of reasons by 
the FAA. If I call up American Airlines and I say I want to go 
from Washington Reagan to DFW and they quote me a price, let us 
say it is $350 one way. Well, when I show up with my ticket, I 
get one seat on that plane. I don't get to take 100 of my 
friends and put them on the plane with me because I happened to 
buy the ticket first and show up first.
    So it is obvious that it would be great for $350 if I could 
fill the plane. But we allow the airlines to price by volume. 
You want one ticket? It is $350. You want two tickets? It is 
$700. Maybe if you want to buy the whole plane, they do give 
you a discount. It is only $250. But we don't let the first 
person to buy the ticket use the whole plane for $350.
    And for all the bold talk about open access, what people 
are really trying to do is, you know, I want to pay a minimum 
price and get all this broadband and I want to download 
everything from Netflix and I don't want to pay if I download 
every movie they rent or vice versa. Netflix pays a basic 
price, and they can service 10 million people instead of 
whatever it would be.
    So you know, the broadband providers who have spent 
billions and billions of dollars and have networked this 
country and provided access through the competitive market 
principles are not going to somehow all of a sudden decide as 
long as the FCC under your chairmanship make sure that it stays 
a competitive model. They are going to continue to provide an 
open Internet, but they may want to provide based on volume of 
use some sort of a pricing system that allocates if it is in a 
limited spectrum.
    I see no reason to try to shoehorn some sort of a 
regulatory approach into either Title II or Section 706. You 
know, explain to me why my approach which is what we have been 
doing which works is the wrong approach?
    Mr. Wheeler. Let me see if I can respond to both parts of 
your question. First, , as I said to the Chairman, we did not 
want to move those whoon LPTV don't have to be moved as a part 
of it. We also believe that there are opportunities to go to 
digital and the new efficiencies that that brings, just like it 
did in the Class A stations. And thirdly, we are opening a new 
rule-making to specifically deal with that because we agree 
with the importance of low power and translators.
    To the second part of your question, let me take the 
Chairman's hat off and put my consumer hat on for a second 
because two weekends ago I called my ISP and increased my 
capacity because I wanted faster through-put. And they said for 
another $10 a month, we will give you another, what turned out 
to be like, 20 Meg. That is a marketplace transaction. That is 
something that is accepted now. That is not something that is 
part of the open Internet rules.
    What the open Internet rules are trying to say is that when 
I buy that capacity, I have bought that ride to every place on 
the Internet, that somebody can't turn around and say, ``Oh, 
but you can't say that,'' or somebody can't turn around and 
say, ``Well, you can deliver that, Tom, but you have got to pay 
me an extra fee.''
    And so the concept of the open Internet is that I have 
bought this broad pathway, and I have the right to use it 
unfettered on an open basis and that is what we are trying to 
deliver in this rule-making.
    Mr. Barton. I am not trying--my time is expired. I am not 
trying to oppose that, but if you want--you are looking at it 
from the consumers' standpoint, and I accept that, that 
everybody should have access. But if you are a provider of 
content, you should be willing to pay more based on the number 
of items you are going to put at any given time on the open 
Internet so that everybody has access to it. Because if you 
have a constrained pipeline, somebody has to make a decision 
how you put things into the pipeline, whether it is the 
airplane, whether it is the airwaves or the Internet.
    With that, Mr. Chairman, I yield back.
    Mr. Walden. The gentleman yields back. The chair now 
recognizes the former chairman on the Democratic side, Mr. 
Waxman, for his questions.
    Mr. Waxman. Thank you, Mr. Chairman. Chairman Wheeler, I 
commended your leadership earlier in my opening statement about 
the spectrum auction, so I want to ask questions about a 
different subject and that is net neutrality.
    Mr. Wheeler. Yes, sir.
    Mr. Waxman. I commend you for tackling this issue and for 
seeking comment on a broad range of issues. But I have serious 
concerns about some proposals that have been discussed.
    You have said that there would be presumption against 
broadband providers like Verizon, AT&T and Comcast, entering 
into arrangements that give exclusive advantages to their 
affiliates. Is that right?
    Mr. Wheeler. Yes, sir.
    Mr. Waxman. OK. What I don't understand is why this 
presumption against exclusive arrangements would be limited to 
affiliates. Suppose Netflix entered into an exclusive 
arrangement with AT&T or Comcast for faster speeds for its 
videos that block competitors like Amazon Prime from getting 
similar services. I think that would be a serious threat to 
competition and an open Internet, yet your proposal does not 
create a presumption against these exclusive arrangements.
    Why would you allow any exclusive arrangement that 
guarantees some content providers faster speeds than 
competitors can access?
    Mr. Wheeler. Thank you, Mr. Waxman. This goes back to this 
virtuous cycle that the court talked about. You know, it was 
interesting. Yesterday in the Wall Street Journal there was an 
article that interviewed a bunch of infrastructure 
manufacturers about the impact of net neutrality, and they 
flat-out said that if you offer fast lanes for some, you are 
going to degrade service for others. I think that is at the 
heart of what we are talking about here. That would be 
commercially unreasonable under our proposal.
    Mr. Waxman. OK. The problem with exclusive arrangements is 
that they would let some companies block their competition from 
similar advantages. In markets where there is no or only 
limited choices of broadband providers, that would stifle 
openness in competition. I just want to say to you that I am 
opposed to any form of paid prioritization. Paid prioritization 
divides the Internet into the haves and the have-nots, and it 
will entrench the big companies at the expense of start-ups. My 
understanding is that you have asked comment on a multi-
factored test for determining when paid prioritization is 
permissible and when it would be prohibited. My concern is that 
this will create a lot of ambiguity and a lot of litigation. I 
believe right lines would be much better for the market and for 
innovation.
    So I am going to ask you to consider a presumption against 
all paid prioritization as you develop final rules. Will you 
agree to consider this option?
    Mr. Wheeler. Absolutely, and we have asked in the NPRM 
specifically whether and if so, how do you accomplish it. So 
that is a ripe debate that is in the NPRM right now, sir.
    Mr. Waxman. My understanding is that the reason you have 
proposed a complicated, multi-factored test is concern about 
the court ruling, and I agree that if you are limited to acting 
under Section 706, your options could be limited. But if you 
are not limited to Section 706, you could establish a 
presumption against paid prioritization under Title II. And 
that is why it is so important for you to use your Title II 
authority as backstop authority. You don't have to settle for 
weak open Internet rules if you exercise your full powers, and 
I am glad you are looking at that possibility.
    Let me close by thanking you for seeking comment on the 
backstop proposal in the proposal adopted last week. I am 
committed to working with you to ensure the Commission adopts 
strong and open Internet protections for consumers and 
innovators while encouraging continued investment in the online 
content and services we all rely on and enjoy today. I think it 
is important that we get the substance right. We have tried 
three times, we meaning you at the FCC, because of the concern 
that the consumer have full access to what is on the Internet 
and full access to be able to use the Internet to its greatest 
maximum potential. And I would hate to see that net neutrality 
in any way be diminished if we have an opportunity under the 
law as we look at it to make sure that we get the substance 
right.
    Mr. Wheeler. Thank you, Mr. Waxman.
    Mr. Waxman. Thank you. Thank you, Mr. Chairman.
    Mr. Walden. The gentleman yields back his time. I now turn 
to the distinguished gentleman from Ohio, the vice chair of the 
Subcommittee, Mr. Latta.
    Mr. Latta. Well, thank you very much, Mr. Chairman, and 
again, Chairman Wheeler, thanks very much again for being here. 
There has been some discussion on Title II, and I would like to 
follow up on some of that questioning.
    The central premise of Title II regulation has always been 
that the regulation was a substitute for competition. And two 
parts for the question then. What types of findings has the 
Commission made to justify entertaining the idea of Title II 
regulation of the Internet? And then do you believe the FCC 
should have to make a specific showing that of a market failure 
before imposing rate regulation or reporting requirements that 
are the precursor to rate regulation?
    Mr. Wheeler. So again, these are the kinds of questions 
that we have tried assiduously not to decide on but to ask 
about in this rule-making. We are going to have to make a 
decision on exactly those questions at some point in time, but 
what we want to achieve is a record that gives everybody the 
opportunity to opine on that so that we can be appropriately 
informed.
    Mr. Latta. Well, let me ask, what is your timeline on that 
then?
    Mr. Wheeler. So we have got 60 days for comments and then 
45 days for reply comments.
    Mr. Latta. OK. So are you saying then that you are not 
ruling out rate regulation?
    Mr. Wheeler. I am saying we have asked the question about 
Title II and the full panoply of Title II, yes, sir.
    Mr. Latta. OK. Well, let me ask you this. What have you 
been hearing from the communities thus far, especially when you 
are saying that you are going to be asking those questions? 
What have you been hearing out there?
    Mr. Wheeler. Well, we have heard very little on the record 
thus far. There has been a great outpouring of people speaking 
to us through the press, people speaking to us through letters 
and this sort of thing. And as I indicated at the outset, there 
are two diametrically opposed positions. One is that you should 
not do anything and the other is that it should go all the way 
to being regulated like a public utility. And our job is to 
find that which is best for consumers and best for encouraging 
investment in the Internet which itself is best for consumers.
    Mr. Latta. Let me go on with this question. While you have 
resolved some of the issues in the 5 gigahertz rule-making, 
there are a number of issues outstanding that have the 
potential to open up another 195 megahertz of spectrum for 
unlicensed use. What is the FCC's and your plan for tackling 
that open issue?
    Mr. Wheeler. In 5 gig?
    Mr. Latta. Right.
    Mr. Wheeler. So there is--you actually think about 5 gig in 
3 bits. The first bit we have dealt with, that is the lower end 
of 5 gigahertz. In the middle component of 5 gigahertz, there 
are lots of national defense kinds of activities, radar and 
this sort of thing. And the question is, how can you work out 
sharing arrangements there, and we are working with those 
parties.
    On the upper end is where you have spectrum that has been 
identified for intelligent traffic, ITFS, kinds of activities, 
and that is based around the 802.11 standard. There are strong 
feelings about the need to protect that. I believe that it is 
possible to work together to meet both sets of needs since it 
is based around a common 802.11 standard.
    Mr. Latta. And in my remaining time, I want to ask this 
last question. The FCC's 2011 Universal Service Transformation 
Order requires phone companies to set minimum prices that they 
can charge the consumers if the provider wants to continue 
receiving the same amount of funds from the USF program to 
support the high cost of its business. So as a result, many 
rural consumers, a lot that I represent out there, will see the 
rate floor go from $14 to about $20.46. And while the 
Communications Act requires rural rates to be reasonably 
comparable to rates in urban areas as affordable, reasonable 
comparable does not necessarily mean that the rural rate should 
be exactly the same as the urban rate when the rural customer 
might be able to call only a few thousand people locally while 
an urban customer can call many times more than that.
    Should the rate be the same in the rural areas where the 
average income is significantly lower, then it might in fact 
not be as affordable. The rate floor continues to be a concern 
for many of our telecommunications providers in my district and 
others servicing rural America. While I understand that the FCC 
has agreed to phase-in the increase at $2 per year and postpone 
that start date until after 2015, can you explain why the FCC 
interpreted the reasonably comparable rates to mean exactly the 
same rates between urban and rural areas considering the 
smaller population of rural calling areas and the fact that 
what is affordable in the largest urban areas is not what is 
also affordable to consumers in the rural?
    Mr. Wheeler. Thank you. I am glad you asked that question. 
It is an important question. So as you stated, we are supposed 
to make sure that things are reasonably comparable. The reason 
for that is to make sure that the subsidies that some Americans 
are paying to deliver service to other Americans don't end up 
being subsidies that some Americans are paying to reduce the 
bills of other Americans but to overcome the high cost of 
getting to them.
    In some instances, it has been, unfortunately, the former. 
In 16 states there are situations where some consumers are 
paying $5 a month for telephone service because they are being 
subsidized by people in your district and other districts. We 
need to get our arms around that. So what we have done is to 
say, OK, step one goes into effect January 15. Then what we are 
going to do is--and that can't be more than $2 by the way. And 
then what we are going to do is go back out with another survey 
that hits the kind of granularity you were talking about in 
terms of service and including long distance and all these 
kinds of things so that we have a better understanding of 
exactly what comparable means, and then look at that issue 
again.
    Mr. Latta. Thank you. Mr. Chairman, my time is expired, and 
I yield back.
    Mr. Walden. The gentleman yields back. The chair now 
recognizes the chairman emeritus of the committee, the 
gentleman from Michigan, Mr. Dingell.
    Mr. Dingell. Mr. Chairman, I thank you for your courtesy. I 
commend you for holding this hearing. I would like to welcome 
our old friend, Mr. Wheeler, back; fine public servant, and we 
are looking forward to good things from him.
    Mr. Chairman, at last week's open meeting, the Commission 
adopted a number of big-ticket items including a new net 
neutrality NPRM and draft rules for the upcoming incentive 
auction of broadcaster spectrum. Concerning the former, I 
commend you for your efforts to keep the Internet open and will 
be watching the matter closely as it goes forward. It is my 
hope the Commission will work with this committee to ensure 
that any final action it takes to conform to its statutory 
authority, especially concerning Title II, reclassification.
    Now, with respect to the incentive auction, I am interested 
in what the Commission intends to do about treating 
broadcasters fairly. My questions will require a simple yes or 
no answer.
    Mr. Wheeler. Yes, sir.
    Mr. Dingell. Mr. Chairman, I would like to begin with a 
parochial matter. Section 6403(b)(1) of the Middle Class Tax 
Relief and Job Creation Act specifies that the Commission may, 
subject to international coordinates along the border with 
Mexico and Canada, reassign and relocate and reallocate 
broadcast frequencies. Is that correct?
    Mr. Wheeler. Yes, sir.
    Mr. Dingell. Now Chairman Wheeler, in the Commission's July 
2013 response to my letter of inquiry about the reverse 
auction, Gary Epstein, head of the Commission's Incentive 
Auction Task Force stated the following. The language used in 
Section 6403(b)(1) of the Act is ``identical to that used by 
the Commission in describing its handling of the earlier DTV 
transition in which the Commission adopted our proposed 
allotments for these stations subject to our continuing 
negotiations with Canada, notwithstanding the broadcasters' 
requests to the contrary.'' One here could reasonably assume 
based on the statement that the Commission may reassign and 
reallocate broadcast frequencies pursuant to the Act while in 
negotiations with Canada and Mexico are still ongoing. Is that 
correct?
    Mr. Wheeler. Yes, sir.
    Mr. Dingell. I am going to ask you to submit for the record 
how you are going to assure protection to the broadcasters and 
the viewers in that process.
    Mr. Wheeler. Yes, sir.
    Mr. Dingell. Now, Mr. Wheeler, does the Commission believe 
that concluding negotiations with Canada and Mexico prior to 
commencing the reverse auction will give broadcasters, 
particularly in border regions, greater certainties and likely 
to increase their willingness to participate in such auction? 
Yes or no.
    Mr. Wheeler. Yes, sir.
    Mr. Dingell. Now, Mr. Wheeler, does the Commission expect 
to conclude negotiations with Canada and Mexico prior to 
commencing the reverse action next year? Yes or no.
    Mr. Wheeler. The expectation is it is the goal.
    Mr. Dingell. You may not make it is what you are saying.
    Mr. Wheeler. It is the goal, and I answered you in your 
previous question----
    Mr. Dingell. Will you notify this committee as soon as that 
becomes likely or dangerous?
    Mr. Wheeler. Yes, sir.
    Mr. Dingell. Now, in this matter, Mr. Chairman, I would 
like to state for the record that it is my understanding based 
on exchange with counsel at the Energy & Commerce Subcommittee 
on Communications and Technology, December 1, 2011, markup of 
the act that border negotiations are to be completed before the 
Commission reassigns broadcast channels. I hope that Chairman 
Wheeler will honor that understanding. I hope, Mr. Chairman, 
you understand I have great apprehensions about that because of 
the impacts it could have on the broadcasters and also on my 
constituents.
    Mr. Wheeler. Mr. Chairman, this is--I share your deep 
concern about this, not only because of the very legitimate 
concern you have about your constituents and other Americans 
getting service along the border but also that the 
cantilevering effect, if you will, as spectrum allocation then 
goes into the middle of the country.
    I can assure you this is an incredibly high priority. I can 
also assure you that our Canadian colleagues have been very 
forthcoming and very helpful.
    Mr. Dingell. I would like to have this submitted for the 
record in response to correspondence. Now, Mr. Chairman, I note 
that the Commission proposes to use a method called ``scoring'' 
to set individual prices for each broadcast station 
participating in the reverse auction. Is that correct? Yes or--
--
    Mr. Wheeler. It is one of the things we are considering. We 
have not made the final decision yet.
    Mr. Dingell. There are others?
    Mr. Wheeler. We are looking at others. Scoring----
    Mr. Dingell. I am going to ask that you submit in response 
to correspondence a proper answer on that particular point.
    Mr. Wheeler. Yes, sir.
    Mr. Dingell. Now, Chairman Wheeler, is the Commission 
concerned that scoring as opposed to competitive bidding will 
decrease broadcasters' willingness to participate in the 
reverse auction? Yes or no.
    Mr. Wheeler. No.
    Mr. Dingell. Chairman Wheeler, in general, do you intend to 
work in good faith with broadcasters as the Commission refines 
the rules for reverse auction in order to see to it that their 
needs are met as the act specifies to the best of your 
abilities? Yes or no.
    Mr. Wheeler. Absolutely.
    Mr. Dingell. I want to quote Admiral Rickover, who once 
observed, ``The devil is in the details but so is salvation.'' 
I am hoping that you are going to see that the salvation is 
there and not just that we are going to find ourselves amidst 
trouble because of carelessness, not by you, but by some of 
your overenthusiastic and less-than-competent predecessors.
    I thank you, Mr. Chairman, and I yield back.
    Mr. Latta [presiding]. The gentleman's time is expired and 
has yielded back. The chair now recognizes the gentleman from 
Illinois, Mr. Shimkus, for 5 minutes.
    Mr. Shimkus. Thank you, Mr. Chairman, and Chairman Wheeler, 
welcome. I am going to try to get this through three pretty 
quick points if I can. As you know, there is a lot of concern 
on this side of the dais on this Title II debate.
    Mr. Wheeler. Yes, sir.
    Mr. Shimkus. And the basic premise is, for me, how do you 
build out? We want more, not less. Does a regulated monopoly 
incentivize more build-out, more pipelines? Or does a 
competitive, capital-intensive incentivize market-driven 
process? I believe the second. We have gone from copper to 
cable, coaxial cable, satellite, cellular, fiber, a lot of 
different ways for data to now flow, and we want to encourage 
that. And I think only--I kind of like the idea of 
incentivizing people who want to use more, making them pay 
more, to incentivize those who carry so someone may want to 
build out more. So that is where I kind of where I come from. 
My position is more pipes, not less. More pipes, not regulated 
pipe. Competitive markets versus controlled markets.
    Because here is an example of a recent--on May 16, a 
Wireline Competition Bureau released a public notice seeking 
comment on state regulation of dial-up Internet traffic. Dial-
up? I mean, this is a dinosaur. It is hardly used.
    You want to talk about uncertainty for the state and for 
the providers when we are still in this process more than 15 
years after the FCC first discussed the treatment of dial-up, 
we are now to this process? That is just kind of a statement. 
That doesn't create certainty. Would you agree?
    Mr. Wheeler. Well, what we are trying to do, Mr. Shimkus, 
is to create an environment that assures consumers and those 
who rely on the Internet that there is openness, while at the 
same point in time encouraging investment and----
    Mr. Shimkus. Well, let us just go back. I get that. But 
this is dial-up.
    Mr. Wheeler. So if we are dealing with the dial-up issue, I 
mean, that is really--that is a different topic----
    Mr. Shimkus. Well, it is but it is not because it is the 
whole debate about certainty, and we actually have a dinosaur 
application that--why are we even----
    Mr. Wheeler. So we still have 40 percent of our consumers 
on dial-up telephone lines. One of the challenges that we have 
is, how do we evolve that into an all-IP environment which 
would be an Internet-like environment? And one of the things 
that I have said to this Committee is that we believe that this 
IP transition is a crucial part in helping to make sure----
    Mr. Shimkus. OK. I get it. I am going to try to move----
    Mr. Wheeler. OK. Sorry, sir.
    Mr. Shimkus. And one deals in both of our sweet spot is 
kind of the public service, 911----
    Mr. Wheeler. Yes, sir.
    Mr. Shimkus [continuing]. The Spectrum Act called for the 
creation of the Do Not Call Registry and the automatic dialing 
issue. The Commission keeps saying there is not enough money to 
do this. I would ask you to check into that. I think there is a 
lot of money in the FCC because obviously, this automatic 
dialing freezes up lines and it is a public safety concern, and 
I would hope that we would work together to try to--you would 
take this----
    Mr. Wheeler. I would look forward to that, sir.
    Mr. Shimkus [continuing]. Under consideration.
    Mr. Wheeler. Let me get back, and I will come----
    Mr. Shimkus. And you know, myself and the ranking member 
have been better involved in these issues----
    Mr. Wheeler. Right.
    Mr. Shimkus [continuing]. As you have in the early days 
also. The last thing I want to, from rural America, is kind of 
there seems to be a de facto freeze on this shared service 
agreements, and this is in the broadcast sector, as you know, 
the local. When you represent \1/3\ of the State of Illinois as 
I do now, 33 counties, these shared agreements are now helping 
to provide--and we have got real-world cases--better local 
service to the local folks than less. And I guess the basic 
question in my last minute is, what is your plan to ensuring 
that the FCC action on television transfer application is 
predictable, consistent, fair and timely?
    Mr. Wheeler. Thank you, Mr. Shimkus. What we have done is 
to put out a Public Notice on how we look at transfers, and I 
consider this to be a procedural reform because the way it used 
to be was broadcasters would come together in some kind of a 
merger situation, and they would come to the Commission which 
was a black box that was constantly changing--``Well, we will 
look at it this way, we will look at it that way.'' And what I 
wanted to do was to say, ``OK, what are the things that we will 
look at?'' So that everybody has notice, everybody understands, 
and it is not a black box. And that is the process that we have 
now established to be able to make those kinds of decisions.
    Mr. Shimkus. Thank you. I know my time has expired. I 
appreciate it if you would keep me in mind as these things move 
forward. It would be helpful.
    Mr. Wheeler. Yes, sir. Thank you.
    Mr. Latta. The chair now recognizes the gentlelady from 
Colorado, Ms. DeGette, for 5 minutes.
    Ms. DeGette. Thank you, Mr. Chairman. I want to follow up, 
Chairman Wheeler, on this discussion about the open Internet 
NPRM. Leading up to the Commission's vote last week, there was 
a robust public exchange among ISPs and edge providers and 
others about the impact of paid prioritization on their 
business models, and as Ms. Matsui said, we have been hearing 
from a lot of our constituents about this as well. Now, you 
talked very briefly a few minutes ago about what the FCC is 
doing in its review process to look at the effect of paid 
prioritization on consumers' broadband bills. I was wondering 
if you can comment about what you think the proposed open 
Internet rules will have on access to new and innovative 
content on line? Because that is one reason why we are 
concerned about these proposed rules.
    Mr. Wheeler. They each should be encouraging of new and 
innovative programming because of the fact that it assures that 
they will be able to reach the consumer unfettered and without 
having to pay special fees.
    Ms. DeGette. And what impact do you think that the rules 
will have on average broadband speeds, network investments and 
overall quality of service?
    Mr. Wheeler. That is a terrific question.
    Ms. DeGette. Thank you.
    Mr. Wheeler. I am glad you asked it. You know, one of the 
fascinating things is that in 2010, when the open Internet 
rules were first proposed, since then there has been hundreds 
of millions of dollars of broadband investment made. So the 
rules don't seem to have a chilling effect. And speeds have 
been doing this, going up. And this is what the court was 
talking about when they talk about this virtuous cycle because 
everything--in the Internet ecosystem, everything adds to 
everything else.
    Ms. DeGette. So what do you think that the new rules, what 
effect will they have on these issues?
    Mr. Wheeler. I believe----
    Ms. DeGette. You just talked about what has been happening.
    Mr. Wheeler. Yes, we are----
    Ms. DeGette. What about your rules?
    Mr. Wheeler. We believe that the rules that we have 
designed will continue to encourage investment in broadband, 
continue to encourage increases in through-put, and as a result 
continue to encourage innovation from edge providers.
    Ms. DeGette. And so are you saying also then average 
broadband speeds will increase?
    Mr. Wheeler. Yes, ma'am.
    Ms. DeGette. And overall quality of service will increase?
    Mr. Wheeler. Yes, ma'am. They need to.
    Ms. DeGette. All right. OK. One last thing no one has 
raised yet is the issue of industry consolidation, and this 
year we have seen two major merger proposals in the telecom 
industry. Now, clearly the industry is going through a period 
of significant technological and economic change, and some 
folks think that consolidation is the best approach to this.
    So all things being equal, do you think industry 
consolidation is good or bad for the consumers?
    Mr. Wheeler. So I read the other day that this is 
probably--in the last decade the biggest year for telecom 
mergers. And what we are doing is opening a record on each of 
them, and we will make that decision based on the record that 
is developed for each----
    Ms. DeGette. So you don't have an opinion at this point?
    Mr. Wheeler. I would not want to prejudge the record.
    Ms. DeGette. OK. And as you know, Congress has recognized 
the importance and unique character of the telecommunications 
marketplace by giving the FCC the authority to review mergers 
under the public interest standard. Do you think the conditions 
the FCC placed on the Comcast/NBC U merger were effective at 
promoting the public interest?
    Mr. Wheeler. Oh, wow. That is something that, a decision 
that my predecessor made. I know that it had an impact. My goal 
is to look at the record that is presented before me and my 
colleagues and make a decision based on that.
    Ms. DeGette. Do you think it promoted the public interest? 
Yes or no.
    Mr. Wheeler. I think that there were multiple things in it 
that promoted the public interest.
    Ms. DeGette. And what other lessons do you take away from 
the Commission's previous attempts to promote the public 
interest by placing conditions on mergers as you go forward?
    Mr. Wheeler. That it is an important role that the 
Commission has. You know, there is a lot of discussion as to 
why should there be any authority at the FCC to look at public 
interest obligations. I strongly believe that there is a big 
difference between the kind of statutory rigidity that the 
Justice Department is required to look at mergers with and the 
kind of broader public interest issues that you have raised 
that the statute asks the FCC to look at.
    Ms. DeGette. Mr. Chairman, I would just ask if you could 
supplement your testimony with some specific takeaways that 
this has given you.
    Mr. Wheeler. Great.
    Ms. DeGette. Thank you very much. Thanks, Mr. Chairman.
    Mr. Latta. The gentlelady yields back. The chair now 
recognizes----
    Mr. Walden. Would you yield a second?
    Mr. Latta. The chair recognizes the chairman.
    Mr. Walden. I just wanted to clarify one thing, make sure I 
heard it right.
    Mr. Wheeler. Yes, sir.
    Mr. Walden. Did you say 40 percent of Americans are still 
using dial-up for Internet access?
    Mr. Wheeler. No, I am talking about dial-up phone service 
at large.
    Mr. Walden. All right, because I was thinking it is more 
like 3 percent.
    Mr. Wheeler. No, dial-up phone service at large.
    Mr. Walden. Thank you much.
    Mr. Latta. Thank you for clarifying that, sir. The chair 
now recognizes the gentleman from Nebraska for 5 minutes, Mr. 
Terry.
    Mr. Terry. Well, it is good to know that my 82-year-old is 
in those 3 percent. That makes him very elite. I am trying to 
talk him out of that, but that is a work in progress.
    Mr. Wheeler. We all remember those days when we were 
thrilled to get 56 KB, right?
    Mr. Terry. So switching gears just a little bit, I want to 
ask about quantile regression analysis progress, and I do think 
that you have probably captured its deficiencies better than 
anyone else has, and I appreciate that work. I was glad to see 
the Commission's follow-up by repealing the QRA formula.
    Mr. Wheeler. Yes, sir.
    Mr. Terry. So congratulations. I appreciate that. I am 
curious on your thoughts of how it should be replaced, and if 
you could walk me through what factors are going to be used in 
any decision-making and timetables and process.
    Mr. Wheeler. I respect the question, but I can't really 
answer it right now because we are in the process of--there are 
several proposals. We are in the process of looking at what the 
best components of each are, and I don't want to hip shoot 
here, but we do have proceedings under way to say, ``OK. What 
is it we replace QRA with?''
    Mr. Terry. Where are we within the process of those?
    Mr. Wheeler. I think that we are probably heading into 
something that you would see before fall.
    Mr. Terry. Before fall?
    Mr. Wheeler. Early fall.
    Mr. Terry. OK.
    Mr. Wheeler. Football season.
    Mr. Terry. Well, I don't want to get distracted.
    Mr. Wheeler. Well, if you joined the Big 10----
    Mr. Terry. Do that when we play McNeese State, and I would 
appreciate it.
    Mr. Wheeler. Yes, sir.
    Mr. Terry. For the rest of you, that was humor. Now, let me 
go to a broadcast question since we succinctly dealt with one I 
thought would take all of 5 minutes. The spectrum bill that was 
authorized and incentive auction and passed through the 
committee was a bipartisan bill. Unfortunately, the order that 
recently removed the FCC was not bipartisan, and some 
Commissioners, particularly Republicans, stated that the order 
treats TV broadcasters that choose not to participate in the 
auction unfairly, and that has me concerned. Congress set aside 
the 1.75 to reimburse broadcasters forced to move. Part of the 
incentive auctions are aimed to fully recover their expenses. 
Why did the FCC not adopt the number as its repacking budget 
and ensure that broadcasters would not have to go out of pocket 
when forced to the FCC to move?
    Mr. Wheeler. Thank you. Congress said $1.75 billion is the 
max that can be spent on repacking. We think that will be 
sufficient. There have been broadcasters who have expressed a 
concern that it might not be sufficient. So we have said, ``OK, 
we don't think that's going to happen, but we will put in place 
a process that will have a structure in place if and when that 
should happen.'' Sir, I don't expect that we are going to get 
there.
    Mr. Terry. All right. I will yield back my time.
    Mr. Wheeler. Thank you, sir.
    Mr. Latta. The gentleman yields back, and the chair now 
recognizes the gentleman from Utah, Mr. Matheson, for 5 
minutes.
    Mr. Matheson. Thanks, Mr. Chairman, and Mr. Wheeler, thanks 
for your testimony. I appreciator your candor and your 
articulate way you answer questions.
    Mr. Wheeler. Thank you, sir.
    Mr. Matheson. I just want to commend you on your efforts to 
open up more spectrum for unlicensed uses. The FCC took an 
important step last month by opening up the 100 megahertz 
spectrum for unlicensed uses in the 5 gigahertz band, and I am 
pleased to see in your testimony that the FCC is actively 
participating in ongoing efforts to free up additional 
unlicensed spectrum in the 5 gigahertz band. Can you provide an 
update on where things currently stand with resolving the 
technical issues in the ITS band currently used for vehicle-to-
vehicle communications and the parts of the band used by the 
DOD for military radar?
    Mr. Wheeler. Yes. So as we talked earlier, there are three 
slices to 5 gigahertz. There is the lower slice that we took 
care of. The middle, as you suggest, is DOD. We are having 
ongoing discussions with them. I have been personally involved 
in those discussions about a wide range of spectrum issues 
including this. There are strongly held beliefs on both sides, 
sir. I continue to believe, however, that people of good faith 
can find answers if you sit at the table long enough, and that 
is the goal.
    Insofar as the high band in 5 gig, yes, that is intelligent 
transportation, which offers such great opportunities. We have 
seen the Google smart car and all this sort of thing. The thing 
that is really encouraging is that that is an 802 type of 
standard. It is not a dissimilar reality, however, where we 
need to make sure that people are sitting around the table 
looking for commonalities rather than looking for differences.
    Mr. Matheson. Something we ought to do around Congress a 
little more.
    Mr. Wheeler. But you have a little experience. You have a 
little experience.
    Mr. Matheson. It's an editorial--on my part, yes.
    Mr. Wheeler. But that's the goal of what we are trying to 
do here.
    Mr. Matheson. Do you have a timeframe for when this 
additional spectrum could be freed up?
    Mr. Wheeler. I wish I did. I would be misleading you, sir, 
if I gave you a date right now.
    Mr. Matheson. I understand. Another issue I wanted to 
mention, the administration's Connect Ed Program----
    Mr. Wheeler. Yes, sir.
    Mr. Matheson [continuing]. The goal to bring 100 megabit 
broadband to every school in the United States. To the extent 
that this initiative is implemented through the E-Rate program, 
what can the Commission do to maximize efficiency and get the 
most bang for the buck?
    Mr. Wheeler. Wow. Thank you. Great question. There were 
multiple challenges in that. One is that we need to spend our 
money, the people's money, on 21st Century high-speed broadband 
solutions, not 20th Century solutions like dial-up telephone 
service and long distance. Right now about half of the $2 
billion, $2.4 billion that is being spent is spent for old 
stuff.
    Mr. Matheson. Not today?
    Mr. Wheeler. Today. Today. Second part is that we have to 
design a system that helps schools and library administrators 
find their way through the maze that is telecom. We put them in 
those jobs to educate students, not to be telecom wizzes. So we 
are trying to develop a process that says, here is what you 
ought to be paying. Here is what somebody next door is paying. 
Here is like situated--so that they can go in and understand 
where their bargaining position is. We are going to be talking 
about being able to have longer contracts because buying it on 
a monthly basis as we all know is the worst way to buy. So let 
us talk about several years. We are going to be encouraging 
consortia so that you can buy in bulk and get better prices, 
and I just think that there are a myriad of things that we can 
do to get more efficiency out of the existing bucks, and we 
intend to do that.
    Mr. Matheson. That is great. Does the FCC plan on using the 
national broadband map to identify fiber that is already in 
place in a given community so it could be leveraged toward 
these Connect Ed goals?
    Mr. Wheeler. Absolutely, and we have now taken over 
ownership of the broadband map, so yes, sir.
    Mr. Matheson. OK. I appreciate that. I will yield back, Mr. 
Chairman.
    Mr. Latta. Well, thank you very much. The gentleman yields 
back the balance of his time, and the chair now recognizes the 
gentleman from New Jersey, Mr. Lance, for 5 minutes.
    Mr. Lance. Thank you very much, and good afternoon to you. 
I believe that some of my colleagues on the other side of the 
aisle would prefer a Title II reclassification, and if the 
Commission were to decide to proceed in that direction, I am 
concerned that it might trigger a lot of ill-fitting 
regulations that might not make sense in the context of these 
services.
    In your opinion, Chairman, would the process of going 
through forbearance to separate the wheat from the chaff, could 
it be a messy exercise and might it lead to more years of 
litigation and uncertainty is my real concern, sir?
    Mr. Wheeler. Thank you, Congressman. That is one of the 
things that gets teed up in the NPRM when we ask about Title II 
versus Section 706. And I presume that that will be 
exhaustively discussed in the responses. And that is exactly 
the kinds of questions that we are asking.
    Mr. Lance. Thank you. One concern has been raised about the 
proposed net neutrality rule, making the protections that would 
be afforded companies who use a carrier who is providing the 
same service as another carrier. For example, the large 
carriers are beginning to bundle services that go well beyond 
phone service, the Internet and television, to include smart 
home services such as temperature control, home health 
monitoring, which of course is important to another 
subcommittee of this committee, as well as alarm services such 
as monitoring of home intrusions and fires, video surveillance 
or personal emergency response systems. What protections will 
the FCC provide to ensure that a carrier does not give its 
service provider a preference over a company using them as a 
broad-based carrier?
    Mr. Wheeler. I am not sure I exactly understand what--your 
concern is will there be preferences----
    Mr. Lance. Yes.
    Mr. Wheeler [continuing]. Among providers of those 
services?
    Mr. Lance. Yes, Chairman.
    Mr. Wheeler. That is contrary to the concept of an open 
Internet.
    Mr. Lance. Can you assure us and through us, the American 
people, that that will not be the case as these other services 
are provided moving forward?
    Mr. Wheeler. Let me give you an example personally.
    Mr. Lance. Yes, sir.
    Mr. Wheeler. I just switched out ADT in my home security 
system for another company, and I was able to access both of 
them over the Internet and both of them over my mobile device. 
And there should be no interference with my ability to move 
from ADT to the other provider.
    Mr. Lance. Thank you. And that is the goal of the 
Commission and you will assure us that that is how we will 
proceed moving forward?
    Mr. Wheeler. It is open. There needs to be open access for 
all providers.
    Mr. Lance. Well, thank you. I look forward to working with 
you. I understand you are a proud graduate of Ohio State.
    Mr. Wheeler. You bet. Yes, sir.
    Mr. Lance. Please be gentle with Rutgers now that Rutgers 
has entered the Big whatever-it-is, the Big 16 or whatever it 
is.
    Mr. Wheeler. It is the Big 10 that can't count.
    Mr. Lance. The Big 10 that can't count. I defer back to the 
chairman the balance of my time, a proud representative from 
Ohio.
    Mr. Latta. Well, thank you very much for the gentleman 
yielding back the balance of his time. The chair now recognizes 
the gentleman from North Carolina, Mr. Butterfield, for 5 
minutes.
    Mr. Butterfield. Thank you very much the gentleman for 
yielding time, and thank you, Chairman Wheeler, for your 
service and thank you for your testimony today.
    Mr. Wheeler. You are welcome.
    Mr. Butterfield. I especially thank you for your clarity. I 
told you that the first time that I met you, and whenever I 
hear you speak, it is unambiguous, at least until the subject 
of your home security system comes up. And then you are a 
little ambiguous on who the new provider is. But thank you so 
very much.
    Mr. Chairman, in the Communications Act, Congress mandated 
that the Commission ensure diverse participation in media and 
telecom, and that includes participation of minority and women-
owned businesses. The quote from the statute basically says 
that the mandate is ``to promote economic opportunity and 
competition by disseminating licenses among a wide variety of 
applicants including small businesses, rural telecoms and 
businesses owned by members of minority groups and women.''
    It seems to me that the response of the Commission to 
judicial criticism of the FCC's inaction in this area and the 
lack of meaningful study in progress as well as the low level 
of minority and women-owned participation in media and telecom 
licensing, that the Commission it seems to me is not committed 
to these diversity goals. And if I am wrong about this, I would 
ask that you correct me.
    On May the 14th, members of the Congressional Black Caucus 
including Congressman Rush and myself, addressed these 
diversity concerns in a letter to you. I suppose the letter may 
not have made its way to your desk yet, but I ask that you look 
at it very carefully when you do.
    Question, what precisely do you need beyond the 
congressional directives and judicial criticism to get the 
Commission to make progress in creating opportunities for 
diverse communities?
    Mr. Wheeler. Thank you, Congressman, and I got the letter 
this morning, so thank you.
    Mr. Butterfield. OK.
    Mr. Wheeler. First of all, I agree that we have a mandate 
to have a broad swath of opportunity for all Americans to 
participate in all aspects of telecommunications. I can assure 
you that that is a goal of mine. Now, let us talk about some 
specifics. Number one, I think what we did on the JSAs in the 
broadcast space actually opens up opportunities for minority 
and small operators. That is why it was supported by more than 
a dozen representative minority groups.
    Secondly is we are going to move on the AWS-3 auction to 
make sure that there are appropriate steps taken to assure that 
minorities can participate through waivers and other kinds of 
processes in that auction.
    Thirdly, we are going to have, and I should pause in all of 
these to call out Commissioner Clyburn who has been the 
constant pusher on all of these issues. There will be rules for 
the incentive auction that will create bidding credits for 
appropriate designated entities. And I very much take to heart, 
both as an institutional responsibility and as a personal 
responsibility, the language that you read.
    Mr. Butterfield. And so when the spectrum is auctioned, you 
are making a commitment that diversity will be an overriding 
concern of the Commission?
    Mr. Wheeler. So what we want to do is make sure that there 
are opportunities for designated entities to get bidding 
credits so that, for instance, they can bid with 75-cent 
dollars against AT&T and Verizon's 100-cent dollars.
    Mr. Butterfield. All right. Let me get this last one in if 
I can, Mr. Chairman. In light of the demographic changes 
occurring in our country and the growing number of mergers in 
the communications industry, how is the Commission encouraging 
companies to partner with diverse businesses in the secondary 
market?
    Mr. Wheeler. We have been doing that, both formally and 
informally, there are great opportunities when there are 
transactions for minority companies. Green Telecom, for 
instance, comes to mind which is now operating spectrum, I 
believe, for both AT&T and Verizon, which they purchased as a 
part of some settlements with the Commission. And those kinds 
of opportunities are important and worthwhile.
    I also believe that there can be new opportunities in the 
broadcast space, particularly after the auction in terms of 
being able to share spectrum and offer other kinds of services.
    Mr. Butterfield. Thank you, Mr. Chairman.
    Mr. Lance [presiding]. Thank you very much. The chair 
recognizes the gentleman from Kentucky, Mr. Guthrie.
    Mr. Guthrie. Thank you, Mr. Chairman. Thank you for coming 
today. I know you had a busy week, so your time is appreciated. 
My colleague from California, Ms. Matsui, and I have spent a 
lot of time on spectrum, spectrum issues, and we founded 
Congressional Spectrum Caucus----
    Mr. Wheeler. Yes, sir.
    Mr. Guthrie [continuing]. With the goal of looking with 
different ideas of how we can move forward on spectrum. And I 
appreciate the efforts that you have done to move the incentive 
auction forward, and I have a couple of questions about the 
guard bands in the 680 megahertz band.
    It appears to me that the band plan for spectrum cleared in 
the broadcast incentive auction carefully considered the 
importance of maximizing license spectrum and adhered to the 
technically reasonable standard set by Congress for creating a 
duplex gap, and I applaud the Commission for its work in this 
regard.
    Two questions. One, how do you foresee going forward with 
unlicensed spectrum in the duplex gap? As you know, it will be 
important for those who have been on adjacent license spectrum 
to have assurance there will not be interference. And are you 
confident the FCC will have technical guidelines to provide 
assurance to those who bid for license spectrum, there will be 
no interference in the duplex gap from----
    Mr. Wheeler. Yes, sir. I think you just--the answer to 
both-- identified technical standards. And so for instance, we 
are going to have a technical standards proceeding for wireless 
mics and others who would be using the unlicensed spectrum, so 
yes, sir.
    Mr. Guthrie. OK. Thank you. And we have been using social 
media to reach out to interested Americans, and we said we are 
here representing the American people. And one came from Kelly 
on Facebook, and Kelly asked this question. Well, Kelly 
submitted through Facebook, user name Kelly, who would like to 
ask you the question about your plans for future spectrum 
policy. And can you give Kelly a brief answer to her question 
about future spectrum policy overall?
    Mr. Wheeler. Thank you, Kelly. The answer is that, they are 
not making it no more. And so what we have to do--I believe 
that we are today on the cusp of the new horizon on spectrum 
policy with two things that we are doing. One is the incentive 
auction that you all created because when you boil everything 
down, it ultimately comes to economics. And if you can address 
the other person's economics, you can probably go a long way to 
solving your economics issue. And that's what the auction does.
    The other component is spectrum sharing, and the days of 
``Here, this is all yours, you can use it,'' are over. And 
fortunately, digital allows that kind of sharing. Think about 
going into a Starbucks and everybody is sharing that Wi-Fi 
spectrum. You put those two together, and that is I think the 
answer to Kelly's question as to where is spectrum policy 
going. And we are in the middle of making both of those work 
right now, which is why what we are doing is so terribly 
important.
    Mr. Guthrie. Yes, to use a metaphor, it is a very simple 
metaphor compared to a complex physics in this, but we don't 
have special highways for ambulances or fire trucks. We get out 
of the way when they need to go down the highway. So sharing 
that, that is kind of a simple way to look at the metaphor.
    There is something in one of your statements--and I am 
putting on my hat as a former state legislator, I was the state 
Senator in Kentucky before here, and there are some convincing 
concerns of places like Utah and Oregon where there has been 
municipal broadband deployed----
    Mr. Wheeler. Right.
    Mr. Guthrie [continuing]. In the projects that failed in 
areas where there were competitive providers. And these 
projects have resulted in putting millions of dollars of 
taxpayer funds in municipal bonds, proper tax and sale and 
franchise taxes at risk. And I believe the iProvo was sold to 
Google for a dollar and leaving city taxpayers on the hook for 
repayment of tens of millions of dollars.
    My understanding isfive states or so have passed laws 
saying that cities can't do this because the states usually----
    Mr. Wheeler. About 20 states.
    Mr. Guthrie. Like in our area, if something happens to a 
city, the state is on the hook for it as well. And I believe in 
your prepared, written testimony, you have said that you 
believe the FCC can do prevention in this area over the state 
law? I wanted you to clarify that.
    Mr. Wheeler. Yes, sir.
    Mr. Guthrie. And why you think Washington could have a 
better view of this than Frankfort, for example, in Kentucky?
    Mr. Wheeler. So there about 20 states that have put some 
kind of restrictions in place. And I can see it through just 
exactly the opposite end of the telescope, with all due 
respect, that if the citizens of a community want to organize 
through their local government to say, to bring competition in 
broadband provision, they should not be inhibited.
    Mr. Guthrie. Not be inhibited by their elected----
    Mr. Wheeler. They should not be inhibited by the fact that 
the incumbents have been urging the adoption of legislation 
that would ban it. And if we believe in competition, we ought 
to let competition flourish. So what I have said is that I am 
following again Judge Silverman's comments in his dissent, 
nonetheless, in the open Internet case in which he said if 
there is ever an example where 706 would apply, it is in the 
ability to say to states, you cannot get in the middle of this 
``virtuous cycle'' and prohibit consumers from being able to 
have access to a competitive service.
    Mr. Guthrie. So your protection is the governments are 
doing that because of incumbents or because they don't want to 
be on the hook for an iProvo type situation?
    Mr. Wheeler. So the--again, I go back to first principles, 
that is, this is a decision that ought to be made by the people 
of the community and that--but if they want to take the risk, 
if they own it themselves--but you don't have to own it 
yourself. It is also--the gentleman from Utah has left, but for 
instance, in Utah, there is a group of cities that have banded 
together to solicit bids for somebody else to own that they 
would have a participation in, that kind of structure. If the 
people say, ``That is what we want, we want this kind of 
competition,'' then I think they ought to be encouraged to get 
it. And competition has clearly been shown to be the best tool.
    Mr. Guthrie. Well, I don't disagree with you on that, but 
my time actually is expired. I know the chairman is ready to 
gavel me down, so I will yield back. Thank you.
    Mr. Lance. Thank you very much. The chairman would never do 
that to the gentleman from Kentucky. The chair recognizes the 
gentleman from Vermont, Mr. Welch.
    Mr. Welch. Thank you very much, Mr. Chairman. Mr. Wheeler, 
I have five questions. We have 5 minutes, so we can go lickety-
split.
    Mr. Wheeler. Yes, sir.
    Mr. Welch. The first thing, Bob Latta and I started the 
Rural Caucus. We so appreciated you coming in. Enormous concern 
in rural America that we get access to the Internet. It is 
essential for our future. Net neutrality is a big deal. That is 
the big topic. You have been getting comments. There is an 
enormous amount of concern that if we make the wrong decision, 
the big guys are going to get the fast lane, the little guys, 
many in rural America, are going to get the breakdown lane.
    Can you give us some reassurance that at the end of this 
process we are going to have access on equal terms for folks in 
rural America to the Internet?
    Mr. Wheeler. You want a quick answer?
    Mr. Welch. Yes.
    Mr. Wheeler. Yes.
    Mr. Welch. And that is the sentence. You can give a full 
sentence to reassure all of us, especially rural America----
    Mr. Wheeler. I should.
    Mr. Welch [continuing]. That we are going to be driving in 
the fast.
    Mr. Wheeler. There is one Internet. There is not a fast 
Internet, there is not a slow Internet. There is not an urban 
Internet, there is not a rural Internet. There is one Internet. 
Everybody ought to have open, equal access to the capacity 
delivered by the Internet.
    Mr. Welch. OK. Thank you. Now, getting the Internet, rural 
America is spread out, and the investors want to put their 
money where they can make their money. We all understand that. 
That was true for electricity, but we have got to get that 
Internet out into rural America so we can be part of the modern 
economy. And we have a Universal Service Fund with the Mobility 
Fund. We need to have that, and I am wondering if you could 
comment on the status of that and what we need to do to make 
sure that the funds are there to build out that broadband.
    Mr. Wheeler. Specifically on mobility? Here is the 
interesting question that gets raised by mobility. Broadband 
wireless is LTE. It is being built out across America. Recently 
just one of the major carriers announced a new initiative in 
rural America with LTE. The question becomes that we are 
wrestling with is should we subsidize something if it is 
already happening and that prudent fiscal responsibility 
suggests probably not?
    Mr. Welch. Well, I got three more questions----
    Mr. Wheeler. OK.
    Mr. Welch. So we want to work with you on that to make it 
rational and not have us investing in things that aren't 
working but invest in things that are going to help rural 
America get----
    Mr. Wheeler. Yes. That is where we are trying to get to.
    Mr. Welch. All right. Third, we have got to work with you 
and your entire commission, the Republicans and the Democrats, 
and when you came into our Rural Working Group, you explained a 
couple of problems you had, ancient IT and also procedures 
where I guess it is easier to hire a lawyer than an engineer.
    Mr. Wheeler. Yes.
    Mr. Welch. I am a lawyer, so maybe I would like that. But I 
wouldn't be very much use to you. What are the things that this 
committee can advocate to help your entire Commission, Rs and 
Ds who want to do the job, so you have the tools you need to do 
it?
    Mr. Wheeler. Thank you for asking. Our IT infrastructure is 
worthy of the Smithsonian. I came from a business background. 
The things that you cannot do that are common sense in the 
business world, the fact that we are still using computers that 
have known cyber risk associated with them, the fact that we 
can't organize a consumer complaint process on line for 
American consumers because our IT system isn't up to it is 
ridiculous. So we have serious problems there.
    And the issue of lawyers versus engineers, far be it from 
me to take a side on that, but we do need more engineers, sir.
    Mr. Welch. OK. Thank you.
    Mr. Wheeler. And economists.
    Mr. Welch. Right.
    Mr. Wheeler. And economists.
    Mr. Welch. OK, well, I would like our committee to work 
with you on that.
    Next, Section 706, there is a lot of concern about whether 
you have the sufficient authority under that section in order 
to give you the rule-making power to guarantee the outcome 
being net neutrality. Can you comment on that? Do you still 
feel that that is sufficient and the court gave you a roadmap 
forward?
    Mr. Wheeler. I think that we do have sufficient authority, 
and when the court talked about this virtuous cycle and they 
said anything that interferes with that virtuous cycle is a 
violation of 706, that is a very broad grant of authority.
    Mr. Welch. OK. My last question in 26 seconds, retrans 
consent and blocking online content. We have seen that in the 
broadcast area where there is a dispute and people can't get 
access to the signal. Now that is starting to migrate into the 
online content. Is this the beginning of the cablization of the 
Internet?
    Mr. Wheeler. Sir, I think it is the right question. Our 
authority goes to retransmission consent, good faith 
negotiations, and program access. I think there is reason to be 
concerned when because I happen to subscribe to an ISP who is 
in a dispute with a program provider, that the program provider 
blocks all access from IP addresses coming from that ISP, I 
think that is something that is of concern and that we all 
should worry about.
    Mr. Welch. OK. I yield back. Thank you very much, Mr. 
Wheeler.
    Mr. Wheeler. Thank you, sir.
    Mr. Lance. Thank you very much. The chair recognizes the 
gentleman from Kansas, Mr. Pompeo.
    Mr. Pompeo. Thank you, Mr. Chairman. Thank you for being 
here today. I don't want to spend a lot of time on net 
neutrality. We have different views. I view it as nothing more 
than a price control. I think we have seen how that works in 
creating supply, and I think it is a very dangerous path that 
you are headed down.
    I do want to ask a couple of process questions related to 
that. Have you spoken to anyone at the White House or OMB in 
the last month regarding net neutrality?
    Mr. Wheeler. Only to keep them appraised. They have been 
assiduous in their recognition that we are an independent 
agency.
    Mr. Pompeo. And did you call them or did they call you?
    Mr. Wheeler. I called them.
    Mr. Pompeo. And has anyone else on your staff spoken to 
folks at the White House or OMB in the last month in addition--
--
    Mr. Wheeler. Well, the answer is I am not sure. On this 
issue, I don't know, but I can assure you from my discussions 
with everybody, from the President on down, the recognition of 
the independence of our agency, and I will go further and 
assure you that never have I or to my knowledge anyone on my 
staff felt any pressure to decide any issue.
    Mr. Pompeo. I appreciate that. Thank you. I want to follow 
up on something Representative Guthrie was saying. You believe 
the FCC has the power to preempt state laws to ban competition 
from community broadband?
    Mr. Wheeler. Yes, sir.
    Mr. Pompeo. Under Section 706?
    Mr. Wheeler. Yes, sir.
    Mr. Pompeo. Do you believe that states have the same 
authority?
    Mr. Wheeler. The issue that I believe is do we have the 
authority to preempt? That raises the question of what is the 
authority of the state, and I think we have preemptory 
authority. I think we will probably end up having this answered 
in court.
    Mr. Pompeo. I just read the statute. The states have the 
same authority that the FCC does. The language is identical. It 
says whatever authority it is, you have and they have.
    Mr. Wheeler. Well, in state Commissions.
    Mr. Pompeo. Right.
    Mr. Wheeler. Well, yes.
    Mr. Pompeo. The states----
    Mr. Wheeler. It says that we have preemptory authority over 
state Commissions.
    Mr. Pompeo. So state commissions have the same authority 
that you do? You would agree with that?
    Mr. Wheeler. No----
    Mr. Pompeo. It is a simple statute. I mean, it just says 
the same thing.
    Mr. Wheeler. No, I think that it says that both of us have 
authority but that we have preemptory authority on this issue, 
and I think that is what Judge Silverman was saying in his 
dissent in that Verizon case.
    Mr. Pompeo. Right, in that law, dissent. Well, the FCC's 
media bureau recently issued new and they call them processing 
guidelines for broadcast transactions, and these broadcast--it 
talks not only about future broadcast transactions but also 
pending applications. I have three questions with respect to 
that. First, how many applications have been singled out for 
close scrutiny since the new guidelines have been issued? How 
many have been approved in those 2 months? And when might those 
broadcasters see the resolution of their applications?
    Mr. Wheeler. I don't know the answer to any of those three 
off the top of my head, but I will be happy to get it for you 
for the record.
    Mr. Pompeo. OK. You can understand these are pending 
applications submitted under a set of rules. You have now moved 
the goal posts on them.
    Mr. Wheeler. Yes, sir, I understand your point. What we are 
trying to do is not move the goal posts but to open up the 
process so that everybody knows what the rules are.
    Mr. Pompeo. But that is what you did. That is what you did. 
You changed the rules with respect to applications already 
submitted under a preexisting set of standards. But I don't 
know how you could describe that as anything but moving the 
goal post.
    Mr. Wheeler. With all respect, sir, we had a series of 
transactions that were in place, and in the decisions on those 
transactions, we said, ``Note, going forward there will be a 
new look at what financial structures are in transactions, not 
in these transactions that we are approving.'' Then we put out 
a Public Notice that said here is how we are going to open up 
this black box, and here is what is going to be going on. And 
it is that standard. So there was notice as a part of a 
decision that was not affected. Then there was notice through a 
Public Notice. And now those that the Bureau is reviewing are 
subject to both of those.
    Mr. Pompeo. And my last 20 seconds, with net neutrality 
there are also cyber security issues. Do you plan to explicitly 
give network providers liability protections in their efforts 
to protect their network from cyber security as part of your 
rule-making for net neutrality?
    Mr. Wheeler. It was not considered as a part of the rule-
making to have that.
    Mr. Pompeo. Mr. Chairman, I yield back my time.
    Mr. Lance. Thank you very much. The chair recognizes the 
gentleman from New Mexico, Mr. Lujan.
    Mr. Lujan. Mr. Chairman, thank you very much. Chairman 
Wheeler, thank you so much----
    Mr. Wheeler. Mr. Lujan.
    Mr. Lujan [continuing]. For being here as well. Chairman 
Wheeler, 2 weeks ago this committee added my amendment calling 
on the FCC to conduct a study on reforming the designated 
market area system to the STELA reauthorization bill. As you 
know, DMAs are currently defined by a map drawn by Nielsen, a 
for-profit marketing research company based upon the reach of 
television broadcast antennas. This network of antennas is 
based upon technology deployed back in the '40s and '50s. 
Americans could have a multitude of viewing options via 
technology such as cable, broadband and wireless Internet, but 
current DMA rules prevent the viewership of much of that 
content.
    I believe that a system embraced by these technologies 
could revitalize television broadcasting with new affiliates 
reaching viewers who have more in common than their placement 
on Nielsen's old map. It is my hope that the Commission takes 
this study seriously and brings the policy into the 21st 
Century, Mr. Chairman, so I hope that we might be able to 
work----
    Mr. Wheeler. Thank you for your leadership on this, Mr. 
Lujan, and I assure you that we will take it seriously.
    Mr. Lujan. Thank you, Mr. Chairman. And Mr. Chairman, it 
wasn't too long ago that a company would not allow access to 
another company's apps. There was a question a few years ago 
with AT&T and Facetime in an Apple product.
    Mr. Wheeler. Yes, sir.
    Mr. Lujan. As I talk about fixed versus mobile, they 
defended it by saying it was allowed under the FCC's net 
neutrality rules. Granted, this was under 3G. Section 62 of the 
proposal suggests the no blocking rule was applied in different 
standard to mobile broadband Internet access, and mobile 
Internet access service was excluded from the unreasonable 
discrimination rules. We are seeing mobile getting faster now 
and with the new spectrum options, even faster than fixed. I 
appreciate and I agree with you that we are talking about one 
Internet with open and equal access. With my colleagues in 
rural areas, I have shared with you before if there is a 
conversation about taking phone calls with bandwidth 
capabilities as well as streaming of content on airplanes, in 
rural America we should be able to get the same treatment. I 
don't understand why we are not there yet. But nonetheless, it 
is coming.
    So I am hopeful that as we have this conversation, that we 
are able to have equitable treatment. I know that as I read in 
the proposal that there are elements of asking for a look into 
this----
    Mr. Wheeler. Right.
    Mr. Lujan [continuing]. In the rule, but I am certainly 
hopeful that this will be treated with the same scrutiny and 
level of attention and again, as I talked about an old, 
antiquated rule within the '40s and '50s, we talked about dial-
up, that this is another area that we are going to have 
equitable treatment as well, especially with new gigabit access 
as well.
    Mr. Chairman, in another area I know that there is a number 
of my colleagues who join me in their concern for recent 
reports of interconnection deals, particularly the one between 
Comcast and Netflix. You stated that peering is not a net 
neutrality issue, that there is a matter of the open Internet 
and there is a matter of the Internet connection among the 
various disparate pathways that become the Internet. And while 
I understand that net neutrality refers only to the behavior of 
Internet service providers blocking or throttling the speeds of 
certain Web sites, my question is how is interconnection an 
agreement that essentially throttles content substantially 
different?
    Mr. Wheeler. Thank you, sir. That is a very good question. 
You can think of the Internet in three parts, actually four 
parts. There is somebody like Netflix getting on the Internet 
and then riding so-called middle-mile providers to a ``peering 
point,'' which is just a fancy word for interconnection, where 
they then have access to Comcast, Verizon, whoever the case may 
be.
    The consumer buys from their computer up to the peering 
point. Traditionally, peering has been an ``I will take mine, 
you take yours,'' back and forth kind of a thing. And for free. 
That has begun to change over time.
    Mr. Lujan. Mr. Chairman, if I may, I apologize. My time is 
going to elapse, and maybe what I will do is--if we could get 
that into the record. All that I would add is once upon a time 
peering agreements didn't have an exchange of money. People 
found a way to work with each other----
    Mr. Wheeler. Exactly right.
    Mr. Lujan [continuing]. And I am hoping that we can get 
some certainty with the treatment of fixed versus mobile, in 
that area. And lastly I would like for the record, if there is 
any way that you might be able to provide us more specifics and 
details with what has been talked about as commercially 
reasonable----
    Mr. Wheeler. Good.
    Mr. Lujan [continuing]. As well as we talked about not 
putting smaller companies at a disadvantage. I apologize to cut 
you off, Mr. Chairman. I could always sit and visit with you. 
And the last thing that I would say is President Obama is in 
support of an open Internet, and I would encourage you to speak 
with him. So thank you very much for that as well.
    Mr. Wheeler. Let me just--Congressman, so am I.
    Mr. Lujan. Thank you.
    Mr. Lance. Thank you very much. The chair recognizes the 
gentleman from Louisiana, Mr. Scalise.
    Mr. Scalise. Thank you, Mr. Chairman, for having the 
hearing, and thank you Chairman Wheeler for being here today 
and answering our questions. I know as we look at the potential 
changes that have been proposed, a lot of us that want to 
continue to maintain a free and open Internet want to make sure 
that we are going about it the right way. I know I have got 
some concerns with the fact that the FCC would even consider 
going the Title II route in terms of reclassifying broadband. A 
lot of us had reached out to our constituents to have them also 
give us suggestions on things that they would like to ask you 
as well. And a lot of the comments that we got, I know that I 
got in my district, were just concerns about maintaining that 
open Internet and keeping the government out of regulating it 
and trying to make sure that the government doesn't impede the 
ability for the innovations that we have seen, which have been 
so dramatic and revolutionized not only the country but 
revolutionized the entire world. And it is a lot of innovation 
that is made in America, and we want to continue to see that 
innovation thrive.
    When you look at going into the reclassification, and it is 
a proposal that is out there, I know, like I said, I have got 
concerns about that. But in your written statement you assert 
that the private sector must play the leading role in extending 
broadband networks to every American. If it were to be 
reclassified under Title II, who would pay for extending those 
networks if they are subject to common carrier regulations?
    Mr. Wheeler. Private sector.
    Mr. Scalise. But then when you look at the Title II route, 
would the FCC have the authority to regulate broadband pricing?
    Mr. Wheeler. So in the vastness of Title II, that is 
conceivable. One of the reasons that we are asking for Title II 
versus Section 706 comments in this proceeding is to be able to 
specifically zero in on what are issues such as that, what are 
the----
    Mr. Scalise. So you think you may have the ability to 
regulate broadband pricing? Is that something you think would 
be an open possibility for the FCC?
    Mr. Wheeler. Should a full Title II regime be chosen, which 
it has not been, we are proposing----
    Mr. Scalise. But you are making the proposal.
    Mr. Wheeler [continuing]. Section 706.
    Mr. Scalise. Right.
    Mr. Wheeler. No, we are not--what we are doing is we are 
proposing Section 706 as the approach and then we have asked 
questions about Title II. And these are the kinds of issues 
that come up, will come up in that discussion and that are 
going to warrant serious consideration.
    Mr. Scalise. But if you deem them telecommunication 
services, because that puts broadband into a different realm 
than it is today. It is not there right now. If you do choose 
to try to put it there, would state public utility--in our 
state we have got a public service commission--would those 
state public service commissions and other related entities in 
the states be able to regulate broadband at that point?
    Mr. Wheeler. So what we have proposed is not Title II. It 
is Section 706. What we have asked is for a discussion of Title 
II and those kinds of issues. But our proposal, for which I 
have taken a lot of heat, is not Title II. I have said----
    Mr. Scalise. You don't have to go forward with the 
proposal.
    Mr. Wheeler. I have said----
    Mr. Scalise. You can stop taking the heat right now.
    Mr. Wheeler. No, I said that Title II was on the table, 
that we are looking to look at Title II, and Mr. Waxman has a 
specific proposal where he thinks that Title II ought to be a 
backup, and that is a proposal that is important and worth 
considering. But the proposal that we made is Section 706.
    Mr. Scalise. Let me ask you this because it seems like a 
one-way street where you are just targeting this toward 
Internet service providers. There are a lot of content carriers 
out there, too--a lot of members have used the Netflix example 
or, Google and other content providers that also have a play in 
this realm, that you seem to just be targeting this toward 
Internet service providers. And so I am not sure if there is 
some axe to grind there, but it just seems like it is a one-
sided approach that you are taking even in the review. And I 
wouldn't recommend going down that road for any of these folks. 
But I just wanted to point that out.
    And one last thing, because I know I am running out of 
time, in a February report, the FCC, some of your staff I know 
in a working group, recommended eliminating some of the reports 
that are out there, the Orbit report, the International 
Broadband report, the Modifying Video Competition report and 
cable prices--some of those things. I have got a piece of 
legislation we have passed out of the Full House twice now, 
bipartisan, I think was unanimous earlier--in this Congress 
called the FCC Consolidated Reporting Act which really tries to 
take a broad view and to eliminate a lot of the outdated 
reports, to streamline the reporting process. Something that I 
think you have seen bipartisan support to do in the House. We 
are trying to get the Senate to take that up. I am not sure if 
you have got a comment on what you think should happen there, 
if that is something you are supportive of generally, 
especially as it relates to the bipartisan bill in the House 
trying to move through the Senate to ultimately become law, to 
streamline the processes as your staff has suggested.
    Mr. Wheeler. So, on the Senate side, it is Senator Heller 
who has been----
    Mr. Scalise. Yes.
    Mr. Wheeler [continuing]. Pushing on this, and I know that 
he and Senator Rockefeller are talking about it in terms of 
their package of legislation over there.
    I definitely agree that there is a plethora of reports and 
that we are spending a lot of time that could be better 
organized, shall we say.
    Mr. Scalise. Including competitiveness in the telegraph 
industry, which is still on the books which we are trying to 
get rid of in this bill. But I appreciate that and anything you 
can do to help us advocate for the advancement. I do think that 
is one area where we found a lot of bipartisan support in the 
way it passed the House. Hopefully we can get the Heller bill 
moved through the Senate as well and get that to the 
President's desk.
    Mr. Wheeler. Thank you, sir.
    Mr. Scalise. Thank you very much for your time, and I yield 
back the balance of my time.
    Mr. Lance. Thank you very much, Mr. Scalise. I do not see 
any member on the Democratic side. Mr. Kinzinger of Illinois is 
recognized.
    Mr. Kinzinger. Thank you, Mr. Chairman, and thank you for 
being here today with us. I know it is a long day.
    Mr. Wheeler. Thank you for your patience, Mr. Kinzinger.
    Mr. Kinzinger. Yes, you are welcome. I might be the end. 
Wow. But we have a lot of big issues that we want to talk 
about. I am just going to hit a couple right now. I would like 
to talk to you a little--I know it was touched earlier about 
the E-Rate program. I am a big supporter of the intentions of 
this program and especially its modernization. And I appreciate 
the Commission putting on the recent workshop on this issue. I 
have a few concerns I want to address. I represent a rural 
district with a number of very small schools and libraries, and 
over the past few months I have reached out to a lot of these 
entities and asked them what their concern is and asked them 
about their participation or their lack of participation in the 
program to see what concerns or issues they have with the 
program itself.
    The number one problem raised in these conversations was 
the complexity involved in both applying for and eventually 
receiving the funding necessary to move forward in implementing 
new technology in their facilities through the E-Rate program.
    In hearing this, I actually looked into the issue a little 
further and found out that the basic application for funding is 
17 pages long. And with additional technologies not deemed 
necessary, it can run even longer, i.e., Wi-Fi. I would 
actually probably rather punch myself in the face than be the 
guy that has to fill this out.
    So the complexity of the application process has actually 
caused a number of these schools to spend money on outside 
consultants to help guide them through this process, and this 
is money that is no longer being spent on our students and 
automatically puts many smaller rural schools at a disadvantage 
as they don't have the funds necessary to pay these outside 
consultants essentially leaving individuals in a technological 
desert, if you will.
    As the Commission continues its efforts to modernize the E-
Rate program, what are your plans to simplify the application 
process for these small and rural districts? And also, will you 
commit to working to address the issues faced by these schools 
who have routinely told me that they simply cannot afford to 
pursue these funds?
    Mr. Wheeler. Congressman, I share your shock and dismay. We 
are going to fix it.
    Mr. Kinzinger. Good. All right. Do you have an idea of a 
timeframe? How long? This is easy. We are going home.
    Mr. Wheeler. Yes, it is going to be part of our E-Rate 
modernization program that we are bringing forward. There are 
actually a series of things that we are going to begin 
administratively even before that rule-making takes place. It 
is--yes, sir.
    Mr. Kinzinger. All right.
    Mr. Wheeler. How do we get online? It becomes an 
interesting challenge. So here we are talking about broadband 
access for schools and libraries, and we have a 17-page paper 
process.
    Mr. Kinzinger. Right.
    Mr. Wheeler. So, unfortunately, it is not something you can 
solve just like this because as I indicated I think to Mr. 
Welch, we have awful IT systems. But what I would like to get 
to is for your schools, and all schools and libraries, to be 
able to get online, to make their filing, to be able to track 
that filing and where things stand and to do it less frequently 
than annually.
    Mr. Kinzinger. Right. Well, I appreciate that. I want to 
touch on one other quick issue in the short amount of time, and 
again, thank you for your consideration with the E-Rate issue. 
I am concerned with the process and policy rationale used to 
change the FCC's treatment of broadcast JSAs for the purpose of 
the broadcast ownership rules. The decision to count TV JSA's 
ownership has the effect of tightening ownership restrictions 
without the comprehensive review of the ownership rules that is 
required by statute, and your analysis seemed to lack an 
appreciation for the public interest benefits fostered by JSAs.
    In Rockford, for instance, an area I represent, without 
these agreements, the Fox station produces actually a Hispanic 
news cast, and they have said that they will not be able to 
produce that Hispanic news cast, for instance. While I don't 
believe my local TV station should have to fight for a waiver, 
and we can have a broader issue on the whole discussion in 
general, I do want to say in light of your rule, are you going 
to make sure that these stations can take advantage of waivers 
and will there be clear, transparent standards for applying for 
waivers in this process?
    Mr. Wheeler. Thank you, Congressman, because you have 
raised a really important point about waivers. The reality as 
to why we had to deal with JSAs is there was becoming a cottage 
industry in this town, down on K Street, of lawyers figuring 
out creative ways to get around the ownership rules that the 
Commissions had in place forever. And JSAs were a favorite way 
of doing that.
    What we have said is that you have to have attributable 
ownership as you indicated but that there is a waiver process 
to address exactly what you are talking about in Rockford. And 
yes it is an expedited process. And it is a situation, 
unfortunately, where the process took over and perverted the 
underlying rules and the basic concepts of ownership.
    Mr. Kinzinger. And we can have that broader discussion when 
I have more time. My time is expired. But I will say, I have 
heard a lot of concerns from local TV stations even in my 
district, and I hope that, you know, while we disagree with the 
rule, I hope that you make it very clear how they can apply for 
these waivers and how they can get this taken care of.
    Mr. Wheeler. Yes. Thank you.
    Mr. Kinzinger. Mr. Chairman, I yield back. And thank you.
    Mr. Lance. Thank you very much. On behalf of Mr. Matheson 
and of myself, thank you, Chairman Wheeler, for your testimony 
this morning. We look forward to working with you in the 
future, and he hearing is now adjourned.
    [Whereupon, at 1:04 p.m., the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                  Prepared statement of Hon. Lee Terry

    I would like to state for the record that I oppose the 
reclassification of broadband services as Title II 
telecommunications services. We are fortunate to see wireline 
broadband speeds continue to increase, whether over cable or 
telecommunications networks. A regulatory framework set up in 
the 1930's to ensure every consumer receives the same voice 
service for a reasonable price is ill-suited for a 
communications platform that we rely on to deliver varied 
services from video and voice to 3-D printing. I should note 
that I am concerned about the proposal to use Section 706 as 
well, and believe that however the Federal Communications 
Commission proceeds, it should be done very, very carefully. 
That said, there is no viable path forward with Title II, and I 
believe that should be crystal clear.
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