[Senate Hearing 113-630]
[From the U.S. Government Publishing Office]
FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL
YEAR 2015
----------
THURSDAY, MARCH 27, 2014
U.S. Senate,
Subcommittee of the Committee on Appropriations,
Washington, DC.
The subcommittee met at 10:02 a.m. in room SD-138, Dirksen
Senate Office Building, Hon. Tom Udall (chairman) presiding.
Present: Senators Udall, Johanns, and Moran.
FEDERAL COMMUNICATIONS COMMISSION
STATEMENT OF HON. TOM WHEELER, CHAIRMAN
ACCOMPANIED BY: HON. AJIT PAI, COMMISSIONER
OPENING STATEMENT OF SENATOR TOM UDALL
Senator Udall. Good morning. I am pleased to convene this
hearing of the Appropriations Subcommittee on Financial
Services and General Government.
First, I want to welcome my ranking member, Senator Mike
Johanns. We don't have anybody else here, but we expect a few
to show up. But great to be here with you and share this
opportunity to learn from our Federal Communications Commission
(FCC) members that are here. I also want to----
Senator Johanns. Mr. Chairman, sometimes it is about
quality, not quantity.
Senator Udall. Yes, that is right. That is very, very well
put. Yes. We have got real quality here. There is no doubt
about it.
And I also want to welcome our witnesses. Chairman Tom
Wheeler, who recently was confirmed as the new chairman of the
FCC. I want to thank you for your service and look forward to
your testimony today. And also with us is Commissioner Ajit
Pai. Really good to have you with us again and look forward to
your testimony as well.
The FCC has been very busy on a number of initiatives,
initiatives that are critical to many Americans. And these are
initiatives that I strongly support.
The FCC is modernizing the almost $9 billion Universal
Service Fund to expand access to vital communications systems
for everyone in America.
The United States invented the Internet, but now we lag
behind many countries in broadband access. This is especially
so in rural parts of New Mexico. So I am pleased to see new
broadband and wireless investments in my home State and on
tribal lands. And that is all thanks to universal service
reforms.
The FCC is also updating and streamlining the E-Rate
program to support Internet access at schools. In New Mexico,
E-Rate already makes a big difference, benefiting over 350
schools and libraries and more than 370,000 school children.
There is no doubt, as you both know, that we live in an
Internet age. And as Chairman Wheeler has noted, every student
in America should have access to state-of-the-art tools for
education. E-Rate helps make that possible.
In 2012, Congress authorized the FCC to conduct spectrum
auctions to make more spectrum available for mobile broadband
use. This fuels innovation in wireless technologies. It helps
build FirstNet, our Nation's public safety broadcast network
for first responders. And it will generate significant revenue
for the U.S. Treasury.
The FCC also has a crucial safety and security role. Our
Nation's communications networks do more than just keep us in
touch with friends and family. In emergency situations, these
networks save lives. This committee explored these issues at a
hearing I chaired last fall in how we can improve emergency
communications. So I look forward to an update from you about
the progress that is being made there.
The FCC request for this fiscal year is--in 2015 funding is
$375 million. This is a modest increase from the fiscal year
2014 enacted level. FCC spending is fully offset, as we all
know, by regulatory fees and from spectrum auctions.
This committee has an important oversight responsibility,
ensuring that the FCC uses that money wisely for the American
people. There are two basic questions. What are the resource
needs of the FCC, and what are the consequences of the
shortfalls?
I have the honor of chairing this subcommittee and serving
with Senator Johanns, and I look forward to working with him to
advance these critical FCC initiatives. So now I would turn to
my ranking member for any opening statement that he would make.
STATEMENT OF SENATOR MIKE JOHANNS
Senator Johanns. Mr. Chairman, thank you very much for
holding the hearing today on the fiscal year 2015 budget
request for the FCC.
Let me also say welcome, Chairman Wheeler and Commissioner
Pai. We are glad to have you both here.
This is an important hearing as the policies and actions of
the FCC reverberate across our economy and impact our Nation's
international competitiveness. The hearing is also significant
as it is our first this year and serves as the kickoff for the
fiscal year 2015 appropriations cycle.
I very much appreciate the work of the chair of the
Appropriations Committee, Senator Mikulski, and Ranking Member
Shelby and other committee members to try to restore regular
order to the congressional appropriations process. However, it
is no secret that I opposed the decision last fall to amend the
Budget Control Act to escalate Federal discretionary spending
back over a $1 trillion.
The changes Congress made to the Budget Control Act simply
raise more money to spend more money. I did not object to
replacing the sequester cuts, but we should have included
targeted cuts that addressed waste or fraud or achieved long-
term savings through structural changes. Unfortunately, in my
judgment, the agreement reached last year just didn't meet the
standard.
Given my concern, I did not support the omnibus
appropriations bill for fiscal year 2014 enacted earlier this
year. There were numerous provisions in that bill that I
supported and would vote for without reservation, but the
package was all or nothing, and the good was unfortunately
outweighed by the trillion dollar price tag.
Because last year's budget agreement increased the spending
caps for fiscal year 2015 as well, I am concerned we are on the
same path for this fiscal year.
I was disappointed that the President's budget for fiscal
year 2015 proposed $56 billion in new spending this year and
$791 billion in spending increases over the next decade, paid
for with tax hikes on American families.
With soaring annual deficits and nearly $18 trillion in
debt hovering over our economy, our country is in need of
serious budgeting that spends responsibly.
As we begin the process of reviewing agency budget requests
for fiscal year 2015, I intend to work with my colleagues on
the committee to ensure we make the difficult decisions
necessary to get our spending under control.
We must also be mindful of the need to clear the way for
economic opportunity and for international competitiveness. The
FCC plays an important role in ensuring that the United States
continues to lead the world in digital innovation and
communications infrastructure. Its policies and actions can
have an enormous impact on our country's economic growth.
I am eager to hear more today about the Commission's
efforts to promote economic growth, reduce regulatory burdens,
and promote greater transparency, predictability, and
accountability in its regulatory process.
So, again, I thank the two of you for being here. I look
forward to your testimony today and to working with you to
address the challenges before us and to clear the way for
continued U.S. leadership in communications, and I look forward
to working with you in the future.
Mr. Chairman, thank you.
Senator Udall. Thank you very much, Senator Johanns. Really
appreciate your opening comments.
And Chairman Wheeler, at this point, I invite you now to
present your remarks on behalf of the FCC, followed by
Commissioner Pai.
SUMMARY STATEMENT OF HON. TOM WHEELER
Mr. Wheeler. Thank you very much, Mr. Chairman, and Ranking
Member Johanns. We appreciate the opportunity to be here.
This is my first time presenting before you. But it is not
the first time in my life that I have presented a budget. So
let me revert to some of my business experience and try and go
to the core of what the issues are.
As you pointed out, Mr. Chairman, we have a reasonable $35
million increase that we are requesting, but it deserves
explanation and discussion. You can really think of it in three
parts.
About a third of that goes for technology upgrades that
produce cost savings and efficiency increases. About a third
goes to universal service reform in the form of both expanded
enforcement and new rules. And about a third is essentially for
two things. One, those mandated costs of inflation--salaries,
benefits, et cetera--that happen, as I say, by mandate. And
second, the movement of the National Broadband Map from the
National Telecommunications and Information Administration
(NTIA) to the FCC and our need to pick up that expense.
Let me see if I can unpack each of those. First, let us
look at information technology (IT), which is about $13.5
million. Our IT systems are old, inefficient, and insecure. Let
me give you a couple of examples.
Forty percent of our IT systems are more than 10 years old.
This means that most of them aren't even supported by their
vendors anymore, and they are costly to maintain. Worse, we
have 207 different systems that are a hodgepodge of
incompatible and inefficient. For instance, we cannot build a
consumer database that works across the entire agency because
we have so many different incompatible systems.
But worst of all, these are insecure systems. I would be
happy to explain in a less public setting some of my concerns
about that, but let me give you one example. We are still using
Windows XP in many of our computers, and it is well known that
it is the access point of hackers worldwide. But we don't have
the money to get out of it.
UNIVERSAL SERVICE FUND
The second leg of this three-legged stool is Universal
Service Fund reform, which is $10.8 million. We have an $8.4
billion program going through big changes with big challenges.
The lifeline program has been abused. We will save $160 million
this year by stopping some of the duplicate payments and the
inappropriate participation that was there. But we are also
dealing with companies, not just consumers, and we have had
inefficient enforcement.
I said from day one, when I came in, I want heads on pikes.
I want to find out who the miscreants are and deal with them.
We have insufficient resources to do that.
Our High-Cost Rural Fund, we are shifting from voice to
broadband, and we are putting out new trial programs. But our
resources in the Wireline Competition Bureau are constrained in
many other directions.
And the E-Rate program, as you pointed out, Mr. Chairman,
is an 18-year-old program, built around 18-year-old ideas and
priorities. We have to change that to reorient it to high-speed
broadband. We are in the process of a rulemaking to modernize
that right now.
But let me talk a little bit about management. We need more
muscular enforcement. I am standing up a strike force on waste,
fraud, and abuse in the Universal Service Program. But it
doesn't make sense that on an $8.4 billion program, we have 25
full-time equivalents (FTEs) for enforcement. It is
insufficient.
And so, what we ask for here are new employees, and let me
be clear--we need investigators. We need auditors. We need
financial enforcement folks. We need to expand by 15 the folks
that we have in our Enforcement Bureau. That is almost doubling
the current FTEs. We need to expand by 10 the folks that we
have doing audits in our Office of Managing Director. That is
doubling the numbers. We need to expand the Office of Inspector
General by 6, and we need to put 14 more in the Wireline
Competition Bureau for rules and enforcement appeals and things
like this.
And I would just say the last third are things that we are
mandated for, for $5.7 million in Consumer Price Index (CPI)
and other increases and $4 million for the broadband map.
AUCTION
One quick observation. We also, as you know and you pointed
out, Mr. Chairman, are responsible for auctions. And while that
is paid for out of the auctions themselves, we are asking for
an additional $7 million there. We have generated $53 billion
from auctions and have spent less than 2 percent of that to run
them, a 98 percent return. I think that is a pretty good return
on investment for America.
We have had many auctions recently, in the last 5 years or
so, that haven't had a very high profile. But in the last 5
years, we have had 10 auctions that have auctioned off more
than 16,000 new licenses. And we are now dealing with a mandate
that we have from you given in 2012 to conduct the world's
first incentive auction, which is literally inventing things as
we go.
As you pointed out, Mr. Chairman, the FCC pays its own way.
It has no impact on deficit or taxes, and we take our
responsibility at the heart of 21st century economies
seriously. And that responsibility is multifold.
One, we need to make sure that we are going away from the
``regulator knows best'' approach. We can't be as smart as the
Internet. We need to make sure that we are providing stability
for those who invest and create jobs.
And two, we need to make sure that we are fulfilling our
responsibility for consumer protection.
And three, we need to make sure that we are fulfilling our
responsibility to deliver about two-thirds of our program,
about $8.4 billion to assist the development of 21st century
communications in rural America.
PREPARED STATEMENT
I appreciate the opportunity to be here and look forward to
discussing these issues with you.
[The statement follows:]
Prepared Statement of Hon. Tom Wheeler
Chairman Udall, Ranking Member Johanns, and members of the
subcommittee, I am pleased to appear before you today, alongside my
colleague Commissioner Pai, to present the Federal Communications
Commission's (FCC's) fiscal year 2015 budget request.
Although I have testified before a number of other congressional
committees during my career, this is my first appearance before a
Senate Appropriations subcommittee. I see this as an important
opportunity to update you on the FCC's activities while providing you
with information essential to developing the Commission's funding
levels.
When I assumed the Chairmanship of the FCC last November, I was
impressed by the Commission's moderate budget levels and the
extraordinary work that this agency has accomplished during the past
few decades. The Commission has raised more than $53 billion for the
Treasury in auctions revenues since 1994--$1.56 billion of that just
last month. We are on course to raise billions more in the next few
years to fund, among other things, the deployment of an interoperable
broadband network for our Nation's first responders, as well as to
reduce the deficit. The Commission supports an industry that is
essential to our Nation's economy and stimulates ever-higher levels of
financial growth. We have repurposed and re-engineered significant
amounts of spectrum to fuel these industries--including spectrum that
would have been considered almost useless barely a decade ago. During
the past 3 years, the Commission has reformed the Universal Service
Fund (USF)--a massive undertaking designed to take this 20th century
program into the next decades of the 21st century--and now we are
building on that reform with a sharpened enforcement focus.
The Commission's activities are entirely funded by those it
regulates. In other words, there is a zero relationship between
Commission expenditures and the Federal deficit. We have no direct
appropriation, and we work hard to raise funds to put money back into
the Treasury. In fact, the industries that we regulate contributed $17
million to sequestration since that money was derived from their
licensing fees. Auctions revenues cover auctions costs, and the USF
funds cover USF program costs.
The FCC's fiscal year 2015 budget request is $375,380,313,
including $11,090,000 specifically allocated to the Office of Inspector
General. Our auctions cap request is $106,200,000. Adopting this
request will allow us to follow through on important priorities
identified by your committee and our authorizers: the continued reform
of USF programs to combat waste, fraud, and abuse and enhanced
enforcement to put teeth into those reforms; as well as internal agency
reform designed to make our processes responsive to consumers and the
industry in a cost-effective fashion. Importantly, the auctions funds
will support spectrum auctions identified in the 2012 Spectrum Act,
which will make additional spectrum worth tens of billions of dollars
available for commercial licensed services as well as providing
nationwide spectrum for unlicensed use, and will support FirstNet.
Although it is important to keep costs down in the current budget
environment, let me give you a snapshot of the Commission's recent
budget restraints. The FCC's spending levels decreased after fiscal
year 2009 from $341 million to $335 million, and hovered just at that
mark for 2 years, finally hitting $339 million during the next 3
years--with $17 million of that number going toward sequestration in
fiscal year 2013. During fiscal year 2013, the FCC cut its programming
to the bone and worked hard to find cost savings, often delaying
lifecycle replacements and improvements for facilities and equipment.
In fiscal year 2011, the FCC had 1,776 employees. Today, we are down to
1,725, which is a 30-year low in full-time equivalents (FTEs). The
number of FCC contracting personnel also has steadily decreased from a
high of 959 in fiscal year 2009 to a current level of 470.
These cost reductions had real consequences. We have been unable to
replace our Office of Engineering's Equipment Authorization System, and
at this year's Consumer Electronics Show, I heard complaints about how
sequestration's impact had slowed the approval of new products before
last year's holiday shopping season. Cuts in employees left us
chronically understaffed in enforcement, for example, so that our work
to police pirate radio activities suffered--a big concern among some
broadcasters--as we focused all available resources on public safety
and homeland security activities. Likewise, we never replaced or
upgraded our enforcement equipment. In fact, we have more than 200
relic information technology (IT) systems that are costing the agency
more to service than they would to replace over the long term.
An effective and well-resourced FCC is critical, because we oversee
the networks that power our information economy. The Commission's
policies to unleash spectrum, promote competition, and provide
regulatory certainty can help spur innovation and investment in a vital
sector that drives economic growth and job creation. And the
information and communications technology sector continues to be one of
the leading lights of our economy and a key to our global
competitiveness. For example:
--American firms account for 84 percent of global profits in the
computer hardware and software industries.
--In 2010, the Information and Communication Technology (ICT) sector
accounted for 24 percent of real gross domestic product (GDP)
growth.
--Each year, the ICT sector generates more than $300 billion in free
goods and services that are not captured by GDP statistics.
--The mobile apps economy, which didn't exist at the start of 2008,
has created more than 750,000 U.S. jobs.
--Since 2009, more than $250 billion has been invested by private
companies to expand, extend and upgrade broadband networks,
which exceeds investment by the major oil and gas or auto
companies.
--Annual investment in U.S. wireless networks grew more than 40
percent between 2009 and 2012.
--Venture capital financing of ``Internet-specific'' businesses has
doubled in the past 4 years, from $3.5 billion in 2009 to $7.1
billion in 2013.
During the next year, the FCC will be hard at work on activities
that will deliver significant benefits to consumers, businesses and our
economy. We will be developing and licensing spectrum resources to spur
innovation in new communications devices; upgrading, enhancing and
securing our internal systems to better serve consumers and the
industries that rely on us; and modernizing and enforcing our USF
programs. That is really what the Commission's fiscal year 2015 budget
is designed to support--another boom year of communications services
for the American consumer and another year of growth for the industries
that we support.
During that same year, the FCC, like the technology and
telecommunications industries, needs to adapt to keep pace with the
exploding marketplace. The FCC needs the basic tools to sustain and
encourage industry growth; to protect licensees; and ensure the
reliability and safety of the systems that we use. We need to do so in
a way that fosters solid management practices that support, sustain and
enhance the industries that we regulate.
One of the primary reasons that I initiated a process reform review
upon assuming the FCC Chairmanship was because of my commitment to
create an agency that is highly efficient, as well as responsive to the
needs of all Americans. Instituting reform at this level will require
the expenditure of resources that support essential programmatic
changes. To support these efforts, the Commission is requesting a total
of 1,790 FTEs for fiscal year 2015, which includes an additional 10
FTEs for Information Technology (IT) programming and 45 FTEs for USF
modernization and oversight. These numbers are projections over the
current low number of FTEs, and they represent an increase of only 14
FTEs over fiscal year 2011 levels.
The FCC carefully considered the need to hire additional employees
prior to submitting its fiscal year 2015 budget request. We have far
fewer personnel in IT than comparable agencies, and, as I mentioned
earlier, we have more than 200 incompatible, aging computer systems
that, because they cannot talk to one another, act to increase the cost
of doing business. We must overhaul, upgrade, secure and replace IT
systems that are antiquated relics--costly to maintain and harmful to
agency productivity. The Process Reform report that I commissioned
draws a direct line between inefficient and unreliable IT systems and
sluggish administrative and regulatory activities. Certainly, the FCC,
of all agencies, must be able to communicate effectively inside and
outside the Commission. The failure to invest in IT now will keep us
from achieving many of the reform goals that Congress has set--from
transparency to timeliness.
Our other major spending target is USF modernization and oversight.
The need here is urgent and resource-intensive. I intend to place a
heavy--but not heavy-handed--emphasis on modernization and enforcement
to ensure that USF adheres to Congress' vision and provides essential
access to telecommunications services to all Americans--whether they
live in a remote area of Alaska, in one of our American territories, or
on an Indian reservation in North Dakota. On that note, I would
emphasize that closing the infrastructure gaps in Indian country is an
agency-wide priority, and I am committed to greater consultation with
tribal leaders to promote broadband deployment and adoption in their
communities.
We envision hiring a broad range of USF specialists with the
regulatory, enforcement, economic, legal, accounting and auditing
skills necessary to provide oversight of the USF programs in multiple
offices and bureaus. Although our budget estimates for fiscal year 2015
indicate that most hires for USF would be targeted in the Wireline
Competition Bureau (WCB), our new Managing Director currently is
reviewing and revising the individual bureau staffing levels in
accordance with the Commission's mission objectives. While the final
recommendation has not yet been made, the USF employees will likely be
distributed among WCB, the Enforcement Bureau (EB), Office of Inspector
General (OIG), and the Office of the Managing Director (OMD). Every
time I read or hear a news story about someone who tries to game the
USF system, I recommit myself to the goal of dedicating qualified staff
to reducing fraud.
Our requested auctions spending bump will support current auctions
activities as well as the complex process of developing the Incentive
Auction Program. Since 1994, the auctions expenses have been
approximately 2 percent of our total auctions revenues. The Commission
operated the auctions program for 10 years under a cap without
inflationary adjustments, only receiving an increase in fiscal year
2013 to fund the start-up for the Incentive Auctions program.
The Commission welcomed the statutory authority to initiate and
operate Incentive Auctions because of its benefits to consumers and
stakeholders, as well as the Treasury. We are grateful that you
recognized the need to ensure that this program is properly funded and
that you provided us with the necessary resources to move ahead with
our work, even as other programs were facing sequestration. The
importance of this auction to the public safety community and the boost
it will provide for nationwide interoperable communications will
benefit all Americans. We also see this auction as a significant
financial opportunity for many broadcasters--it will enhance the
ability of broadcasters retaining their spectrum to continue providing
the public with diverse, local, free over-the-air television service.
At the same time, the reclaimed spectrum will promote economic
growth and enhance America's global competitiveness. More spectrum
means more speed, capacity and ubiquity of mobile broadband services
such as 4G LTE and Wi-Fi networks. These benefits will be magnified by
another auction scheduled for the next year, AWS-3, which will provide
access to reclaimed Federal spectrum.
I appreciate this subcommittee's attention to the Commission's
funding needs during the next fiscal year, and I look forward to
working with you to fulfill our statutory mission efficiently and
effectively. Thank you.
Senator Udall. Thank you very much for your testimony.
And Commissioner Pai, good to see you here, and please
proceed with your testimony.
SUMMARY STATEMENT OF HON. AJIT PAI
Mr. Pai. Thank you, Mr. Chairman.
Chairman Udall, Ranking Member Johanns, Senator Moran,
thank you for inviting me to testify this morning on the work
of the Federal Communications Commission.
This morning, I would like to focus my opening remarks on
two critical issues: Reforming the Universal Service Fund (USF)
and modernizing the agency's processes.
First, USF. The Communications Act makes an important
promise in the very first sentence: Congress created the FCC
``to make available, so far as possible, to all the people of
the United States'' communication services.
We at the FCC take this promise seriously. And that is one
reason why the Commission reoriented USF support away from
telephone service and toward next-generation broadband networks
in 2011.
And, of course, not every reform of the Universal Service
Transformation Order has worked out as intended. Chairman
Wheeler and I were not yet at the Commission when that order
was adopted. So we can take a fresh look and reexamine whether
any aspects of that order have actually deterred rural
investment and harmed rural consumers.
Fortunately, it appears the Commission will soon cross one
such aspect off the books--the Quantile Regression Analysis, or
QRA, benchmarks. For over a year, I and many others have warned
that the QRA benchmarks have increased regulatory uncertainty,
chilled the investment climate, and impeded the deployment of
broadband to rural Americans.
That said, the benchmarks were unanimously adopted. So it
was no small matter when Chairman Wheeler announced a change of
course in December. I applaud him for that decision. Ending
regulatory uncertainty was the right thing to do, especially
given that the QRA benchmarks did not save the Fund a single
dollar.
There is another aspect of the Universal Service
Transformation Order I hope the Commission will reexamine soon,
and that is the so-called rate floor. The rate floor was
designed to reduce ``excessive subsidies for basic phone
service.'' But it doesn't do that. Instead, it increases the
rates rural consumers pay without reducing the subsidies that
carriers receive.
Specifically, the rate floor offers certain rural telephone
companies Federal universal service dollars to increase
consumers' phone bills. And these rate hikes are not minimal.
Today, the rate floor is $14 per month, but it is set to go up
soon to $20.46 on July 1, increasing rates for over 1 million
rural consumers. That is a 46 percent jump for some consumers,
many of whom are still waiting for the economic recovery to
arrive.
And for small carriers in these areas, it may mean more
serious financial problems. Rate shock could send customers off
their networks entirely, which means further uncertainty about
the economics of rural investment.
My view is that we should not add to the challenges our
fellow citizens face in rural America. Instead, we should
freeze the rate floor indefinitely and reexamine this policy.
We followed that path with respect to the QRA benchmarks under
the Chairman's leadership, and I hope we do so here, too.
Second, process reform. This is important because it
affects every area of the Commission's work. On the legislative
front, a bipartisan supermajority of the U.S. House of
Representatives passed recently the FCC Process Reform Act of
2013. The House also passed the FCC Consolidated Reporting Act
of 2013 back in September by a vote of 415 to 0. Together,
these bills would eliminate outdated mandates on the agency,
streamline our operations, and make it more accountable to the
public. I hope these bills become laws soon.
However, the FCC cannot and should not wait for Congress to
act. There is much that we can do on our own. All too often,
proceedings at the FCC drag on needlessly for many years. I am
encouraged that Chairman Wheeler from the get-go has said that
process reform is a priority, and many of the reforms proposed
in last month's staff report on this topic are a good starting
point.
For instance, we should establish more deadlines and set an
internal schedule for meeting those deadlines. We should also
become more transparent to the public and to Congress about the
work we do, and we can do that by creating an FCC dashboard on
our Web site that collects in one place key performance
metrics, such as how long it takes us to process consumer
complaints.
And Chairman Udall, I support your call to make our
consumer complaint database searchable and user friendly. You
are absolutely right that this idea, which is included in the
FCC Process Reform Act I just mentioned, would benefit
consumers. I believe it should be a part of our dashboard. For
if we make it easier for others to hold us accountable for our
performance, I am confident that all of us would act with more
dispatch.
PREPARED STATEMENT
Finally, I should note that while all commissioners are
asked to vote on a budget proposed by the Chairman and
submitted to the Office of Management and Budget, I have not
been asked to participate in the development of the agency's
budget request. But with that context in mind, I will do my
best to respond to any questions you might have on that score
or on any of the policy priorities that the FCC is tackling.
Thank you once again, Mr. Chairman, Ranking Member Johanns,
and I look forward to our exchange.
[The statement follows:]
Prepared Statement of Hon. Ajit Pai
Chairman Udall, Ranking Member Johanns, and members of the
subcommittee, it is a privilege to appear before you today. Thank you
for inviting me to testify on the work of the Federal Communications
Commission (FCC).
We have been busy, and today I'd like to share with you my views on
several important issues that we are confronting, namely: freeing up
spectrum for commercial use, reforming the Universal Service Fund's
high-cost and E-Rate programs, removing regulatory barriers to
infrastructure investment, adjusting our rules to the changing media
marketplace, ensuring Americans can always reach help when they dial
911, and reforming the agency's processes.
Spectrum.--Given this subcommittee's focus on appropriations, it is
worth noting that the FCC is one of few agencies that can generate a
profit for the Federal Government. By auctioning off spectrum, the
Commission has raised tens of billions of dollars for the Treasury over
the last two decades. Between 2005 and 2008, for example, the
Commission's spectrum auctions raised over $33 billion that was used
for deficit reduction, and the FCC's auctions program was a net
contributor to the Treasury each and every year.
But the Commission's auction program has not always turned a
profit. From January 2009 through December 2013, the Commission raised
a paltry $72 million in auction revenue, or about two-tenths of 1
percent of the amount raised in the prior 4 years. Indeed, when you
account for the Commission's spending on auctions, our auctions program
has actually lost money during the last 5 years. This is bad news not
just for the Treasury but also for American consumers, whose demands
for additional bandwidth have increased as their use of tablets and
smartphones has spiked over this same period of time.
That is why, since joining the Commission, I have concentrated on
trying to accelerate the allocation of spectrum for mobile broadband
and to rejuvenate the Commission's auction program. And I am pleased to
report that we recently have made real progress on both of these
fronts. Just last month, the Commission completed its first major
spectrum auction in 6 years by auctioning off the H Block, 10 MHz of
long-fallow spectrum once thought to be virtually worthless, to the
tune of $1.564 billion. Former Chairwoman Clyburn deserves credit for
pushing that auction through, as does Chairman Wheeler for finishing
the job.
But our work isn't finished. In the Middle Class Tax Relief and Job
Creation Act of 2012, often called the Spectrum Act, Congress entrusted
the Commission with holding a number of spectrum auctions, all with the
twin goals of getting new spectrum into the commercial marketplace and
raising at least $27.95 billion for national priorities.
What are those national priorities? In short, they are deficit
reduction and public safety--two things I'm sure every member of this
subcommittee holds as priorities. Regarding the former, our incentive
auctions hold the promise of raising more than $20 billion for deficit
reduction. Indeed, Congress counted on us raising this money when it
passed the Spectrum Act, so if the Commission fails to follow through,
we will be responsible for increasing the budget deficit.
As for public safety, successful spectrum auctions will provide
money for key public safety priorities, such as the First Responder
Network Authority's (FirstNet's) build-out of a nationwide,
interoperable public safety broadband network. That $7 billion build-
out makes good on the recommendation of the 9/11 Commission that first
responders need interoperable communications systems in times of
disaster. The Spectrum Act also set aside up to $135 million for State
and local public safety officials, up to $300 million to advance the
research and development of wireless public safety communications, and
up to $115 million for the deployment of next-generation 911 (NG911).
Under the law, all of this funding will be realized only if the net
revenues of our wireless auctions are at least $27.95 billion.
Given these important national priorities, we need to aim high. The
H Block auction was a first step toward those goals, but a chunk of the
money raised there will pay for running our auctions program. We still
have about $27 billion to go.
The next step towards raising these needed funds will be the
auctioning of Federal spectrum as required by the Spectrum Act. Most
important to that effort are two bands of spectrum, 1755-1780 MHz
paired with 2155-2180 MHz, that will hopefully become part of a new
Advanced Wireless Service-3 (AWS-3) service. These bands are already
internationally harmonized for commercial use, which means deployment
will be swifter and cheaper than other options. That also means
carriers are likely to bid more for this spectrum, which can lead to
greater net revenues for the national priorities I described above.
Note that I said ``hopefully.'' Under the Commercial Spectrum
Enhancement Act, the Commission can only assign commercial licenses for
this spectrum if the revenues from the auction exceed 110 percent of
the costs of relocating Federal users out of that spectrum and
coordinating with those that remain. And the best way to make sure that
we hit that mark and push that spectrum out into the marketplace is to
invite all carriers to participate in the auction and offer a band plan
that incentivizes the carriers to bid up the spectrum without
restraint.
One further note on this band: I regret that we will not be
bringing all of this spectrum to the marketplace free and clear from
interference by incumbent Federal users. Clearing 1755-1780 MHz of
Federal users would be the best way to maximize the value of spectrum,
both at auction and for consumers. That's what we did 10 years ago when
we created the AWS-1 band that is so important to mobile broadband
today, and that's why the Spectrum Act puts a thumb on the scale for
clearing and allows sharing only if clearing is ``not feasible because
of technical or cost constraints.'' But it appears that the decision
has been made that clearing is not feasible at this point. I therefore
hope that the Government will do its part for the public, publishing
specific and detailed transition plans as early as possible and
coordinating with carriers quickly so that this spectrum can be put to
use soon.
After this auction of Federal spectrum in the fall, the broadcast
incentive auction will be the Commission's best opportunity to push a
large amount of spectrum well-suited for mobile broadband into the
commercial marketplace and raise the billions we need. With this
auction, television broadcasters will have the opportunity to
relinquish their spectrum that wireless carriers will then have the
opportunity to purchase, with the bid-ask spread (i.e., the net
revenues) going to the Treasury once the Commission has paid for the
relocation expenses of broadcasters remaining in business.
As the Commission moves forward on incentive auctions, I believe
that five principles should guide our work. First, we must be faithful
to the statute. It is our job to implement the Spectrum Act, not to
rewrite it to conform to our policy preferences. Second, we must
respect the laws of physics. Our band plan and approach to repacking
must work from an engineering perspective. Third, we must be fair to
all stakeholders. This is especially important because the incentive
auction will fail unless both broadcasters and wireless carriers choose
to participate. Fourth, we must keep our rules as simple as possible.
The broadcast incentive auction is inherently complicated; unnecessary
complexities are likely to deter participation. And fifth, we need to
complete this proceeding in a reasonable timeframe. Prolonged
uncertainty is not good for anyone.
My greatest worry regarding the incentive auction, at this point,
is about participation. In order for the incentive auction to be
successful, we will need robust participation by broadcasters and
wireless carriers alike. But right now, I am concerned that the
Commission will make unwise policy choices that will deter
participation in both the reverse and forward auctions. My position on
the reverse auction is simple. Prices paid to broadcasters should be
determined by the market. The Commission should not set them by
administrative fiat. The Commission should not deter broadcaster
participation through a complicated ``scoring'' scheme that tries to
prejudge the compensation television station owners should receive. Any
attempt to restrict payments to broadcasters will prove to be penny-
wise and pound-foolish. Indeed, without sufficient broadcaster
participation, the entire incentive auction will fail.
And on the forward auction, the Commission should not limit
carriers' ability to participate, such as by setting a spectrum cap or
narrowing the spectrum screen despite the significant competition that
exists in the wireless market. The inevitable effect of such a policy
would be less spectrum for mobile broadband, less funding for national
priorities, a higher budget deficit, and an increased chance of a
failed auction. With a $27.95 billion target, we cannot let this
auction fail.
Finally, there's one last piece of spectrum I'm excited to discuss:
the 5 GHz band. Although we are not planning to auction this spectrum,
it can--and I believe will--be of substantial value to the American
economy. The 5 GHz band is tailor-made for the next generation of Wi-
Fi. Its propagation characteristics minimize interference in the band
and the wide, contiguous blocks of 5 GHz spectrum allow for extremely
fast connections, with throughput reaching 1 gigabit per second. The
technical standard to accomplish this, 802.11ac, already exists, and
devices implementing it are already being built. All of this means we
can rapidly realize these benefits: more robust and ubiquitous wireless
coverage for consumers; more manageable networks for providers; a new
test bed for innovative application developers; and other benefits we
can't even conceive today.
Following the instructions set forth by Congress in the Spectrum
Act, the Commission launched a rulemaking last year to make up to 195
MHz of additional spectrum in the 5 GHz band available for unlicensed
use. We also proposed to allow greater utilization of those segments of
the 5 GHz band already available for unlicensed use. Last summer, I
urged the FCC to move forward with its 5 GHz proceeding in stages,
addressing the easier questions (such as how to modify the service
rules for the UNII-1 band) before moving on to the hard ones.
And at the end of this month the Commission will be taking action.
Although I cannot comment on specifics, I can say that I am pleased
that we will be making the band attractive for commercial Wi-Fi while
safeguarding incumbent users. That means better, faster devices for
consumers, which is all the more important given the growing congestion
in the 2.4 GHz band (which consumers right now commonly rely upon for
Wi-Fi access).
Universal Service Fund.--Another big ticket item in the
Commission's budget is the Universal Service Fund, which disbursed over
$8.36 billion last year. The Fund contains four separate programs,
three of which are capped. The high-cost program has a yearly budget of
$4.5 billion, which is used to keep rural telephone rates
``affordable'' and deploy broadband to areas where the competitive
market would not otherwise go. The E-Rate program, which supports
schools and libraries, had a $2.38 billion cap last year, which is
adjusted each year for inflation. And the rural healthcare program is
capped at $400 million, but spending totaled only $157 million last
year. The only uncapped program is the Lifeline program, which
disbursed $1.79 billion last year, more than double the $817 million
disbursed in 2008. In addition to these disbursements, the Fund spent
$109 million in 2013 on administrative costs (not including the costs
of Commission staff overseeing the program), with the majority ($65.6
million) dedicated to administering the E-Rate program. My testimony
will focus on the high-cost program and the E-Rate program.
High-Cost.--The Communications Act of 1934 makes an important
promise in its very first sentence: Congress created the Federal
Communications Commission to ``make available, so far as possible, to
all the people of the United States . . . a rapid, efficient, Nation-
wide, and world-wide wire and radio communication service with adequate
facilities at reasonable charges.'' We at the FCC take this promise
seriously. That is one reason why the Commission adopted the 2011
Universal Service Transformation Order, which reoriented the Fund away
from supporting telephone service and toward supporting next-
generation, broadband-capable networks.
Fortunately, it looks like the Commission will soon be crossing one
obstacle to rural investment off its books: the quantile regression
analysis (QRA) benchmarks. For over a year, I and many others have
warned that the QRA benchmarks have increased regulatory uncertainty,
chilled the investment climate, and impeded the deployment of broadband
to rural Americans. That said, the benchmarks have been the law for
over 2 years so it was no small matter when Chairman Wheeler announced
a change of course in December. Ending regulatory uncertainty is the
right thing to do, especially given that the QRA benchmarks did not
save the Fund one dollar. I am hopeful that ending the QRA benchmarks
means that bringing next-generation technologies to our Nation's rural
citizens will be a priority during Chairman Wheeler's tenure, and I
look forward to continue working with him to make that happen.
But sometimes it seems that every step forward for rural America is
accompanied by a step back. I am concerned about another aspect of the
Universal Service Transformation Order that is likely to have serious
and unfortunate consequences for rural consumers: the so-called ``rate
floor,'' which was adopted before Chairman Wheeler or I arrived at the
Commission. The rate floor was designed to reduce ``excessive subsidies
for basic phone service,'' but in fact it increases the State-set rates
rural consumers pay without reducing the subsidies that carriers
receive. Specifically, the rate floor offers certain rural telephone
companies Federal universal service dollars to increase customers'
phone bills. So if a company increases its rates by a dollar, it'll
receive an extra dollar for per line from the Fund.
And these rate hikes are not de minimis. Today, the rate floor is
$14 per month, but it is set to go up to $20.46 on July 1 under the
terms of the Universal Service Transformation Order. That's a 46
percent jump for rural consumers, many of whom are still waiting for
the economic recovery to arrive. And for small carriers, it may mean
more serious financial problems. Such a rate shock could send customers
off the network entirely, which means further uncertainty about the
economics of investing in rural America. We should not be adding to the
challenges our fellow citizens face in rural America. Instead, I hope
the Commission will soon freeze the rate floor indefinitely and
reexamine this policy.
There are other steps that we must take to follow up on the promise
of universal service. For example, we have yet to implement phase II of
the Connect America Fund, which is the FCC's primary vehicle for
delivering broadband to the millions of rural Americans without it. The
second phase was supposed to commence at the beginning of 2013 but it
looks like it won't start until 2015 at the earliest. Given that the
Wireline Competition Bureau has been doing yeoman's work to complete
the model necessary for that effort--and given the urgent need for
broadband in the country--we should aim to make sure that effort does
not fall further behind. That means setting out the competitive bidding
process that will occur in areas where price-cap carriers decline
Connect America Fund support sooner rather than later because no part
of rural America should miss the broadband revolution while waiting for
the regulatory dust to settle.
Similarly, it is time for the Commission to start moving forward
with a Connect America Fund for rate-of-return carriers. In
constructing that fund, we must recognize that broadband operators in
rural America today face unique challenges. Rural carriers must
carefully plan their infrastructure over a 10- or 20-year time scale if
they are to recover their costs. Indeed, Congress embedded this
principle into section 254 of the act, including a statutory command
that universal service support be ``predictable.'' What is more, line
loss in rural America is real. As such, we must recognize that direct
support for broadband-capable facilities, within the existing budget,
is critical.
E-Rate.--I am hopeful that, in the next few months, we will bring
about real reform of that program. Established at the direction of
Congress 18 years ago, the E-Rate program is intended to bring advanced
communications services to schools and libraries across America.
In many ways, the E-Rate program has been a success. Internet
access in public schools has almost tripled, and speeds have grown
alongside availability. For example, a 2010 FCC survey showed that 22
percent of respondents were ``completely'' satisfied and another 58
percent were ``mostly'' satisfied with the bandwidth they're getting.
And just last year, 87 percent of educators responding to an
independent survey reported that ``access to adequate bandwidth is
available for robust communication, administrative and instructional
needs'' in ``all'' or ``most'' classrooms on a school campus.
But like all Federal programs, E-Rate has had its share of
difficulties. For applicants, the funding process from start to finish
can stretch for years. To navigate arcane steps like Form 470
competitive bidding, Form 471 Program Integrity Assurance review, and
the Form 500 commitment adjustment process, schools must enlist
specialized E-Rate consultants, draining scarce dollars away from
students and technology.
For parents, the process is so opaque that they cannot know ahead
of time how much funding their child's school might receive and cannot
track whether it is actually spent on enriching the education of their
kids.
For school boards, E-Rate's ``priority'' system (under which things
like paging and Blackberry services for administrators get prioritized
over connecting a classroom to the Internet) distorts their spending
decisions since some services are discounted by up to 90 percent while
others may or may not receive any discount in a given funding year.
For Government watchdogs, there's plenty of waste and abuse to
worry about. For example, one Brooklyn school has gotten millions of E-
Rate dollars over the years including money for Internet access
services--even though the students are not allowed to use the Internet.
And for everyone with a phone line, and who hence contributes to
the program, it's hard to tell what bang we're getting for our
universal service buck--there is no meaningful transparency with
respect to E-Rate spending and no real information on the impact of
that spending.
There is a better way--one which would focus the E-Rate program on
children. To create a student-centered E-Rate program, we need to
fundamentally rethink how we structure the program. That means starting
each school and library with an upfront allocation of funding so they
know how much they can spend and can plan accordingly (a concept a
subcommittee like this one should appreciate). That means establishing
a meaningful matching requirement so that schools and libraries have a
strong incentive not to waste money. That means cutting the red tape so
that the initial application is just one page and there's only one
other form needed before funds are disbursed. That means targeting
funding at next-generation technologies like broadband and Wi-Fi while
still letting local schools set their own priorities. And that means
publishing all funding and spending decisions on an easily accessible,
central Web site so that every parent, every journalist, every
Government watchdog, every American can see just how E-Rate funds are
being spent.
The student-centered E-Rate program I have outlined (a summary is
appended to this testimony) would fulfill E-Rate's statutory mission of
bringing advanced services to schools and libraries across the country.
It would reduce waste, fraud, and abuse in the program and increase
transparency and accountability. By streamlining the rules, we would
also reduce the need for administrative overhead, saving the Government
millions more. And it would free an extra $1 billion for next-
generation services in its first year ($600 million of which is
currently spent each year on basic telephone service and other outdated
technologies), all without collecting an extra dime from the American
people.
Given the potential savings at hand, I do not support increasing
the program's budget at this time, and I am pleased that Chairman
Wheeler appears to be on the same page. For example, last week he said
that ``[s]imply sending more money to the E-Rate program to keep doing
business as it has been for the last 18 years is not a sustainable
strategy.'' I concur. Indeed, under no circumstances should we increase
the size of the E-Rate program without finding corresponding new
savings elsewhere in the Universal Service Fund. We cannot ask
Americans to pay even more in their monthly phone bills, especially
when median household income in this country is lower than it was in
2007.
If we are willing to make the ``hard decisions,'' as Chairman
Wheeler has put it, I believe that real reform of the E-Rate program
can become a reality. A student-centered E-Rate program--that's what
teachers and librarians need, and that's what America's students and
parents are counting on us to deliver.
Infrastructure Investment.--Removing regulatory barriers to the
deployment of infrastructure is another Commission priority. To give
entrepreneurs, investors, and innovators the regulatory certainty they
need to invest in next-generation infrastructure, we need to make sure
that we are not saddling them with last-generation rules. That means
hastening the Internet protocol (IP) Transition and facilitating
wireless infrastructure deployment.
IP Transition.--Almost every segment of the communications industry
is competing to offer newer, faster, and better broadband services.
Telecommunications carriers are upgrading DSL with IP-based technology
and fiber. Cable operators have deployed DOCSIS 3.0 to increase
bandwidth 10-fold. Satellite providers are offering 12 megabit packages
in parts of the country that never dreamed of such speeds. And millions
of Americans--many of whom don't subscribe to fixed broadband service
at home--now have access to the Internet on the go using the mobile
spectrum the Commission auctioned back in 2006 and 2008. Indeed,
according to the State Broadband Initiative of the National
Telecommunications and Information Administration, 98.8 percent of
Americans had access to high-speed broadband as of December 2012. The
common thread knitting all of these changes together is the Internet
protocol (IP), a near-universal way to route and transmit data.
What are the results of all this competition? More choices for
consumers, and major challenges to old business models. Thirty years
ago, most American consumers had access to one network largely run by
one carrier, Ma Bell. Today, Americans are fleeing the copper network.
33.6 million Americans dropped their copper landlines over the past 4
years. About one in seven households with plain old telephone service
over the public-switched telephone network (PSTN) dropped their service
last year alone. And competition is rampant: 99.6 percent of Americans
can choose from at least three wireline competitors, and 92 percent can
choose from 10 or more. The evidence also shows that consumers are in
fact exercising that choice: Interconnected voice over Internet
protocol (VoIP) providers added 14.6 million subscriptions over the
last 4 years. Essentially, voice is becoming just another application
riding over the Internet.
Over a year ago, I called on the Commission to move forward with an
All-IP Pilot Program, one that would give forward-looking companies a
path to turn off their old time division multiplexing (TDM) electronics
in a discrete set of wire centers and migrate customers to an all-IP
platform. Why? Because we cannot continue requiring service providers
to invest in both old networks and new networks forever. Every dollar
that is spent maintaining the networks of yesterday is a dollar that
can't be invested in building and upgrading the networks of tomorrow.
Our goal should be to maximize investment in IP infrastructure so that
high-speed broadband extends to every corner of our country.
I am pleased that, under Chairman Wheeler's leadership, the
Commission adopted an order establishing an Al-IP Pilot Program
consistent with the four guidelines I set forth last year. First,
carrier participation should be voluntary--and the order announced that
``no provider will be forced to participate in an experiment.'' Second,
trials should reflect the geographic and demographic diversity of our
Nation-- and the order sought ``experiments that cover areas with
different population densities and demographics, different topologies,
and/or different seasonal and meteorological conditions.'' Third, no
one can be left behind--and the order declared that ``no consumer [may]
lose[ ] access to service or critical functionalities'' and that
residential and business customers must receive ``clear, timely, and
sufficient notice of any service-based experiment.'' And fourth, we
must be able to evaluate an all-IP trial with empirical data--and the
order sought ``experiments that collect and provide to the Commission
data on key attributes of IP-based services.'' With these core
principles in place, I am optimistic that the trials will be a success.
I am especially happy that the All-IP Pilot Program is moving
forward on a unanimous, bipartisan basis. As I said last year, this
isn't an issue that divides the left from the right or Republicans from
Democrats. Accordingly, the order reflects our consensus that companies
should have the opportunity to go all-IP. What is more, the order
demonstrates that reaching an agreement does not mean compromising your
values. I look forward to continuing our collaborations as we assess
the proposed trials that are already coming in.
Of course, preparing for the IP Transition does not end with
conducting an All-IP Pilot Program. We also need to take a hard look
our regulations in light of the coming transition, if for no other
reason than that the private sector needs flexibility to make
investment decisions based on consumer demand, not outdated regulatory
mandates. Accordingly, I believe four principles should shape our
approach to the overall transition.
First, we must ensure that vital consumer protections remain in
place. For example, when consumers dial 911, they need to reach
emergency personnel; it shouldn't matter whether they are using the
(public switched telephone network (PSTN), a VoIP application, or a
wireless phone. The same goes for consumer privacy protections and
antifraud measures like our slamming rules. Second, we must not import
the broken, burdensome economic regulations of the PSTN into an all-IP
world. No tariffs. No arcane cost studies. And no hidden subsidies that
distort competition to benefit companies, not consumers. We must also
repeal the old-world regulations such as retail tariffing that no
longer make sense in a competitive all-IP world. While they remain on
the books, wholesale expansion to IP may just be too tempting. Third,
we must retain the ability to combat discrete market failures and
protect consumers from anticompetitive harm. Fourth, we must respect
the limits of the Communications Act and not overstep our authority. If
the law does not give us the authority to act, we must turn back to
Congress for guidance rather than venturing forth on our own.
Wireless Infrastructure.--Along with ending the economic
regulations that deter wireline infrastructure investment and delay the
deployment of next-generation networks, we need to address the business
and technical challenges of deploying wireless broadband. Building a
wireless network is expensive enough, but numerous Federal, State, and
municipal regulations can make further deployment difficult or even
prohibitive. To be sure, some oversight is necessary to ensure sound
engineering and safety and to respect environmental, historical, and
cultural concerns. But many procedures simply frustrate, rather than
facilitate, deployment. That ultimately harms consumers who are denied
better and cheaper wireless services.
I am therefore pleased that the Commission moved forward last
September with a Notice of Proposed Rulemaking seeking comment on a
variety of ideas for reducing regulatory barriers to the construction
of wireless infrastructure. In particular, I'd like to highlight three
of them in my testimony this morning.
First, we should make clear that local moratoria on the approval of
new wireless infrastructure violate Federal law. The FCC has already
put in place a shot clock for localities to address tower siting
permits and other building applications. Prohibiting moratoria would
address the tactic some localities have used to evade those deadlines
by adopting an indefinite ``time out'' on the approval of wireless
infrastructure.
Second, we should modernize our rules to exempt distributed antenna
systems (DAS) and small cells from our environmental processing
requirements, except for rules involving radio frequency emissions.
Given their small size and appearance--some small cell equipment can
fit in the palm of your hand, for instance--there is no reason to
subject DAS and small cells to the same environmental review process as
a 200-foot tower. We should similarly update our historic preservation
rules, which add yet more regulatory requirements, in order to
facilitate the deployment of DAS and small cells. It bears noting that
the greater the deployment of wireless infrastructure like this, the
less reliance carriers (and hence consumers) must place on larger,
``macro'' cell sites and the less power networks and devices will
consume.
Third, we should address what happens when a local government
doesn't comply with our shot clock. Currently, if a city does not
process an application within 150 days, the only remedy is to file a
lawsuit. This increases delay and diverts investments away from
networks. To fix this problem, we should supplement our shot clocks
with a backstop: If a locality doesn't act on a wireless facilities
application by the end of the time limit, the application should be
deemed granted. (As a legal matter, I believe the FCC has this
authority following the Supreme Court's decision last May in City of
Arlington, Texas v. FCC.)
There are also other steps that the Commission can take to hasten
the deployment of wireless infrastructure. For example, we have sought
comment on clarifying the scope and meaning of section 6409(a) of the
Spectrum Act, which prohibits State and local governments from denying
certain collocation requests. I hope that we make appropriate
clarifications in the near term. And we are looking for ways to
expedite the deployment of infrastructure to implement positive train
control, as required by the Rail Safety Improvement Act of 2008. I
support moving forward on all these fronts swiftly; the American public
deserves no less.
Net Neutrality.--Given the amount of work the Commission must do to
remove regulatory barriers to infrastructure investment, I hope that we
do not divert our attention to promulgating rules that may in fact
erect new barriers. I am of course talking about ``net neutrality,''
which has apparently returned to the FCC's agenda after the courts
ruled--for the second time in 4 years--that the FCC exceeded its
authority in attempting to regulate the network management practices of
Internet service providers.
Without delving too far into the subject, let me say this. For over
a decade, the Nation's broadband infrastructure has been governed by
four Internet Freedoms, set forth by then-FCC Chairman Michael Powell.
First, consumers should have their choice of legal content. Second,
consumers should be able to run applications of their choice. Third,
consumers should be permitted to attach any devices they choose to the
connection in their homes. And fourth, consumers should receive
meaningful information regarding their service plans. Although our
Nation's broadband marketplace is dynamic and rapidly evolving, these
four freedoms have remained vibrant throughout--they are in a sense the
pillars, the foundation of the market--and they have long received
bipartisan support.
With those principles already entrenched, the FCC should stay its
hand and refrain from any further attempt to micromanage how broadband
providers run their networks. Such restraint is the best way to ensure
that the market--and hence consumers--dictate the future of the
Internet. This, in turn, will encourage innovation throughout the
entire Internet ecosystem and incentivize the continued deployment of
high-speed, quality broadband service. Our goal should be to connect
all Americans with smart networks, not to enact rules that require
networks to be dumb pipes. So let's recognize net neutrality for what
it is: an unnecessary distraction from the pressing need to end
regulatory barriers that stand in the way of ubiquitous broadband.
Media Marketplace.--The media landscape has undergone revolutionary
change in the last few decades. But the FCC's rules have not kept pace
with the realities of the marketplace. Accordingly, since joining the
Commission, I have advocated updating our regulations on a variety of
fronts while at the same time preserving the Commission's commitment to
the core values of competition, diversity, and localism. Today I will
focus on two aspects of our work: reviewing our media ownership rules
and revitalizing the AM radio band.
Media Ownership.--The Commission is required by law to review its
media ownership regulations every 4 years. This cycle's review began in
September 2009 as we announced a series of workshops to begin gathering
information from various stakeholders. Now, more than 4 years later,
our review is still not complete. The time has come for us to launch
our next review, but we have not yet finished the last one. This is
unacceptable and shows a troubling disregard for our legal obligations.
We should bring the current quadrennial review to a close at the
Commission's March 31 meeting.
We should make sensible reforms to our rules so that they reflect
the marketplace realities of 2014 rather than those of 1975. For
example, I supported then-Chairman Julius Genachowski's proposal to
eliminate the newspaper-radio and radio-television cross-ownership
rules. I also believe that the time has come to eliminate the
newspaper-television cross-ownership rule. In this day and age, if you
want to operate a newspaper, we should be thanking you, not placing
regulatory barriers in your path. I am a realist and understand that
whatever reforms we end up implementing will not go as far as I might
prefer. But I do believe that we should be able to find common ground
and move forward with some sensible reforms.
Unfortunately, it appears that the Commission is set on tightening
our media ownership rules in a piecemeal fashion rather than engage in
the holistic review that Congress envisioned. Most disturbing is a
proposal to make Joint Sales Agreements (JSAs) attributable under our
local television ownership rule. As broadcasters' share of the
advertising market has shrunk in the digital age, television stations
must be able to enter into innovative, pro-competitive arrangements in
order to operate efficiently.
JSAs allow stations to save costs and to provide the services that
we should want television broadcasters to offer, particularly in our
Nation's mid-sized and small media markets. In my home State, for
example, a JSA between two Wichita stations enabled the Entravision
station, a Univision affiliate, to introduce the only Spanish-language
local news in Kansas. Across the border in Joplin, Missouri, a JSA
between Nexstar and Mission Broadcasting not only led to expanded news
programming in that market but also nearly $3.5 million in capital
investment. Some of that money was spent upgrading the stations'
Doppler Radio system, which probably saved lives when a devastating
tornado destroyed much of Joplin in 2011.
JSAs are also an important tool for enabling minority ownership of
television broadcasters. Although the Commission has not studied the
link between joint sales agreements and ownership diversity, my
office's own review estimated that 43 percent of female-owned and 75
percent of African-American-owned full-power commercial television
stations currently are parties to JSAs. For example, WLOO serves the
Jackson, Mississippi market and is owned by Tougaloo College, a
historically African-American college. WLOO is also party to a JSA with
another Mississippi station, WDBD, which, in the words of WLOO's
general manager, ``has permitted WLOO to become a real success story,
enabling a new, minority station owner to reinvigorate this station and
expand its local services.'' Without the JSA, WLOO reports that it
would have to stop creating locally-produced programming so that it
could redirect that money to hiring a small sales staff, and its
general manager is worried that it may not have the funding to survive
an equipment failure.
For stations in smaller markets like Wichita, Joplin, and Jackson,
the choice isn't between JSAs or having both television stations
operating vibrantly on an independent basis. Rather, the real choice is
between JSAs and having at most one television station continue to
provide news programming while the other does not. Indeed, the
economics suggest that there likely will be fewer television stations,
period.
Another piecemeal change to our media ownership rules was teed up
in September with a notice of proposed rulemaking (NPRM) proposing to
eliminate the ultra high frequency (UHF) discount portion of our
national television ownership rule. Given the transition from analog to
digital television, there is a strong case for ending the UHF discount;
UHF signals are not inferior to very high frequency (VHF) signals in
the digital world. Unfortunately, the Commission's NPRM went about it
the wrong way.
We should not modify the UHF discount without simultaneously
reviewing the national audience cap, which currently stands at 39
percent. The NPRM recognized the interdependent relationship between
the national audience cap and the UHF discount, acknowledging that
``elimination of the UHF discount would impact the calculation of
nationwide audience reach for broadcast station groups with UHF
stations.'' Or, to put the matter succinctly, eliminating the UHF
discount would substantially tighten the national ownership limit. For
example, one company that is now more than 19 percentage points under
the cap would be only 3 points below the cap if the UHF discount were
eliminated.
I was therefore disappointed that we proposed to end the UHF
discount without asking whether it is time to raise the 39 percent cap.
Indeed, this step is long overdue, notwithstanding any change to the
UHF discount. The Commission has not formally addressed the appropriate
level of the national audience cap since its 2002 Biennial Review
Order, and it has been about a decade since the 39 percent cap was
established. The media landscape is dramatically different today than
it was then, and I wish that the NPRM had addressed the national
television rule in a comprehensive manner.
AM Radio.--This past October, the Commission launched an AM Radio
Revitalization Initiative, something I had championed for more than a
year. It's been over two decades since we last comprehensively reviewed
our AM radio rules. Over that time, the AM band has struggled.
Interference problems, declining listenership, financial challenges for
minority-owned broadcasters, and other factors have brought the band
low. But millions of Americans--myself included--still rely on and
believe in AM radio. So this initiative is close to my heart.
The Commission's NPRM embraced a sensible two-stage strategy for
improving AM radio service. First, we proposed several ways to give AM
broadcasters relief in the short term. For instance, we suggested a
number of changes to our technical regulations, such as eliminating the
``ratchet rule,'' which effectively prevents AM broadcasters from
improving their facilities. And perhaps most importantly, we sought
public input on letting AM stations apply for new FM translators so
that it is easier for them to reach listeners with a quality signal.
I'm the first to acknowledge that these and other proposals will not be
an immediate panacea for the difficulties confronting the AM band. But
based on the conversations I have had with AM broadcasters across the
country during the past year, I am convinced that they can make a
substantial, positive difference to numerous AM stations.
Second, we also invited the American public and stakeholders to
share their proposals for the long-term future of the AM band. What
steps can the Commission take so that there will be a vibrant AM radio
service 10 or 15 years from now?
The comment cycle closed last week, and we received many insightful
and creative submissions from broadcasters, engineers, and others with
an interest in AM radio. While we continue to review those comments, I
am optimistic that the Commission will act quickly to implement an
initial set of reforms to help the AM band. Indeed, my office's quick
review of the comments that were filed suggests overwhelming support
for many of the Commission's proposals.
Connecting Americans to 911.--Federal law designates 911 as ``the
universal emergency telephone number within the United States for
reporting an emergency to appropriate authorities and requesting
assistance.'' So when Americans dial 911, they expect and deserve to
reach emergency personnel who can assist them in their time of need.
Unfortunately, a recent tragedy shows that this is not always the case.
On December 1, Kari Rene Hunt Dunn met her estranged husband in a
Marshall, Texas hotel room so that he could visit their three children,
ages 9, 4, and 3. During that encounter, Kari's husband forced her into
the bathroom and began stabbing her. Kari's 9-year-old daughter did
exactly what every child is taught to do during an emergency. She
picked up the phone and dialed 911. The call didn't go through, so she
tried again. And again. And again. All in all, she dialed 911 four
times--but she never reached emergency personnel. Why? Because the
hotel's phone system required her to dial 9 to get an outside line.
Tragically, Kari died as a result of this vicious attack. Kari's
daughter behaved heroically under horrific circumstances. But the
hotel's phone system failed her, her mother, and her entire family.
At first, I was shocked to hear that such a situation could exist.
But when you think about it, it's probably the case in many places--
hotels, office buildings, college campuses, and schools--that use
``multiline telephone systems'' or MLTS. But the truth of the matter is
that we don't know the extent of the problem. That's why I launched an
inquiry in January to gather the facts. As a first step, I sent a
letter to the chief executive officers (CEOs) of the 10 largest hotel
chains in America. As we continue to examine the information provided
by those companies, I am encouraged by their willingness to respond and
work with us to ensure everyone can reach a 911 operator when they need
to. I am also encouraged that the American Hotel and Lodging
Association, which represents 9 of the top 10 chains and many, many
more hotels and motels, has convened an internal task force to address
the issue.
So what is the issue, precisely? In the case of Kari Hunt Dunn, it
was what we call the ``Direct Dial'' issue--whether somebody picks up
on the other end if you dial 911. But there are a couple of
accompanying issues that come along with it. First is the question of
who should pick up the other end of the line. Should it always be
someone at the Public Safety Answering Point (PSAP)? Or in some
buildings, should it be an on-site security office or front-desk clerk?
And if the call does to go the PSAP, how does someone in the building
find out that a call has been placed so that he or she can provide more
immediate assistance or guide first responders to the correct room?
The second question is location. Do the first responders know where
the call is coming from? In large office buildings or complexes, on
college campuses, and in hotels, it's not enough for first responders
to show up at the front door, if one even exists. Conveying accurate
location information to these emergency personnel is critical. If
someone calls 911 in this building, for instance, think about how long
it could take emergency medical technicians (EMTs) to find a person in
distress if they don't know exactly where to go.
We can't erase the tragedy that occurred in a Marshall, Texas hotel
room last December. But we can work to prevent such tragedies from
happening again, and that's what I am determined to do. I am confident
that everyone here shares my belief that when an emergency strikes,
people, whether in a hotel or office building, should be able to reach
someone who can help.
Process Reform.--Before concluding, I would like to touch on a
subject that affects all areas of the Commission's work: process
reform. The U.S. House of Representatives recently passed the Federal
Communications Commission Process Reform Act of 2013, H.R. 3675. I hope
that this commonsense bill, as well as the Federal Communications
Commission Consolidated Reporting Act of 2013, H.R. 2844, which the
House of Representatives passed 415 to 0 back in September, will soon
be enacted into law. Together, these bills squarely address the need to
modernize the FCC to reflect our dynamic, converged communications
marketplace. And they would eliminate outdated mandates on the agency,
streamline its operations, and make it more accountable to the public.
These are two pieces of straightforward, good-government legislation,
and I hope that the President will soon have the opportunity to sign
them.
The FCC, however, should not and need not sit still waiting for
Congress to act. We should do what we can on our own to improve our
internal processes. Our goal should be clear: The FCC should be as
nimble as the industry that we oversee. All too often, proceedings at
the Commission needlessly drag on for many years. I am encouraged that
Chairman Wheeler has said that process reform is a priority, and many
of the reforms proposed in last month's staff process reform report are
a good starting point.
Indeed, a variety of reforms would improve the Commission's
performance. We should streamline our internal processes where
possible. For example, let's adopt a procedure akin to the U.S. Supreme
Court's certiorari process for handling applications for review--but
one that maintains accountability by giving each of the five
Commissioners the opportunity to bring a Bureau-level decision up for a
Commission vote. Let's speed up our processing of smaller transactions.
Let's establish more deadlines, such as a 9-month deadline for ruling
on applications for review and petitions for reconsideration along with
a 6-month deadline for handling waiver requests--and let's ensure our
internal calendar sets a schedule for getting those items prepared and
circulated in time so that we can meet those deadlines. When we adopt
industry-wide rules, let's more frequently use sunset clauses that
require us to eventually revisit the wisdom of (and, if necessary,
revise or repeal) those rules.
We should also become more transparent to the public and to
Congress about how long it takes the Commission to do its work. One way
to do this would be by creating an FCC Dashboard on our Web site that
collects in one place key performance metrics. Let's keep track of how
many petitions for reconsideration, applications for review, waiver
requests, license renewal applications, and consumer complaints are
pending at the Commission at any given time. And let's compare the
current statistics in all these categories against those from a year
ago, from 5 years ago, so everyone can see if we are headed in the
right direction. If we make it easier for others to hold us accountable
for our performance, I'm confident that we would act with more
dispatch.
My emphasis on acting promptly is not just about good government.
It is also about the impact that the FCC's decisions (or lack thereof)
have on our economy. As the pace of technological change accelerates,
so too must the pace at the Commission. We can't let regulatory inertia
frustrate technological progress or deter innovation.
Finally, I should note that while all Commissioners are asked to
vote on a budget proposed by the Chairman that is delivered to the
Office of Management and Budget, I have never been asked to participate
in the development of the agency's budget request. With that context in
mind, I will do my best to respond to any questions you may have.
appendix--a student-centered e-rate program
A student-centered E-Rate program focuses on five key goals:
(1) Simplify the Program
-- Schools need to fill out only two forms: an initial application
and a report back on how the money was spent
-- Initial application can be no more than one page
-- Universal Service Fund (USF) administrator does all the
calculations, reducing the burden on schools
-- Less red tape means fewer delays, more predictability, and no
need to hire consultants
(2) Fairer Distribution of Funding
-- Allocates E-Rate budget across every school in America; every
school board and parent knows how much funding is available on
day one
-- Schools receive money on a per-student basis; funds follow
students when they change schools
-- Additional funds allocated for schools in rural and/or low-income
areas as well as small schools to account for higher costs and
different needs
(3) Focus on Next-Generation Technologies for Kids
-- Eliminates disincentive to spend money on connecting classrooms
-- No more funding for stand-alone telephone service
-- Students come first; funding directed only to instructional
facilities, rather than non-educational buildings like bus
garages
-- Equal funding for all eligible services; local schools (not
Washington) set priorities
(4) More Transparency and Accountability
-- Creates Web site where anyone can find out exactly how any school
is spending E-Rate funds; enables parents, schools boards,
press, and public to conduct effective oversight
-- School district superintendent or school principal must certify
that E-Rate funds were used to help students
(5) Fiscal Responsibility
-- Ends the ``more you spend, more you get'' phenomenon: Schools
given fixed amount of money and must contribute at least one
dollar for every three E-Rate dollars they receive
-- Better incentives, reduced waste, and less red tape allows
program to accomplish a lot more with the same amount of money;
over $1 billion more in first year provided for next-generation
technology
-- Caps overall USF budget before any increase in E-Rate budget; any
expansion in E-Rate must be accompanied by corresponding cuts
elsewhere in USF
------------------------------------------------------------------------
Legacy E-Rate Student-Centered
Program E-Rate Program
------------------------------------------------------------------------
Spending Priorities.............. --Prioritizes --Focuses on next-
voice telephone generation
service, long- services; no
distance calling, funding for
cell phone stand-alone
service, and telephony
paging ahead of service
connecting --All eligible
classrooms with services treated
broadband equally
Internet access (including
--Funding connecting
available for non- classrooms);
instructional local schools,
facilities such not Washington,
as bus garages should set
and sports priorities
stadiums --Students come
first; funding
directed only to
instructional
facilities
------------------------------------------------------------------------
Process.......................... --Complicated --Simple
--Schools face up --Only 2 forms
to 6 separate required;
forms plus initial
outside review by application is
an approved only one page
planner --Streamlined
--Schools must rules eliminate
spend money on need for
consultants to consultants
navigate web of --USF
rules such as the Administrator
28-day rule, the does all the
2-in-5 rule, and calculations
discount
calculations
--Backlog of
appeals stretches
back a full
decade
------------------------------------------------------------------------
Funding Allocation............... --Funding tied to --Funding follows
discounts; higher- the student
discount schools --Funding
get more funding allocated to all
overall and schools based on
funding for more student
services population,
--Complex rules adjusted for
encourage challenges that
arbitrage and schools in rural
gaming and low-income
--Differences in areas face
spending among --Additional
States and within allocation for
States are very small
largely arbitrary schools and
--More than $400 schools in
million lost each remote areas
year due to red like Alaska
tape --Much less money
lost as a result
of red tape
means more money
for students
------------------------------------------------------------------------
Financial Planning............... --Funding --Funding
available to a available
school may change immediately to
dramatically from all schools,
1 year to the independent of
next decisions made
--Funding tied to by other schools
decisions of --Minimal
every other fluctuations
school in the from 1 year to
country the next allow
--Schools must bid for long-term
out services financial
before they know planning
if funding is
available
--Funding not
secured until
months or even
years after
funding year
starts
------------------------------------------------------------------------
Fiscal Responsibility............ --The more you --Fixed pot of
spend, the more money for each
you get school and
--Some schools matching
have little skin requirement of
in the game by one dollar for
receiving up to a every three from
90 percent E-Rate promotes
discount prudent spending
--Priority and --Reducing
group-discount wasteful
rules discourage spending allows
long-term, the program to
efficient-scale accomplish a lot
purchasing more with the
--Cap on E-Rate same amount of
but not overall money; over $1
Universal Service billion more
Fund provided in
first year for
next-generation
technology
--Cap overall
Universal
Service Fund
before any
increase in E-
Rate budget
------------------------------------------------------------------------
Transparency and Accountability.. --Funding --Funding
available to available to
schools not schools publicly
disclosed until disclosed
after the fact immediately to
--Parents can't go enable parents,
online to see school boards,
precisely how a press, and
school's E-Rate public to
funds are being conduct local
spent; online oversight
catalog just --Schools to
shows funding for report online
each recipient exactly what
divided into four they're getting
broad categories for E-Rate
--Relies on dollars; school
complicated rules administrators
and Federal must certify
audits and it's spent on
investigations students
for --Transparency
accountability and local
control are key;
Federal
oversight a
backstop
------------------------------------------------------------------------
Relation to Libraries............ --Libraries --Libraries
receive about 10 receive about 10
percent of E-Rate percent of E-
funding Rate funding
------------------------------------------------------------------------
Senator Udall. Thank you very much, Commissioner Pai. Thank
you both for your testimony.
We are going to proceed with 7-minute rounds for each
member, and then we will go through multiple rounds if the
members desire, however long.
Chairman Wheeler, I wanted to focus--you have mentioned
this, both of us have mentioned the $36 million increase, which
is a 10 percent increase, and you have discussed a little of
that. I am wondering if you can talk a little bit--with these
additional funds, will they improve the FCC's ability to carry
out its mission? And what would be the impact if you didn't
have those funds?
I am trying to look at the other side of it. You put, I
think, very solidly forward the positive side. What would be
the impact of not doing that?
FCC FUNDING
Mr. Wheeler. Thank you, Mr. Chairman.
You know, I am 5 months on the job now. And having come
from the private sector, I am still learning the realities of
Government. But one of the things that we have been trying to
focus on is a basic concept of efficiency and how do you make
things work and work well?
As I indicated previously, the IT situation at the FCC is
intolerable. It is a situation that no American business would
allow to exist. We have begun to put in place solutions. We
have brought in a crackerjack chief information officer (CIO)
who understands what needs to be done. Absent the resources to
do it, however, we are going to sit there with incompatible
devices, with the inability to have common databases.
We have--just to give you an example--98,000 different data
points inside our agency that make it totally impossible to
build the database, to relate back and forth. We have got to
consolidate all of those. So, clearly, one thing is how do we
become more efficient?
And one of the frightening things, when you look at it from
a budgeting point of view, we are asking for $13 million to fix
IT. It is going to cost us more than that the next 2 years for
baling wire and glue if we don't. So, clearly, there is cause
and effect here, and there are results that come from it.
Like Commissioner Pai, I strongly support what you have
proposed insofar as an online consumer database. We just
couldn't do it--we didn't have the tools to do it. Yes, it
ought to be online. Yes, it ought to systematized. It is
ridiculous.
And as Commissioner Pai indicated, we are looking at other
process reform kinds of activities. If we don't deal with the
challenges presented by an $8.4 billion program that is being
overhauled in all of its components and enforce our rules and
our expectations, as is our fiduciary responsibility, then we
won't be carrying out our fiduciary responsibility.
Twenty-five people enforcing an $8.4 billion program
doesn't make sense. So what I have tried to do, sir, is to--is
to bring to the job a businessman's approach and say, okay,
what are the challenges? How do we fix them? And then let us
demand the results on that.
RURAL BROADBAND
Senator Udall. Thank you very much for that.
In my second question, I wanted to focus on rural
broadband. And as you are well aware, this is a really, really
critical challenge.
And I am wondering, how will you continue to advance
universal service reform to ensure that unserved areas are
targeted for broadband support? How will you balance the need
to connect areas with no broadband service while upgrading
areas with slow service? And how will the additional staff
requested in the budget help achieve these goals?
Mr. Wheeler. So you said the key word, ``balance.'' And one
of the joys that I have learned and that you all experience
daily is making choices and how do you balance between various
things.
Yes, we have to get service into unserved areas. Yes, we
have to make sure that in areas where there is service, that
that service is expanding in its quality and speed. Yet we have
a finite pot. And so, that balance is crucial.
My concern and why we have asked for additional FTEs for
the Wireline Competition Bureau is that these are huge issues
to have these balancing of interests and to have fairness
across an incredibly diverse country.
And what we have--we are constrained in the Wireline Bureau
because of all of the issues that we are dealing with. And when
we pull people away to do enforcement, we are pulling them off
of things like this. And we need to make sure that we have the
right kind of enforcement activities so that we are then are
not robbing Peter to pay Paul in the rural broadband kinds of
decisions that have to be made.
Senator Udall. The thing that is striking to me from your
2012 Broadband Progress Report is 19 million Americans lack
access to broadband. That is 6 percent of the population. Rural
Americans are 13 times more likely to lack access to broadband
than Americans in urban areas.
My State of New Mexico ranks 44th among 50 States when it
comes to broadband access, and over 14 percent of New Mexicans
do not have access to broadband. So we appreciate your
initiatives, and we appreciate you working to really push us
forward in that area.
And with that, Senator Johanns, I call on you for your
first round of questions.
FTE DEPLOYMENT
Senator Johanns. Thank you, Mr. Chairman.
Chairman Wheeler, as you have pointed out, one of the most
significant increases in your budget is the 45 FTEs anticipated
in the Universal Service Fund program, if you will. You have
also acknowledged that the FCC budget request essentially parks
most of the new USF hires in the Wireline Competition Bureau,
but I think you are anticipating that they could be spread
elsewhere.
For example, I could see they could go to the Wireline
Bureau, the Enforcement Bureau, the Office of Inspector
General, the Office of Managing Director. The difficulty that
creates for us who are supposed to be providing some oversight
here is how are these people going to be deployed? So I have a
couple of questions for you.
Can you give me--give the subcommittee here more
specificity as to where you think you are heading here maybe
today, but also as this rolls out?
And then the second thing I want to ask because your
testimony prompts this question, with the sorry state of your
IT as you have described it, does it make sense to try to get
that up to speed and allocate resources there more aggressively
and think about FTEs in a future budget request? So those are
my questions.
Mr. Wheeler. Thank you.
Senator Johanns. And Commissioner, I will ask you to offer
some thoughts on that, too.
Mr. Wheeler. Thank you, Senator.
Let me be specific on where the people go. Fifteen people
into the Enforcement Bureau, which is almost doubling the
number of enforcement people for universal service. Ten people
into the Office of Managing Director.
And the reason that is important is that the Universal
Service Administrative Corporation, which is the structure, the
quasi-independent structure that disburses the funds, reports
in through the Office of the Managing Director, and that is
where you need to have auditing capability and oversight
capability there. So there are 10 people for that.
Six people for the Office of Inspector General, and as you
know, they run their own shop.
Senator Johanns. Right.
Mr. Wheeler. We don't dictate how they do that.
And then the remaining 14 are for the Wireline Competition
Bureau, which is for multiple reasons. One, what happens in
enforcement is you get a series of appeals and things like
this, and that gets handled by the Wireline Bureau. And also,
as I was saying to Senator Udall, we have been robbing Peter to
pay Paul to do enforcement. So that is the specific breakout of
it.
Now insofar as your question about IT versus enforcement, I
wish that I could make that decision, sir. But I don't see
how--I mean, I think that we have got two fiduciary
responsibilities here.
One is to make sure that $8.4 billion is appropriately
spent. And with all respect, I think that we have some catching
up to do on our oversight and enforcement of those programs.
And we are in the process of modernizing.
And second, as you suggested, the IT system, I mean, we
just simply cannot go on this way. Here is a little interesting
fact. As a result of my being here today and being in the news,
we will see a precipitous increase in the amount of attacks on
the FCC Web site, just because people say, ``Oh, FCC, let's
go.'' We cannot tolerate that.
If we have responsibility for the economic engine of the
21st century, we can't be sitting here, one, without
capabilities and, two, exposed as we are. So the choosing
between these is incredibly difficult.
Senator Johanns. You know, Mr. Chairman, your observation
is correct. You know, back in my U.S. Department of Agriculture
days, one of the most surprising things I learned in the first
days of being there is how aggressively the system was
attacked. Every minute, every day, it was just constantly being
pinged by somebody who was trying to find a weak point.
So that is what prompted my question. If you had to make
tough choices, and I know you would like to do it all, where
would you go? Would it be IT, or would you go to employees, the
new ones that you have requested?
Mr. Wheeler. And I appreciate what you are saying. I think
we have a fiduciary responsibility on both counts. I can't sit
here and say to you, sir, and members of the committee, that we
can allow enforcement to continue as it has on the Universal
Service Fund and all its components.
I have stood up a special strike force to be able to deal
with waste, fraud, and abuse. There are two things. Both of
these issues undermine the basic foundation of both activities.
If you don't have a good IT system, it undermines your ability
to get things done at the agency. And if you don't have a good
enforcement system, it undermines the credibility of the
program itself. I wish I could cut the baby in half, sir.
Senator Johanns. Commissioner Pai, do you have any
thoughts?
USF FUNDING
Mr. Pai. Senator, just briefly, I think the exchange you
have just heard is reflective of the difficult balance that has
to be struck. On one hand, the FCC has to vindicate the public
interest. On the other hand, the American people deserve and
expect a measure of fiscal responsibility, and that is a
difficult balance to strike in any situation.
I think it also comes in the context of the overall cap in
domestic discretionary spending, which is slated to increase,
as you know, only by 0.1 percent. And so, I think it is
incumbent on us, both to justify the proposed increase and to
devote those resources that are approved to worthy causes.
With respect to USF enforcement, I, of course, support
robust enforcement of the agency's rules and the law. I,
myself, have not been presented with a very specific plan about
how those resources would be deployed in terms of the
particular tasks the particular employees would be devoted to.
Would it be time limited or permanent, et cetera? But I
certainly look forward to working with the Chairman and this
committee on that regard.
With respect to IT spending, I do agree that we need to
devote more attention to our IT systems. For example, our
internal tracking system, among other things, is rather slow,
shall we say. A charitable way of putting it. And so, I think
it would help us operate more efficiently, deliver better
results for the American public if that were speedier.
On the other hand, I also think it is important for us to
use the IT spending resources we get more effectively. And so,
for example, we spent a great deal of money on the FCC Web
site. It is a Web site that many people find incredibly
difficult to use. More often than not, people actually click
through to the old Web site, which looks like it was, you know,
cutting edge back in 1998. I myself do that.
And so, I think it is important for us to focus on the IT
priorities that really matter and to make sure that that
balance between the public interest and fiscal responsibility
always is maintained.
Senator Johanns. Mr. Chairman, I have some more questions,
but I will wait until the next round.
Senator Udall. Senator Moran.
Senator Moran. Mr. Chairman, thank you very much.
Mr. Chairman and Commissioner, thank you very much for
being here.
Senator Udall, thank you for having this hearing.
We had a hearing on the FCC in which we had the Chairman
and a number of the commissioners here 2 years ago before you
were the chairman and when I sat in the chair of Senator
Johanns. That was the first hearing this subcommittee had had
in 9 years on the FCC.
And I think this is--your agency is one of the most
important. You happen to have three Senators here who represent
pretty rural States, and I appreciate the focus that we can
bring to this attention. And I thank you for your leadership.
On IT acquisition, Senator Udall and I are interested in
trying to determine how to have a system of IT acquisition that
is well founded across the Federal Government. And I am going
to submit for the record a number of questions in writing about
IT acquisition at the FCC.
In response to certainly Senator Johanns' question, what I
see, Mr. Chairman, is that you have found two areas in which
you think there is a need for additional funding, two that are
priorities. Hard to differentiate which one has the highest
priority.
In your short time that you have been Chair of the FCC,
have you found places that the FCC is spending money that it
should not or does not need to or is a low priority?
Mr. Wheeler. Yes. I think the issue that we have is, again,
when I came on, what I discovered was about 70 percent of the
budget is people, without much flexibility in the people other
than moving desks around from one assignment to the other. And
so, as our priorities change, what we end up doing is
reassigning people rather than seeking new budgets or things
like this.
So, yes, we have had some dramatic changes from--in the
Wireline Bureau, from narrowband activities being repurposed
into broadband activities, being repurposed into rural
broadband activities in particular.
In the Wireline Bureau things are being repurposed into the
new Internet protocol transition that is taking place in
networks. I mean, something as current as this morning, sir.
The matter of what are the rights of traditional telephone
companies operating on twisted copper pairs to end their
service and say we are going to go over to an IP service that
can affect the ability to power the phone in the middle of a
tornado in Kansas, can affect the ability of a burglar alarm to
communicate and other kinds of things. We are having to switch
resources.
So what I am trying to say, in an answer to your question,
is we are constantly reprioritizing. It doesn't show up like a
business account normally does in a line-by-line kind of
operation because what we are doing is moving existing bodies
back and forth among tasks.
RURAL BROADBAND
Senator Moran. When you and I first met, Mr. Chairman, the
initial conversation, you were going through the nomination
process.
Mr. Wheeler. Yes, sir.
Senator Moran. The first conversation, we had several
topics, but rural broadband is often front and center with me.
You indicated in a House hearing--and I appreciate that
conversation. You said things that I like to hear, and you
followed through with changes in the order of 2011.
You indicated in a House hearing that the QRA would be
altered. And my question is, can you give us an update on your
plans? What will replace the QRA? How long of a term strategy--
what is the long-term strategy in regard to Universal Service
Fund?
Mr. Wheeler. The long-term strategy for the Universal
Service Fund, we could be here past lunch. But first of all, I
thank you for the kind words and the credit for the change
decision on the QRA and particularly, as you pointed out, that
it was a unanimous decision out of the Commission.
But I know you raised this, and believe me, you weren't the
only member of this body or the other body that raised it with
me. So I had to dive in and learn about it. And you know, the
QRA was a really well-intentioned, well-meaning pursuit of
perfection. And like everything else in life, you know, the
perfect is the enemy of the good. And the complexities just
went out of control. And so, my comment was, ``Timeout, let us
stop this.''
Now the question is, what are we going to replace it with?
There are multiple proposals that have been submitted by rate-
of-return carriers and their various representatives. We are
trying to sort through those right now.
I can't tell you what the answer to that is going to be
right now. We have just reverted to the previous process before
the QRA and continue working on the old allocation
methodologies.
But we will--I believe the record is just in the process of
closing, if it hasn't just closed. And we will take all of
those and try and piece them together.
The interesting thing to me, though, is that there are
different approaches being proposed by the same kinds of
carriers, which again puts us back in this position of, okay,
how do you make decisions or how do you say, okay, here is
another alternative that we ought to be looking at?
Senator Moran. Timeframe?
Mr. Wheeler. I hope that we get done with that in the next
6 months.
Senator Moran. Mr. Chairman, I used most of my time
complimenting you, but I assume that the time still has
expired. I am glad we are having another round.
Thank you.
TRIBAL ISSUES
Senator Udall. Okay. We will go for another round here.
You mentioned QRA, and I also, I think, communicated with
you that we welcomed your plan to scrap that. In the case of
New Mexico, I think that hurt many small rural telephone
cooperatives, and so we appreciate that effort there.
Wanted to talk a little bit about tribal broadband and the
FCC Office of Native Affairs and Policy, Chairman Wheeler. I
want to express my appreciation to the Commission's efforts to
address the digital divide facing Native American communities.
Telephone access on tribal lands still lags far behind the rest
of the country.
By the FCC's own report, the number of people without
broadband access on rural tribal lands is eight times worse
than the national average. This digital divide creates real
hardships for people. We know that. We see it on a firsthand
basis in visits out in New Mexico in these rural areas. And it
is also a barrier to economic development, which is obviously
crucial.
So I support the recent positive developments, such as the
work of the FCC's Office of Native Affairs and Policy. I am
concerned, however, that the FCC's budget request does not
include specific funding to support this office's critical
mission for Indian Country, which encompasses, as you know, 565
federally recognized tribes, approximately 231 federally
recognized Native Alaskan entities, and about 38,000
beneficiaries of Hawaiian homelands.
Can you explain to me how the FCC budget request will
address the telecommunication challenges facing Native American
communities and how high a priority are tribal issues to you?
Mr. Wheeler. Yes, sir. Thank you.
The only reason it isn't spelled out in the budget is that
you don't spell out offices. But I can assure you that the
$300,000 that this subcommittee has in the past suggested and
that was affected by sequestration is definitely in there and
will be appropriately spent.
Insofar as our policy with regard to tribal lands, I met
probably 3 weeks ago with leaders of the Native American
community, and I told them several things. First of all, I
learned something. I learned about the concept of trusteeship
and how I am a trustee and I didn't know I was. And I learned
about how the concept of consultation is not the concept--is
not the use of the word that I have always grown up using.
There are specific responsibilities associated with that.
And I committed to these leaders and I committed in front
of their large meeting several things. One, that we would
improve the consultations. Two, that I took the trusteeship
seriously. And three, that I wanted their help on three
specific goals. One is improving broadband in Indian country.
Two is dealing with the question of access to the spectrum that
passes over Indian country. And three is assuring the diversity
of voices, which is the question of priority licensing for
radio stations that operate in Indian country.
I also told them that we would refresh and strengthen the
Native Nations Broadband Task Force and that I would physically
be in Indian country addressing these issues with the people.
I also noted to them in passing that because of my son, I
am probably the only FCC Chairman that has ever attended
powwows on Indian reservations from the Dakotas down to
Arizona. Unfortunately, never in West Virginia--never in New
Mexico, Senator.
Senator Udall. Thank you.
And I think, I know my two Senators who are up here on the
dais with me understand a lot of these tribal and Native
American issues. But you are absolutely right. The trust
responsibility is one that is there, Federal Government with
the tribal communities, and needs to be one that is respected
and worked with and understood.
And also consultation. I mean, it is a different kind of
consultation, and that is why the office we have is so
important. Because the folks in there know and understand that.
They reach out in a very significant way and involve all of
these many communities across the United States to participate
and be a part of the dialogue, among many other things. So
thank you very much for that.
I am going to try to get one more question in here on E-
Rate, and I mentioned the importance of E-Rate in my opening
remarks, and I am excited about the potential innovations to
help improve student achievement. Could you expand on your
testimony about how E-Rate could be modernized to better meet
the needs of schools in the current broadband era?
Mr. Wheeler. Yes, sir.
We need to focus on a 21st century goal, which is high-
speed broadband to schools. When the E-Rate was put in place in
1996, the world was a little different. We were talking about
dial-up modems then. And the idea of connecting schools was
quite different.
We are in a situation today where we are spending $2.4
billion on the E-Rate, and over half of that is not going to
high-speed broadband. Now over the years, paying for pagers,
paying for dial-up voice service, paying for cell phone
service, things like this were logical. But the world has
changed, and I am again back to--we have got to make decisions
on how we spend a finite pot of money.
So we are in a process right now of developing a new
rulemaking, which we will bring to the Commission this summer,
that modernizes the E-Rate program to focus on the delivery of
broadband as a priority. To make sure that rural America
doesn't end up dealing with the leftovers as it often has in
the P2, the Part 2 of the program--making sure that it is less
burdensome on the schools.
I mean, it is--first of all, back to the IT issue, it is
done on paper. It is really ridiculous in the way it is done.
And it is done annually. Continuing on, we need to make sure
that there is efficiency in the way in which the program is
both administered at our level and at the local level. And that
the buying is done right, that we emphasize buying consortia
who can get better prices and that we create a structure that
does that. And that is what we are doing in this new
modernization order.
Senator Udall. Thank you very much.
Senator Johanns.
Senator Johanns. Thank you, Mr. Chairman. Just a couple
more questions.
Let me, if I might, Chairman Wheeler, shift gears a little
bit here to positive train control.
Mr. Wheeler. Yes, sir.
Senator Johanns. My understanding is that the FCC has put
together a proposal known as program comment that is intended
to function as an amendment to the FCC's 2004 programmatic
agreement. I understand that FCC's licensing authority over
spectrum necessary for positive train control triggers an FCC
role in the infrastructure.
Why would the FCC not be able to recommend to the Advisory
Council on Historic Preservation (ACHP) that the utility poles
that are necessary here in the railroad rights-of-way be
excluded from the historic preservation review? Wouldn't the
ACHP exempt activity where the potential effects on historic
properties are foreseeable and likely to be, de minimis,
minimal and not adverse? And could you--do you feel you could
make that recommendation to them?
And I guess what I am looking for here, we know we have got
a big problem out here. You must carry this around in the back
of your mind as the must-do checklist for the next few months.
Isn't there a way to put some streamline behind this, and
because at the end of the day, it needs to get done, right? We
all face that.
Mr. Wheeler. Yes, sir, Senator.
And it is not in the back of my mind. Yes.
Senator Johanns. Front and center, yes.
Mr. Wheeler. The points you make are all spot-on. There are
two roles the Commission has in positive train control (PTC).
One is spectrum, and the other is antenna siting. I think on
the spectrum side, we get pretty good marks because we
facilitated the transfer of spectrum. We facilitated the
sharing of spectrum. That is working.
As you point out, the National Environmental Protection Act
and the National Historic Preservation Act have specific
provisions that say that there needs to be tribal sign-off on
any antennas.
Now I came out of the wireless business. When you are going
one-off, that can be done. When you come in with tens of
thousands like we have to do here, it chokes the system. So
there are two options that I faced.
Option one is, yes, we could do what you suggested, and we
could go amend the whole process. The joy of that is that the
processes you have to go through to get there--and then the
court review, and then everything that comes with it--probably
puts us on the other side of the deadline date here.
So my decision was how do you make things move faster?
Because the reality is the railroads have a date, a deadline
that you established. The tribes had no deadline. So we started
back to the consultation concept.
We brought together a couple of meetings and have developed
a process for batch processing, if you will, to handle these in
groups rather than one-off that we hope is going to break
through the logjam. I must say that the issue has been
exacerbated by the fact that there were many, as in thousands,
of antennas put in place by railroads before any recognition of
this. And the need to go back and catch up on those while
moving forward on the others is a nontrivial undertaking.
But again, I think that we have developed a process that
speeds it up by doing batch. But I can assure you, sir, that we
are keenly aware of what you are talking about. And this is a
statutory responsibility, two statutory responsibilities, and
our job is to facilitate and obey both.
Senator Johanns. Yes, and here is what I would offer, Mr.
Chairman and Commissioner Pai. This is the kind of issue where
us getting in the middle of it and doing this, that, or the
next thing may only interfere with the process. On the other
hand, I think both the chairman, myself as ranking member,
Senator Moran, others who work with the tribes every day, every
week in our office would be more than willing to be as helpful
as we can because this deadline is real. And unless we change
the deadline, we have all got a big problem on our hands. So I
just put that out there.
ISSUE DIALOGUE
The last thing I wanted to say--and I will have some
questions that I will just submit to the record. But this is
more of an offer, Mr. Chairman, than a question. I think, in
your job, if you could satisfy two issues, they would be naming
the building after you.
Spectrum and net neutrality. And you know, you have this
huge history. You have kind of worked with everybody here. I
find these issues enormously interesting and engaging. I have
got no ax to grind. I am not running for reelection. I am going
to move on in life.
Here is an offer that I would make. I would love to start a
dialogue with you in just a general way about these issues. I
would welcome it. Obviously, at the end of the day, it might be
more dialogue than anything, but I think these are--I love to
tell the story about my first car phone where my wife took my
car for a day, got this huge surprise for me. Got a phone
installed. You know, one of these big clunky things on a cord.
I loved this thing. I used it every day for that first
month. I got the first bill, darn near had to mortgage the
house to pay the first bill.
Look at the difference that has occurred in a rather brief
period of time. The key to the way forward, though, and the
impact on our economic growth in this country really deals with
many issues, but these two issues are so at the core of it. And
I would love to pick your brain about it.
Mr. Wheeler. This afternoon, our offices will be in
contact, and I would look forward to that a lot.
Senator Johanns. Thank you. I welcome that dialogue, and
let us hope it continues. So thank you.
Mr. Wheeler. Thank you, sir.
Senator Udall. Thank you both.
Senator Moran.
RURAL RATES
Senator Moran. Chairman, thank you again.
Commissioner Pai indicated in his opening statement about
the impact of the announced rate floor increase. I wanted to
highlight for you, Mr. Chairman, in Kansas our companies
currently charge rural customers anywhere from $11.77 to $18.25
per month for phone service. By State law, they are prohibited
from increasing that rate more than $1.50 in any 1 month for a
12-month period.
So by State law, it just seems to me there is no capability
of complying with this decision. The new rate of $20.46, they
just can't meet that July 14 deadline. And so, I am interested
in what the FCC's response is into that particular problem.
But further, many rural customers in Kansas receive both
phone service and broadband service from the same company. And
therefore, when the phone service costs are increased, I think
a natural reaction, and it is particularly true in today's
world, is to eliminate the land line. And the costs then fall
for broadband even more directly. I mean, my guess is that
broadband services become even more expensive as a result of
the increasing phone rate.
I wondered if you had--if you have any thought that that is
a rational occurrence, if I am making something up or that is
the propensity to do that exists? Have you given any thought to
what the consequence is to broadband customers because of the
increasing cost of phone service? And then are you willing to
address this issues?
Mr. Wheeler. Well, that is--on the second point, I would
like to get some research on that and not just shoot from the
hip. But I mean that is a legitimate issue.
On the first point, again, this is the joy of this job. I,
Senator Johanns, thank you for your thought that they might
name the building after me. This is not a goal, okay?
But if there is anything that I hope that folks will say at
the end of my term is that at least we made decisions. Because
the thing that American business can't afford and American
consumers can't afford is limbo.
Senator Moran. Certainly.
Mr. Wheeler. So as Commissioner Pai said in his statement,
and he and I are in agreement on this, it was a unanimous
decision out of the FCC before we arrived to set up the
structure that led to exactly what you talk about. So I inherit
the results of the algorithm that everybody agreed to that
produces this result.
We have two responsibilities--to adhere to the statute and
not to be stupid. And it seems to me that if we create a
situation where we run headlong into the kind of Public Utility
Commission (PUC) problems you were talking about, where we
create a situation where suddenly there is a 46 percent rate
hike that gets slapped on everybody in July, that is tending
towards the other thing that we don't want to have.
So what I am going to be proposing is that, one, we delay
the implementation beyond July because you have got to provide
the window for the PUCs to be able to deal with--the companies
to be able to deal with the PUCs to be able to deal with
things. And secondly, that we develop a phase-in so that this
isn't hitting everybody's bills bang on, but comes in over
time.
Because there still is a statutory responsibility that the
rates be reasonably comparable. And it is not just urban
subscribers who are doing some of this subsidization of rates.
It is other rural subscribers who are doing this subsidization
of rates as well.
So it is not a question of whether. It is a question of
how, and how do you do it reasonably.
INTERNAL REVENUE SERVICE USF POLICIES
Senator Moran. Thank you.
I don't want Commissioner Pai to have been here and not had
an opportunity. But before I turn to him and before my time
expires, let me raise another topic and then hear from either
or both you.
I have never thought of this before. This question was
brought to my attention, that the Internal Revenue Service
(IRS) treats all universal service high-cost funding, including
the Connect America Fund Phase 1 dollars, as general revenue
instead of a contribution to capital. You are smiling. So you
know this topic.
The general revenue has tax liability consequences that
will diminish the effectiveness of the fund. And I am curious
as to whether or not the FCC has had ongoing conversations with
the IRS. I am told that there is a comparable analogous
situation that occurred previously, and I am curious as to
whether you are addressing this issue between the FCC and the
IRS.
Mr. Wheeler. So I am smiling because I recently became
aware of this as well. There was literally a company, in seeing
this yesterday, that said that they had just been told by the
IRS to follow the same rules as had been used in the Broadband
Technology Opportunities Program (BTOP) that you are
referencing.
And so, what I am doing is asking our general counsel to
get into this and to find out what is going on. I was smiling
when you mentioned the IRS because it is that time of year.
Senator Moran. I don't know that the IRS brings many
smiles.
Here or at home. Commissioner Pai, either one of those
topics?
RATE FLOOR
Mr. Pai. Sure. To start, Senator, you should know that the
Chairman is already making his mark. The very first floor at
the FCC is labeled ``TW,'' and I think it is a sign of things
to come. Even in 5 months, he is getting the floors renamed for
him.
But more seriously----
Mr. Wheeler. It stands for ``12th Street.''
Mr. Pai. Well, so they say. I am not buying it yet.
But to the first topic, with respect to the rate floor, the
FCC has twin responsibilities here under the law. We have to
make sure that the rates are reasonably comparable. We have to
make sure that communication services are affordable.
The way I think about it is from the perspective of a
consumer in Washington, DC, versus my hometown of Parsons,
Kansas. The rates are different. I mean, in DC, it is $20.46.
In Parsons, it is $14. But if you look at the median income,
the median income in Washington, DC, is $64,000. The median
income in Parsons is $38,000.
So if you try to pair those statutory responsibilities, it
seems to me that reasonably comparable doesn't just mean that
the exact rate has to be equal. It has to mean that these
services are affordable for people, regardless of where they
live, taking into account all of the circumstances.
Second, in terms of State law, I think it is critical for
us from an institutional perspective to have a good
relationship with our State and local colleagues who, to the
extent that the rate floor would end up overriding State law or
putting these carriers in a catch 22--either they comply with
State law or Federal law--I think that is something to be
avoided.
The second thing, though, that you mentioned is something
that is really close to my heart, and I think the chairman
captured it exactly right in his opening statement. We live in
an Internet age. And so, it follows from that that the
consequence of not having broadband Internet access or access
to other advanced communication services is that almost quite
literally you live in another era. And that is becoming all too
real for people in rural America.
And the reason that I say that in answer to your question
is that line loss in rural America is real. I have heard it
from carriers in Kansas, Nebraska, New Mexico, States across
this country. And so, as a result, if they lose universal
service support because people just feel compelled to drop that
land line, either the carrier has to try to make a go of it on
broadband alone, for which there is no support, or they simply
go out of business. And I think that is an untenable state of
affairs.
And so, stepping back from the trees of the QRA and the
rate floor, et cetera, and looking at the forest of universal
service, my own vision is that we would move to a Connect
America Fund for rate-of-return carriers. We would move to a
system that would allow standalone support for broadband
facilities, recognizing that, for an increasing number of
Americans today, voice isn't a distinct service as it used to
be for the last 100 years. It is simply another application
riding over the Internet.
And if we embrace that kind of a vision depending, of
course, on what the particulars of the record show, I think we
are going to be in a situation where rural Americans and urban
Americans will have a more level playing field in terms of, you
know, the Internet access and other communications
opportunities that truly do fall at the heart of the
Communications Act.
So that is something to flag for the future. And I think,
Senator Johanns, you would be perfectly positioned to take a
role on this issue going forward. That is the real level
playing field, I think, for our people going forward.
Senator Moran. Commissioner, thank you.
If the voting schedule allows, I will be in your hometown
of Parsons tomorrow, visiting the community college and the
community hospital.
Mr. Pai. I hope you say ``hi'' to my parents.
Senator Moran. I hope to see them. Thank you.
Mr. Wheeler. Are they going to name those after you?
Mr. Pai. I am by far not the most august person from
Parsons. Even now there is a quarterback in the NFL who
deserves that title.
Senator Udall. Thank you for those comments.
Chairman Wheeler and Commissioner Pai, I just want to add
to the earlier comments about the impact on small rural
telephone cooperatives of a potential new increase in terms of
the local service rate floor.
New Mexico telephone providers in rural areas of Chaves and
Lincoln Counties, for example, are very worried that this will
cause a spike in their customers' phone bills. So I do
appreciate your willingness to look carefully at the concerns
that are raised here and thank you for doing that.
RURAL TRANSLATORS
I just have one additional question here. And to both of
you, this is about TV translators. Nearly 54 million Americans,
including most--almost 600,000 New Mexicans rely exclusively on
over-the-air TV. In New Mexico, many of those TV viewers rely
on more than 200 translators located throughout the State to
receive broadcast television. This is especially the case in
rural areas and on tribal lands. As the Commission proceeds
with the incentive auction rulemaking, will you consider the
importance of protecting TV viewers in rural areas who are
served by TV translators?
Mr. Wheeler. I have been hogging. Do you want to go first?
Mr. Pai. Sure. So, Senator, I take that concern very
seriously. I have heard from folks across the country, but
especially in the Mountain West and Midwest that this is an
area of concern for a lot of people.
And that is specifically why I mentioned when the FCC
adopted the Notice of Proposed Rulemaking on September 28,
2012, that the FCC should flag this issue and make sure that we
do whatever we can, within the constraints of the law, to make
sure that the people who rely on these translator services
don't suddenly find that they are left in the dark, so to
speak.
Mr. Wheeler. Ajit just put it right. Do everything we can
within the constraints of the law. I mean, the difficulty in
the law is that it specifically excluded translators and low-
power TV stations in the repacking kinds of activities.
I believe that there are--I believe that there are
solutions to this that range from, one, fortunately these are
in rural areas, and the spectrum crunch does not exist in rural
areas. So the betting odds that a translator gets caught up in
this are slim. There may be some. But in those instances where
there are, I think that there are other alternatives, and what
we are going to be doing is trying to work through developing
those other pathways so that we can maintain exactly what Ajit
said, which was how do you maintain, keep the service from
going black, at the same point in time adhering to the law? And
again, that is what you pay us for.
Senator Udall. Right. Thank you very much for that.
I know that I may have additional comments for the record.
I know my distinguished ranking member may also.
I think Senator Moran has one final question, he tells me.
INCENTIVE AUCTIONS PROCESS
Senator Moran. Thank you, Mr. Chairman and Ranking Member,
for your indulgence.
I want to talk about license--about spectrum auction,
excuse me. There is a lot of focus on the nature of the
auction, how that is--how it is going to occur.
What I think may be missing is whether there is going to be
any spectrum to auction. And I think broadcasters are looking
for, you talked earlier about certainty, the business community
needs some certainty. When can a broadcaster begin to
understand what their company spectrum may be worth?
They have got to enter into contracts for towers and
employees. You have got to plan your business, and I don't know
that any broadcaster knows what return, what they may receive
if they put their spectrum up for auction. Is there--I think
you are going to be in front of the broadcasters here in Las
Vegas before very long. I assume this would be a question. Any
thoughts?
Mr. Wheeler. Yes, sir.
There is a timeline that basically works this way. Starting
next week, we start working inside the Commission with
commissioners, such as Commissioner Pai, and working through
the options that we see that are on the table and narrowing it
down. Same point in time, working with you all up here to share
with you what our thoughts are in terms of how to structure the
auction.
As you mentioned, then I go out to talk to the National
Association of Broadcasters (NAB). I am not going to give a
speech that says here are all the answers. But what will follow
from that is a series of meetings with broadcasters that roll
out here are the various concepts.
But I think that it is beyond that. That I spent the last
almost decade investing in companies and selling companies. I
am used to seeing a book, that the investment banker comes
forward and says, okay, here are all the numbers you need to
know. Here are the assumptions. Here are the spreadsheets. Plug
in whatever assumptions you want and kick out conclusions at
the end.
I think it is incumbent upon us to meet with broadcasters
and say here is a book. Here is what it means in your
particular circumstance. You make the decision. This is a
voluntary auction. You've got to decide whether you want to
come, then you decide whether you want to stay in it.
But we are going to approach this in a business-like manner
that provides to the broadcasters the information they need to
make an informed decision. And you can't do it on a blanket
kind of a basis. You have got to sit down and say, okay, now in
this community, with these kinds of realities, these are the
expectation.
Senator Moran. I hope you are successful in accomplishing
that.
Mr. Chairman, thank you.
Senator Udall. Thank you, and thank you both, Senator
Johanns and Senator Moran, for participating today. Really
appreciate that.
I want to thank everybody who participated in the hearing.
And especially our staff members, who I think worked very
closely with your staff to make this a successful hearing. And
appreciate hearing from the top officials of the FCC about the
resource needs and the opportunity to explore a number of
important and timely issues.
Today's discussion has provided helpful insights, I think,
into the FCC's operations and, really, the challenges that you
all face. This information will be instructive as Congress
moves forward with our work on the fiscal year 2015 funding.
ADDITIONAL COMMITTEE QUESTIONS
And with that, I believe our hearing is concluded. And
well, let me also say the hearing record will remain open until
next Thursday, April 3 at 12 noon for subcommittee members to
submit statements and/or questions to be submitted to witnesses
for the record.
[The following questions were not asked at the hearing, but
were submitted to the Commission for response subsequent to the
hearing.]
Questions Submitted to Hon. Tom Wheeler
Questions Submitted by Senator Tom Udall
consumer complaints database
Question. Chairman Wheeler, thank you for your comments about the
importance of improving how the Federal Communications Commission (FCC)
handles consumer complaints. As you know, Senator Nelson and I wrote to
you before the hearing to ask that the Commission implement an online
consumer complaints database.
What steps can the Commission take now to begin to implement a
consumer complaints database?
More generally, how should the Commission use new technologies to
help guide its enforcement and policymaking activities?
Answer. Despite limited funds for mission-critical information
technology (IT) projects, the Commission is making significant progress
toward modernizing the FCC's consumer complaints process and supporting
IT. To speed this process, we are exploring the use of cloud-based,
commercially available, ``off-the-shelf'' technology to address
consumer needs. With careful use of fiscal year 2014 funds and the
infusion of fiscal year 2015 funds, we hope to meet our goal of having
a new consumer complaint system in place by the end of the calendar
year. In the interim, the Commission will make modifications to
existing systems that support progress toward a new system, and engage
in related outreach efforts.
As part of our modernization process, the Commission will solicit
input from stakeholders, including both service providers and consumer
groups. These comments will assist the Commission in developing design
features for the new consumer complaint Web site that support core
mission objectives--accessibility, transparency and functionality. The
planned system will be designed to accommodate a more user-friendly
complaint portal for consumers and allow consumers to check their
complaint status online. This redesign also will make available
summarized data about the volume and type of complaints to provide more
information to the public and our partners as part of a ``dashboard.''
A streamlined consumer complaints process and the implementation of
modern technologies will provide essential support to Commission staff
as they review consumer complaints and initiate enforcement activities.
In addition, the Enforcement Bureau is reviewing new methods for
streaming information from agents in the field. These combined system
improvements and modernization will enable better tracking of
complaints, cases, and related information. Overall, the ability to
review complaints in a more efficient fashion will provide a foundation
for policy decisions that rely upon statistical data analysis while
supporting less workforce-intensive information gathering efforts.
data caps
Question. Mr. Wheeler, I previously authored legislation to help
wireless consumers avoid ``bill shock'' after inadvertently exceeding
monthly usage limits. Today, most consumers are accustomed to online
access at home with a broadband subscription that allows unlimited
access to data from the Internet. Yet many wireline and wireless
Internet service providers are now experimenting with or implementing
usage-based pricing and ``data caps.'' My understanding is that
consumer groups have asked the Commission to collect information on how
companies implement and administer such data caps.
What steps has the Commission taken to do so?
Will you commit to studying the impacts of data caps for consumers
and publicly reporting the Commission's findings?
Answer. In August 2013, the Commission's Open Internet Advisory
Committee investigated the use of data caps for wireline broadband
services and identified policy issues that data caps raise. That report
can be found at http://transition.fcc.gov/cgb/oiac/Economic-
Impacts.pdf.
Building on the report and consumer concerns, the May 15, 2014 Open
Internet Notice of Proposed Rulemaking asked a number of questions
about data caps, including whether the Commission should require both
wireline and wireless providers to disclose network practices that
relate to data caps. We also have asked whether the Commission should
require disclosures enabling end users to identify application-specific
usage, to distinguish which user or device contributes to total data
usage, to identify traffic potentially exempt from caps, and to
identify current consumption levels. We will fully examine the record
garnered by the Notice of Proposed Rulemaking (NPRM) and from other
sources on data caps, and address consumer concerns in any future
order.
digital television channel 6 radio interference protections
Question. Public radio stations operating at FM frequencies near
the digital television (DTV) channel 6 petitioned the FCC in 2009 to
updates its interference rules. In general, such rules are important to
preventing harmful interference between various broadcasters. Yet my
understanding is that the Commission's current rules for DTV channel 6
interference are based on analogue TV technology.
Given the DTV transition, will the FCC consider reviewing proposals
to update its DTV channel 6 interference rules?
Answer. National Public Radio filed a Petition for Rulemaking in
October 2009 seeking the elimination of the current rule that protects
TV Channel 6 from non-commercial FM station interference. At the end of
2009, the Commission placed the Petition out for public comment. While
I recognize that the Petition was filed several years ago, Commission
action remains pending given our work to implement the Incentive
Auction provisions contained in the Middle Class Tax Relief and Job
Creation Act of 2012 (Spectrum Act). One of the options for TV
broadcasters under the Spectrum Act is to volunteer to move from a UHF
channel to a VHF channel (which includes Channel 6 allotments). It may
well be prudent to wait to see what the final channel plan will look
like before modifying any interference rules between the different
services.
emergency 9-1-1 call centers ``do-not-call'' registry
Question. The Middle Class Tax Relief and Job Creation Act of 2012
requires the Commission to create a ``Do-Not-Call'' Registry for
telephone numbers used by emergency 911 call centers, or Public Safety
Answering Points (PSAPs), and to prohibit the use of automatic dialing
``robocall'' equipment to contact those numbers. Your budget request
includes a resubmitted fiscal year 2014 base item increase of $500,000
to implement PSAPs' Do-Not-Call Registry.
Could you explain in more detail how this funding will be used to
improve emergency 9-1-1 operations?
Answer. The Commission's budget request supports the October 17,
2012 FCC Order establishing the Do-Not-Call Registry for telephone
numbers used by Public Safety Answering Points (PSAPs). This registry
is essential to protecting the integrity of PSAP communications. Under
the Middle Class Job Relief Act of 2012 and the 2012 FCC Order,
verified PSAP administrators or managers must be able to place into the
registry telephone numbers that are used for the provision of emergency
services or for communications between public safety agencies. The
current Federal Trade Commission (FTC) Do-Not-Call List does not
support these numbers and creates a gap where robocallers can interfere
with essential first responder actions and communications. The
Commission currently is exploring the least expensive alternatives for
implementing this list, including potentially utilizing the sofiware
and contractors involved in the development of the FTC's Do-Not-Call
List.
fcc regulatory fees
Question. Last year, the Commission adopted an order to update its
regulatory fee structure. This followed a Government Accountability
Office (GAO) report that found the Commission's regulatory fee
structure is out of date given changes in the telecommunications
market, in regulation, and in the Commission's work over the last
decade. The FCC order describes the changes as initial steps to more
comprehensively revising the Commission's regulatory fee program. The
order also notes that the Commission will issue ``shortly'' a Second
Further Notice of Proposed Rulemaking once more public input is
considered.
When does the Commission plan to take the next steps to modernizing
its regulatory fee structure?
Answer. The Commission is currently involved in a multi-year effort
designed to ensure fairness and transparency within the section 9
regulatory fee structure. Congress annually requires the Commission to
collect regulatory fees ``to recover the costs of . . . enforcement
activities, policy and rulemaking activities, user information
services, and international activities.'' To calculate regulatory fees,
the Commission allocates the total amount to be collected among the
various regulatory fee categories. This allocation is based on the
number of full time employees (FTEs) assigned to work in each
regulatory fee category. Below is a summary of the Commission's
rulemaking efforts:
Reform Effort Summary
2008 Further Notice of Proposed Rulemaking.--FCC sought comment on
revising its regulatory fee schedule to address significant changes in
the communications industry and the Commission since FTEs were
allocated to regulatory fee categories in 1998.
2012 NPRM.--FCC inquired into updating the FTE allocations for the
first time since 1998.
2012 GAO Report.--General Accountability Office (GAO) recommended
fundamental reevaluation of how to align regulatory fees more closely
with regulatory costs.
2013 NPRM; 2013 Report and Order.--FCC applied current FTE data to
determine the number of FTEs working on regulation and oversight of
Interstate Telecommunications Service Providers and other fee
categories and revised the calculation of FTEs in the International
Bureau to categorize most of those FTEs as indirect.
FCC also adopted permitted amendments (reclassification of services
in the regulatory fee schedule as defined in section 9(b)(3) of the
Communications Act of 1934, as amended (the act)) which requires
notification to Congress prior to implementation. Notifications are
planned to be provided for fiscal year 2014 regulatory fees.
--Consolidation of UHF and VHF television stations into one
regulatory fee category.
--Assessment of regulatory fees on Internet Protocol TV (IPTV)
licensees by including them in the cable television category.
The Commission also committed to a further notice to consider
additional regulatory fee reform and conclusively readjust regulatory
fees within 3 years.
2014 Ex Partes.--FCC staff engaged a wide and numerous array of
Commission regulatees to obtain further input concerning regulatory fee
reform.
2014 Draft Second Further Notice of Proposed Rulemaking.--FCC staff
have drafted and circulated a Further Notice seeking comment on
additional reform measures to improve the regulatory fee process,
including the adoption of methodologies tailored to ensure more
equitable distribution of the regulatory fee burden among categories of
Commission licensees under the statutory framework in section 9 of the
act. Some of the issues for which the draft Further Notice seeks
comment were raised by commenters in fiscal year 2013 (or earlier),
along with subsequent ex parte meetings, and the Further Notice now
tailors its inquiry, in response to the more developed record, to
further examine these proposals.
fcc resources for merger reviews
Question. Chairman Wheeler, given recent announcements of
telecommunications mergers, does the Commission's budget proposal
include sufficient funding to support the timely review of major
telecommunications transactions? What impact does the review of large
transactions have on the Commission's resources?
Answer. The Commission maintains a special Transaction Team within
the Office of General Counsel (OGC), which confers with other bureaus
and uses administrative efficiencies to ensure transparent and timely
review of large-scale mergers. The volume of these transactions varies
year-to-year, but we have found that the creative use of intra-agency
teams of this nature provides the required level of support for our
mission-critical activities.
The Commission overall has the lowest level of FTEs in 30 years as
well as half as many contractors as 4 years ago. This situation,
coupled with unwieldy, relic IT systems, hobbles our efforts in all
agency operations. If this Committee supports our overall budget
request, the Commission should have sufficient resources to handle
transactions as well as other OGC projects.
lifeline
Question. Chairman Wheeler, your testimony highlights plans to
increase universal service oversight. I am pleased that the FCC has
already increased oversight of the Lifeline program, which helps low
income persons get telephone service. As you know, Lifeline dates to
the Reagan administration and was expanded to include wireless phone
service during the presidency of George W. Bush. This initiative can be
a ``Lifeline'' for low income persons in a time of emergency, or when
applying for a job. That is why the Commission must continue reforms to
guard against waste, fraud, and abuse. One of those reforms is a new
National Lifeline Accountability Database. This will help weed out
``double dipping'' if there are duplicate participants receiving
Lifeline assistance.
How soon will this database be implemented?
Answer. Last month, the National Lifeline Accountability Database
(NLAD) became fully operational in all States and has had a significant
impact in reducing waste, fraud, and abuse. Thus far, NLAD already has
identified $169 million in annual savings by flagging existing
duplicates for elimination while preventing enrollment.
net neutrality
Question. Chairman Wheeler, as you know, I am a supporter of a free
and open Internet. The principle of such ``network neutrality'' is that
Internet users should be able to access lawful online content and
applications regardless of the source, without blocking or interference
from their Internet service provider. This helps innovators and
startups compete on a level playing field with established companies.
Following the Verizon v. FCC decision by the U.S. Court of Appeals for
the District of Columbia Circuit, you stated that you intend to propose
new open Internet rules. You further noted the Commission's
responsibility to preserve the Internet ``as an open platform for
innovation and expression while providing certainty and predictability
in the marketplace.''
Do you believe that the authority granted under section 706 of the
Communications Act gives the Commission adequate authority to ensure a
free and open Internet?
Under what circumstances would the Commission use its authority
under title II of the Communications Act to ensure a free and open
Internet?
Answer. For over a decade, the Commission has struggled with the
idea of net neutrality. There has been a bipartisan consensus, starting
under the Bush administration with Chairman Powell, on the importance
of an open Internet to economic growth, investment, and innovation.
In January of this year, the U.S. Court of Appeals for the D.C.
Circuit agreed that the Commission has the legal authority under
section 706 of the Telecommunications Act of 1996 to craft enforceable
rules to preserve a free and open Internet, even while it found that
two of the rules we adopted in the 2010 Open Internet Order went beyond
the FCC's authority.
On May 15, 2014, the Commission adopted a Notice of Proposed
Rulemaking initiating the process of crafting rules to protect and
promote the open Internet. The proposals we put forward and the
questions we ask in this Notice focus on maintaining an open, fast, and
robust Internet that continues to serve as a platform for economic
growth, investment, innovation, free expression, and competition.
I believe that the section 706 framework set forth by the Court of
Appeals in Verizon is sufficient to give us the authority to adopt and
implement robust rules that will accomplish this goal. At the same
time, the Notice asks whether the best path forward may be under title
II. The entire purpose of an NPRM is to give Americans the ability to
express themselves and provide analysis and guidance. I look forward to
a broad and thoughtful debate on the record.
We have specifically created a means by which Americans who may not
otherwise participate in an FCC proceeding can make their voice heard
through our new Open Internet e-mail address: [email protected]. And
to ensure sufficient opportunity for broad public comment, we have
provided for a comment and reply period that will give everyone an
opportunity to participate.
number portability
Question. Under the Commission's local number portability (LNP)
rules, consumers can generally keep their existing phone number when
switching to a new telephone service provider. Today, this is something
many consumers take for granted. A private, third-party entity
administers the number portability system on behalf of the Commission.
My understanding is that the Commission is in the process of
considering proposals for administering this system.
Without commenting on any specific proposal before the Commission,
will you assure me that the Commission will preserve consumer
protections such as number portability in the transition to Internet
protocol- or IP-based telephone networks?
Answer. The Commission will work to preserve consumer protections
such as number portability in the transition to Internet Protocol- or
IP-based telephone networks.
positive train control
Question. After the crash between a commuter train and a freight
train in 2008, Congress moved quickly to require the installation of a
safety system, known as ``positive train control.'' It was not clear at
that time how many antennas and stations would be required along the
tracks. We now know that over 20,000 antennas need to be installed and
approved by the FCC. In some areas, the approval process includes
consultation with tribal governrnents.
How will the FCC balance the need to move expeditiously to permit
this new safety system while ensuring that the proper environmental and
historical reviews are taking place?
Does the budget request include enough resources to complete this
task in time to meet, the statutory deadline for installing the
positive train control system?
How is the FCC coordinating with other Federal, State, local and
tribal officials on this issue? Have you encountered any problems in
those collaborations?
Answer. On May 16, 2014, the Advisory Council on Historic
Preservation (ACHP) voted to approve a Program Comment that modifies
the FCC's usual procedures for historic preservation review. The
process outlined in the Program Comment is tailored to the unique
circumstances surrounding the deployment of Positive Train Control
(PTC) facilities, and provides a mechanism for timely review by all
parties. PTC is a transformative technology that has the power to save
lives, prevent injuries, and avoid extensive property damage. It is a
top priority of the Commission to facilitate an efficient and timely
review process that complies with the National Environmental Protection
Act (NEPA) and the National Historic Preservation Act (NHPA) while
expediting this important safety measure. I believe the timelines set
forth in the Program Comment will help the Commission reach this
balance.
Additionally, I am pleased that we have reached an agreement with
the freight rail industry that will resolve the siting issues for one-
third of the PTC poles while providing substantial resources to tribal
nations and States to support and advance historic preservation. As a
result of this agreement, the freight railroads are immediately able to
start using nearly 11,000 previously constructed poles for important
testing and other preparatory activities and for the ultimate provision
of PTC.
As part of the agreement, the seven class I freight railroads have
agreed to create a Cultural Resource Fund totaling $10,000,000 to
provide funding directly to tribal nations and State Historic
Preservation Offices to support cultural and historic preservation
projects. A neutral third-party administrator will administer the fund.
Each freight railroad has also committed to training its employees on
environmental and historic preservation compliance and to building
working relationships with tribal nations.
The Memoranda of Understanding between the freight railroads and
the FCC is available on the FCC Web site at http://www.fcc.gov/
encyclopedia/positive-train-
control-ptc.
The Program Comment Public Notice is also available on the FCC Web
site at http://hraunfoss.fcc.gov/edocs_public/attachmatch/DA-14-
680A1.pdf.
The FCC moved resources from other projects to the PTC project over
a year ago and continues to dedicate additional personnel and resources
to resolving this issue. The pending budget request for fiscal year
2015 does not contain a specific request for PTC funding but the
Commission has been able to fully fund the necessary resources for this
project from its internal S&E account, utilizing FTEs and resources
within the Wireless Telecommunications Bureau and the Consumer and
Governmental Affairs Bureau.
During this time we have worked closely with tribal nations, State
Historic Preservation Officers, the Advisory Council for Historic
Preservation, the Federal Railway Administration, the National
Transportation Safety Board, and land-holding Federal agencies. We have
a constructive working relationship with all of these parties which led
to the adoption of the procedures in the Program Comment and the
landmark agreement with the freight rail industry.
telehealth
Question. Telehealth tecimologies can greatly enhance rural medical
services. New Mexico is a large State with many residents living far
from urban areas. Telehealth sometimes offers the best avenue to help
meet healthcare needs. That is why I am working in a bipartisan manner
with Senator Thune and others to help reduce some of the barriers to
telemedicine. In December 2012, the Commission updated its existing
rural healthcare universal service mechanism, making $400 million
available to rural healthcare providers for broadband services through
the ``Healthcare Connect Fund.''
What other actions can the FCC take to encourage greater use of
telehealth technologies?
Answer. We must leverage all available technologies to ensure that
advanced healthcare solutions are readily accessible to all Americans,
from rural and remote areas to underserved inner cities. By identifying
regulatory barriers and incentives and building stronger partnerships
with stakeholders in the areas of telehealth, mobile applications, and
tele-medicine, we can expedite this vital shift.
That's why I recently announced the formation of a new Commission
Task Force--CONNECT2HEALTHFCC--that will bring together the expertise
of the FCC on the critical intersection of broadband, advanced
technology, and health. I appointed a senior, experienced staffer--
Michele Ellison as Chair of the Task Force and Deputy General Counsel.
Specifically, the CONNECT2HEALTHFCC Task Force will consider ways
to accelerate the adoption of healthcare technologies by leveraging
broadband and other next-gen communications services. To advance this
broad initiative, our Task Force will work hand in hand with the
leadership of the Commission, in particular with the FCC's Director of
Health Care Initiatives and the Chiefs of the Wireline and Wireless
Bureaus and Office of Engineering and Technology. The Task Force will
also collaborate with public and private stakeholders in the healthcare
and technology space.
tribal mobility fund eligibility
Question. The Eastern Navajo Agency in New Mexico, along with the
Ramah Navajo and Zuni Pueblo, are some of the most underserved areas in
the continental United States. It is my understanding that first phase
of the Tribal Mobility Fund auction treated the vast majority of the
Eastern Navajo Agency as having 3G service. This meant that those areas
were not eligible for funding. Yet my understanding is that mobile
broadband service is not actually available throughout this area.
Will the Commission take steps to confirm the level of service
available in these areas before excluding them from consideration in
future Tribal Mobility Fund auctions?
Answer. I recognize the importance of finding solutions and
ensuring robust service on tribal lands and I will continue to take
actions that support this goal.
tv blackouts during retransmission disputes
Question. Last year during a dispute over retransmission fees,
nearly three million Time Warner Cable customers lost access to CBS
programming. In response, then Acting Chairwoman Clyburn stated that
media companies should ``accept shared responsibility'' for putting
consumers' interests above other interests during such disputes.
Given the Commission's authority under section 325 of the
Communications Act, what more can the Commission do to better protect
consumers during such retransmission disputes?
Answer. There is no question that the video marketplace has changed
since Congress established the retransmission consent regime in 1992.
Additionally, retransmission agreements have become more complicated
with the advent of digital distribution options. The Commission's rules
require parties to negotiate in good faith for retransmission consent.
Although not directly related to blackouts, we recently modified our
rules to prohibit joint retransmission consent negotiations between two
non-commonly owned, top-four ranked TV stations in the same market in
order to help level the playing field and get negotiations back to a
one-on-one discussion, as Congress intended. With respect to blackouts,
the Commission continues to monitor situations when disputes occur, and
we will continue to help facilitate fair and effective completion of
negotiations for the benefit of consumers.
telecommunications relay services
Question. The Americans with Disabilities Act (ADA) recognizes the
importance of telecommunications for persons with disabilities,
including those who have difficulty hearing or speaking on the
telephone. With Video Relay Service (VRS), individuals using sign
language can make relay calls through communications assistants. These
assistants then voice what is signed to the called party. For Americans
who communicate best with sign language, VRS provides an important
service.
Will you give your assurance that the Commission will fully meet
its obligations under the Americans with Disabilities Act with respect
to telecommunications relay services?
Answer. I agree that the Commission must fully meet its obligations
under the Americans with Disabilities Act with respect to
telecommunication relay services and I will continue to take all
actions necessary to facilitate this program.
21st century communications and video accessibility act
Question. Passed by Congress in 2010, the Twenty-First Century
Communications and Video Accessibility Act contains protections that
enable people with disabilities to access broadband, digital and mobile
innovations. According to a 2009 FCC study, persons with disabilities
are less likely to use Internet-based communications technologies. For
examples, 65 percent of Americans have broadband at home, yet only 42
percent of Americans with disabilities have these services. This gap is
due in part to physical barriers that people with disabilities confront
in using the Internet.
What is the level of compliance with the communications provisions
of the Twenty-First Century Communications and Video Accessibility Act?
What other actions can the FCC to ensure that Americans with
disabilities have access to new broadband technologies?
Answer. The Commission has completed all rulemakings associated
with statutory deadlines established by the provisions of the Twenty-
First Century Communications and Video Accessibility Act (CVAA). You
will find below a list of implementation deadlines requiring compliance
with the Act's provisions. Generally, the Commission has been very
pleased with the efforts of covered entities to meet these deadlines in
a timely fashion.
The Commission's Disability Rights Office (DRO), housed in the
Consumer and Govenmiental Affairs Bureau, is active on various
proceedings designed to ensure access to new broadband technologies.
These include proceedings requiring access to Internet-based
telecommunications relay services, updating the hearing aid
compatibility requirements, and ensuring disability access to wireline
communications as we make the transition from the public switched
telephone network to IP-based forms of communication. In addition,
through its complaint process, DRO keeps abreast of and addresses
accessibility barriers as these arise. Finally, DRO maintains an email
list, Accesslnfo, of over 2000 individuals through which DRO regularly
informs consumers, state and local governments, and industry
stakeholders nationally and internationally of Commission rulemakings,
events, and other actions pertaining to expansion of the rights of
people with disabilities.
Summary of Compliance With the Act
implementation of the twenty-first century
communications and video accessibility act of 2010 (cvaa)
Section 102. Hearing Aid Compatibility
Extends hearing aid compatibility requirements to handsets used for
advanced communications services.
No implementation deadlines.
Section 103. Relay Services
Revises the definition of telecommunications relay services (TRS).
No implementation deadlines.
Requires VoIP service providers to contribute to the TRS Fund by
October 8, 2011.
On October 7, 2011, the FCC adopted rules requiring covered
entities to register with FCC by December 31, 2011; report
revenues for fourth quarter 2011 by April 1, 2012, to determine
contributions for the 2012-2013 TRS Fund year; and to report
revenues and contribute to the TRS Fund annually thereafter.
Section 104. Access to Advanced Communications Services and Equipment
Adds sections 716 (accessibility requirements for advanced
communications services and equipment), 717 (recordkeeping and
enforcement provisions), and 718 (accessibility requirements for
Internet browsers built into mobile phones) to the Communications Act.
1. Requires implementing rules for Sections 716 and 717 by October
8, 2011.
On October 7, 2011, the FCC released a report and order
adopting rules. Covered entities must comply with accessibility
requirements by October 8, 2013. FCC established new request
for dispute assistance and informal complaint procedures,
effective October 8, 2013, for alleged violations of Sections
255, 716, and 718 of the Communications Act.
2. Requires recordkeeping obligations to commence 1 year after
rules become effective.
Rules became effective January 30, 2012; recordkeeping
obligations began January 30, 2013. FCC established Web-based
system for submission of recordkeeping compliance
certifications and contact information (RCCCI Registry) by
April 1, 2013, and annually thereafter.
3. Requires Section 718 to be effective October 8, 2013.
On April 26, 2013, the FCC adopted rules to implement Section
718. Covered entities must comply with the accessibility
requirements by October 8, 2013.
4. Requires the FCC to establish an accessibility clearinghouse by
October 8, 2011.
The FCC launched its Accessibility Clearinghouse in October
2011.
5. Requires FCC biennial reports to Congress; first report by
October 8, 2012.
The FCC submitted its first biennial report to Congress on
October 5, 2012; next report due October 2014.
6. Requires the Comptroller General to conduct a study and report
to Congress by October 8, 2015.
Section 105. National Deaf-Blind Equipment Distribution Program
(NDBEDP)
Adds Section 719 to the Communications Act, which authorizes up to
$10 million from the TRS Fund annually to support programs that
distribute accessible telecommunications, advanced communications, and
Internet services equipment to low-income individuals who are deaf-
blind. Requires implementing rules by April 8, 2011.
On April 4, 2011, the FCC adopted rules to establish the
NDBEDP as a pilot program. The FCC certified state-based
entities and launched the pilot program on July 1, 2012. The
FCC will adopt rules for a permanent NDBEDP by June 2015.
Section 106. Emergency Access Advisory Committee (EAAC)
1. Requires the FCC to establish the EAAC within 60 days after
October 8, 2010.
On December 7, 2010, the FCC announced the appointment of
EAAC members.
2. Requires the EAAC, within 1 year after member appointment [or by
December 7, 2011], to conduct a national survey and submit a report
with recommendations to the FCC.
The EAAC conducted a national survey and submitted a report
and recommendations to the FCC on December 6, 2011.
3. Authorizes the FCC to promulgate regulations.
No implementation deadlines. On May 8, 2013, the FCC adopted
rules to require bounce-back messages by September 30, 2013,
when text-to-911 messages are not supported. Major carriers
volunteered to support text-to-911 by May 15, 2014.
Section 201. Video Programming Accessibility Advisory Committee (VPAAC)
1. Requires the FCC to establish the VPAAC within 60 days after
October 8, 2010.
On December 7, 2010, the FCC announced the appointment of
VPAAC members.
2. Requires the VPAAC to submit, within 6 months after the VPAAC's
first meeting on January 13, 2011 [or by July 13, 2011], a report with
recommendations about closed captioning of IP-delivered video
programming (``first report'').
The VPAAC submitted its first report to the FCC on closed
captioning on July 13, 2011.
3. Requires the VPAAC to submit, within 18 months after October 8,
2010 [or by April 9, 2012], a report with recommendations about video
description, emergency information, user interfaces, program guides,
and menus (``second report'').
The VPAAC submitted its second report to the FCC on April 9,
2012.
Section 202. Video Description, Emergency Information, and Closed
Captioning
Amends Section 713 of the Communications Act with respect to the
provision of video description, accessible emergency information,
closed captioning on video programming delivered using Internet
protocol, and petitions for exemption from the closed captioning
requirements.
Video Description
1. Requires, 1 year after the enactment of the CVAA, or by October
8, 2011, the reinstatement of FCC regulations that mandated the
provision of video description on video programming, with certain
modifications.
On August 25, 2011, the FCC released a report and order
reinstating the video description rules, effective October 8,
2011, and requiring compliance by July 1, 2012.
2. Requires, not later than 1 year after the completion of the
phase-in of the reinstated regulations, or by July 1, 2013, the FCC to
initiate an inquiry on video description and report to Congress 1 year
after initiating that inquiry, i.e., by July 1, 2014.
The FCC initiated an inquiry on video description on June 25,
2013.
3. After filing its report to Congress by July 1, 2014, but no
later than October 8, 2016, 6 years after the enactment date of the
CVAA, the FCC must extend the video description requirements to
broadcast stations in the top 60 television markets.
The FCC's video description rules extend requirements to
broadcast stations in the top 60 television markets beginning
on July 1, 2015.
4. Not before July 1, 2016, 2 years after completing its report to
Congress, the FCC may increase the video description requirement by up
to 75 percent (from 50 to 87.5 hours per quarter) for televised video
programming.
5. Nine years after the date of enactment of the CVAA, or by
October 8, 2019, the FCC must submit to Congress a report assessing the
provision of video description, particularly with respect to television
markets outside the top 60.
6. Ten years after the date of enactment of the CVAA, or on October
8, 2020, the FCC is authorized to phase in the video description
regulations for up to 10 additional television market areas each year.
Emergency Information
Requires the FCC to adopt rules, not later than 1 year after the
second VPAAC report, or by April 9, 2013, that require video
programming owners, providers, and distributors to convey emergency
information in a manner that is accessible to individuals who are blind
or visually impaired.
The FCC adopted rules on April 8, 2013, to require, by May
26, 2015, the use of a secondary audio stream to convey
televised emergency information aurally, when such information
is conveyed visually during programming other than newscasts,
for example, in an on-screen crawl.
Closed Captioning on Video Programming Delivered Using Internet
Protocol (IP)
Requires the FCC to adopt rules, not later than 6 months after the
first VPAAC report, or by January 13, 2012, to require closed
captioning on IP-delivered video programming that was published or
exhibited on television with captions after the effective date of such
regulations.
On January 12, 2012, the FCC adopted rules governing the
closed captioning requirements for IP-delivered video
programming. Implementation was phased in for two different
types of IP-delivered programming: (1) programming newly added
to an IP distributor's inventory; and (2) programming already
in an IP distributor's inventory.
Programming that is newly added to an IP distributor's
inventory must be captioned if the program was shown on
television with captions on or after the following dates:
-- September 30, 2012--for pre-recorded video programming
that is not substantially edited for the Internet.
-- March 30, 2013--for live and near-live video programming.
-- September 30, 2013--for pre-recorded video programming
that is substantially edited for the Internet.
Programming already in an IP distributor's inventory must be
captioned according to the following implementation schedule:
-- Within 45 days after the program is shown on television
with captions on or after March 30, 2014 and before March 30,
2015;
-- Within 30 days after the program is shown on television
with captions on or after March 30, 2015 and before March 30,
2016; and
-- Within 15 days after the program is shown on television
with captions on or after March 30, 2016.
Exemptions Based on Economic Burden
Replaces the term ``undue burden'' with the term ``economically
burdensome'' as the standard by which the FCC is to assess requests for
exemptions from the closed captioning requirements.
No implementation deadlines. On July 19, 2012, the FCC
amended its rules to replace the term ``undue burden'' with
``economically burdensome'' and determined that the four
factors in Section 7 13(e) of the Communications Act will be
used to evaluate requests for exemption.
Section 203. Closed Captioning, Emergency Information, and Video
Description Capability
Amends Section 303(u) and adds Section 303(z) to the Communications
Act to update requirements for apparatus that receive, play back, or
record video programming to be compatible with closed captioning, video
description, and accessible emergency information so that these
features and services reach viewers.
Apparatus Closed Captioning Capability
Requires the FCC to adopt rules to update apparatus closed
captioning capability requirements within 6 months after the first
VPAAC report, or by January 13, 2012.
On January 12, 2012, the FCC adopted rules that require
apparatus manufactured on or after January 1, 2014 to comply
with the updated closed captioning capability requirements.
Apparatus Video Description and Emergency Information Capability
Requires the FCC to adopt rules for apparatus video description and
emergency information capability within 18 months after the second
VPAAC report, or by October 9, 2013.
The FCC adopted rules on April 8, 2013, to require apparatus
manufactured on or after May 26, 2015, to provide a secondary
audio stream to convey required video description and televised
emergency information aurally, when such information is
conveyed visually during programming other than newscasts, for
example, in an on-screen crawl.
Section 204. User Interfaces on Digital Apparatus
Adds Section 303 (aa) to the Communications Act. Requires user
interfaces on apparatus designed to receive or play back video
programming, including IP-delivered video programming, to be accessible
to and usable by individuals who are blind or visually impaired, and
mandates a mechanism that is reasonably comparable to a button, key, or
icon for activating closed captioning and video description features.
Requires the FCC to adopt rules for these provisions within 18 months
after the second VPAAC report, or by October 9, 2013.
On October 29, 2013, following the shutdown of the Federal
govermnent due to a lapse in appropriations, the FCC adopted
rules requiring video programming apparatus user interfaces to
be accessible to and usable by individuals who are blind or
visually impaired, and a mechanism for activating closed
captioning and video description by December 20, 2016.
Section 205. Access to Video Programming Guides And Menus Provided on
Navigation Devices
Adds Section 303(bb) to the Communications Act. Requires on-screen
text menus and guides provided by navigation devices (set-top boxes) to
be audibly accessible in real-time upon request by individuals who are
blind or visually impaired, and mandates access to any built-in closed
captioning capability through the use of a mechanism that is reasonably
comparable to a button, key, or icon designated for activating the
closed captioning or accessibility features. Requires the FCC to adopt
rules for these provisions within 18 months afier the second VPAAC
report, or by October 9, 2013.
On October 29, 2013, following the shutdown of the Federal
government due to a lapse in appropriations, the FCC adopted
rules requiring on-screen text menus and guides provided by
navigation devices to be accessible to individuals who are
blind or visually impaired, and a mechanism for activating
closed captioning by December 20, 2016. Small multichannel
video programming distributors (MVPDs) must comply by December
20, 2018.
unlicensed spectrum
Question. Spectrum is a scarce and valuable resource. This is the
case for both licensed and unlicensed spectrum. Unlicensed spectrum
fuels innovation and, according to one recent study, helped generate
over $220 billion in value to the US economy last year. Given the
growth of WiFi and the explosion of connected devices sometimes
referred to as the ``Internet of things,'' the value of unlicensed
spectrum will likely continue to grow.
As the Commission proceeds with upcoming spectrum auctions, will
you work to preserve adequate access to unlicensed spectrum?
Answer. As contemplated by the Middle Class Tax Relief and Job
Creation Act, the May 15th Incentive Auction Report and Order adopted
rules to permit unlicensed use of technically reasonable guard bands
required to protect licensed services in the new 600 MHz band, in
addition to Channel 37 and remaining TV White Spaces. This action will
make available a significant amount of low-band spectrum for unlicensed
use, much of it on a consistent, nationwide basis.
We also are actively participating in ongoing efforts with the
Department of Transportation and industry to resolve technical issues
in a portion of the 5 GHz ITS band currently used for vehicle-to-
vehicle communications and with the Defense Department to resolve
issues in a portion of the 5 GHz band used for military radar.
Resolving these issues could make an additional 195 MHz of spectrum
available for wireless broadband. We hope and expect parties to engage
productively, and we will be watching closely.
budget request for universal service fund (usf) reform
Question. The fiscal year 2015 President's budget requests an
additional 45 FTE for Universal Service Reform. Please provide a table
that lists each new FTE by office and bureau, with a description of the
proposed responsibilities for each new FTE.
Answer. The FCC's $10,877,000 request would provide 45 additional
FTEs for enforcement-based oversight and supplement the 25 FCC
employees tasked with oversight of the $8.4 billion USF programs.
Specifically, the requested funds will provide for a Joint USF Anti-
Fraud Task Force to combine resources agency-wide and develop a
strategic, targeted approach to identifying, preventing, eliminating
and prosecuting activities that undermine the integrity of the USF
program. The 45 FTEs will be spread throughout the agency as follows:
--6 FTES for Office of Inspector General (investigations and
enforcement)
--20 FTEs for Enforcement Bureau (increasing EB 's capacity to handle
complex cases)
--10 FTEs for Office of Managing Director (financial systems and
operational oversight)
--9 FTEs for Wireline Competition Bureau (oversight and compliance
activities such as identifying potential rule violations,
reviewing data and reports from beneficiaries)
Below are detailed descriptions of the bureau activities and the
bulk of these employees, but note that there may be adjustments based
on budgetary constraints and a final programmatic review:
FCC USF Anti-Fraud Joint Task Force Plan: Wireline Competition Bureau
--The Wireline Competition Bureau (WCB) oversees the Federal
Universal Service Fund. WCB manages the four USF programs--
Lifeline, E-Rate, Connect America Fund and Rural Health Care--
as well as contributions. Because WCB manages the Fund in close
coordination with USAC, WCB often becomes aware of potential
abuse of the Fund, mainly through USAC audits, appeals, annual
filings, press reports and! or through discussions with
stakeholders.
--WCB's role will fall into three main categories: initial inquiry
into potential rule violations; internal support and
consultation; and coordination and outreach.
--Initial Inquiry into Potential Rule Violations.--WCB is well-
positioned to serve as the eyes and ears of the agency to
identify potential rule violations. WCB meets with funding
recipients and others involved with USF on a daily basis
and in the course of those meetings frequently identifies
situations that deserve further scrutiny. WCB also
coordinates with USAC on a daily basis and often becomes
aware through that process of potential violations.
WCB staff will enhance and augment these existing functions by
dedicating expert staff to these tasks as well as to
analyzing data (e.g., National Lifeline Accountability
Database data, FCC Forms and Annual Reports), to identify
potential targets for investigation, conduct initial
assessments, and make prompt referrals to the EB Strike
Force.
--Internal Support and Consultation.--WCB will serve as a resource
on factual (including historical) and legal issues
regarding waste, fraud and abuse in each of the USF
programs. The team will identify patterns of fraud/fraud
risk in and among the USF programs. Based on lessons
learned in this process, the team will advise policymakers
on how to mitigate the risk of waste, fraud and abuse going
forward. The team would also provide USAC with guidance and
training on fraud related issues and will have a role in
the development and review of compliance plans. Finally,
the team will recommend areas for intensive review or
auditing to USAC, the EB Strike Force, and the OIG.
--Coordination and Outreach.--WCB will work with other
representatives of the USF Anti-Fraud Task Force to
coordinate efforts with OGC and OIG on fraud issues and
will work with OMR on crisis communications.
------------------------------------------------------------------------
Role Description # FTEs
------------------------------------------------------------------------
WCB Anti-Fraud Director............ Direct overall Anti-Fraud 1
activities for WCB;
report to Chief of TAPD.
Anti-Fraud Dedicated Staff Experts. For each program, at least 8
one legal expert and at
least one finance/
auditing expert initially
allocated as follows with
but with flexibility to
shift experts among
programs as needed:
--2 E-Rate legal experts
(also support Rural
Health Care)
--2 E-Rate compliance/
auditing experts (also
support Rural Health
Care)
--1 Lifeline legal
expert
--1 Lifeline compliance/
auditing expert
--1 Connect America Fund
legal expert
--1 Connect America Fund
compliance/auditing
expert
------------------------------------------------------------------------
Enforcement Bureau USF Strike Force
--The EB USF Strike Force will target fraud, waste, and abuse in all
four components of the USF: Lifeline, E-Rate, High Cost
programlConnect America Fund, and Rural Health Care.
--Strike Force--working in teams composed of attorneys,
investigators, and forensic analysts--will pursue violations of
the Communications Act, the Commission's rules, the False
Claims Act, the Debt Collection Improvement Act, and other laws
bearing on USF programs.
--The Strike Force will investigate allegations of wrongdoing by
specific targets, analyze data (e.g., NLAD data, USAC E-Rate
funding request data, etc.) to identify patterns of misconduct,
conduct undercover work, and target recidivists who resurface
under different corporate guises.
--The Strike Force will coordinate internally with other components
of the Joint USF Anti-Fraud Task Force (e.g., on investigations
where appropriate, on rulemakings, on policy issues) and
externally with DOJ and State authorities (e.g., Public
Utilities Commissions (PUCs), State attorney generals (AGs) and
other law enforcement) to investigate and pursue wrongdoers.
POSITIONS
------------------------------------------------------------------------
Role Description # FTEs
------------------------------------------------------------------------
Strike Force Director....... Direct overall activities of 1
Strike Force; report to EB
Bureau Chief
Deputy Directors............ Three deputies with 3
responsibilities divided as
follows:
--1. E-Rate
--2. Lifeline, Contributions
--3. High Cost, Rural Health
Strike Force Teams.......... Three 4-person teams responsible 14
for specific cases. Teams
consist of:
--1 attorney (team leader)
--1-2 investigator (interviews,
undercover, doc production,
etc.)
--2-3 forensic examiners
(document and financial
analysis)
Policy Counsel.............. One attorney tasked with working 1
collaboratively with other FCC
stakeholders on policy matters,
rulemakings, etc.
DOJ Trial Attorney Detailee. Funding for a DOJ criminal trial 1
attorney detailee dedicated to
handling USF fraud, waste, and
abuse cases
------------------------------------------------------------------------
Office of the Managing Director: FTEs to Eliminate Improper Payments;
and Improve Operational and Financial Oversight
The Office of the Managing Director (OMD) manages and oversees the
functions of the Universal Service Administrative Company related to
auditing, improper payments assessments and reporting, finance,
accounting, procurement, information technology, administration, and
personnel issues.
Identifying, Recovering and Reducing Improper Payments
--As required by the Improper Payments Elimination and Recovery
Improvement Act of 2012, OMD has worked to develop assessments
for each of the universal service programs that disburse
funding: Lifeline, E-Rate, High Cost programlConnect America
Fund, and Rural Health Care. Improper payments are any payments
that were not made or any payments that should have been made.
The law requires the Commission to have an error rate of lower
than 1.5 percent of total disbursements for each program.
--For the High Cost/CAF, E-Rate and Lifeline programs, the Commission
must analyze and constantly review and improve procedures to
accurately capture improper payments based on OMB guidance.
Specifically, additional OMD staff will focus on working with
other Commission offices and USAC to bolster the assessments
for those programs so we can demonstrate that we are testing
all of the key components of those programs. In addition, as
the programs are reformed, assessments procedures must be
updated and revised accordingly.
--Based on the findings in the completed assessments--as well as
findings from other audits and investigations--the Commission
must develop corrective action plans to reduce improper
payments under the statute. OMD staff will work other
Commission offices and with USAC to address areas of concern,
including by proposing rule changes, referring actions to the
Enforcement Bureau, performing further targeted audits,
conducting additional outreach, improving predisbursements
reviews, and taking other actions as necessary to remediate the
issues identified.
--OMD staff will work to increase recovery of funds from payment
recapture audits (USF Beneficiary and Contributor Audits, or
BCAP). Nearly $300 million in potential recoveries is
outstanding based on audit findings. Staff will determine
whether audit findings were correct and if funding can be
collected before recovery can proceed. Staff will review
outstanding issues and provide guidance to USAC and
stakeholders.
Operational and Financial Oversight
--Financial.--OMD staff will analyze USF program cash management
practices to determine whether to revise the current commitment
and disbursement policies and procedures. Work with agency's
CFO to ensure compliance with Federal financial requirements.
Oversee USAC efforts to reduce outstanding commitments and
disbursements.
--Information Technology.--OMD staff will work with USAC and
coordinate with other offices to modernize and improve USF
financial and programmatic systems. Improvements in the
financial systems will (1) ensure the proper funding is being
disbursed for each program; (2) provide stakeholders with
updated and user-friendly access to Commission and USAC
systems, information and data; and (3) improve data collection
and analysis to support policymaking and to determine whether
the Commission's programmatic and administrative goals are
being met for each program.
--Risk Assessments.--To comply with GAO recommendations, OMD staff
will manage and oversee program risk assessments for E-Rate and
Lifeline. OMD staff will also analyze, review and implement
recommendations that result from the risk assessments.
POSITIONS
------------------------------------------------------------------------
Role Description # FTEs
------------------------------------------------------------------------
Director of USF Oversight... Direct, plan and coordinate 1
overall activities
administrative oversight team;
report to Managing Director
Improper Payments Reduction As described above 3
and Reporting Team.
Information Technology As described above 2
Modernization Team.
Financial Management Team... As described above 2
Risk Assessment Team........ As described above 2
------------------------------------------------------------------------
______
Questions Submitted by Senator Mike Johanns
Question. In our hearing, you indicated that a change to the
regulation governing the FCC's implementation of their responsibilities
would take too long and therefore be of little value in helping the
rail industry meet the deadlines specified in the Positive Train
Control statute.
If the FCC is able to utilize the Program Comment and any modified
procedures in the 2004 Programmatic Agreement specified by the Program
Comment, what do you expect the pace of Positive Train Control (PTC)
pole approval to be, assuming the parties subject to compliance
obligations submit timely and complete data packages to the FCC?
Answer. On May 16, 2014, the Advisory Council on Historic
Preservation (ACHP) voted to approve a Program Comment that modifies
the FCC's usual procedures for historic preservation review. The
Program Comment permits several changes to our existing procedures that
should significantly reduce the time required for necessary review.
First, the Program Comment contains new, significant provisions that,
subject to certain exceptions, exclude from review deployments of PTC
poles installed in railroad rights of way within 500 feet of existing
equipment that is at least 25 feet tall, including signaling equipment
that includes a vertical post, catenary bridges or masts, or above
ground utility transmission or distribution lines and associated
structures.
For those poles not excluded from review, the Program Comment
provides for streamlined processing times. Once a railroad submits a
deployment notification, State and Tribal Historic Preservation
Officers have 30 days to express their interests or concerns. If there
is no response within 30 days, the railroad can refer the matter to the
FCC, which in turn has 10 business days to decide whether a Tribe or
SHPO can participate in the review. In addition, the Commission must
resolve disputes between the railroads and Tribes and SHPOs within 10
days. These are meaningful improvements to current processing times.
Question. The FCC's budget proposes to retain $106 million
collected from auction revenues to develop, implement and maintain its
auction program. This is $7.5 million above the fiscal year 2014 level.
In fiscal year 2013 the FCC sought a $13.7 million dollar anomaly,
increasing the cap from $85 million to $98.7 million, specifically for
costs associated with the first-ever incentive auction. The auction cap
was again set at the higher level in fiscal year 2014 at $98.7 million,
citing the need for additional resources for the incentive auction. The
fiscal year 2015 FCC budget again seeks an increase, now to $106
million, for essentially the same purpose.
Given concerns about transparency, the fiscal year 2014 Omnibus
adopted House report language which required the FCC to submit to the
Committees a report with specific detail on the Commission's fiscal
year 2015 projected auction expenditures.
The Committee just received the first required Auction Expenditure
report and it is difficult to understand what costs are attributable to
various auctions and what progress is being made towards the rollout of
the incentive auction with the use of these funds.
Would you please provide the Committee with more specific detail on
how those funds will be spent and any update you have on the progress
of the incentive auction process?
Answer. The Commission must maintain its systems and staff to carry
out traditional auctions while creating and maintaining new systems and
structures to handle the Incentive Auction process. Prior to 2013, the
Commission maintained its systems for a 10-year period at $85 million
without any inflationary adjustments. During that period, the
Commission administered its spectrum auction program, raising billions
of dollars for the Treasury and providing tens of thousands of
licenses. The Commission recently completed the $1.65B H Block auction,
while the AWS-3 auction is scheduled for the current year. Accordingly,
the next fiscal year will place additional strain on the traditional
auction process.
The increases during the past two fiscal years are specifically
geared toward the incentive auctions process. The first increase funded
start-up and initiation costs of a complex, unique system, and the next
fiscal year will see an intensification of the auctions activities
process. Below is a description of the work and continuing activities
generating the added costs for the auctions program.
Public Releases
--The Incentive Auction rulemaking process continues, with the
adoption of the Incentive Auction Report and Order, Wireless
Microphones Report and Order, and Mobile Spectrum Holdings
Report and Order on May 15, 2014.
--To assist the Commission in making policy decisions, and to support
auction research conducted by our outside auction design
experts, the staff runs studies daily, using complex software
developed to support these tasks. Preliminary results from
these studies have been released to the public in the Repacking
Data Public Notice,\1\ and the accompanying workshop/webinar
discussing these results,\2\ and in the Aggregate Interference
Public Notice,\3\ which is scheduled to be released concurrent
with the Incentive Auction Report and Order.
---------------------------------------------------------------------------
\1\ Incentive Auction Task Force Releases Information Related to
Repacking; Announces Workshop/Webinar to Provide Additional Detail, GN
Docket No. 12-268, ET Docket No. 13-26, Public Notice, 29 FCC Rcd 47
(2014).
\2\ LEARN Workshop on Feasibility Checking During Repacking
Process, FCC (Feb. 21, 2014), available at http://www.fcc.gov/events/
learn-workshop-feasibility-checking-during-repacking-
process.
\3\ Incentive Auction Task Force Releases Updated Constraint File
Data Using Actual Channels and Staff Analysis Regarding Pairwise
Approach to Preserving Population Served, GN Docket No. 12-268, ET
Docket No. 13-26, Public Notice, DA 14-677 (2014).
---------------------------------------------------------------------------
Software Development
--IT Upgrades.--Conducting the first-ever Incentive Auction is
complicated, and requires advanced computer system development
and upgrades to the Commission's current auction system to
support integrating the reverse and forward auctions with the
``repacking'' of television stations in the UHF band.
--Feasibility Checking.--The voluntary reverse auction, where
descending prices are offered to broadcast television licensees
in return for relinquishing usage rights, can continue only
insofar as the Commission is able to guarantee that any bidder
that exits the auction can receive a channel in its ``home''
(UHF, upper VHF, or lower VHF) band. To determine how prices
decrease and how winners are selected, our outside auction
system designers have developed software called a ``feasibility
checker'' to perform thousands of these checks in real-time.
--Optimization.--To determine an initial spectrum clearing target, as
well as a final channel assignment, the Commission will need to
run integer optimization software. In conjunction with our
outside auction designers, we are also continuing to explore
the use of integer optimization solvers at other points of the
reverse and forward auctions, or in the repacking process. The
staff has been working to develop elaborate optimization models
to achieve a balance between cost and computational time.
--Auction Bidding Systems.--The Commission has an online auction
system (``ISAS'') that has served well since the debut of
spectrum auctions. However, the system as it is currently built
cannot support the unique nature of the Incentive Auction, and
staff has been working with our outside auction service
provider to design a replacement bidding system engine that
will support our current and future needs. The three components
of the Incentive Auction are all integrally connected, and
major features, including to the user-experience, require a
redesign to allow for a successful bidding process.
--Systems Integration.--Similarly, if any one component of the
Incentive Auction system fails, it could cause the entire
auction system to fail. Recognizing that systems integration is
a crucial component to achieving the goals of the Spectrum Act,
the staff has focused much attention on ensuring that connected
pieces communicate successfully (from the clearing target
optimizer to the reverse auction bidding engine and feasibility
checker, for example). We have also begun the process of hiring
a team to help with systems user acceptance testing, and an
independent verification and validation team.
Studies
--As in the previously mentioned public releases, the Incentive
Auction team runs studies and study scenarios to inform staff
and Commission decisions regarding policy decisions, and the
cost-benefit analysis of certain design considerations. The
staff works closely with our outside contractors to develop and
refine study software to test auction designs.
--The auction studies feed into cross-bureau and office teams, and
have been integral in negotiations with Mexico and Canada on
the possibility of performing a joint repacking of the UHF
band.
______
Questions Submitted by Senator Jerry Moran
Question. Thank you for your assurance at the hearing that the FCC
has a timeline and process to provide broadcast TV stations a ``book''
of financial data to help stations understand the kind of prices they
can expect to earn if they choose to participate in the upcoming
incentive auction. Strong participation by broadcasters will be
critical to the success of the auction. Could you please provide the
Committee with the timeline of the FCC process you referenced in your
testimony, including an approximate estimation about when TV stations
can expect to receive the financial information they need to determine
whether or not to participate in the auction?
Answer. I agree that strong participation by broadcasters will be
critical to the success of the Incentive Auction, and I am committed to
providing information to facilitate broadcasters' ability to make
informed, fact-based decisions about whether and how to participate. On
May 15, 2014, the Commission adopted its rules for the Incentive
Auction. We will be providing additional data and information to
broadcasters in the coming weeks and months, including a timeline for
our future actions, and a ``book'' of financial data to provide
broadcasters with an estimate of potential prices in the reverse
auction.
Question. As was noted in Commissioner Pai's testimony, the FCC has
traditionally generated large revenue for the Treasury from its
spectrum auction program, but between fiscal year 2009 and fiscal year
2013, Congress appropriated to the FCC $452 million for auction-related
expenses and the Commission only generated $73.25 million in auction
revenue. The FCC budget proposal asks for $106 million for costs
associated with auctions, which is just shy of a 25 percent increase
from the $85 million Congress allocated for most of the last decade. As
you know, the administration has suggested that they do not envision
clearing additional spectrum for auction after next year's auctions and
they will instead focus on spectrum sharing. If spectrum sharing
becomes the preferred strategy, should we expect the Commission's
auctions-related costs and corresponding personnel levels to drop in
fiscal year 2016 and beyond since there are no additional major
spectrum auctions planned?
Answer. Certainly spectrum sharing is a goal of the Commission, and
spectrum clearing is also possible in other instances. In some
instances, shared spectrum may be auctioned, as will be the case with
our AWS-3 auction scheduled for this Fall. We have spectrum auctions
authority during the next decade, and sometimes those auctions will be
small but with significant economic impact. For instance, during the
period where you noted that the Commission only generated $73.25
million in revenue, we auctioned more than 16,000 licenses, resulting
in important growth benefits for numerous businesses nationwide. Also,
it is essential to recognize the overall numbers--that auctions
spending has cost less than 2 percent of the revenue received from the
program, which is a terrific record for any government or private
program.
Question. The 's Wireline Competition Bureau recently announced a
rate floor increase, which will have a major impact on Kansas telephone
customers across the country. Rural Kansas telephone companies
currently charge rural customers anywhere from $11.77 to $18.25 per
month for phone service, and under Kansas law, they are only allowed to
increase rates by $1.50 per month in any 12-month period. The new rate
of $20.46 will be impossible for companies in my state to comply with
by the July 1, 2014 deadline. Are you willing to commit to delaying the
rate floor increase, and will you work with companies to address their
challenges so they can comply with the law?
Furthermore, if a carrier increases its rates to match the rate
floor, I understand that it does not lose any universal service
support. This appears to counter the argument that the rate floor
reduces ``excessive'' universal service subsidies, yet increases rates
despite the statute's requirement that telephone rates be
``affordable.'' What purpose does the rate floor serve other than
making rural rates less affordable?
Answer. For 2014, the Commission has delayed any further reductions
in universal service support until we have more information on the
number of lines affected. The Commission adopted an Order on April 23,
2014, that maintains the requirement that carriers file with the
Universal Service Administrative Company the number of lines with rates
below the rate floor, but delays any potential universal service
support reductions until January 2015. In addition, the universal
service support reductions that go into effect in January will only be
for those lines with rates below $16, with no further increases until
July 2016. The Order also excludes Lifeline recipients in order to
ensure that people with the least means are not affected. Future
reductions will be limited to an increase of no more than $2 per year.
Although I understand the concern regarding increased landline
rates because of the increased rate floor, what we have seen since the
Commission implemented this rule in 2012 is a minimal impact. The rate
floor increased from $10 in 2012 to $14 in 2013, a 40 percent increase.
Our rules do not require carriers to raise their rates. The fact that
many carriers continue to report some lines with rates well below the
$14 rate floor suggests that they may have made a business decision to
grandfather the lower rates for those customers and accept the
associated support reductions. In 2013, carriers in 34 study areas in
16 states were still reporting a number of lines with residential local
service charges of $5 or less, further reinforcing that individual
carriers may choose not to raise rates in response to the current rate
floor.
Question. On March 31, the FCC approved a plan to restrict
television broadcasters' use of joint sales agreements (JSAs). What
data and facts were considered by the FCC to make a determination that
the use of JSAs was inconsistent with the spirit of media ownership
rules? Does the FCC currently collect information on JSA usage among
television broadcasters? If so, how many are there in the United
States? How many television stations owned by women and minorities
participate in JSAs? How many JSAs were approved by the FCC since 2002?
Answer. The Commission's attribution rules ``seek to identify those
interests in licensees that confer on their holders a degree of
`influence or control that the holders have a realistic potential to
affect the programming decisions of licensees or other core operating
functions.' '' The attribution rules are taken into account when
calculating ownership interests under the local TV and local radio
ownership rules. The Commission first proposed to attribute JSAs that
involve the sale of 15 percent or more of the weekly advertising time
between same market television stations in 2004, and sought additional
comment in 2010.
Based on the records developed, and our ongoing review of TV JSAs
as part of license transfer applications, there was growing concern
that the increasing prevalence of such agreements warranted attribution
similar to the radio attribution rules adopted in 2003, because they
``provide incentives for joint operation that are similar to those
created by common ownership.''
It is important to note that the Commission does not review or
approve JSAs, but does take such agreements into consideration when
reviewing applications to transfer licenses between entities. With the
adoption of the new rules, TV stations will now be required to file any
attributable JSA with the Commission, and will have 2 years to unwind
any attributable JSAs where the local TV ownership rule would not allow
joint ownership. Additionally, under existing rules, all radio and TV
stations are required to place a copy of JSAs in their public files.
Based on these self-reporting requirements, approximately 130 stations
currently report being involved in a JSA. Within the Order, the
Commission recognized that there could be some exceptions to the new
rule, where a JSA could be found to be in the public interest, and
provided an expedited waiver process to address those instances.
Question. Almost all small and medium-sized cable operators license
most of their programming through a single buying group, the National
Cable Television Cooperative (NCTC). In October 2012, the FCC issued an
FNPRM that tentatively concluding its definition of a ``buying group''
needs to be modernized and sought comment on this and other related
matters to ensure that buying groups utilized by smaller cable
operators can avail themselves of certain program access rules as
Congress intended. What is the status of this proceeding?
Answer. The Media Bureau is currently evaluating the record in this
proceeding, which raises complex legal and policy issues impacting not
just small cable operators but also programmers. The Bureau is
analyzing the costs and benefits of such a rule change as well as the
effect of this proposed rule change on the video marketplace generally.
While I understand the concerns raised by the NCTC, nothing is
prohibiting the NCTC from qualifying as a buying group under the
existing rules, as they previously have done.
questions related to information technology strategy and investments
Question. Describe the role of your agency's Chief Information
Officer in the oversight of IT purchases. How is this person involved
in the decision to make an IT purchase, determine its scope, oversee
its contract, and oversee the product's continued operation and
maintenance?
Answer. The Commission's Chief Information Officer (``CIO'') or a
member of the CIO's team is involved in every major IT acquisition by
the FCC. The FCC IT Team has recently launched an updated enterprise
planning approach that will improve transparency, accountability, and
responsibility throughout the entirety of the IT investment lifecycle.
The IT team is involved from the submission of an investment request to
seeing the projects to completion as well as simultaneously tracking
the on-going benefits of the investment made as a result of the
project.
Question. Describe the existing authorities, organizational
structure, and reporting relationship of your agency Chief Information
Officer. Note and explain any variance from that prescribed in the
Information Technology Management Reform Act of 1996 (aka, The Clinger-
Cohen Act) for the above.
Answer. The FCC's CIO is located within the Office of the Managing
Director (``OMD''). The Managing Director directs operations in OMD and
reports directly to the Chairman. The CIO in turn reports to the
Managing Director on the FCC's organizational chart and for practical
purposes coordinates with the Managing Director on the day-today
activities of the IT team at the FCC. For longer tenn, high priority,
and high visibility IT projects, the CIO along with the Managing
Director brief the Chairman on a regular basis.
The Clinger-Cohen Act specifically designated the CIO as reporting
to the agency head for certain matters related to strategic planning in
larger agencies listed in 31 USC Sec. 901(b) that are considered Chief
Financial Officer Act (``CFO Act'') agencies.\4\ While the FCC is a
smaller agency and is not a CFO Act agency; the CIO does regularly
advise the Chairman on IT issues as mentioned above.
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\4\ See 40 USC Sec. 11315(c).
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Question. What formal or informal mechanisms exist in your agency
to ensure coordination and alignment within the CXO community (i.e.,
the Chief Information Officer, the Chief Acquisition Officer, the Chief
Finance Officer, the Chief Human Capital Officer, and so on)? How does
that alignment flow down to agency subcomponents?
Answer. The FCC's smaller size and management structure lends
itself to a high level of coordination among the FCC's CXOs. The CIO,
CFO, CHCO, and CAO are all a part of OMD. The team meets at least
weekly as a group to discuss ongoing issues and to coordinate on
agency-wide matters.
Question. How much of the agency's budget goes to demonstration,
modernization, and enhancement of IT systems as opposed to supporting
existing and ongoing programs and infrastructure? How has this changed
in the last 5 years?
Answer. The FCC has spent the vast majority of its fiscal year 2014
IT budget, as it has in previous years, towards ongoing Operations and
Maintenance (O&M) of existing systems versus delivering new
functionality to the bureaus and offices it supports. To date, the FCC
has only spent 23 percent of its budget outlay on development,
modernization, and enhancement efforts. The remaining 77 percent has
been spent on O&M, mainly directed towards systems far beyond the
normal upgrade cycles. These numbers will change as a new system is
built out to accommodate the incentive auction scheduled for 2015.
Question. Where and how are you taking advantage of this
Administration's ``shared services'' initiative? How do you identify
and utilize existing capabilities elsewhere in government or industry
as opposed to recreating them internally?
Answer. Since the arrival of our new CIO, Dr. David Bray, the FCC
has conducted a number of information gathering sessions with industry
and with agencies and departments in government to ascertain the best
practices and best solutions available for various IT functions. The
FCC is pursuing avenues to have infrastructure services channeled
through larger, and better resourced, agencies in order to minimize its
exposure, both physical and monetary, to risks associated with the use
of the Internet.
The FCC recognizes that it cannot maintain a security posture
nearly as well as larger and better equipped agencies in government. As
an example, the FCC has been pursuing a course of action with Defense
Information Systems Agency (DISA) as a provider. Unfortunately, DISA is
looking for at least 50,000 users in an organization when it provides
these services. The FCC's size at less than 1,800 employees does not
readily lend itself to the DISA solution without additional incentives
for them to take on the work.
On the application side, the FCC has been working at outsourcing
its Office of Inspector General (OIG) system to an agency with mature
and well-funded solutions, such as NASA. In this case, both government
agencies that do provide the service for other agencies are out of
capacity. The CIO is continuing to reach out to other agencies as well
as to industry providers to move capacity to a more flexible and modern
environment in a modular fashion. The above examples demonstrate some
of the FCC's ongoing efforts to find shared solutions. Since 40 percent
of the systems at the FCC are 10 years old, or more, the need for a
change is absolute, but re-creating the same applications on a new
platform inside the FCC' s four walls is not the preferred approach.
Question. Provide short, two-page, summaries of three recent IT
program successes, projects that were delivered on time, within budget,
and delivered the promised functionality and benefits to the end user.
How does your agency define ``success'' in IT program management?
Answer. Please find three summaries of recent FCC IT program
successes below. The FCC can provide additional details as necessary.
--ELS Enhancement.--The Experimental Licensing System (ELS) Web
portal was upgraded to allow for the licensing of four new
types of devices, medical in nature. This upgrade accelerates
the delivery of these medical devices for use in the
population.
--OGC Tracking System.--The Office of General Counsel expanded its
capabilities for the tracking of court cases. This was an
internal upgrade to help OGC's specific business needs. This
upgrade deferred the need to build a new system and was
accommodated within the existing infrastructure by building
upon a system that already existed at the FCC.
--EAS Redesign.--An agile development exercise with nine sprints
(discrete roll outs of functionality) which addressed some
security issues and developed the first phase of a new login
system. The new login system improves the ability of users from
outside the agency to login without having to go through a
separate unrelated system at the FCC to receive a separate
numeric login. This improvement assists users and saves time.
Question. What ``best practices'' have emerged and been adopted
from these recent IT program successes? What have proven to be the most
significant barriers encountered to more common or frequent IT program
successes?
Answer. The introduction and infusion of agile development and
behaviors throughout the organization has resulted in more timely and
better suited outcomes from development and projects in general. The
organization conducted numerous Agile training sessions ensuring that
all of the staff is aware of the methodology and practice of Agile.
The process of collecting and communicating requirements has long
been a sore point in the development and deployment of successful
systems. The FCC, through Agile development and better performance
tracking, has been able to overcome the initial challenges of producing
requirements that actually meet business goals. Through proper
discipline, and breaking down and measuring work in digestible slices,
the FCC can better understand and control the deliverables.
The FCC IT department has also adopted a strategy which includes
using ``intrapreneurs'' as the vehicle for strengthening partnerships
with the 18 bureaus and offices of the FCC. Using this system, each
bureau and office has a liaison working closely with them in defining
requirements and establishing a business case which is then fed through
a capital planning and investment control (CPIC) process for
evaluation. This approach promotes budget transparency and provides the
opportunity to drive data driven dashboards across all of the projects
in IT.
Question. Describe the progress being made in your agency on the
transition to new, cutting-edge technologies and applications such as
cloud, mobility, social networking, and so on. What progress has been
made in the CloudFirst and ShareFirst initiatives?
Answer. FCC IT has also instituted a layered approach driven by
modular development which allows for agility, and cost-savings, through
re-use of code, templates, and business functions. Resiliency in FCC
operations is also a major driver in the modernization of the FCC.
Protecting data, systems, and privacy by design through the use of
multiple tools and approaches has delivered a more secure environment
for FCC employees and clients. Examples of FCC commitment to
modernization and security can be evidenced in the roll-out of Virtual
Desktop Infrastructure (VDI) and delivering secure connections to
mobile devices, whether FCC or personally owned.
In committing to finding CloudFirst and ShareFirst approaches, the
FCC is modernizing in a modular fashion which will allow for faster
deployment to new environments as they become available. In moving data
to the cloud environment and creating a datamart, the FCC is attempting
to consolidate its sources of information to eliminate redundancies in
processes and data gathering.
The deployment of VDI, allowing for the use of devices anywhere at
any time in a secure fashion, has gone a long way towards making FCC
staff more mobile. The FCC has also facilitated the use of staffs
personally owned devices by deploying secure technologies allowing for
mobile device use in a secure fashion.
Furthermore, the FCC is moving to a new and more interactive
platform on its Web site which will allow for more timely and
interactive exchanges with the public as well as its employees.
To facilitate these many ongoing efforts and bring strategic vision
to the future of IT at the FCC, the CIO's team has identified the 7
tracks below as the primary paths forward for the IT organization's
support of the mission of the FCC:
--Improving Security to enhance telework and mobility.
--Securing internal and external collaborations.
--Strengthening FCC's IT security posture.
--Transforming access to FCC enterprise data.
--Modernizing legacy systems and tracking.
--Improving FCC.gov and complaint reform.
--Increasing transparency and system usability.
Question. How does your agency implement acquisition strategies
that involve each of the following: early collaboration with industry;
RFP's with performance measures that tie to strategic performance
objectives; and risk mitigation throughout the life of the contract?
Answer. The newly installed CIO of the FCC has instituted a process
by which providers who offer distinct solutions in areas where the FCC
is interested have an opportunity to present to relevant staff in our
Technology Center. This process is ongoing and allows the staff to
understand what is possible rather than focusing on the status quo.
Through this process, the FCC has chosen some technology paths which
allow for participation with technology providers who can solve present
problems with modernization and technology dependent solutions.
There are numerous examples of where the FCC has experienced
success in using performance measures for major IT investments. One
clear example was the replacement of its Core Financial System. As part
of the procurement process, the FCC asked bidders to prepare a quality
assurance surveillance plan (QASP) founded on an initial set of
performance metrics established by the FCC. The QASPs submitted by the
bidders were evaluated as part of the procurement process, and the FCC
has used the QASP throughout the lifecycle of the contract to evaluate
the quality, accuracy, and timeliness of products and services provided
by the vendor that was selected. Using the QASP process, a monetary
incentive or disincentive is assigned at regular intervals throughout
the lifecycle of the contract. The incentives correspond to the
project's performance standards.
Furthermore, the FCC has risk management processes built into its
major IT services contracts that were established as part of the
acquisition process. Through these processes, the FCC's vendors seek
first to plan appropriately to avoid risk. If risks do arise, the
vendors track the risks, seek to mitigate them, and generate regular
risk management reports by which IT staff can monitor the contracts
throughout their lifecycles.
Question. According to the Office of Personnel Management, 46
percent of the more than 80,000 Federal IT workers are 50 years of age
or older, and more than 10 percent are 60 or older. Just 4 percent of
the Federal IT workforce is under 30 years of age. Does your agency
have such demographic imbalances? How is it addressing them? Does this
create specific challenges for attracting and maintaining a workforce
with skills in cutting edge technologies? What initiatives are underway
to build your technology workforce's capabilities?
Answer. The FCC does not base hiring decisions on age or consider
age as a factor in determining workforce composition. Being mindful of
increasing levels of the staff becoming eligible for retirement,
however, the FCC has sought to use a combination of new hires and
detailed employees from other agencies to fortify its information
technology group.
By building a workforce based on skilled veteran employees as well
as new hires and detailed employees from other agencies, the FCC would
be able to increase its knowledge base. Outside expertise will help
inform the current staff about solutions used in other organizations
and agencies.
Question. What information does your agency collect on its IT and
program management workforce? Please include, for example, details
about current staffing versus future needs, development of the talent
pipeline, special hiring authorities, and known knowledge gaps.
Answer. Having recently brought in a new CIO to the FCC, the CIO's
transition team is evaluating the current workforce to identify
knowledge gaps and the agency's long-term staffing needs for the IT
workforce. Through this process, the CIO has identified staffing needs
that it is filling through both outside hires and detailed employees
from within the agency. Also, as mentioned above, the CIO is using
detailed employees from other agencies to provide a bridge across
knowledge gaps while the team seeks to fill open positions.
Questions Submitted to Hon. Ajit Pai
Questions Submitted by Senator Tom Udall
emergency 9-1-1 in hotel rooms
Question. Commissioner Pai, I understand from your testimony that
you are examining how to improve emergency 9-1-1 service in hotel
rooms. Could you explain briefly what the challenges are?
Answer. Yes. As you know from my written testimony, the problem is
that some of the ``multiline telephone systems'' (or MLTS) that are in
use in hotels, office buildings, college campuses, schools, and other
large facilities require users to dial an access code (like ``9'') to
complete a 911 call. In the case of Kari Rene Hunt Dunn, which is
discussed in my testimony, this meant that her daughter was required to
dial ``9-911'' to complete a call to 911. In emergencies, consumers
will not necessarily know that they are dialing from a phone that
requires an access code or what that access code might be.
So far, my inquiry has revealed that the challenges are not
technical, at least not for modern MLTS systems. Both the MLTS vendors
and the hotels I have heard from say that their MLTS systems can be
programmed or reprogrammed to allow consumers to reach emergency
personnel when they dial ``911.''
The problem is that a substantial number of these devices just
aren't set up that way, and many hotels do not realize that this is an
issue. When facilities that use MLTS are made aware of this issue, I
have found that they are willing and able to take steps to fix it. Take
La Quinta, for example. After surveying its franchisees earlier this
year, the company discovered that in about 60 percent of its franchised
hotels a guest would not reach emergency services by dialing ``911''
alone. La Quinta understood that this situation was unacceptable and
instructed its franchisees to solve the problem. It stated that, by
April 1, 2014, it expected that all La Quinta-branded hotels would have
systems in place that would connect guests with emergency personnel
when they dial ``911.'' This means that one company showed that it was
possible to fix this problem in hundreds of hotels in just 2\1/2\
months. Similarly, the InterContinental Hotel Group informed me that
the telephone provider for two of their hotel brands has already agreed
to push out a no-cost software update to allow for direct 911 dialing.
Based on these responses, I am not aware of any challenges that
would prevent hotels that use modern MLTS devices from ensuring that
their guests can reach emergency personnel when they dial 911. However,
from talking with various industry representatives about this issue, I
have heard that some older MLTS devices might not be capable of being
reprogrammed to allow direct access to 911. I have not heard a
definitive age or date range that would define that category of devices
(though some have suggested anecdotally that it might be in the 10-15
plus year range); nor do I have data about the percentage of any such
devices that may still be in the marketplace. I am going to continue to
explore this issue.
Question. How can the Federal Communications Commission (FCC) help
address these challenges?
Answer. One of the most important ways the FCC can help address
this issue is to bring public awareness and attention to the problem.
As suggested above, hotels in my experience are willing and able to fix
the problem when they are made aware of it.
I am committed to continuing to work on this issue and raise
awareness. As my testimony indicated, I launched an inquiry earlier
this year and started out by sending letters to the chief executive
officers of the 10 largest hotel chains in the United States. I have
also been working with the American Hotel and Lodging Association
(AH&LA) to find solutions to this problem. I expanded my inquiry at the
end of March by sending letters to some of the leading vendors of MLTS
devices and services, because this issue may occur not just in hotels
but also in the office buildings where Americans work and in the
schools where our children learn, among other places. In order to
address the problem on this broader scale, the entire MLTS vendor
community must be involved. I am looking forward to reviewing their
responses to my inquiry.
SUBCOMMITTEE RECESS
Senator Udall. And with the subcommittee being concluded,
the subcommittee is hereby recessed.
Thank you.
[Whereupon, at 11:18 a.m., Thursday, March 27, the
subcommittee was recessed, to reconvene subject to the call of
the Chair.]