    [House Hearing, 114 Congress]
    [From the U.S. Government Publishing Office]

               OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION

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

                                    HEARING

                                   BEFORE THE

                 SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

                                     OF THE

                        COMMITTEE ON ENERGY AND COMMERCE
                            HOUSE OF REPRESENTATIVES

                        ONE HUNDRED FOURTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                                 JULY 12, 2016

                                   __________

                               Serial No. 114-161

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

          Printed for the use of the Committee on Energy and Commerce

                            energycommerce.house.gov

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                        COMMITTEE ON ENERGY AND COMMERCE

                              FRED UPTON, Michigan
                                     Chairman

    JOE BARTON, Texas                    FRANK PALLONE, Jr., New Jersey
      Chairman Emeritus                    Ranking Member
    ED WHITFIELD, Kentucky               BOBBY L. RUSH, Illinois
    JOHN SHIMKUS, Illinois               ANNA G. ESHOO, California
    JOSEPH R. PITTS, Pennsylvania        ELIOT L. ENGEL, New York
    GREG WALDEN, Oregon                  GENE GREEN, Texas
    TIM MURPHY, Pennsylvania             DIANA DeGETTE, Colorado
    MICHAEL C. BURGESS, Texas            LOIS CAPPS, California
    MARSHA BLACKBURN, Tennessee          MICHAEL F. DOYLE, Pennsylvania
      Vice Chairman                      JANICE D. SCHAKOWSKY, Illinois
    STEVE SCALISE, Louisiana             G.K. BUTTERFIELD, North Carolina
    ROBERT E. LATTA, Ohio                DORIS O. MATSUI, California
    CATHY McMORRIS RODGERS, Washington   KATHY CASTOR, Florida
    GREGG HARPER, Mississippi            JOHN P. SARBANES, Maryland
    LEONARD LANCE, New Jersey            JERRY McNERNEY, California
    BRETT GUTHRIE, Kentucky              PETER WELCH, Vermont
    PETE OLSON, Texas                    BEN RAY LUJAN, New Mexico
    DAVID B. McKINLEY, West Virginia     PAUL TONKO, New York
    MIKE POMPEO, Kansas                  JOHN A. YARMUTH, Kentucky
    ADAM KINZINGER, Illinois             YVETTE D. CLARKE, New York
    H. MORGAN GRIFFITH, Virginia         DAVID LOEBSACK, Iowa
    GUS M. BILIRAKIS, Florida            KURT SCHRADER, Oregon
    BILL JOHNSON, Ohio                   JOSEPH P. KENNEDY, III,
    BILLY LONG, Missouri                 Massachusetts
    RENEE L. ELLMERS, North Carolina     TONY CARDENAS, California7
    LARRY BUCSHON, Indiana
    BILL FLORES, Texas
    SUSAN W. BROOKS, Indiana
    MARKWAYNE MULLIN, Oklahoma
    RICHARD HUDSON, North Carolina
    CHRIS COLLINS, New York
    KEVIN CRAMER, North Dakota

                 Subcommittee on Communications and Technology

                              GREG WALDEN, Oregon
                                     Chairman
    ROBERT E. LATTA, Ohio                ANNA G. ESHOO, California
      Vice Chairman                        Ranking Member
    JOHN SHIMKUS, Illinois               MICHAEL F. DOYLE, Pennsylvania
    MARSHA BLACKBURN, Tennessee          PETER WELCH, Vermont
    STEVE SCALISE, Louisiana             JOHN A. YARMUTH, Kentucky
    LEONARD LANCE, New Jersey            YVETTE D. CLARKE, New York
    BRETT GUTHRIE, Kentucky              DAVID LOEBSACK, Iowa
    PETE OLSON, Texas                    BOBBY L. RUSH, Illinois
    MIKE POMPEO, Kansas                  DIANA DeGETTE, Colorado
    ADAM KINZINGER, Illinois             G.K. BUTTERFIELD, North Carolina
    GUS M. BILIRAKIS, Florida            DORIS O. MATSUI, California
    BILL JOHNSON, Missouri               JERRY McNERNEY, California
    BILLY LONG, Missouri                 BEN RAY LUJAN, New Mexico
    RENEE L. ELLMERS, North Carolina     FRANK PALLONE, Jr., New Jersey (ex
    CHRIS COLLINS, New York                  officio)
    KEVIN CRAMER, North Dakota
    JOE BARTON, Texas
    FRED UPTON, Michigan (ex officio)

                                      (ii)

                                 C O N T E N T S

                                  ----------
                                                                       Page
    Hon. Greg Walden, a Representative in Congress from the State of
      Oregon, opening statement......................................     1
    Hon. Anna G. Eshoo, a Representative in Congress from the State
      of California, opening statement...............................     3
    Hon. Fred Upton, a Representative in Congress from the State of
      Michigan, opening statement....................................     5
        Prepared statement...........................................     6
    Hon. Frank Pallone, Jr., a Representative in Congress from the
      State of New Jersey, opening statement.........................     7
        Prepared statement...........................................     8

                                   Witnesses

    Tom Wheeler, Chairman, Federal Communications Commission.........     9
        Prepared statement...........................................    12
        Answers to submitted questions \1\...........................   107
    Mignon L. Clyburn, Commissioner, Federal Communications
      Commission.....................................................    19
        Prepared statement...........................................    21
        Answers to submitted questions...............................   108
    Jessica Rosenworcel, Commissioner, Federal Communications
      Commission.....................................................    26
        Prepared statement...........................................    28
        Answers to submitted questions...............................   114
    Ajit Pai, Commissioner, Federal Communications Commission........    32
        Prepared statement...........................................    34
        Answers to submitted questions...............................   122
    Michael O'Rielly, Commissioner, Federal Communications Commission    39
        Prepared statement...........................................    41
        Answers to submitted questions...............................   129

                               Submitted Material

    Letter of July 11, 2016, from Laurence H. Tribe, et al., to Hon.
      John Thune, et al., on behalf of the International Center for
      Law & Economics, submitted by Mr. Walden.......................    83
    Letter of July 12, 2016, from Ms. Clarke, Mr. Rush, and Mr.
      Butterfield to Thomas E. Wheeler, Chairman, Federal
      Communications Commission, submitted by Ms. Clarke.............    87
    Statement of Global Automakers, et al., July 8, 2016, submitted
      by Mr. Upton...................................................    89
    Report of May 9, 2016, ``Understanding and Appreciating Zero-
      Rating: The Use and Impact of Free Data in the Mobile Broadband
      Sector,'' Multicultural Media, Telecom and Internet Council,
      submitted by Mr. Butterfield...................................    90
    Letters of December 1, 2015, through June 15, 2016, from Members
      of Congress and Senators to Tom Wheeler, Chairman, Federal
      Communications Commission, \2\ submitted by Mr. Butterfield

    ----------
    \1\ Mr. Wheeler's responses have been retained in committee files and
    also are available at  http://docs.house.gov/Committee/Calendar/
    ByEvent.aspx?EventID=105179.
    \2\ The information has been retained in committee files and also is
    available at  http://docs.house.gov/meetings/IF/IF16/20160712/105179/
    HHRG-114-IF16-20160712-SD005.pdf.

               OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION

                                  ----------

                             TUESDAY, JULY 12, 2016

                      House of Representatives,
         Subcommittee on Communications and Technology,
                              Committee on Energy and Commerce,
                                                        Washington, DC.
        The subcommittee met, pursuant to call, at 10:18 a.m., in
    room 2123 Rayburn House Office Building, Hon. Greg Walden
    (chairman of the subcommittee) presiding.
        Members present: Representatives Walden, Latta, Barton,
    Shimkus, Blackburn, Scalise, Lance, Guthrie, Olson, Pompeo,
    Kinzinger, Bilirakis, Johnson, Long, Collins, Cramer, Upton (ex
    officio), Eshoo, Doyle, Welch, Yarmuth, Clarke, Loebsack, Rush,
    DeGette, Butterfield, Matsui, McNerney, Lujan, and Pallone (ex
    officio).
        Staff present: Gary Andres, Staff Director; Elena Brennan,
    Staff Assistant; Rebecca Card, Assistant Press Secretary; Gene
    Fullano, Detailee, Communications and Technology; Theresa
    Gambo, Human Resources and Office Administrator; Jay Gulshen,
    Staff Assistant; Kelsey Guyselman, Counsel, Communications and
    Technology; Grace Koh, Counsel, Communications and Technology;
    David Redl, Chief Counsel, Communications and Technology;
    Charlotte Savercool, Professional Staff Member, Communications
    and Technology; Dan Schneider, Press Secretary; Gregory Watson,
    Legislative Clerk, Communications and Technology; Jeff Carroll,
    Democratic Staff Director; David Goldman, Democratic Chief
    Counsel, Communications and Technology; Jerry Leverich,
    Democratic Counsel; Lori Maarbjerg, Democratic FCC Detailee;
    Dan Miller, Democratic Staff Assistant; Matt Schumacher,
    Democratic Press Assistant; Ryan Skukowski, Democratic Senior
    Policy Analyst; Andrew Souvall, Democratic Director of
    Communications, Member Services, and Outreach.

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

        Mr. Walden. I call to order the Subcommittee on
    Communications and Technology. I want to thank the Chairman and
    the Commissioners for being here once again today. I think this
    is our sixth oversight hearing, probably more to come before
    the end of the year, just for scheduling purposes for all of
    you. Obviously, it is our important responsibility to continue
    to be in active dialogue with the Commission and its Chairman
    and those that we oversee. It is both our responsibility, our
    obligation, and a good opportunity--I was going to say ``and a
    joy,'' Anna says ``fun''--to continue this. It is a very
    important segment of our economy, as you know, with lots of
    issues at stake.
        I want to just talk about several things that are on my
    mind this morning that I know the Commission is actively
    engaged in. One, as you know, Mr. Chairman, we have four, well,
    I don't know, since 2010 or so, complained about no update,
    meaningful update in the ownership rules. I am told that the
    Commission majority has now voted on that and I am also told
    that we probably won't see many changes when it comes to the
    ownership rules and regulations in the NPRM. And yet, the
    marketplace to me has changed dramatically since 2004. Further,
    the Congress has sent very specific views to the Commission
    through the legislative process that I hope have not been
    ignored when it comes to JSAs and other issues. That would be
    very disappointing.
        Obviously, I know several of you are concerned about the
    future of 911 as are we. And we are also concerned about States
    identifying in your own reports that levying money from
    consumers for 911 purposes and then turnaround and spend it in
    non-911 related areas. And so I would like to get your views on
    that because we are not a blank check and neither are you the
    consumers. So ownership rules, 911, obviously pretty important
    when we look at things.
        I would love to get an update from you on the incentive
    auction to the extent you can discuss that. Obviously, there
    are lots of issues related to the number of participating
    stations, the amount of spectrum available, and whether that
    meets up with capital. We all want to see a successful auction
    and I know you do too, and you and your teams have worked very,
    very hard in a very complicated part of the area.
        Merger authority continues to be an issue. It has been
    brought to my attention by some that continue to be
    requirements put on either sales or mergers that my opinion I
    get right up on the line, not of extortion necessarily, but
    certainly pretty heavy handed. I think of one involving a
    broadcast sale where apparently there was a pending complaint
    about indecency and the people involved in the sale had to
    waive their rights of appeal, couldn't put money in escrow in
    order to get approval and I would like to know if that is true
    or not and why the Commission might have gone that way. Also,
    the over-billed requirements apparently in the Charter- Time
    Warner merger, I would be curious to know why that was
    necessary going forward.
        Obviously, we remain concerned about communication among
    the Commissioners and the Chairman and vice versa and how that
    is going. We would love to get your update on your views of
    that from each of you and the sort of process reforms that we
    have talked about and in many cases in a bipartisan way
    legislated here at least through the House and kind of what you
    are seeing in terms of where the Commission is at from each of
    your perspectives.
        I know having been both in the minority and the majority,
    it is a lot easier in the majority, but that is also where you
    have to maintain, it is your responsibility to maintain an open
    process with the minority to the extent you may have
    differences, but hopefully there is a fair opportunity for the
    minority to have their say. We try to do that here. Sometimes
    we are even successful at it. We pass a lot of bipartisan
    legislation out of this subcommittee and full committee. It is
    always our intent to get to that point if we can.
        So obviously, a lot of issues before us. I look forward to
    your testimony. With that, I would yield the balance of my time
    to the vice chair of the committee, Mr. Latta.
        Mr. Latta. Well, thank you very much, Mr. Chairman, for
    yielding, and thanks to our Commissioners for being with us
    today.
        Lately, the Federal Communications Commission has proposed
    substantial rules without respect to their full effects and
    implications. The rules proposed on privacy requirements for
    broadband Internet service providers go beyond protecting
    consumers' data and fragments the current successful privacy
    framework established by the Federal Trade Commission.
        Another example I am still very concerned with is the
    Commission's vision on the set-top box proposal. No one is
    opposed to the goal of promoting alternatives to pay TV
    provider set-top boxes, but the FCC's plan is not the answer
    for addressing consumer demands.
        I am, however, encouraged that the Commission has seemed
    more open to making necessary changes to the Chairman's
    proposal. I urge the Commission to continue to work with the
    industry to develop an alternative plan that will foster
    competition and innovation while protecting small TV providers
    from onerous regulations, offer consumers more choice of
    privacy protection and safeguarding programming content and
    license agreements.
        Concerning the Commission's integral role in this
    marketplace, we must be watchful of the regulatory policies it
    places on the communications and technology industries. Today's
    hearing is an opportunity to maintain proper oversight of the
    FCC, Mr. Chairman, and I look forward to today's hearing and I
    appreciate and I yield back.
        Mr. Walden. The gentleman yields back the balance of his
    time. The Chair recognizes the gentlelady from California, the
    ranking member of the subcommittee, Ms. Eshoo, for opening
    comments.

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

        Mr. Eshoo. Thank you, Mr. Chairman, for holding this
    oversight hearing. Good morning to you, Mr. Chairman, and the
    members of the Commission. It is good to see all of you.
        This is the first oversight hearing since the Federal
    Appeals Court decision that upheld the FCC's net neutrality
    rules took place. I think and many think the ruling was a clear
    victory for the American people who believe in a free and open
    Internet and ensures that the Internet will remain a platform
    for innovation well into the future.
        So congratulations to you, Mr. Chairman, to the
    Commissioners, to the staff, to all the public advocacy
    organizations and the millions of people that contacted the
    Commission.
        The court's ruling also makes clear that the FCC is the
    sole Federal agency with authority to protect broadband users'
    privacy. Now some still argue that the Federal Trade Commission
    is the agency that should handle privacy protections for
    broadband. But the fact is that the FTC lacks the authority to
    do so. Under the law today, only the FCC can protect broadband
    user privacy. We can have a debate over the details of what the
    FCC should put into place, but I think the authority question
    is settled.
        Beyond privacy, the FCC has two other key issues it needs
    to act on before the end of the year. The first is opening up
    the set-top box market to more competition. The cable industry
    has put forward an alternative proposal and I am encouraged by
    the industry's recognition that competition is needed and that
    is actually required by law.
        The second issue is special access reform. INCOMPAS and
    Verizon have come together in an unprecedented way to provide
    the FCC with a framework to promote competition in this market.
    And we are all grateful to Congressman Doyle for leading on
    this issue relentlessly for over a decade. It is over a decade,
    isn't it, Mike, at least that? Yes, it feels that way anyway.
        So I urge the Commission to take advantage of the
    opportunities that the agreement presents to finally finish
    special access reform before the end of the year.
        And finally, I think it is really a source of shame that
    the majority continues to attack the Lifeline Program. Now
    whether it is an attempt to put an artificial cap on the fund
    or legislation to outright strip support for mobile phone
    service, I think that message is very clear. The majority is
    willing to rip away lifesaving communication tools from our
    most vulnerable citizens, including the ability to dial 911. I
    don't know which Commissioner would be willing to give that up
    themselves.
        So my thanks to Chairman Wheeler for his leadership, to
    each Commissioner for your work and for being here today, and I
    yield the remaining time that I have to Representative Doyle.
        Mr. Doyle. I want to thank you, Anna, for yielding to me.
    And, Mr. Chairman and the Commission, I want to add my voice to
    congratulate you on your victory last month in the U.S. Court
    of Appeals. I am glad to see the court affirmed what I and many
    of my colleagues have argued for years, that the FCC has the
    authority to ensure that the Internet remains an open platform
    for innovation and competition. This is a great victory for
    consumers and the Internet ecosystem at large.
        There is one area that I believe merits investigation and
    it is the Anti-Competitive Zero Rating, particularly when it is
    married with restrictive data caps. These policies, I believe,
    have the potential to harm consumers and inhibit innovation. I
    would like to see the Commission take some action to address
    these harmful policies.
        Finally, I want to also add my voice to urge the
    Commission. You have got three big things on the table to get
    done. And I would hope that the Commission finds a way to work
    together and get all three. Special access, I really don't want
    to go through another FCC Commissioner on special access and I
    think a solution is at hand. And I would urge you to follow
    through on that.
        I also believe, like Anna, that there is a path forward on
    set-top boxes. There has been an alternative solution offered
    by cable that I think merits consideration and we should take a
    look at and with regards to privacy, I know it is tough. I know
    there are issues between FCC and FTC, but I do believe if you
    all work together that there is a solution to be found, and I
    urge you to try to do that before you finish up your work this
    year. Thank you. I yield back.
        Mr. Walden. The gentlelady yields back the balance of her
    time. The Chair recognizes the chairman of the full committee,
    the gentleman from Michigan, Mr. Upton.

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

        Mr. Upton. Thank you, Mr. Chairman. Chairman Wheeler,
    members of the Commission, thank you again for joining us.
        Over the many times that we have convened, our message has
    been, my message has been consistent. The FCC has jurisdiction
    over one of the most important and vibrant sectors of our
    economy. Decisions are critical to innovation, jobs, and our
    Nation's leadership in global technology.
        What you do and how you do it has tremendous impact on all
    of us today, tomorrow, and for lots of years to come. And it
    matters here in Washington. It matters at home in Michigan. It
    matters across the country.
        We ask you to follow the lead of this committee and its
    pursuit to improve the FCC process for the betterment of all
    stakeholders. And dating back to the 112th Congress, we worked
    in a bipartisan way to usher H.R. 2583, the FCC Process Reform
    Act, through the House.
        And we urge the agency to engage in a fair, open,
    transparent process in the execution of its mission. We stress
    that your loyalty to these things provides the certainty that
    nurtures innovation, investment, and job creation.
        When we last met, the Chairman had recently presented his
    colleagues with a proposal to impose new requirements on the
    video subscription market and a new privacy regime for Internet
    service providers. These proposals have the potential to harm
    the very sectors that are attempting to preserve and stimulate
    and concerns continue to grow on both sides of the aisle.
        American consumers across the country and job creators are
    concerned with continued innovation, investment, and job
    creation that the communications and technology industries have
    delivered in the past. If you approach these significant
    matters and all others in the last couple of months, do so with
    an eye towards the successful policies that have fostered the
    video market and the Internet that are the cornerstones of
    American society. It is not time to throw in the towel. There
    remain opportunities to work across the aisle to get things
    done that really impact consumers, resolving concerns about
    rural call completion, successfully completing the incentive
    auction, and preventing the waste, fraud, and abuse in the
    Universal Service Fund should be bipartisan issues that we can
    agree on.
        Let us continue to work to the better, putting more of a
    premium on cooperation. There is a lot at stake and we need to
    get that done.
        [The prepared statement of Mr. Upton follows:]

                     Prepared statement of Hon. Fred Upton

        Chairman Wheeler and members of the Commission, thank you
    for joining us. Over the many times we have convened, my
    message has been consistent, the FCC has jurisdiction over one
    of the most important and vibrant sectors of our economy--its
    decisions are critical to innovation, jobs, and our Nation's
    leadership in global technology. What you do and how you do it
    has a tremendous impact on all of us--today, tomorrow, and for
    years to come. It matters here in Washington. It matters back
    home in Michigan. It matters everywhere.
        We asked you to follow the lead of this committee in its
    pursuit to improve FCC process for the betterment of all
    stakeholders. Dating back to the 112th Congress, we've worked
    in a bipartisan way to usher H.R. 2583, the FCC Process Reform
    Act through the House. We urged for the agency to engage in
    fair, open, and transparent process in the execution of its
    mission. We stressed that your loyalty to these things provides
    the certainty that nurtures innovation, investment, and job
    creation.
        Unfortunately, notwithstanding our repeated calls, all
    indications are that these requests have been ignored and that
    the FCC is broken--honest and vigorous policy debate,
    compromise, and collegiality are by all accounts absent on the
    eighth floor: an observation supported by the ever growing list
    of 3-2 votes. The agency has sadly become tainted by partisan
    politics, and seemingly lost its independence.
        When we met last, the Chairman had recently presented his
    colleagues with a proposal to impose new requirements on the
    video subscription market and a new privacy regime for Internet
    service providers. These proposals have the potential to harm
    the very sectors they are attempting to preserve and stimulate,
    and concerns continue to grow from both sides of the aisle.
        Folks back in Michigan, American consumers across the
    country, and job creators are concerned with continued
    innovation, investment, and job creation that the
    communications and technology industries have delivered in the
    past. As you approach these significant matters--and all others
    in these last months--do so with an eye toward the successful
    policies that have fostered the video market and Internet that
    are cornerstones of American society.
        While the agency has lost its way, it's not time to throw
    in the towel. There remain opportunities to work across the
    aisle to get things done that really impact American consumers.
    Resolving concerns about rural call completion, successfully
    completing the incentive auction, and preventing waste, fraud,
    and abuse in the Universal Service Fund should be bipartisan
    issues. Let's continue working to do better. Putting more of a
    premium on cooperation than on partisanship. There is much at
    stake, and we all want a flourishing and functioning, truly
    independent agency to help guide our economy for years to come.

        Mr. Upton. I yield the balance of my time to Mrs.
    Blackburn.
        Mrs. Blackburn. Thank you, Mr. Chairman. I join in
    welcoming each of you. We are so pleased that you are here. You
    have heard a myriad of issues that we are continuing to work on
    and appreciate that you would take the time to come and update
    and engage in conversations with us.
        Today, I am going to focus much of my attention on the set-
    top box issue. This is something we are hearing a good bit
    about and I am pleased that independent programmers have come
    to you with what could be an alternative approach that would
    still protect content. I should say it would protect content.
        For my content creators in Tennessee and individuals that I
    am hearing from, they are very concerned about this, not only
    in the domestic market, but what it would do to licensing
    agreements, et cetera, and their ability to work through this
    process. My content creators believe that if you create
    something, it is yours, and you deserve to be compensated on
    it.
        So I am pleased that you are here to enter into this
    discussion. We appreciate so much your time and your
    preparation, and Mr. Chairman, I yield back.
        Mr. Walden. The gentlelady yields the balance of her time.
    The Chair recognizes the gentleman from New Jersey, Mr.
    Pallone, ranking member of the full committee.

    OPENING STATEMENT OF HON. FRANK PALLONE, JR., A REPRESENTATIVE
                IN CONGRESS FROM THE STATE OF NEW JERSEY

        Mr. Pallone. Thank you, Mr. Chairman. Today's hearing comes
    weeks after the FCC's sweeping net neutrality victory before
    the DC Circuit. The court's decision was a major victory for
    Internet consumers and small businesses and the ruling was a
    momentous step towards legal certainty that the Internet
    remains an open platform for everyone. It was also a strong
    recognition of pro-consumer and pro-innovation policies that
    Democrats have championed for years.
        The court's decision helps create a stronger foundation for
    future policies that put consumers in the driver's seat.
        And now as we look ahead, we still have a number of issues
    before us including how to deal with Internet privacy. A recent
    study by the National Telecommunications and Information
    Administration found 84 percent of Americans are worried about
    their privacy and security online. And we must take these
    concerns seriously. And I appreciate the Federal Trade
    Commission who oversees privacy on Web sites providing
    thoughtful input into the FCC's proceedings. We should give
    consumers more protection online and not less.
        During this oversight hearing today, we are likely to hear
    more from our Republican colleagues about the Lifeline Program
    that keeps our Nation's low-income families connected. For
    months, Republicans have used charges of waste, fraud, and
    abuse to justify wrong-headed bills designed to rip phones away
    from those who need them the most.
        This morning I am releasing a Democratic committee staff
    report that investigated the on-going Republican charges. The
    report found that Republican allegations of more than $500
    million in fraud are baseless, relying on unfounded assumptions
    and bad data. In order to get to their $500 million claim,
    Republicans first assumed that every Lifeline recipient in a
    homeless shelter, in a veterans' group home, in a nursing home
    or just living with roommates to get by, that nearly every one
    of these people got their phone as a result of fraud. There is
    simply no way to justify these assumptions and it is incredibly
    counterproductive to any serious discussions on how to improve
    and strengthen this program.
        Our report finds that most of the waste, fraud, and abuse
    that have plagued the program resulted from policies the FCC
    adopted during the Bush administration and while some waste,
    fraud, and abuse likely still does take place, the FCC has
    worked hard over the past few years to track it down and wipe
    it out. Nearly $1 billion of unnecessary spending has been
    eliminated from the program as a result of the FCC's actions
    over the last 6 years.
        So I will repeat what I have been saying for months.
    Lifeline is a successful program that helps more than ten
    million Americans and we need to protect it. If my colleagues
    are serious about eliminating waste, fraud, and abuse in the
    program, stop these over-the-top accusations. Our report has a
    number of recommendations on productive ways to move forward.
    And so I encourage our Republican colleagues to work with us to
    make this critical program stronger.
        [The prepared statement of Mr. Pallone follows:]

                 Prepared statement of Hon. Frank Pallone, Jr.

        Today's hearing comes weeks after the FCC's sweeping net
    neutrality victory before the DC Circuit. The court's decision
    was a major victory for internet consumers and small
    businesses.
        The ruling was a momentous step toward legal certainty that
    the internet remains an open platform for everyone. It was also
    a strong recognition of pro-consumer and pro-innovation
    policies that Democrats have championed for years. The court's
    decision helps create a stronger foundation for future policies
    that put consumers in the driver's seat.
        And now, as we look ahead, we still have a number of issues
    before us, including how to deal with internet privacy. A
    recent study by the National Telecommunications and Information
    Administration found 84 percent of Americans are worried about
    their privacy and security online.
        We must take these concerns seriously. And I appreciate the
    Federal Trade Commission-who oversees privacy on Web sites--
    providing thoughtful input into the FCC's proceeding. We should
    give consumers more protection online--not less.
        During this oversight hearing today, we are likely to hear
    more from my Republican colleagues about the Lifeline program,
    a program that keeps our Nation's low-income families
    connected. For months Republicans have used charges of waste,
    fraud, and abuse to justify wrong-headed bills designed to rip
    phones away from those who need them the most.
        This morning I'm releasing a Democratic committee staff
    report that investigated the ongoing Republican charges. The
    report found that Republican allegations of more than $500
    million in fraud are baseless, relying on unfounded assumptions
    and bad data.
        In order to get to their $500 million claim, Republicans
    first assumed that nearly every Lifeline recipient in a
    homeless shelter, in a veterans group home, in a nursing home,
    or just living with roommates to get by--nearly every one of
    these people got their phone as a result of fraud. There is
    simply no way to justify these assumptions, and it is
    incredibly counterproductive to any serious discussions on how
    to improve and strengthen this program.
        Our report finds that most of the waste, fraud, and abuse
    that had plagued the program resulted from policies the FCC
    adopted during the Bush administration. And while some waste,
    fraud, and abuse likely still does take place, the FCC has
    worked hard over the past few years to track it down and wipe
    it out. Nearly $1 billion of unnecessary spending has been
    eliminated from the program as a result of the FCC's actions
    over the last 6 years.
        So, I will repeat what I've been saying for months.
    Lifeline is a successful program that helps more than ten
    million Americans and we need to protect it. If my colleagues
    are serious about eliminating waste, fraud, and abuse in the
    program, stop these over-the-top accusations. Our report has a
    number of recommendations on productive ways to move forward.
    We encourage our Republican colleagues to work with us to make
    this critical program stronger.
        Thank you to all of the Commissioners for testifying here
    today.

        Mr. Pallone. I would like to yield--well, I want to thank
    the Commissioners for testifying here today, and I will yield
    the remainder of my time to Congresswoman Clarke.
        Ms. Clarke. I thank the ranking member for yielding me
    time. I thank our chairman and ranking member for this
    morning's oversight hearing.
        Mr. Chairman and FCC Commissioners, good morning. According
    to the U.S. Census Bureau, by the mid-2040s, if not before,
    America will be a majority minority nation, meaning that the
    majority of Americans will be non-European descent people of
    color. It is critical that his population has access to news,
    information, and entertainment that is reflective of their
    experiences and their perspective. Without this representation,
    there is no voice reflective of their stories and without a
    voice, our cultural content suffers, thus decreasing cross-
    cultural communication and understanding.
        My core concerns focus on equity and inclusion and the
    media and telecommunications industry. And I am particularly
    concerned that we are not doing enough to create parity for all
    stakeholders.
        I recently formed the House Congressional Multi-Cultural
    Media Caucus where caucus members will offer suggestions and
    recommendations to the FCC to ensure that these tenets are
    considered when public policy decisions are being made. The
    goal is simple, to create economic sustainability and viability
    of multi-cultural media in any ecosystem. The owners of our
    Nation's media are shaping the public's narrative and it is
    important that it is inclusive in both representation on the
    airwaves, as well as ownership of its assets.
        Thank you very much, Mr. Ranking Member, and I yield back
    the balance of my time, his time to him.
        Mr. Walden. And he yields it back to the committee. So
    thank you all for your opening comments. We will go now to the
    Chairman and the Commissioners for their testimony.
        And Mr. Chairman, we welcome you back before our
    subcommittee. And I think you have heard from members on both
    sides of the aisle about issues they are deeply concerned about
    and the direction of the FCC and we appreciate your being here
    to respond to those and any other comments you may have.

      STATEMENTS OF TOM WHEELER, CHAIRMAN, FEDERAL COMMUNICATIONS
         COMMISSION; MIGNON L. CLYBURN, COMMISSIONER, FEDERAL
     COMMUNICATIONS COMMISSION; JESSICA ROSENWORCEL, COMMISSIONER,
      FEDERAL COMMUNICATIONS COMMISSION; AJIT PAI, COMMISSIONER,
       FEDERAL COMMUNICATIONS COMMISSION; AND MICHAEL O'RIELLY,
            COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION

                        STATEMENT OF TOM WHEELER

        Mr. Wheeler. Thank you very much, Mr. Chairman, Ranking
    Member, and all members of the committee.
        Today is a special day, obviously, with this committee
    coming together. We also have to recognize it is a special day
    for another reason. It is Commissioner Rosenworcel's birthday
    today.
        Mr. Walden. Happy birthday.
        [Applause.]
        Mr. Wheeler. We can find unanimity on that resolution.
        Ms. Rosenworcel. Such a great way to spend my birthday here
    with you all.
        [Laughter.]
        Mr. Walden. Is there a hint of sarcasm?
        Mr. Wheeler. I have three quick topics to address, some of
    which you also have raised, Mr. Chairman, and I look forward to
    have questions from you and the rest of the committee: the
    incentive auction, the national priority of 5G, and as you
    indicated, next-generation 911.
        The incentive auction has sure put the lie to the claim
    that broadcasters wouldn't show up and participate. And the
    credit goes to this committee, your leadership, the ranking
    member's leadership for your foresight, vision, and leadership
    in creating this first in the world auction.
        The broadcasters have made available 126 megahertz. And
    what is really significant is that 99 percent of all the
    licenses that would be created are unimpaired licenses. And we
    spent a lot of time together worrying about impairment issues.
    It is the world's first reverse auction. It worked flawlessly
    and kudos are owed to Gary Epstein and Howard Symons and the
    team that has been working literally for years to follow
    through on your instructions.
        And now it is time to move on to the forward auction. For
    as long as I can remember--and I am sure you, too--the wireless
    industry has been pleading for more spectrum. Well, they got
    it, and it is beachfront spectrum at 600 megahertz. Our job is
    to create a market that makes that spectrum available. We now
    know the ``ask'' in that market, and we will soon know the bid.
        We have received the up-front payments from the wireless
    carriers, qualifying them to bid. And we will shortly be
    issuing a PN, public notice, indicating who those bidders are.
        If there is no bid ask alignment, we will start over with a
    reduced supply and we will keep working that until the market
    is made. Because of how licenses are assigned, the steps would
    be 120 megahertz, 114 megahertz, 108 megahertz, 84 megahertz.
    But I will remind everyone that the average of the FCC auctions
    over the years has been about 45 megahertz. So this is a big
    deal no matter what the number is.
        The bottom line is that your mandate is under way. The
    decisions made in the design of the auction are working. The
    systems are functioning and a market has been created for the
    first time ever.
        On Thursday, we will vote on another important spectrum
    issue to open up high-band spectrum for fifth generation
    wireless licensed and unlicensed spectrum. It is another world
    first. We will be the first nation to identify high-band 5G
    spectrum which means that in the last 2 years, we have made
    available low-band spectrum, mid-band spectrum, and high-band
    spectrum.
        Europe, by comparison, is talking about how maybe by 2020
    they will have low-band and mid-band and what their plans are
    for high-band are still very much up in the air.
        Our leadership in this is a national priority. The 21st
    century belongs to high-speed, high-capacity, low-latency
    wireless networks. And if we are the first in the world to move
    as we are hopefully going to do on Thursday, we will create a
    home-field advantage for those American companies and American
    workers who are involved in infrastructure, software and
    services.
        Our plan is to make the spectrum available and then get out
    of the way of the technology. The reality of our networks that
    we live in today is a reality that was created years ago, a
    decade ago, by decisions that were made or weren't made. The
    decision that we are going to make on Thursday will affect
    where this country is going to be for decades to come.
        Lastly, every time that I have been before you, I have
    urged Congress to legislate, to protect public safety over the
    next-generation 911 capabilities. Mr. Chairman, thank you for
    raising it today. The Commission has gone about as far as our
    authority can take it. I know Commissioner Rosenworcel has been
    touring 911 facilities. She wrote a spot-on op-ed on the topic
    and I know she has some thoughts in her testimony. And I have
    some recommendations in my prepared text as well.
        But here is the reality. Absent congressional action, there
    is no national program to improve public safety by applying the
    technology of next-generation 911. We are in the second decade
    of the 21st century and we are still relying on mid-20th
    century technology.
        I appreciate the opportunity to be here, Mr. Chairman, and
    I look forward to engaging in discussion on any topics you may
    want to ask.
        [The prepared statement of Mr. Wheeler follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Walden. I thank the Chairman. Obviously, we are willing
    to have that discussion on 911. We also, I would remind him,
    did a lot on FirstNet and enhancing that and some 911
    enhancements there. We know there is more to be done.
        We now recognize the former Chairwoman of the Commission,
    the gentlelady, Ms. Clyburn. Thank you for being here,
    Commissioner, we look forward to your comments.

                     STATEMENT OF MIGNON L. CLYBURN

        Ms. Clyburn. Thank you very much. Chairman Walden, Ranking
    Member Eshoo, distinguished members of the subcommittee, thank
    you for the opportunity to once again appear before you this
    morning to share my priorities and vision for a more connected
    America.
        Building on my mantra, community, community, community, in
    April I launched a ConnectingCommunities tour as a way to hear
    firsthand about the opportunities and challenges of bringing
    affordable, diverse, and competitive communications services to
    all Americans.
        Last month, I traveled to the ranking member's district and
    met several key innovators who are using technology to drive
    advancements in healthcare, broadband infrastructure,
    connectivity, and viewpoint diversity. Next month, I will
    travel to Congressman Lujan's district to learn about the
    unique communications needs of tribal communities.
        Now as I travel the country, people voice a common refrain,
    robust competition, affordably priced communications services,
    and policies that will enable innovation to flourish.
        Broadband is the way that a 21st century America connects
    with communities. It is with this in mind that I continue to
    prioritize affordable broadband opportunities.
        Modernizing our Lifeline Program was a momentous step in
    bringing affordable broadband to more Americans, but we can and
    must do more to make sure those economically disadvantaged are
    not priced out of the digital opportunity and the digital
    economy.
        Broadband is not truly available unless it is affordable.
    How can we make this happen? It starts with better data and a
    thorough analysis of consumer broadband costs. It also means
    making sure that affordability is a factor in how the
    Commission evaluates technology transitions. And it also means
    moving forward on a permanent Mobility Fund to bring the
    benefits of affordable mobile broadband to those currently
    without.
        Our great nation is on the cusp of ushering in the next
    generation of wireless broadband with the Commission's action
    this week to free up high-band spectrum for innovative 5G
    services. With an ever-increasing percentage of low-income
    Americans reliant on mobile broadband for online access, it is
    imperative that we ensure that they can reap the benefits of 5G
    and they are not left in the digital darkness.
        But my quest to connect all communities is not limited to
    broadband. It is also about examining how best to promote the
    availability of diverse and independent sources of video
    programming. The Commission heard repeated concerns of
    independent and diverse programmers from every conceivable
    ideological spectrum and followed through with the adoption of
    a Notice of Inquiry this past February.
        I am now working with Chairman Wheeler to determine next
    steps, but no matter the outcome, I believe the Commission has
    come out of this fact-finding exercise better positioned to
    identify solutions that can enhance our access to independent
    and diverse voices.
        Finally, I continue to believe that transparency should be
    a driving principle in the Commission's work to promote
    consumer choice, competition, and innovation.
        It should come as no surprise that billing issues rank
    among the top consumer complaints at the FCC. Knowing this, I
    partnered with Congressman Doyle on an op-ed calling for the
    Nation's communications providers to lead the way by
    voluntarily improving transparency and disclosure of ``below-
    the-line'' fees. Enhanced transparency will ensure that when
    consumers sign up for service, either online or in a store,
    that they will not have to wait for their first bill to learn
    what their total monthly costs will be.
        Thank you once again for allowing me to share my priorities
    with you this morning. And I look forward to answering any
    questions you may have.
        [The prepared statement of Ms. Clyburn follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Walden. Thank you very much, Ms. Clyburn. We appreciate
    your testimony and your work at the Commission.
        We now go to Ms. Rosenworcel. Thank you for being here
    again. Happy birthday to you and we are glad we could celebrate
    it with you.
        Ms. Rosenworcel. Thank you.
        Mr. Wheeler. Please go ahead.

                    STATEMENT OF JESSICA ROSENWORCEL

        Ms. Rosenworcel. Good morning, Chairman Walden and members
    of the subcommittee. Thank you for the opportunity to appear
    before you today.
        This week the Commission has the future on its agenda. At
    our monthly meeting on Thursday, we will adopt a framework for
    high-band spectrum to help develop the next generation of
    wireless services, known as 5G. This is exciting because the
    future belongs to the connected. And the United States should
    lead.
        However, I want to spend my time today not talking about
    the future, but instead talking a little bit about the here and
    now and what can be done right now to help improve our Nation's
    emergency number system.
        Last month, I was in Dallas, a city that is still reeling
    from the events of last week when a peaceful protest collapsed
    into unthinkable violence. While in Dallas, I spent time with
    Betty Wafer. She is the kind of person who knows the Big D
    inside and out. She was born and raised in the city and over
    the course of 33 years has risen to the top of its public
    safety ranks. She now wears the uniform and is in charge of 911
    Communications for the Dallas Police Department. There is not a
    lot she hasn't seen. Like most people who work the 911 front
    lines, she has a steely calm. After all, these are people who
    listen to us at our most troubled, and then help ensure that
    help is on the way.
        And as we walked through the Dallas 911 center, Ms. Wafer
    spoke about how technology has changed during her more than
    three decades on the job and how it has altered the ways we
    reach out in times of emergency. And the numbers back her up
    because nationwide we now call 911 240 million times a year.
    And more than 70 percent of those calls are made from wireless
    phones rather than traditional landline phones. In other words,
    the bulk of our emergency calls come over a different
    technology than the 911 system was designed to use.
        This is a problem. Because while technology has changed so
    much in our lives, the communications systems used by our
    Nation's 911 call centers have not fully kept pace. I know
    because I have seen this firsthand, not just in Dallas, but in
    the nearly two dozen 911 call centers I have visited all across
    the country from Alaska to Arkansas, California to Colorado,
    Nevada to New Jersey, Vermont to Virginia and many more places
    in between.
        It is not that work is not being done. I mean in the last 2
    years alone, with my colleagues we have been able to put in
    place policies to advance texting to 911. We have devised a
    framework to improve the ability of 911 call centers to
    identify the location of emergency calls made from wireless
    phones. And this is progress. But what can come next is even
    bigger.
        Next-generation 911 services can support a whole new range
    of video and data communications. For those who call in an
    emergency, it will mean an opportunity to offer real-time video
    from an accident. It will mean the ability to provide first
    responders with instantaneous pictures of a fleeing suspect or
    emergency incident. And those are the kind of capabilities that
    make public safety both more effective and more responsive.
        But to remake the Nation's 911 systems to fully reflect the
    digital age, it takes funding. And historically supporting our
    Nation's roughly 6,000 911 call centers has been strictly a
    local affair. There is no national program or annual Federal
    revenue source. But still, there is one thing this committee
    can do right now to kick start local 911 modernization.
        It is this. As you know, the Middle Class Tax Relief and
    Job Creation Act of 2012 authorized a series of spectrum
    auctions at the Commission. These auctions have already raised
    billions. And the proceeds from these auctions are dedicated to
    some initiatives that get a lot of attention like FirstNet,
    like assisting broadcasters with relocation in the 600
    megahertz band, and like deficit reduction. But there is
    program these spectrum auctions fund that has not get gotten
    the glory it deserves and that is a program for next-generation
    911.
        Section 6503 reinstates the joint 911 Implementation Office
    and authorizes a $115 million grant program for next-generation
    911. You might be familiar with it because this committee
    developed the program. But it has stalled and has yet to begin
    more than 4 years after this committee created it and after
    Congress authorized its creation.
        So I think if you can help us you can put on the pressure
    because it is time to get it up and running. It is the best
    near-term resource we have to put next-generation 911 in place.
    And while these funds are limited, they can have broad impact
    if we use them wisely and fund next-generation 911 projects
    that can be a blueprint for updating services in Dallas and
    nationwide.
        Thank you.
        [The prepared statement of Ms. Rosenworcel:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Walden. Thank you, Commissioner Rosenworcel. We
    appreciate you bringing that to our attention. Obviously, we
    get pretty frustrated when agencies and commissions don't do
    what they are mandated to do by statute on a timely manner. And
    so we are happy to follow up with that.
        We will now go to Commissioner Pai. Commissioner Pai, thank
    you for joining us. We look forward to your testimony as well.

                         STATEMENT OF AJIT PAI

        Mr. Pai. Thank you, sir. Chairman Walden, Ranking Member
    Eshoo, and members of the subcommittee, thank you for giving me
    the opportunity to testify this morning. Since 2012, it has
    been an honor to work with you on a bipartisan basis on many
    issues.
        Kari's Law is a good example of this. Dialing 911 should
    always work, but it sometimes doesn't. And the reason is that
    many phone systems require callers to dial an access code like
    a 9 before the call is placed. Kari's Law would help fix this
    by making direct 911 calling the default on those systems.
        Thanks to your work, along with the courageous efforts of
    Kari's father, Hank Hunt, the House of Representatives recently
    passed this legislation. I hope the Senate does so and that
    this bipartisan measure soon becomes law.
        I would like to focus the rest of my testimony on two
    important topics: the FCC's set-top box proposal and its
    Lifeline Program.
        First, set-top box. The breadth of opposition to the
    Commission's set-top box proposal signals how badly its scheme
    misses the mark. My friend and colleague, Commissioner
    Rosenworcel, rightly observed that the FCC's proposal has real
    flaws and we need to find another way forward.
        What should that way forward look like? In my view, first,
    it must protect the intellectual property of content creators
    and safeguard minority programmers. As Jesse Jackson put it,
    the FCC's proposed rules would allow third-party set-top box
    manufacturers to ``pull networks apart, ignore copyright
    protections, and dismantle the local and national advertising
    streams that have traditionally supported high quality, multi-
    cultural content.'' That is why Congresswoman Yvette Clarke and
    many other members of the Congressional Black Caucus have
    called upon the FCC to analyze the impact of these proposed
    rules on the diversity of programming and independent and
    minority television programming before pushing ahead. We should
    heed those voices.
        Second, we must address the challenges faced by small video
    providers. The record makes clear that the FCC's proposed rules
    would have a disproportionate impact on small companies.
    Indeed, the American Cable Association has stated that the
    FCC's proposal would force over 200 small operators to go out
    of business or to stop offering video service. Separately,
    bipartisan groups of 61 Representatives, led by Congressman
    Kevin Cramer and 10 Senators have expressed serious concern
    along these lines.
        Third, we must protect Americans' privacy. Senator Patrick
    Leahy has stressed that the ``same Federal privacy protections
    and enforcement mechanisms that apply to proprietary set-top
    boxes today should apply to third-party navigation systems as
    well.'' In other words, all consumers should have the same
    privacy protections. Unfortunately, the FCC's proposal fails
    this basic test.
        And fourth, we must embrace the technology of the future
    instead of clinging to the hardware of the past. Americans are
    increasingly accessing video programming through apps. With an
    app, there is no need to have a set-top box or the rental fee
    that goes along with it. With an app, your smart phone, your
    tablet, or your smart television can be your navigation device.
        Recently, as has been mentioned by members of the panel,
    stakeholders have proposed an app-based approach. My office is
    currently reviewing this promising proposal and I look forward
    to hearing what the members of this subcommittee think about
    it.
        The next topic is Lifeline. The FCC must be vigilant in
    stopping abuse of the Universal Service Fund. Hard-working
    Americans deserve to know that the money they contribute each
    and every month to the fund isn't wasted or put to fraudulent
    use. Unfortunately, the FCC's recent investigation of Total
    Call Mobile suggests that American taxpayers should be worried.
    Although my own investigation is still ongoing, the waste,
    fraud, and abuse in the Lifeline Program appears greater than I
    had imagined.
        Consider this. The National Lifeline Accountability
    database or NLAD, is supposed to check whether a subscriber
    already receives Lifeline service. But an unscrupulous wireless
    reseller can override that determination simply by checking a
    box and so wireless resellers have enrolled over 4.2 million
    subscribers using this override process since October of 2014.
    That is more than 35 percent of all subscribers enrolled in
    NLAD-participating States. And that is more than the population
    of the State of Oregon. The annual price to the taxpayer for
    these overrides alone is steep, about $476 million. That is not
    my only concern.
        Wireless resellers have overridden other Federal
    safeguards, enrolled actual duplicates, claimed support for
    phantom customers, and otherwise exploited loopholes in the
    program that likely resulted in hundreds of millions of dollars
    in USF money and taxpayer money going to wireless resellers
    instead of to deserving, low-income consumers. That is
    outrageous.
        I plan to work with this committee and my colleagues to
    stopping this spending spree and I particularly appreciate the
    decision of Committee Chairman Fred Upton to investigate this
    kind of waste, fraud, and abuse.
        Chairman Walden, Ranking Member Eshoo, members of the
    subcommittee, thank you once again for giving me the
    opportunity to testify. I look forward to answering your
    questions and working with you in the time to come.
        [The prepared statement of Mr. Pai follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

         Mr. Walden. Thank you, Commissioner Pai, we appreciate
    your diligence and your comments this morning.
        We will now go to Commissioner O'Rielly. Thanks for being
    with us, again for enlightening us on what your views are at
    the Commission and issues before the country. Please go ahead
    with your testimony.

                     STATEMENT OF MICHAEL O'RIELLY

        Mr. O'Rielly. Thank you, Mr. Chairman. Thank you for the
    honor to appear before you today.
        Let me start my testimony on an issue raised by my
    colleague, the Lifeline Program. I continue to be troubled by
    the waste, fraud, and abuse in the program and worry that it is
    not on a sufficiently sound footing. In retrospect, I had urged
    the Commission to address these concerns before expanding
    Lifeline to include broadband. When it became clear that the
    Commission was on a different track, I recommended reforms be
    paired with adequate measures to safeguard the program and
    protect consumers that pay fees to support the fund, including
    establishing procedures to stop new payments to a provider if
    certain metrics were exceeded, a concept I have referred to as
    creating circuit breakers.
        These ideas were ultimately rejected, in part, because the
    Lifeline order took the position that the reforms put in place
    since 2012 including the creation of a National Lifeline
    Accountability Database were highly effective. Sadly, that has
    not been the case. If more is not done to correct the
    situation, everyone should expect more incidents of waste,
    fraud, and abuse.
        Turning to the debate over set-top boxes, I share the
    concerns that many members of this committee have expressed
    about the Commission's proposed technology mandate as contained
    in the NPRM. In my dissent to that item, I argued that the
    proposal could significantly impede innovation in video
    delivery and put at risk valuable content as well as consumer
    privacy without assurances that anyone would save one thin
    dime. I have taken the position that it would make more sense
    to get rid of set-top boxes altogether. A common-sense,
    technology-friendly replacement for set-top boxes already
    exists in the form of downloadable apps, which can serve as the
    basis for a consensus approach to the set-top box quandary.
    Various video providers have strengthened this argument and
    approach by firm commitments on timing and price.
        Another issue of interest to the subcommittee is the
    Commission's long-awaited attempt at the required Quadrennial
    Review of media ownership rules. While American consumers
    embrace players such as MVPDs, over-the-top video players, Web
    sites, streaming music services, and satellite radio as part of
    their daily lives, broadcasters and newspapers alone are
    saddled with rules from a bygone era. I believe the Commission
    can better promote localism, competition, and diversity and be
    consistent with the public interest by thoughtfully removing
    outdated restrictions to media combinations.
        It has been argued that now is a bad time to introduce any
    disruption in the existing media ownership regime, due to the
    ongoing broadcast incentive auction. However, nothing excuses
    the retention of all the stale rules regarding radio and
    newspaper industries which will see little to no impact from
    the auction. Moreover, Congress was well aware of the
    Quadrennial Review requirements when it authorized the auction,
    and no special ``pending auction results'' or ``during the
    auction'' exemption was enacted. So the incentive auction
    cannot and does not let the Commission off the hook regarding
    its responsibilities to modify the rules in response to the
    marketplace conditions that actually exist today.
        On another matter, the Commission seems intent on adopting
    broadband privacy rules this year, but if the current proposal
    is adopted, it will affect the consumer Internet experience and
    reverberate throughout the technology industry for years to
    come. In addition to the legal problems I have previously
    articulated, the Commission has not justified imposing
    dramatically higher burdens on one segment of the Internet
    economy. By most accounts, current privacy structures,
    including the FTC's framework, have provided ample and
    appropriate protections for consumers. The FCC's proposal,
    however, goes much further. Instead of creating privacy rules
    based on consumer expectations and the sensitivity of the data,
    the FCC's proposal would require heightened consent for many
    consumer activities and could even prohibit certain practices
    that many consumers find beneficial.
        The record is full of many thoughtful comments from a wide
    range of participants, and I can only hope that the Commission
    will take them into account when crafting the final rules.
        Lastly, let me mention that my written testimony raises the
    need to consider legislation to enact fees in a spectrum-
    sharing environment where mutual exclusivity which is needed to
    trigger an auction is not obtained. I would be pleased to
    follow up on this topic if interest warrants.
        Thank you for the opportunity to testify and I stand ready
    to answer any of your questions.
        [The prepared statement of Mr. O'Rielly follows:]

    [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

        Mr. Walden. Thank you, Commissioner O'Rielly, and yes, we
    will look forward to further discussions on that last topic you
    raised.
        I am going to open up the questioning round. First of all,
    before I get started on questions, I do have a letter for the
    record signed by 14 law professors, economists, and experts on
    the operation of the Internet that details a number of very
    serious legal, economic, and constitutional concerns with
    regard to the FCC's proposed new rules for broadband privacy,
    some of which you have raised. Without objection, we will put
    that in the record.
        Now some questions. I met recently with folks from the
    Oregon Shakespeare Festival in Oregon, the Manhattan Theater
    Club and others, about this issue of licensed and unlicensed
    wireless microphones. Apparently, the FCC set a limit of 50 or
    more you can get licenses. Under 50, you can't. I don't know
    why 50 was chosen, but I do know representing one of the best
    theater companies in the world, the Shakespeare Theater
    Festival in Ashland, they are very concerned because they don't
    use 50 mikes, but now they can't get licensing and they are
    going to have a real mess. It is going to be expensive. It is a
    problem. It is not the sort of thing normally rises to a
    hearing level. I will follow up in writing with you, but just
    know from what they indicated it is a serious issue that will
    affect them and every other. There are only a couple of theater
    companies apparently on Broadway maybe that are big enough to
    get licensed and you have got all these regional ones that will
    be adversely affected.
        I want to go Lifeline since that has been brought up. Here,
    I will look forward to getting a copy of the Democrats'
    committee report. I was not aware of that. Have not read it.
    Look forward to the information and digesting it. But I am
    concerned, Commissioner Pai, about what you said about 4.2
    million consumers somehow get signed up and override one of the
    safeguards against fraud and abuse.
        I also know the Commission attempted to find common ground
    in a bipartisan way on this issue to try to get to a cap.
    Frankly, we were thinking the Commission was moving in a good,
    solid direction and I don't know what happened there. I
    understand there is an IG investigation, so I won't pursue it,
    but something went off the rails there. I am disappointed by
    that because we thought we were going to get the professional
    agency doing its professional job in that area and getting a
    cap that seemed to be reasonable and responsible. Very
    disappointed.
        So talk to me about this $4.2 million. Talk to me about the
    level of waste, fraud, and abuse. From what I have read in the
    press reports and the Democrats' position paper, they say there
    is no fraud, waste, or abuse increase after '08. Is that the
    case?
        Mr. Pai. Well, thank you for the question, Mr. Chairman. My
    investigation is ongoing, so these results are preliminary, but
    thus far, I have uncovered five different species of fraud. The
    fraud that you asked about was what is known as an independent,
    economic, household verification or IEH. Essentially, enforcing
    the FCC's rule that not more than one person in a particular
    household can get a Lifeline subsidy.
        Now based on the figures that I have received from the
    Universal Service Administrative Company, or USAC, which
    administers the Lifeline Program on our behalf, since October
    of 2014, wireless resellers have enrolled over $4.2 million
    subscribers in the Lifeline Program. That is over one third of
    the total enrollment in the program.
        The annual price to the taxpayer just for these overrides
    for 1 year is $476 million. That is just one type of fraud, the
    type of fraud that the staff report talks about.
        The other four kinds are also critical, however. Simply
    duplicates, essentially one person getting the same Lifeline
    subsidy. Just for those overrides as well, those duplicates,
    there are hundreds of thousands of them since between October
    and May of 2015, October of 2014 and May of 2015. USAC is
    compiling the additional analysis beyond that. Those duplicates
    cost $23 million. There is a third which is phantom
    subscribers. Essentially, these resellers tell the NLAD we have
    a certain number of subscribers, but then when it actually
    comes to be paid, they file a different form suggesting they
    have a higher number of subscribers and they get paid based on
    that higher amount. Those phantom subscribers, as they are
    called, cost the taxpayers millions more.
        There is also what is known as the TPIV or Third Party
    Independent Verification process. Those two cost $122 million
    because of the override of identity vectors.
        And fifth and finally, address overrides cost $55 million.
    Altogether, we are talking about----
        Mr. Walden. Why do we even have an address override
    capability by a vendor?
        Mr. Pai. I think it is a serious problem, and that is one
    of the reasons why I started this investigation, is to figure
    out if there is a problem with this loophole, and, if there is,
    we need to fix it on a bipartisan basis.
        Mr. Walden. Chairman Wheeler, moving to a topic high on
    your mind on 911, is there anything that prevents the States
    from moving forward with these enhancements in their 911
    facilities? Is there any Federal prohibition on that? And
    second, do you think States that take money from consumers
    under the auspices of 911 and then spend it on non-911 related
    services should continue to get Federal support or is that
    something we should look at, saying if you are going to divert
    this money, you are not going to get the Federal money?
        Mr. Wheeler. Thank you, Mr. Chairman. You know, almost 20
    years ago I worked with Mr. Shimkus on the first national 911
    bill. And one of the things that was in that bill was that the
    FCC should try and work with the States to do exactly what you
    have talked about and how can you have a Statewide program?
    There is resistance to Statewide programs. There are exceptions
    to it obviously, it is for 50 States, but there is a resistance
    to that in many instances.
        Mr. Walden. But don't you think because I am going to run
    out of time as I have now, do you think we ought to go down a
    path of considering cutting off support if States are raising
    money under the auspices of 911--if I am a consumer in Oregon
    and I am paying a 911 fee, I am thinking that is going to 911
    services. I will tell you it really irritates you then to find
    out as a consumer no, that is just a scam.
        If this was a private entity, if this was a private phone
    company, how long would you put up with that on the below-the-
    line billing practice?
        Mr. Wheeler. And, unfortunately, it is not new news. It
    goes back again, back to 20 years it has been happening. And I
    agree with you. If this were commercial, this would be a fraud,
    deceptive advertising.
        Mr. Walden. Deceptive advertising. And Ms. Rosenworcel, in
    terms of NTSA because we understand that is who has
    jurisdiction over what we mandated in the act a couple of years
    ago, happy to work with them, bring them in as well. Because as
    I said, you all know this first hand because you all have
    missed a few deadlines that are in statute in terms of reports
    back to us. We will push on NTSA to find out why they have not
    followed the statutory guidance of this Congress in their
    activities and appreciate the work you are doing.
    Unfortunately, it may be your birthday, but I am over time.
        So we will go to Ms. Eshoo now.
        Mr. Eshoo. Thank you, Mr. Chairman, and I would be glad to
    work with you on the issue of microphones in theaters.
        And I think that we should really seriously examine this
    issue of 911, the dollars that are collected by States, and
    then God knows what they do with the money. They use for it for
    everything but what the dollars are collected for. I think
    there should be a nexus between the Federal dollars that are
    expended and sent to States in order to set up what we know we
    need to serve the public well and if they want to take money
    from people, blow it elsewhere, I don't think they should
    qualify for Federal funds. So I would be glad to work with you
    on that.
        On the issue of set-top boxes, I just want to make this
    comment and I think that it is a very important one. Because it
    is a huge allegation which I don't think sticks and that is the
    issue of minorities and what all of that represents relative to
    cable.
        Twenty years ago, the Telecom Act was passed. In the
    ensuing 20 years, out of 500 channels there are 4 African-
    American programmers that have programs and 2 Hispanic. So to
    say that the FCC's proposal that wants to unlock all of this to
    give opportunity and ignore what has happened under what
    cable--the cable industry has done, really is a head scratcher
    to me. I don't understand how anyone can say with the straight
    face that the cable industry has really made progress. So I
    just want to set that down.
        Mr. Chairman, some of the critics of your proposed
    broadband privacy rules argue that any rules you adopt should
    apply to edge providers as well as to broadband providers. So I
    have two questions. Does the FCC in your view have authority to
    extend privacy rules to edge providers? And also, critics argue
    that the FCC lacks the necessary expertise to develop and
    enforce privacy rules.
        Do you want to comment on both of those?
        Mr. Wheeler. Thank you very much, Congresswoman.
        Mr. Eshoo. And just briefly because I have more questions.
        Mr. Wheeler. First of all, the answer is no, we do not
    intend to extend our reach to edge providers. And second, and I
    have now forgotten your second--what was your second one?
        Mr. Eshoo. Does the FCC have the necessary expertise?
        Mr. Wheeler. Oh, yes.
        Mr. Eshoo. Because your critics are saying----
        Mr. Wheeler. For decades, for decades.
        Mr. Eshoo [continuing]. Give it to the FTC. We love the
    FTC, except there is other legislation to take just about every
    jurisdiction away from the FTC. So, I mean, we have got some
    hypocrisy here, really.
        Mr. Wheeler. Congresswoman, the reality is that for
    decades, we have been regulating the use of network information
    in the telephone network saying a phone company cannot make it
    available to a third party without the consumers' permission.
    It is exactly the same kind of concept that we are talking
    about in broadband.
        Mr. Eshoo. Good. Thank you. To Commissioner Pai, you assert
    that all duplicate households, subscribers, have been enrolled
    fraudulently. At least that is what I heard you say including
    those living in multi-household addresses like nursing homes,
    homeless shelters, veteran group homes. In what you have
    undertaken to examine all of this, have you examined the--what
    I just mentioned, these multi-household addresses? Have you
    included them? Excluded them? And tell me that first.
        Mr. Pai. Thanks for the question, Congresswoman. So based
    on the information that I have collected, 4.2 million which
    represents 35 percent of all Lifeline----
        Mr. Eshoo. I know that. You already testified to that. But
    I am asking you specifically in this investigation that you
    have taken on, have you examined multi-household addresses
    because they exist. They exist in my congressional district, in
    everyone's congressional district. And if you are using those
    multi-household addresses to allege that there is fraud, then
    you know what, you have to be really careful with this. You
    really have to be careful with this.
        Mr. Pai. I agree completely, Congresswoman, and that is why
    I said we don't know if it is potentially fraudulent. We need
    to investigate given the magnitude of that number.
        Mr. Eshoo. So you don't know, you are just saying it might
    be?
        Mr. Pai. That is why I did the investigation to figure out
    what the facts are.
        Mr. Eshoo. It might be.
        Mr. Pai. Correct.
        Mr. Eshoo. It might be. Do you have any evidence of fraud
    yet?
        Mr. Pai. In some of the other areas, we have uncovered
    potential fraud, but I----
        Mr. Eshoo. So there is no area that you have discovered
    fraud yet, is that correct?
        Mr. Pai. Well, I think if you look at all of the----
        Mr. Eshoo. No, just answer me yes or no.
        Mr. Pai. I believe I have uncovered potential fraud. We
    just need to gather----
        Mr. Eshoo. No. Just answer me yes or no. Have you uncovered
    any fraud so far? That is fair, OK?
        Mr. Pai. To date, I have not reached that conclusion.
        Mr. Eshoo. Not. OK. Thank you very much.
        Mr. Wheeler. Congresswoman, we do know the facts. I would
    be happy to give them for the record. There are 2.2 million
    Lifeline subscribers today who live in 890,000 multiple
    resident addresses. I have got a list here. So for instance,
    the Kalamazoo Gospel Mission, the Louisville Rescue Mission,
    the Associated Ministries of Tacoma, Rescue Mission Christian
    Ministry in Roanoke, et cetera, et cetera.
        The total represents----
        Mr. Walden. Conveniently located in the members of the
    subcommittee's districts.
        Mr. Wheeler. I am sorry, what?
        Mr. Walden. Just by happenchance members of the
    subcommittee.
        Mr. Eshoo. We all have them in our districts. They said
    that.
        Mr. Walden. I know.
        Mr. Wheeler. The point being that it is about 16 percent of
    our total. The Census Bureau tells us that somewhere between 20
    and 50 percent, depending upon your economic situation, 20 to
    50 percent of American households are doubled up households,
    just like the ones that I read. We are at 16 percent, which is
    the low end.
        So the answer to the question, yes, we do know what the
    number is. We do know the households.
        Mr. Walden. So you are going to say there is no fraud
    there. Yes or no?
        Mr. Wheeler. I am going to say to you, sir, that we are
    vigilantly working and the reason that we know----
        Mr. Walden. Just like Commissioner Pai.
        Mr. Wheeler. The reason that we know this is because we
    have been out making these kinds of investigations.
        Mr. Walden. Right. We do know there was a case of fairly
    substantial fraud that you all have gone over after, right?
        Mr. Wheeler. And the reality on that case, as is most of
    Commissioner Pai's so-called statistics is that he is reading
    from yesterday's newspaper.
        Mr. Walden. I don't care if it is yesterday's or a month
    ago.
        Mr. Wheeler. These were set down in 2015.
        Mr. Walden. Right. What was the dollar amount in that?
        Mr. Wheeler. $51 million was our fine.
        Mr. Walden. Do you think that is an insignificant number?
        Mr. Wheeler. No, I am sorry, that was our fine. There were
    37,000 individuals----
        Mr. Eshoo. And that was the private sector ripping off the
    public sector, and the FCC went after them.
        Mr. Walden. And what is what we are all talking about doing
    more of.
        Mr. Wheeler. The root of the problem goes back to the fact
    that the program was designed at the outset to be one where the
    fox was guarding the hen house. What the original FCC proposal
    plan was that we have been playing Whac-a-Mole with for the
    last 8 years----
        Mr. Shimkus. Mr. Chairman, I would ask for regular order
    and getting back to the schedule.
        Mr. Wheeler. It was to how do we deal with this reality and
    the design was bad. It is an important program, poorly
    designed. And we have been playing catch-up ball, and in our
    recent order we put a national verifier in place.
        Mr. Walden. I am going----
        Mr. Wheeler. Which changes the game entirely.
        Mr. Walden. And as you know, I have said publicly, you all
    have been cleaning it up. The notion that all of the kinks are
    out of the system, I think it would be hard to defend.
        We will now go to----
        Mr. Eshoo. I yield back.
        [Laughter.]
        Mr. Walden. We will now go to the vice chair of the full
    committee, Ms. Blackburn.
        Mrs. Blackburn. And I will promptly change the topic.
    Chairman Wheeler, let us go to the E-rate funds. I have talked
    to you about the Sweetwater Consortium.
        Mr. Wheeler. Yes, ma'am.
        Mrs. Blackburn. And we brought it up at the last hearing.
    That is a group of 46 schools in Tennessee. They serve hundreds
    of thousands, a third of the school children in our State. And
    they have been denied $60 million in funding for 4 years and in
    your response you submitted after the last hearing, you state
    the Consortium's appeal was filed on May 9th. It is currently
    pending with the Wireline Bureau. What is the status update?
        Mr. Wheeler. So thank you, Congresswoman. I mean it is not
    unrelated to the discussion we just had because it is how do
    you follow the rules to make sure that waste, fraud, and abuse
    is mitigated? And one of the rules in the E-rate Program should
    be competitive bidding. And in the Sweetwater example there was
    no competitive bidding. Therefore, it was not in accord with
    the structure of the rules put in place to try to mitigate
    exactly the kind of thing the chairman has been talking about.
    That is now currently on appeal before the Bureau.
        Mrs. Blackburn. And when do we expect a resolution?
        Mr. Wheeler. I don't know the answer to that.
        Mrs. Blackburn. OK, well, let me move on to set-top box
    because as I mentioned earlier, this is something of great
    concern and I am going to channel John Dingell for a few
    minutes. We just have his 90th birthday in this room, so I want
    all of you to think very concisely and give me a yes or a no. I
    know I do need the luck. Mr. Barton is right.
        OK, question number one. Do you agree that the initial FCC
    set-top proposal is flawed?
        Mr. Chairman, I will start with you. Let us go quickly down
    the line. The clock is ticking.
        Mr. Wheeler. Everything is designed to seek improvement.
        Mrs. Blackburn. I said yes or no. OK, OK. Ms. Clyburn?
        Ms. Clyburn. Yes or no.
        Mrs. Blackburn. Which one do you want, pick one? You are
    saying both. OK.
        Ms. Rosenworcel. I will make it easy, yes.
        Mrs. Blackburn. OK.
        Mr. Pai. Yes.
        Mr. O'Rielly. Yes.
        Mrs. Blackburn. All right, question two, do you agree that
    if the FCC is to move forward, it should follow a different
    approach than outlined in the NPRM?
        Mr. Wheeler. That is what we are trying to do right now.
        Mrs. Blackburn. OK.
        Mr. Wheeler. We are working with the industry.
        Mrs. Blackburn. OK.
        Ms. Clyburn. Yes.
        Ms. Rosenworcel. Yes.
        Mr. O'Rielly. Yes.
        Mrs. Blackburn. I like this. Do you agree that the pay TV
    provider alternative shows some promise.
        Mr. Wheeler. One page is not a proposal. It is a press
    release.
        Mrs. Blackburn. Does it show promise?
        Mr. Wheeler. Oh, does it show promise?
        Mrs. Blackburn. Yes.
        Mr. Wheeler. Yes, the great thing is that it lowered the
    temperature so we can talk together. Yes, it shows promise.
        Mrs. Blackburn. OK.
        Ms. Clyburn. Yes.
        Ms. Rosenworcel. Needs work, but yes.
        Mr. Pai. Yes.
        Mr. O'Rielly. Yes.
        Mrs. Blackburn. You all are doing really well on this. OK,
    I met with the Copyright Office yesterday and they have got
    some concerns about this proposal. So do you agree that no
    matter what the FCC does, it must not diminish copyright law,
    jeopardize the security of content, or undermine the license
    and advertising models that finance programming in the first
    place?
        Mr. Wheeler. Copyright protection and the protection of
    contracts which exceed the authority of the Copyright Office
    are essential and must be an essential part.
        Mrs. Blackburn. So I take that as a yes.
        Mr. Wheeler. They must be an essential part.
        Ms. Clyburn. Copyright security and privacy must be in
    place.
        Ms. Rosenworcel. Yes.
        Mr. Pai. Yes.
        Mr. O'Rielly. Yes.
        Mrs. Blackburn. OK, would you agree that the original set-
    top box proposal effectively renders content worthless?
        Mr. Wheeler. No.
        Ms. Clyburn. No.
        Ms. Rosenworcel. My office has met with the Copyright
    Office and I know that the Copyright Office has expressed
    concern about just what you describe, so I think that more work
    is necessary on our part.
        Mrs. Blackburn. Commissioner Pai?
        Mr. Pai. Yes, I agree with Commission Rosenworcel.
        Mrs. Blackburn. OK.
        Mr. O'Rielly. Yes.
        Mrs. Blackburn. OK, thank you all for that. You have left
    me 30 seconds to wrap up so I am grateful for that.
        I will tell you this. Meeting with content producers and
    the independents that are there in Tennessee, individuals that
    have the ability and have been creating a lot of cable TV
    programming, things of this nature, what they find and Mr.
    Chairman, going back to what you said, if this original
    proposal, the set-top box proposal got out there, they would be
    paid for the first round, but basically, the ability to go in
    and to negotiate those licenses is something they feel would be
    stripped from them. And they think not only does it have
    domestic, it also has international implications because of the
    ability to hack in and grab that digital file and then to
    utilize it.
        I think that you have got a long way to go on set-top boxes
    and I am pleased to hear that you are willing to work on that.
    I yield back.
        Mr. Walden. Thank you. The gentlelady yields back. The
    chair recognizes for a point of personal privilege, the
    gentlelady from California.
        Mr. Eshoo. Thank you, Mr. Chairman. I meant to do this at
    the beginning of the hearing. Former chairman of our full
    committee is with us today in the hearing room and I want to
    acknowledge his presence, former congressman and chairman of
    the full Energy and Commerce Committee, Billy Tauzin. Welcome.
        [Applause.]
        Mr. Walden. Thank you. The gentlelady yields back. The
    chair now recognizes the gentleman, the ranking member of the
    full committee, the gentleman from New Jersey for 5 minutes.
        Mr. Pallone. Thank you, Mr. Chairman. It is good to see
    Chairman Tauzin here as well.
        Chairman Wheeler, I am trying to get your commitment to
    three things, so I am trying to move quickly here to cover all
    three.
        The first is about the set-top box. I have seen encouraging
    reports from the press that you have been negotiating with
    stakeholders on a compromise proposal in the set-top box
    proceeding. I urge you to work swiftly toward a resolution that
    will benefit consumers. For me, that resolution must include
    adequate protections for content. Consumers will not care how
    their TVs work if they can no longer get their favorite
    content.
        So my question, can you commit to me that before you vote
    on final rules that you will work with the Copyright Office as
    well as other copyright experts inside and outside the
    Government to make sure your plan will not run afoul of
    intellectual property laws?
        Mr. Wheeler. I can go beyond that, Mr. Pallone, to say we
    will work with the copyright holders as well because the
    Copyright Office has only a limited area of jurisdiction and
    there are a lot of issues such as contracts and things like
    this that are important to the copyright holders.
        Mr. Pallone. Thank you, Mr. Chairman. Next is about the
    Lifeline Program. You heard during my opening statement today
    that Democratic committee staff issued an interim report
    concluding that evidence does not support Republican
    allegations of $500 million of waste, fraud, and abuse in the
    FCC's Lifeline Program. And the report also includes several
    recommendations for the FCC. And these recommendations include
    first having the FCC periodically review the Lifeline Program
    data for new trends; second, preventing the use of fraudulent
    snap cards as verification for Lifeline subscribers; third,
    making sure the independent economic household worksheet is not
    being abused; and lastly, studying whether safeguards that have
    been implemented in some States can improve the program at a
    national level.
        And again, it may be difficult to say yes outright, but I
    just would like you, if possible, to follow these
    recommendations to help prevent fraud from the Lifeline
    Program, if you could comment on that.
        Mr. Wheeler. Thank you, Congressman. I haven't seen the
    report.
        Mr. Pallone. I know you haven't.
        Mr. Wheeler. Those sound like very logical recommendations
    that ought to be pursued.
        Mr. Pallone. All right, thanks again. We are going quickly
    here. And then lastly, on the SANDy Act, a few months ago, I
    was proud to announce that the Nation's wireless carriers were
    committing to voluntarily comply with the wireless portions of
    my bill called the SANDy Act. And I wanted to thank you for
    working with me to make sure that the carriers are making the
    networks more accessible during emergencies. But because this
    wireless resiliency agreement is just voluntary, ongoing
    oversight is critical. So with that in mind, could you update
    us on the implementation of the wireless network resiliency
    cooperative framework and how the FCC is making sure that
    carriers live up to their commitments?
        You have 2 minutes left, so take your time.
        Mr. Wheeler. Thank you, Congressman. The industry has done
    an excellent job after your leadership pushing this issue. And
    industry should be commended for stepping up like this. As you
    say, our job in this environment now is to be the watchdog, to
    check on the process.
        The first step in this activity had to do with the upcoming
    hurricane season. And what is the industry doing to prepare for
    something that we know is coming and has been the source of so
    many difficulties in your district and elsewhere up and down
    the East Coast in particular.
        And so the industry has been working on that, and later
    this month--I can't give you the specific date, but it is in
    the next couple of weeks--our Public Safety Bureau, who has
    responsibility for us, is sitting down with the industry to
    review the things that they have put in place and to make sure
    that indeed that is stepping up to the commitment that they
    made to you and to us as a result of your leadership on this
    issue.
        Mr. Pallone. All right. Thank you so much. I appreciate it.
    And I yield back, Mr. Chairman.
        Mr. Latta [presiding]. Thank you very much. The gentleman
    yields back and the chair now recognizes for 5 minutes the
    gentleman from Texas the chairman emeritus of the full
    committee.
        Mr. Barton. Thank you, Mr. Chairman. And we have given
    Chairman Tauzin the big head. He is out there grinning like a
    Cheshire Cat as he got introduced by Anna. We will have to make
    sure we put him back in his place and find out who is clients
    are and see if we can't do him some harm or something.
        [Laughter.]
        Mr. Wheeler. Mr. Barton, could I just make one observation?
    Looking at that picture up there and the chairman sitting here
    in the audience. One is a lot younger than the other.
        Mr. Barton. Actually, he looks pretty good.
        Mr. Wheeler. But I would not want to make that observation
    about another portrait.
        Mr. Barton. Exactly.
        Mr. Wheeler. Because that would be wrong.
        Mr. Barton. I look nothing like that.
        [Laughter.]
        Mr. Barton. It is probably why Chairman Upton hadn't put
    his portrait up yet. Anyway, it is good to see Billy.
        I am going to have to do something I almost never do and
    that is in a hearing like this bring up a constituent issue,
    but it is the only way I know to maybe get some action.
        Mansfield Independence School District is one of the best
    public school districts in my congressional district. It is a
    community of about 80,000 in the suburbs of Dallas-Fort worth.
    Several years ago, they got $1 million from the Universal
    Service Administrative Company to do some Internet access for
    their low-income classrooms. They received $1 million over
    three funding cycles.
        They applied for another $820,000. That application was
    denied and at the same time USAC said oh, by the way, that $1
    million we have already given you, you have got to give it
    back. They have been trying for the last 2 years to resolve
    this issue without success. My district office has sent several
    letters to try to help resolve the issue without success. Their
    last appeal was cursorily denied without any explanation.
        So Mr. Chairman, I am asking you if you would ask your
    staff to do something unusual which was to take a personal look
    at this and see if we can't resolve it. I don't personally have
    a problem that their request for additional funding was denied.
    I understand how tight those funds are. But I have got a real
    problem if they agreed to fund it. They gave them the $1
    million over three cycles and then asked for it back. Can you
    look into that?
        Mr. Wheeler. Yes, sir, Mr. Barton.
        Mr. Barton. OK, I appreciate that. Now my policy question,
    I am the co-chairman of the Privacy Caucus and I am way back
    when one of the people that helped put into place what we now
    call Caller ID. Under the proposed rulemaking have to--instead
    of certain information being automatically included and then
    you can opt out of that information being used, you are going
    to go to an opt-in procedure where consumers have to opt-in to
    certain information. If you do that, in all probability, a lot
    of consumers will not opt-in. And if they don't, you make it
    almost impossible for Caller ID, as we know it today, to be
    utilized.
        Can you all, all the Commission take a look at that? I know
    we are trying to protect privacy, but my premise is if somebody
    is calling me, I should have the right to know who is calling
    me and I make the decision whether I take that phone call. That
    means that you have to have the phone number and in most cases
    some sort of a personal identifier, Congressman Billy Tauzin is
    calling Joe Barton or vice versa. If you don't have that basic
    information, you really don't give people that are receiving
    the call the opportunity to decide whether they want to take
    the call.
        Mr. Wheeler. Thank you, Mr. Barton. I think you raise a
    very good point. What our privacy rules are directed at, that
    is poor English, what we are trying to get to in the privacy
    rules is the broadband area. You are talking about a telephony
    item. We are talking about how you have some consistency back
    and forth between the two, but we are not trying to rewrite
    what is going on in the telephony world. But I will
    definitely--it is on board, sir.
        Mr. Barton. I appreciate the Commission, all the other
    Commissioners, taking a look at that.
        I yield back, Mr. Chairman.
        Mr. Latta. Thank you. The gentleman yields back and the
    Chair now recognizes for 5 minutes the gentleman from
    Pennsylvania.
        Mr. Doyle. Thank you, Mr. Chairman. Chairman Wheeler, I
    want to thank you for your leadership on business data services
    or special access. I think I have really been working on it 8
    years. It just feels like a decade. This issue has been pending
    before the Commission too long and I appreciate your leadership
    on it. But I just want to give you a minute to just tell us why
    completing the proceeding is so important and what is online
    for the American consumer?
        Mr. Wheeler. Well, you know, it is really interesting,
    Congressman. Back in the day when I was president of CTIA, I
    remember being at board meetings and the wireless carriers
    coming in and saying 30 percent of my operating cost is what I
    am paying for backhaul because I am dealing with an area that
    has been totally unregulated and can't you do something about
    that?
        And then the principal providers of this backhaul services,
    also wireless carriers, would raise their hand and say, ``Uh,
    no, we can't go there, we can't go there.'' So this has been an
    issue that I have been dealing with for probably as long as you
    have been dealing with as well.
        The reason I tell that story is because wired
    infrastructure is essential for wireless. And it will become
    even more essential in 5G because 5G is a multiple of much
    smaller cells that all have to be connected.
        And so what we are talking about here, yes, we are talking
    about competitive services, but yes, we are also talking about
    if we are going to have this national priority and we are going
    to be the world leaders in 5G, you have got to be able to
    connect it and you have got to be able to connect them at
    reasonable rates. That is why this is an important proceeding.
        Mr. Doyle. Thank you. Commissioner Clyburn, as you had
    noted, the two of us wrote a joint op-ed on below the lines
    fees. We have seen these fees skyrocket across the
    telecommunication marketplace in recent years and we know what
    they cost consumers. Tell me, what tools does the FCC have to
    address the proliferation of this practice?
        Ms. Clyburn. I was pleased to bring this to the attention
    of those who already know it. One of the things I am pleased
    about with the attention that we got with the op-ed is the fact
    that our advisory committee is actually taking this up, is
    moving ahead because surprises again--that is the type of
    surprise that you do not want when you sign up for services.
        So when you talk about people, especially with individuals
    who are on fixed income, it is really important what they sign
    up for, the financial expectations they have are realized and
    as I said, I am pleased to let you know that we are going to
    follow up with this to ensure that the information flow that is
    at the type of transparency needed for this will get more
    attention and more traction in the days to come.
        Mr. Doyle. Thank you. Commissioner Wheeler, I want to go
    back and talk a little bit about zero rating and the fear that
    a lot of us have that this has the potential to have some anti-
    competitive effects on the marketplace.
        Studies have shown that users overwhelming prefer apps and
    services that are zero rated and I believe that if these
    services aren't properly policed, it could have the same effect
    as paid privatization or anti-competitive interconnection and a
    range of other behaviors that are restricted in the Open
    Internet Order.
        So what steps is the Commission taking to examine these
    offerings and ensure that they are not harming consumers?
        Mr. Wheeler. Thanks, Congressman. You know, we took a long
    and hard look at the zero rating question during the Open
    Internet proceeding and decided that a case-by-case approach
    was better than a broad-brush approach. The question really
    boils down to what is the impact on consumers? What is the
    impact on competition? And what is the impact on innovation?
        And if you can have positive checkmarks in that, but it is
    zero rating, then you shouldn't catch it in some kind of
    blanket. But you also want to have the ability to go through
    and say no, that is not pro-consumer, that is not pro-
    competition, that is not pro-innovation.
        So what we have been doing is gathering information about
    the various zero rating items that are out there, as well as
    various proposals, to try and be able to put together the kind
    of analysis that helps you answer that kind of question and
    that is what we are in the process of doing right now.
        Mr. Doyle. Thank you. And I would just close by saying with
    regards to Lifeline, is there no fraud in the program? Of
    course, we know there is no fraud. Is the fraud as prolific as
    Commissioner Pai suggests? We know that is not true either.
        The danger with the kind of information, Commissioner Pai,
    that you stated is that somehow the potential for fraud somehow
    gets translated in the newspapers as actual fraud and the
    public believes that this number is this big and we know the
    number isn't zero. It is somewhere in between this big and
    zero. And I just think we all need to be responsible when we
    throw out numbers that we don't lead taxpayers to believe that
    there is this massive type of fraud going on. And I would end
    by saying that the fraud is being committed by companies, not
    the poor, and I think that should be emphasized, too. Thank
    you, I yield back.
        Mr. Latta. The gentleman's time has expired. And the Chair
    now recognizes himself for 5 minutes. First, if I could ask
    you, Commissioner Pai, and then follow up with you,
    Commissioner O'Rielly, two of the FCC's major rulemakings this
    year seem to be at odds with each other. On the one hand, the
    FCC has proposed rules with very prescriptive broadband privacy
    regulations and on the other hand, consumers' privacy and
    viewing data is left completely exposed in a highly
    controversial set-top box proceeding.
        Has the majority of staff of the Commission ever discussed
    this with you?
        Mr. Pai. No, Congressman.
        Mr. O'Rielly. The contradiction between the act--no.
        Mr. Latta. So that is a no. OK. Thank you. Commissioner
    O'Rielly, let me go on. I have been very active with the
    Internet of things here in committee with some other members
    and what will the spectrum frontiers order in the development
    of the 5G mean for the Internet of things?
        Mr. O'Rielly. So if the chairman alluded to what activity
    we are going to take, I want to be careful on getting too much
    into this, but the opportunities of what it can bring and the
    connectivity for expanding the universe to the Internet of
    things, the billions and billions of devices and applications
    that will be made available, be connected with our high-band
    spectrum is going to be monumental for decades to come,
    assuming that we get our rules right.
        Mr. Latta. Even what you said at the very end, what I have
    been hearing during these discussions, you just said the words
    ``if we get our rules right.'' What I have been hearing from
    everyone that we have been having in is that the one thing that
    they worry about is on the legislative and the regulatory side
    making sure that they pretty much all of a sudden might be shut
    down from getting these things done out there.
        And so when you say getting them done right, how would you
    foresee in the future of getting things done right at the
    Commission?
        Mr. O'Rielly. Well, I am in negotiations with the chairman
    and his team to try and finesse some of the points that are in
    the item. I like the general direction of where it is going,
    but we have to make sure that the licensing structure to make
    sure that the bands are available in a way that carriers are
    apt to use them. We want to make sure that it coincides with
    what the applications and the industry and the manufacturing
    world plan to use them as well. So we are trying to finesse
    some of those finer points.
        Mr. Latta. Thank you very much. Commissioner Pai, with my
    remaining time, one of my concerns of the FCC's set-top box
    proposal is the disproportionate impact it would have on small
    companies. The costs to comply could result taking funds away
    from other initiatives and services that benefit consumers.
        As someone that represents--and you have been out to my
    distract and thank you very much. My district goes from very,
    very rural to urban. This is a great concern of mine because
    small, paid TV companies typically provide communications
    services to the rural areas. As the Commission considers
    alternative approaches to their proposal, how are you seeking
    to balance the cost and benefits for the small operators and
    their customers?
        Mr. Pai. That is a great question, Congressman. It was a
    privilege to have met with the small cable companies and other
    small video providers in your district and around the country.
    The concern they generally express about the FCC is that the
    burden of regulations falls disproportionately on them since
    they don't have the scale to comply. I think in the set-top box
    proceeding that the concern has been brought home by the fact
    that 61 Representatives, 10 Senators have expressed bipartisan
    concern that this cost and benefit analysis has not been done
    generally, and it especially has not been done with respect to
    small businesses. And so that is a concern I take very
    seriously and I hope the Commission does as well.
        Mr. Latta. Well, thank you very much and I am going to
    yield back the balance of my time and recognize the gentleman
    from Vermont who also co-chaired the Rural Caucus here on the
    Energy and Commerce Committee for 5 minutes.
        Mr. Welch. Thank you very much, Mr. Chairman. I welcome the
    FCC Commissioners. We really appreciate the work that you do.
    First, I just note that the DC Court of Appeals supported in
    its entirety the net neutrality rule. That was very debated and
    very contentious, but it is resolved legally, at least at that
    stage. And I hope that that means that we will be able to focus
    on some of the other efforts that require some bipartisan
    cooperation like the homework gap in like the deployment of 5G.
        I want to ask some questions about three areas, the
    homework gap, the special access, and 5G. And I will start with
    the homework gap.
        Commissioner Rosenworcel, thank you for your aggressive
    leadership on this. It really makes a difference in Vermont and
    a lot of our rural areas. Actually, urban areas as well. About
    70 percent of teachers, as you know, according to the FCC's
    statistics, assign homework that requires Internet access, but
    only about 33 percent of households are really able to take
    advantage of that.
        Representative McKinley and I have a bill that I think can
    help a bit on this. And I am going to be introducing another
    bill on that as well, that would require the FCC to issue new
    rules that would ensure providers of mobile broadband Internet
    that participate in the Lifeline Program to offer subscribers
    mobile devices that are Wi-Fi capable. Do you have a view on
    this bill and how it could help the homework gap?
        Ms. Rosenworcel. Well, thank you, Congressman Welch, and I
    appreciate your leadership on this subject, too, with the
    Digital Learning Equity Act. As you mentioned, seven in ten
    teachers assign homework that requires Internet access and one
    in three households does not have access. And where that
    overlaps is a homework gap and it is the cruelest part of the
    digital divide. Anything we can do to help fill that gap is
    going to help students and the tethering you describe is ideal
    and could be really useful.
        Mr. Welch. Thank you. And Chairman Wheeler, I want to ask
    you a little bit of follow up on what Congressman Doyle asked
    you about special access. This is going to be a big deal,
    obviously, for all of America, but we are going to have a
    challenge in rural America as well with the cost of
    infrastructure being what it is.
        Can we have some assurance that the rules that will be
    promulgated will take into account the extraordinary challenges
    that have existed in rural America about having access to the
    infrastructure that is essential for it to have the Internet?
        Mr. Wheeler. Thank you, Mr. Welch. Yes, and as you know,
    the programs that we have for addressing that issue in rural
    America are extensive, and we should not be coming out with a
    rule that unfairly targets. There is the reality that there
    needs to be a competitive environment, and you have to be
    dealing with how do you incentivize that competition.
        Mr. Welch. Thank you. And Mr. Pai, I will ask you, too. On
    5G, again, it is sort of similar to what I was just talking to
    Chairman Wheeler about. It is a different infrastructure. You
    are not going to have as many of the pipes and wires, but there
    continue to be challenges in rural America. And at the very
    beginning of establishing rules that are going to be absolutely
    essential to the build out of 5G, there has to be integrated
    into it the challenges in rural, hilly America, whether it is
    Appalachia with Mr. McKinley or rural Vermont for me.
        And can you comment on what steps can be taken in order to
    treat rural America as the first-class citizen?
        Mr. Pai. Thanks for the question, Congressman. I take this
    seriously, both as a Commissioner and also as a rural American
    myself, having grown up in a small town in Kansas. I think
    increasingly what we are seeing is a digital divide where
    people in the bigger cities can take as granted that they will
    have fiber and other advantaged technologies that allow them to
    have high-speed connectivity.
        In rural areas, like ours, it might be a copper line that
    has faded over time. And how do we promote the deployment of
    fiber in rural areas where you can't necessarily have a
    business case? That is the $64,000 question.
        We have part to play in that with our Universal Service
    Fund, and so I pushed, for example, for a support for stand-
    alone broadband to make sure that that fiber was available. I
    think it is also the IP transition is critical for us to give
    the private sector the maximum incentive to connect every
    American, rural Americans, tribal Americans, and others with
    that fiber and I think additionally, we always need to be
    forward thinking. If there are other regulations that some of
    the smaller competitors tell us about that are standing in the
    way, we need to have an open mind.
        I have met with some small providers, in some cases one and
    two-man shops, who have told us look, your rules in this case
    or that case are holding us back. We are not a big company,
    help us out. I think that could go a long way.
        Mr. Welch. Thank you. I yield back. Thank you, all.
        Mr. Lance [presiding]. Thank you very much. The chair
    recognizes Mr. Shimkus.
        Mr. Shimkus. Thank you, Mr. Chairman. Welcome,
    Commissioners, it is great to see you all.
        Sometimes we quibble too much. I am getting a little
    frustrated today. We are picking at each other for things that
    there is a lot of agreement. I think there are people we know,
    we need a Universal Service Fund. The question is how it is
    going to be properly deployed. Should it go into broadband now?
    Do we need to clean up the abuse in Lifeline? The answer is
    yes. We all know that. So these levels, again, I get
    frustrated.
        I think the set-top box thing that was raised, I think you
    raised a question, opened it up. I think there has been
    response and I think there is a consensus growing that we
    should move to an app-driven world.
        I think the last time we met, I think people use that now,
    and I hope that we just get some of these what are perceived to
    be very contentious issues away from us so we can address other
    things.
        911, as was mentioned, we did pass a mandate on grants,
    prohibition on grants if the States were stealing 911 dollars.
    We could do that.
        So there are more things that unite us than divide us. That
    is all I am going to say.
        But I do want to address, this might be your last time
    here. I mean, the chairman said maybe not. It could be. I have
    been really focusing on what is the FCC for the future. And I
    ascribe to a lot of the debate that it is a time for a rewrite
    of the Telecommunications Act for a lot of reasons. If you pull
    up the Web site we have a Consumer and Government Affairs
    Bureau. We have an Enforcement Bureau, an International Bureau,
    Media Bureau, Public Safety and Homeland Security, Wireless and
    Telecommunication, Line Competition, those are bureaus. Under
    the bureaus like the Wireline Competition Bureau we have a
    bureau chief, three deputy chiefs, one chief of staff, a data
    officer, economist, three associates bureau chiefs one program
    manager of the USF, two--I mean you have got an army over
    there.
        So the first question is, and it is great to have Chairman
    Tauzin here because in the telecom rewrite which I wasn't a
    member yet, but I have been here 20 years, what was the
    Wireline Competition Bureau, what was it designed to do after
    the rewrite of the '96 Act, Chairman Wheeler?
        Mr. Wheeler. Thank you, Mr. Shimkus. As you all sit here, I
    would like to identify myself with your remarks about how--yes,
    we do--it is interesting. But 91 percent of our decisions are
    unanimous.
        The Wireline Competition Bureau was created after the Act,
    because the Act required several specific actions by the
    Commission to make decisions----
        Mr. Shimkus. OK, fast forward today. What does it do today?
        Mr. Wheeler. It oversees activities in the wireline world.
    So for instance, what we are dealing with on Thursday which is
    the move from analog to IP and what are the expectations there
    when service is discontinued is something that comes out of the
    Wireline Bureau.
        Mr. Shimkus. My point is I think that when we had part of
    the questions and answers, you talked about telephony and
    broadband. They are merged. We have a lot of stuff, a lot of
    telephony goes over broadband and we still have some stovepipe
    administration programs and procedures.
        Mr. Wheeler. They are merging. And yes, we have----
        Mr. Shimkus. Well, there is a nexus and definitely the
    nexus isn't in the way they were designed. I would challenge
    you to start looking at the FCC 2.0 or 3.0 or the future
    because we are just--we are not there.
        On the Web site, the wireless--just simple things. When you
    look at the organizational charts, you are not standard.
    Everybody has got their own little, how they portray their
    organizational structure. There is like two that have different
    formats. Three that are the same. And the Wireless Competition
    Web site comes up page not found.
        Mr. Wheeler. I am sorry, what?
        Mr. Shimkus. Page not found.
        Mr. Wheeler. It does?
        Mr. Shimkus. Yes. Just for your information.
        Mr. Wheeler. Thank you.
        Mr. Shimkus. So I would really hope and my time is running
    out. Chairman Wheeler, you have kind of pushed, and I will ask
    Commissioner O'Rielly to weigh in, too, because he has
    mentioned this, that there is a reason that you have procedures
    in place and that they are working, but you also form multiple
    task forces to look at FCC processes.
        Can you comment on what you found out and then Commissioner
    O'Rielly can you respond to these task forces?
        Mr. Wheeler. So we have been working through a process.
    Your time has run out.
        Mr. Shimkus. This would be the first time that you have
    ever said time has run out.
        [Laughter]
        Mr. Shimkus. I wonder why that is.
        Mr. Wheeler. You said this may be my last chance, Mr.
    Shimkus, so I don't want to miss that. But Commissioner
    O'Rielly earlier this week had an excellent blog on process
    reform in which he identified 24 specific issues. So I will let
    Commissioner O'Rielly respond to that.
        Mr. O'Rielly. I appreciate the chairman's kind words. The
    difficulty has been that on process reform the task force that
    we set up was intended to look at some of the ideas that I had
    already previously talked about and the offices all assigned
    somebody and they have gone round and round and round for
    months on end and we have gotten absolutely nowhere. So that is
    why I put up the bar to kind of show where we are at the
    moment. We are nowhere.
        The chairman says that a lot of these are good ideas, but
    we can't get any of them to move forward and these are not the
    biggest ticket items. The biggest ticket item I know he doesn't
    agree with. He said he would do it over his dead body and I was
    willing to take him at his word.
        [laughter]
        But that being said, there are things that can make our
    organization work better and we will have improved
    collegiality.
        Mr. Shimkus. And I would just, reclaiming my time, and I
    know I am--I would just hope that in our last cycle here, we
    start talking about how we can make it all work better and move
    forward, not backwards. And I yield back my time.
        Mr. Lance. Thank you and for the first time as chair, time
    has run out. Ms. Clarke, you are recognized.
        Ms. Clarke. Thank you so much, Mr. Chairman, and I thank
    our ranking member.
        Chairman Wheeler, it appears that some progress is being
    made on the set-top box issue and I want to applaud your
    efforts to solicit and consider alternate proposals from
    industry. However, I believe that for the Commission to
    continue down this path, based upon the telecom law of 20 years
    ago with regard to the technology hardware that is set-top box
    is quickly becoming obsolete. It is, in fact, a fool's errand.
    I hope that this debate, however, has been useful in unearthing
    the complexity and layers of issues that intersect and so
    profoundly impact on consumers and the industry that are
    impacted by creating this new ecosystem.
        I hope that the rulemaking will be done in a way that we
    can look to a 21st century model. And as you know, the GAO has
    approved my request for an impact study. Clearly, my preference
    would be that no action is taken prior to the GAO study,
    following your own advice to trust and verify.
        However, if there remains an insistence on moving ahead, I
    would like to have your assurances that you will work with me
    to ensure that the findings of the proposal's impact on multi-
    cultural media will be integrated into any file rulemaking.
        Mr. Wheeler. Thank you, Ms. Clarke. You and I have talked
    about this repeatedly and you know that I do feel strongly
    about the importance of making sure that the Commission step up
    its role to make sure that we do create opportunity to multi-
    cultural media.
        Ms. Clarke. Absolutely, but my question was----
        Mr. Wheeler. Would I work with you? Yes, ma'am.
        Ms. Clarke. And when the GAO study findings come out that
    we will review them together and see how they can be
    incorporated into a final rule.
        Mr. Wheeler. And I hope that what we are doing is in the
    process right now building a record.
        Ms. Clarke. I hope so, too. But I am talking about the GAO
    study. I am very specific about what I am looking at.
        Mr. Wheeler. Yes.
        Ms. Clarke. OK, very well. Thank you. On June 27th, you
    circulated a fact sheet describing an item provided in response
    to the Third Circuit's remand in the wake of the Prometheus
    decision. Five minority ownership proposals suggested by MMTC
    were excluded, including the extension of the MVPD procurement
    rule to all communications platforms, a rule introduced in
    advance by my colleague, Congressman Rush.
        Would you be willing to commit to the extension of this
    rule across all platforms recognizing industry convergence? I
    think this is one of the things that has become self-evident
    through this process.
        Mr. Wheeler. There is a real challenge that we face under
    the Supreme Court's strict scrutiny standard.
        Ms. Clarke. I am clear on that.
        Mr. Wheeler. And the ability to get through that standard
    becomes a threshold to all of this. If there is a way that you
    think that that could be done, I am interested.
        Ms. Clarke. Let us talk about that. Chairman Lance, I would
    like unanimous consent to submit a letter for the record signed
    by myself, Congressman Rush, and Congressman Butterfield to
    Chairman Wheeler requesting the extension of the MVPD
    procurement rule to all FCC-regulated entities.
        Mr. Lance. Without objection.
        Ms. Clarke. Thank you. Finally, Mr. Chairman, you have
    noted that the media and telecom ecosystems are converging
    rapidly. Leading the way in this convergence is advertising
    whose messages cut across media platforms from AM radio to
    wireless apps to everything in between.
        When the FCC banned discrimination in ad placement in 2008,
    the agency recognized how critical advertising is in
    facilitating the diversity of voices and ownership. Under the
    current statutory authority, it appears that the Commission can
    ask the industries it regulates for information on the use of
    minority-owned advertising agencies and their current status
    with minority-owned media ad placement.
        Would you be willing to make such an information request of
    both the agencies you regulate and edge providers to provide
    the results to members of this subcommittee within 90 days of
    today's hearing?
        Mr. Wheeler. Thank you, Congresswoman. I am not familiar
    with the specifics, so a blanket yes ma'am, but I would like to
    learn more and see what can be done.
        Ms. Clarke. Very well. Chairman Wheeler, I will also be
    submitting to the record follow-up questions regarding the
    Commission's movement on secondary market transactions for
    minority owners. Having said that, Mr. Chairman, thank you.
        Mr. Lance. Thank you very much, Congresswoman. I will
    recognize myself for 5 minutes.
        I am pleased to see that we are discussing 5G technology.
    Just yesterday, Verizon Wireless in the district I serve in
    Basking Ridge, New Jersey, announced that it had completed its
    5G radio specification, the first U.S. carrier to do so and I
    look forward to working with all of the members of the
    Commission and the members of this committee on this issue.
        For Commissioner Pai, with all of the convergence going on
    in the communications industry and the Internet ecosystem,
    policy makers strive to make laws and regulations that are
    technology neutral so as not to disadvantage one company over
    another in the marketplace because competition among firms on a
    level playing field is, in my judgment, beneficial to all
    consumers.
        If the FCC applies a certain set of rules to ISPs that
    differ significantly from the rules that apply to other
    participants in the Internet ecosystem, would that be
    considered technology neutral?
        Mr. Pai. Congressman, I do not believe it would be
    considered technology neutral.
        Mr. Lance. And do you believe that this is a possibility
    moving forward?
        Mr. Pai. It is not only a possibility, the FCC itself
    recognized that in paragraph 130 of the privacy NPRM.
        Mr. Lance. Thank you. Commissioner O'Rielly, would you like
    to comment on that, please?
        Mr. O'Rielly. I agree, I don't believe it is technology
    neutral and I think that is the path we are headed for.
        Mr. Lance. Thank you. For Commissioner Pai as well, and
    also Commissioner O'Rielly, one of the foremost concerns of
    consumers today are Caller ID spoofing calls and I have worked
    on this issue, scammers using IP-based technology to spoof the
    phone number, the name and pose as a legitimate financial
    institution or law enforcement agency to scam consumers and
    Congressman Barton raised this as well.
        It is my understanding that there is an effort underway
    among service providers and third parties with directory
    listing information to develop a protocol to verify the Caller
    ID information before sending the call to consumers. This
    protocol relies on the sharing of data. Under the FCC's
    proposal if we move to an opt-in consent regimen, there are
    concerns that this effort could be undermined. Would you please
    comment, Commissioner Pai?
        Mr. Pai. Thanks for your question, Congressman. I think
    this highlights part of the problem. One of the unintended
    consequences of the FCC's intended approach by diverging from
    what the Federal Trade Commission previously had done apply
    more of a consumer-based approach, the FCC has highly
    prescriptive regulations that would single out certain players
    in the echo system for disparate regulation. I think one of the
    harms could be to consumers in that regard. And that is part of
    the reason why the FTC staff itself recently commented to the
    FCC that this two track privacy scheme that is in development
    is something that is not going to benefit consumers in the long
    run.
        Mr. Lance. Commissioner O'Rielly?
        Mr. O'Rielly. I would agree. I think the unintended
    consequence that you highlighted gets to the point of the rush
    to judgment. We are trying to move this expeditiously to finish
    by the end of this term, the end of this year. This is a very
    sensitive topic. It is a very complicated topic and it should
    be done on a timeline such as that.
        Mr. Lance. Thank you. There are constituents of mine as
    well as just about everyone here on the dais and we have
    petitions pending at the FCC. However, we know that in some
    cases petitioners can wait years before having a resolution.
    Former Chairman Emeritus Barton discussed this. This is also
    true of constituents of mine.
        What more can be done to clear pending petitions so
    individuals and businesses who have business before the FCC can
    have certainty as to what is occurring?
        Commissioner Pai?
        Mr. Pai. Thanks for the question, Congressman. My very
    first speech as a Commissioner, I targeted this as an area of
    good Government reform. I think the public expects and deserves
    to be given an answer. Tell me yes, tell me no, but just tell
    me something.
        One thing we can do that I teed up 4 years ago was apply
    Section 7 more vigorously which requires the FCC to rule on
    applications for new products and services within a year. It is
    essentially a dead letter for many years at the FCC. We should
    impose more deadlines on ourself and I think we should also
    impose more sunset clauses so that regulations don't persist
    well past their due date. They have to be revisited every now
    and then. And those are the kinds of things on a bipartisan
    basis that would ensure that every member of the American
    public gets an answer that is responsive and that matches
    marketplace reality.
        Mr. Lance. Mr. O'Rielly?
        Mr. O'Rielly. I would agree with my colleague's comments. I
    would also say that in the legislation that this committee has
    addressed, it would require us to set deadlines on a number of
    things in the petitions. We can move that without--we can do
    that ourselves. It would be helpful to have legislation. I am
    supportive of that, but we can do that notwithstanding and I
    would like to see us do so.
        Mr. Lance. Thank you very much. I yield back the balance of
    my time and I recognize Congresswoman DeGette.
        Ms. DeGette. Thank you, Mr. Chairman. I just want to
    clarify a couple of things that we have been talking about this
    morning. The first one is this set-top box proposal and the
    alternatives that have been proposed. One of my big concerns as
    the co-chair of the Privacy Caucus with Mr. Barton is
    protecting consumer privacy.
        And so Chairman Wheeler, I just wanted to ask you
    irrespective of what path the set-top box final rules goes,
    does the FCC plan to retain enforcement authority over any
    violations of Section 631 and 338?
        Mr. Wheeler. Yes, ma'am.
        Ms. DeGette. Thanks. The second area I wanted to talk about
    very briefly is this lingering discussion of waste, fraud, and
    abuse in Lifeline. Always I hear--I have been in Congress now
    for a while I always hear people criticize waste, fraud, and
    abuse. This is certainly something we can agree on on a
    bipartisan basis. Nobody wants to see waste, fraud, and abuse.
    We are opposed on a bipartisan basis to waste, fraud, and
    abuse. I think it is important to get that on the record and so
    when I hear people like Commissioner Pai talk about waste,
    fraud, and abuse in the system, I take that seriously, and I
    think that we should all talk about this investigation and
    these findings and is it true and what are we going to do about
    it?
        And so Chairman Wheeler, I thought I might give you the
    opportunity to talk about some of the actions that the FCC has
    taken either during or before your tenure to combat fraud,
    waste, and abuse, and is this an issue that you take seriously
    moving forward?
        Mr. Wheeler. Thank you very much, Congresswoman, and yes,
    it is hard to understate the seriousness of something like this
    for two reasons. One, as has been pointed out, this is the
    people's money.
        Ms. DeGette. Right.
        Mr. Wheeler. But two, if waste, fraud, and abuse is being
    used to compromise the ability of individuals who deserve to
    have connectivity and to threaten the program ,then it is
    worse, even worse.
        We are existing in an environment where technology is
    moving ahead and people are falling behind. We must be
    vigilant. What we have been doing, as I said before, is playing
    Whac-a-Mole on this, that there was a design for the program
    that said we will let the fox guard the henhouse, that we are
    going to count on self-certification from those who get the
    money to say yes, this is a real person, yes, this is a good
    address, et cetera. That is the way the program was designed at
    the outset and we spent the last 8 years playing Whac-a-Mole
    trying to beat those down as new attacks on that pop up.
        Ms. DeGette. So that is great. I am glad you recognize, as
    I do that this is a problem. Can you give me some concrete
    examples about what the Commission is doing and also maybe
    respond a little bit to what Commissioner Pai said in about 30
    seconds?
        Mr. Wheeler. As Commissioner Pai said we just had a $51
    million judgment against a company called Total Call Mobile
    which was engaged in virulent fraud. We have actually shut them
    down so that they are not getting any funds going forward now.
        Because this is a law enforcement issue, I can't give you
    specifics other than to say that both the Enforcement Bureau
    using civil means and the Inspector General of the Commission
    working with the Justice Department and the FBI for criminal
    prosecution are moving forward and have identified over a dozen
    specific instances where you need to be going after.
        Ms. DeGette. Thanks, and if you could please supplement
    your testimony today to tell me what processes the Commission
    is putting into place within its network to prevent fraud,
    waste, and abuse?
        And Commissioner Rosenworcel, since it is your birthday, I
    just have to ask you one question. How do you think that the
    expansion of broadband to the Lifeline Program will help close
    the homework gap that you talked about in your testimony?
        Ms. Rosenworcel. Thank you. If you don't have access to
    modern communications today, you don't have a fair shot at
    prosperity in the 21st century. And that is especially true for
    school children. Pencil and paper doesn't cut it any more. So
    what we can do with Lifeline could make a big difference for
    students by giving them the connectivity they need to simply do
    their homework.
        Ms. DeGette. Thank you. Thank you very much, Mr. Chairman.
        Mr. Lance. Thank you very much. The chair recognizes Mr.
    Scalise.
        Mr. Scalise. Thank you, Mr. Chairman. I first wish you
    Happy Birthday, Commissioner Rosenworcel. I promise not to ruin
    it by singing to you. I couldn't imagine where else you would
    rather be than on your birthday than here.
         I really appreciate all the Commissioners coming to talk
    to us about a number of things that we are interested in that I
    think people across the country are interested in in relation
    to the decisions that the FCC is considering in making.
        I do want to applaud Congressman Shimkus' comment that it
    is long past time to consider rewrite of the '96
    Telecommunications Act. I have been talking about this for a
    long time. I would be remiss if I didn't bring up the fact that
    this was the mobile telecommunications device, the last time
    our laws were written. And today, when we do so many new and
    innovative things on this device, we are still governed by the
    laws that were available when this device was the main smart
    phone. And we do need to change those laws.
        As we consider some of those changes, I have also been
    critical of the '92 Cable Act and the need to update that. I
    think at the time they were really good laws that some of the
    people that wrote those laws are here in this room and they
    were very valid and modern when they were written, but it is
    our responsibility to go and identify those areas where we need
    to modernize.
        And I have also been very careful to point out that as we
    are modernizing those laws, we need to respect copyright law.
    The basic idea that somebody that created content ought to be
    compensated for the negotiations that occur and how that
    content is best distributed. And that brings me to the latest
    proposal that the FCC is considering dealing with set-top
    boxes.
        And I would be remiss if I didn't bring more modern
    technology, and so when you look at this set-top box which is
    actually being used today in the marketplace, I would hope that
    we don't look at it under the prism that we have got to figure
    out a way to make this device the main source of content
    distribution for consumers and again, I will go to the more
    modern device that I use. I can literally stream and am
    streaming ESPN right here on this app on my smart phone. I will
    be in person when LSU plays Wisconsin and the Speaker and I are
    going to have a difference of opinion when the Tigers beat the
    Badgers in Lambeau Field, but if you are not there, you could
    actually watch the game live on this device. And so it is
    incredible how much innovation has occurred in the marketplace.
    And a lot of it is through the app-based world. And I would
    hope that we don't force the one size fits all as we are
    looking at the different approaches.
        I do want to ask you, Chairman Wheeler, the Motion Picture
    Association of America had submitted a comment, as many have,
    on the set-top box. In their reply, they had sent you a comment
    and said, ``Our ask is straight forward. That in seeking to
    ensure set-top box competition, the FCC not give third parties
    our content without our permission and without compensation,
    not put our content at risk of theft, and not threaten the
    economics underpinning the creation of programming that is
    fostering a second Golden Age of Television.''
        So what I want to ask you is have you started looking
    closer maybe at different alternatives including app-based
    technologies as opposed to just looking at different ways to
    distribute through this archaic device, as the industry is
    looking at different innovations that are even more convenient
    for consumers like this.
        If you could share that with me and I would like to ask
    some of the other Commissioners as well.
        Mr. Wheeler. Thank you, Congressman. Yes, the answer to
    your question is yes. I loved your show and tell here.
        Mr. Scalise. All of this will be in a museum. This is
    actually a lot more valuable than when I bought it a few years
    ago.
        Mr. Wheeler. And it is even beyond this. I mean I just read
    that Pokemon is back on an app, of all things. So that is how
    rampant the changes are. But let me be specific to your
    question.
        The set-top boxes are not going away. I learned an
    interesting thing the other day in Business Week, an article
    about Comcast, that they are delivering 40,000 set-top boxes a
    day. And this of their X1, their latest whiz-bang. So set-top
    boxes are not going away.
        Mr. Scalise. And I have seen some great innovations----
        Mr. Wheeler. And these apps are important.
        Mr. Scalise. And these companies compete against each
    other, and I don't want us to be interfering with their
    competition.
        Mr. Wheeler. And apps are very important, and one of the
    concerns that we are trying to learn in the proposal that NCTA
    put forward, for instance, is that there are those who are
    suggesting that the way in which they are structuring their
    apps' proposal actually requires a new gateway for every
    television. That is a second box. This committee has told us a
    lot about how much you don't like second boxes.
        So we are trying to work our way through this. I am
    encouraged that we will be able to get through it. I have lived
    through all of those evolutions up there, and I know that we
    will--none of them were easy, and we will continue to work
    through it, but we are going to be in serious discussions as to
    how do we make sure that we have a solution that follows the
    statute and offers consumers choice both in hardware and
    software.
        Mr. Scalise. And I know I am out of time. I wanted to ask
    Commissioner Pai about privacy. I will submit that for the
    record, just on expectation of privacy, and you have been
    pretty vocal about that in the past.
        Mr. Pai. Well, thanks, Congressman. I personally embrace
    the twin goals that the White House set forth in the 2012
    Privacy Report that consumers should have a uniform expectation
    of privacy and that there should be a level playing field with
    respect to all providers in the Internet ecosystem. And those
    are the twin goals that I will carry forward in this
    proceeding.
        Unfortunately, the FCC's proposal right now singles out
    Internet service providers for disparate regulation despite the
    fact that they are nascent players in the online advertising
    market and that is part of the reason why we have seen, for
    example, around the administration's first FTC chair, Jon
    Leibowitz, suggests that this type of disparate regulation
    would not be good for consumers in the long run.
        Mr. Scalise. Yes, different standards. I appreciate it, Mr.
    Chairman. I yield back.
        Mr. Lance. Thank you very much. The Chair recognizes
    Congresswoman Matsui.
        Ms. Matsui. Thank you, Mr. Chairman. I want to thank the
    Commission for appearing before us again. It is great to see
    you.
        Mr. Chairman, I know you all, all of you, appreciate the
    need for greater access to spectrum to fuel our wireless
    economy. The FCC has done a lot of important work in this area.
    The incentive auction, as you say, is under way and I was
    encouraged to see the FCC identify an ambitious clearing
    target, so congratulations.
        There is ongoing work to identify Government spectrum for
    commercial use. I appreciate the FCC started a proceeding on
    the 1675 to 1680 megahertz which Representative Guthrie and I
    wrote to you about along with many of our colleagues. I look
    forward to continuing to work with you to bring that spectrum
    to auction.
        And later this week, the Commission is voting on the
    spectrum frontiers proposal to open up high-frequency bands for
    5G, the next generation of wireless broadband. This is all
    progress and there is more to do if we want the United States
    to continue to lead the global wireless economy.
        Chairman Wheeler, as I said, this is all progress. Can you
    elaborate on our broader strategy to ensure that the United
    States will continue to lead the world in 5G and I have
    additional questions for you, too.
        Mr. Wheeler. Thank you, Congresswoman. I will be really
    brief then. What we hopefully are going to do on Thursday is to
    become the first nation in the world to identify high-band
    spectrum for 5G. And that, coupled with what we have already
    done in low-band and what we have already done in mid-band,
    puts this country, its manufacturers, its entrepreneurs and
    innovators, it gives them a home-field advantage. And that, I
    truly believe, and I was saying to one of my colleagues
    yesterday, the decision we make Thursday could actually be the
    most important decision this Commission makes this year.
        Ms. Matsui. That is great. Chairman Wheeler, as you know, I
    am very interested in how we improve spectrum efficiency and
    spur innovation so that we can maximize the benefits of this
    finite resource. We often talked about this in the context of
    mobile phones and wireless carriers. But innovation is
    important for all spectrum uses including over-the-air
    broadcasting. I know that a coalition including public
    broadcasters and consumer electronics manufacturers have
    submitted a proposal for next-generation TV standard which
    could allow broadcasters to innovate within their existing
    spectrum. I understand the FCC has sought comment on that
    proposal.
        Mr. Chairman, what are the next steps as the FCC considers
    this proposal, and will you take further action this fall?
        Mr. Wheeler. Thank you, Congresswoman. I don't know exactly
    where we are on being able to commit to it this fall kind of
    agenda. The record has just closed on this. We are in the
    process of working our way through it. Then, of course, we will
    be meeting serially and ad nauseam with all of the players to
    try and collect the basic information to be able to have an
    informed decision going forward.
        Ms. Matsui. Thank you very much. And let me just say that I
    really want to comment on Lifeline. I am very passionate about
    it and I know other Commissioners are passionate about it. I
    just really feel that this is so important for not only
    connectivity, but the fact of the matter is that there are so
    many people in our country who are unserved and under served in
    both rural and urban areas.
        In order to bring us to a point where economically we could
    really be competitive, we need to make sure that everyone
    participates. So I encourage all of you to proceed further
    because I think this is an area where we really need to ensure
    that we make a lot of progress. And I do thank you for
    everything you are doing and I yield back. Thank you.
        Mr. Lance. All right. Thank you. We will be adjourning. We
    have a vote and we will be back. The Chair has announced that
    we are in adjournment. Thank you.
        [Recess.]
        Mr. Lance. The committee will reconvene, ladies and
    gentlemen. The Chair recognizes Mr. Kinzinger of Illinois.
        Mr. Kinzinger. Thank you, Mr. Chairman. Thank you all for
    being here and bearing with us on the votes and schedule.
        Mr. Chairman, I have a very rural district that is served
    by a number of companies that specializes in providing services
    such as power distribution into areas with unique
    infrastructure needs. In my district, there is about 50,000
    people served by rural electrical co-ops who provide safe and
    reliable services on a continuous basis. The issue of those co-
    ops have brought forward to your Commission and into my office
    is the timely distribution of information when you have
    service-related outages, interruptions, maintenance issues,
    things like that, and how that could--anything that basically
    could negatively affect the consumer.
        As I am sure you are aware, I am talking about the TCPA
    regulations that were first introduced two decades ago before
    the advent of majority of the technology we use today was
    invented.
        Are you aware of the petition filed by Edison Electric
    Institute and the AGA requesting expedited action by your
    agency by a utility-specific exemption from parts of TCPA
    regulations?
        Mr. Wheeler. Yes, sir.
        Mr. Kinzinger. Have you met with representatives of the
    industry to hear their concerns, who are my constituents, their
    views on the importance of service-related text messages, phone
    calls, that they want to receive regarding outages,
    maintenances, and other issues?
        Mr. Wheeler. I haven't met with them directly, sir. My
    staff has.
        Mr. Kinzinger. OK. Do you have any plans for responding to
    the petition or a time frame?
        Mr. Wheeler. I put a proposal on the floor in December.
        Mr. Kinzinger. OK. Do you have any idea on timing beyond
    the staff?
        Mr. Wheeler. It is up to them.
        Mr. Kinzinger. Do you have more to add?
        Mr. Wheeler. Commissioner Rosenworcel is now telling me it
    was adopted.
        Mr. Kinzinger. OK, great. Commissioner O'Rielly, could the
    FCC have set up an enforcement regime modeled after the FTC's
    enforcement regime? And is there any way that the two agencies
    could have worked out an enforcement regime that took better
    advantage of the FTC's expertise?
        Mr. O'Rielly. I think you are getting into the issue of
    privacy. I think there was an opportunity and still is an
    opportunity to work in cooperation with the FTC. I think the
    path that we are headed down though would not allow that.
    Hopefully, we will change course. I am not too optimistic at
    the current time.
        Mr. Kinzinger. Can you talk just a little about I guess
    about the benefits of their expertise and----
        Mr. O'Rielly. So the FTC has been working on privacy 15-
    plus years. I worked on it when I was a staff member here and
    oversaw. They built an extensive backhaul of material. They
    have hundreds of people working on the issue.
        Compare that to the FCC, we have maybe 15 people working on
    it. And our experience is this narrow in terms of what the
    scope is and also how long we have been working on it. So I
    would argue that we should adapt and adopt a lot of the
    approach from the FTC. They have a different statute that
    governs their operations than us. It is an enforcement model
    structure, but they have been able to get to a place that
    provides, I believe, and I think most people that operate in
    the space, privacy protections for consumers and ensures that
    the privacy is treated fairly without jeopardizing the Internet
    and the Internet experience.
        Mr. Kinzinger. It would seem to make sense to learn from
    what other agencies have done as we implement it. Let me ask
    you another question, different subject. This committee spent a
    great of time considering infrastructure issues. As we move
    towards 5G, infrastructure becomes both more important and more
    complicated with networks running on many, many small cells
    instead of the more traditional macro towers.
        Can you tell us what the Commission is doing to enable the
    infrastructure deployment, and particularly, can you give us a
    status update on this proceeding regarding distributed antenna
    systems?
        Mr. O'Rielly. Sure, the Chairman may be better to answer
    your last part as to the status. I only have so much say in the
    activities of the Bureau, but I have been pushing the agency to
    move a number of items that would allow greater infrastructure
    buildout. There is going to be more need for buildout. People
    are talking of it being ten times the number in terms of macro
    cells compared to the small cells, so to try and build that
    infrastructure, it is going to be smaller, but you are going to
    need more of them. You are going to need to get backhaul to
    them. You are going to need to get power to those sites and
    that is a very difficult universe.
        We have a number of localities who believe in federalism,
    but we have a number of localities that have been problematic
    in terms of allowing infrastructure builds. We have been trying
    to build best case scenarios, but we also have worst case
    scenarios and we are trying to use the authority that we have
    that Congress has granted us to push those localities to allow
    greater infrastructure because in the same breath that we will
    hear from a mayor that my citizens want broadband. At the same
    time they will say but we don't want you to build. It is a
    push-pull. And so we are obligated to try and make available
    Internet access and broadband.
        Mr. Kinzinger. Sounds like politics. With that I will
    respect the time and yield back. Thank you.
        Mr. Lance. Thank you very much. The Chair recognizes Mr.
    McNerney of California.
        Mr. McNerney. I thank the chairman. I want to thank the
    Commission for your hard work. I mean this is interesting, but
    it is complicated and sometimes controversial, so I appreciate
    your work on this.
        I am glad to hear that the chairman of the subcommittee and
    the ranking member are interested in the wireless microphone
    licensing issue and I offer to work with anyone on that.
        Chairman Wheeler, regarding set-top boxes, one of the goals
    outlined in an FCC fact sheet about your initial proposal was
    better prices for customers. This goal is especially important
    for customers in my district which has high unemployment and
    high poverty rates. Are better prices for consumers still a
    priority considering the apps-based approach?
        Mr. Wheeler. Thank you very much, Congressman. You know,
    set-top box forced rentals because you really have no choice,
    have been going up at about 5 percent a year every year like
    clockwork. And so yes, it is a very serious concern. And one of
    the reasons why I believe the Congress mandated that we have a
    competitive--we assure that there is a competitive set-top box,
    or navigation device which is what the language uses, was for
    that very reason because competition has the effect of having
    an impact on lowering prices.
        Mr. McNerney. It should any way.
        Mr. Wheeler. It should.
        Mr. McNerney. Commissioner Clyburn, do you believe that the
    adoption of the apps-based approach could in any way
    disadvantage low-income consumers?
        Ms. Clyburn. I believe that the direction in which we are
    headed and the proposed regime and the outcome that all of that
    envisions should bring overall net benefits to all in terms of
    a more openness, more competition, adherence to Section 629.
        And again, we are keeping in mind all of the privacy,
    security, and other protocols that is without question as a
    baseline, but what we want is more options. What we want is
    more affordability. What we want is more competition and more
    people having access and I think that is the direction in which
    we are headed.
        Mr. McNerney. Well, I hate to ask a procedural question,
    but going to apps-based approach, is there going to be another
    new Notice of Proposed Rulemaking?
        Mr. Wheeler. I think the notice that we put out is broad
    enough at this point in time to be able to justify it because
    we asked for what are other approaches to the whole.
        And certainly there is a record developing on this, sir, so
    you can't say that there wasn't a record.
        Mr. McNerney. Moving on to Lifeline, I would like to thank
    Mr. Pai for acknowledging the difference between potential
    widespread fraud and widespread providers. I encourage you to
    keep that distinction in mind as we move forward.
        Mr. Wheeler, the Lifeline Program is a critical resource in
    my district. More than 56,000 households participate. How would
    capping the budget for Lifeline Program impact the Lifeline
    recipients?
        Mr. Wheeler. Thank you, Congressman. What it does is it
    disincentizes the offering of service because if you look at--
    you need to be able to say to someone who is going to provide
    service you can count on $9.25 a month because you have got to
    amortize equipment, you have to worry about all of the expenses
    associated with this and you can count on that kind of a cash
    flow.
        If you say well, it is $9.25 today, but tomorrow, could be
    $6, then you create an economic disincentive to be offering the
    service. So what we tried to put in place was a budget that
    said OK, when you get to 90 percent of this number, then it is
    time for the Commission to come back and revisit what is going
    on. How do you put a mechanism in there? We don't want things
    just go whacko here, but how do you put a mechanism in first
    control while creating incentive at the same time?
        Mr. McNerney. Moving on to the 911 technology issue, how do
    you see the FCC gaining the authority that you feel you need to
    move forward with adapting the new technology?
        Mr. Wheeler. I think this committee is in charge of that
    question, sir, with all due respect.
        Mr. McNerney. OK. Good. I have 18 seconds, so Mr. Wheeler,
    I am interested in the privacy issue as well. If the Commission
    allows paper privacy practice in moving forward with this
    rulemaking, how will it ensure that the costs of incent of
    Internet service is not inflated so that consumers are forced
    to accept the discount in order to use that to keep their
    information from being----
        Mr. Wheeler. Thank you, Congressman. Excellent question. So
    I think that everybody agrees that privacy isn't a luxury. You
    can kind of start there. And as your question indicates, this
    is a very complex issue, and so we specifically called it out
    in our rulemaking and said can we please have everybody's
    thoughts on what the best way is to do it. I haven't got an
    answer for you yet, but we are searching for it.
        Mr. McNerney. Thank you, Mr. Chairman.
        Mr. Lance. Thank you very much. The Chair recognizes Mr.
    Bilirakis of Florida.
        Mr. Bilirakis. Thank you, Mr. Chairman. I appreciate it
    very much and I want to thank the panel for their testimony
    today. Welcome.
        Like many of my colleagues on both sides of the aisle, I
    think it is imperative for you to listen to the chorus of
    concerns for your set-top box NPRM and embrace the apps-based
    approach that won't shackle the industry to a hardware-
    dependent model moving forward.
        My constituents and I are also concerned about the
    likelihood of confusion that will grow exponentially with your
    new ISP privacy proposals under our Title II. It does not make
    a lot of sense to me to regulate Internet service providers
    under one new set of untested rules and allow everyone else to
    continue under the successful FTC privacy standard.
        My constituents want to be sure that their important
    information is security protected online at all times. The best
    way to ensure this is to consistently apply uniform standards
    to all of their information so they don't have to worry that
    their information can be treated differently depending on who
    they are providing it to.
        This recent trend towards differentiating between types of
    companies that can potentially compete against one another in
    the free market is a troubling regulatory development in my
    opinion. I want to follow up on a matter that we have discussed
    in the past few meetings regarding the FCC field offices, Mr.
    Chairman.
        I along with many of my colleagues from both sides of the
    aisle were concerned about the impact of losing the fields'
    boot on the ground presence, especially with regard to
    resolving interference to public safety communications. You
    have consistently stated the FCC will continue to meet its
    speed of disposal metric for public safety interference. The
    FCC will respond to 99 percent within one day and that response
    is typically an email to the complaint, so I don't really
    consider that a response.
        However, you have since disclosed that it takes 28 days, I
    understand, on average to resolve the interference to end it.
    In one sentence or less, Chairman Wheeler, has that data point
    changed since you closed the field offices?
        Mr. Wheeler. I can't answer that with specificity, sir, but
    the need to get out and deal with what are the realities in
    each interference situation, for instance, one of the major
    interferers is ballast in neon bulbs. So I remember a situation
    where our inspectors go and knock on a beauty shop door and
    they have no idea what is going on. How do you find it in here?
    It becomes an ongoing extensive process to get through it, but
    I can't--I'll try to find what the answer is to your question,
    but I don't know it off the top of my head.
        Mr. Bilirakis. Please get that to us as soon as possible.
    Again, members from both sides of the aisle are interested in
    this, our constituents come first.
        So moving on, Commissioner Pai and O'Rielly, a European
    commentary recently asserted that rather than move towards the
    type of harmonization our privacy rules achieved in Europe, the
    FCC's proposal and I quote ``seems to be instead moving towards
    fragmentation and more prescriptive rules for Internet service
    providers versus other Internet companies including some of the
    largest users of personal data.''
        She indicated that ``from European eyes, it appears strange
    to see the U.S. normally a leader on digital issues taking this
    apparently retrograde step.''
        Now that the privacy shield agreement was formally approved
    earlier today, what does it mean for Europe to have harmonized
    privacy standards and transatlantic reliance on the FTC model
    whereas domestically the FCC rules could lead to fragmentation
    of our privacy regime? Whoever wants to take it first.
        Mr. Pai. Congressman, thanks for the question. Those
    concerns are shared domestically included by myself and I think
    part of the reason why the privacy shield was notable was that
    it is backed up by Federal Trade Commission enforcement and the
    U.S. Commerce Department represented to the European Union that
    FTC enforcement was an adequate way to ensure that at least
    domestically those privacy protections would be upheld.
        Unfortunately, I think what the FCC has done according to
    the FTC's own staff comments it is carved out for special and
    more onerous regulation Internet service providers and so as
    you pointed out in your question we now have a two-track
    regime. Ironically, the new competitors in the online
    advertising market apparently will face more onerous regulation
    than everybody else who will face FTC regulation. And I think
    that is something that ultimately will redound to consumers'
    detriment.
        Mr. Bilirakis. Commissioner O'Rielly?
        Mr. O'Rielly. I would agree with my colleague's comment. I
    hate to admit it, but it looks like Europe is taking a more
    thoughtful approach than the United States on this issue.
        Mr. Bilirakis. Thank you. Commissioner Pai--oh, I know
    there is not much--can I have 30 seconds?
        Mr. Lance. Certainly.
        Mr. Bilirakis. Thank you very much, Mr. Chairman, I
    appreciate it.
        Commissioner Pai, what is so unique about the Lifeline
    aspect of the Universal Service Program where a basic fiscal
    responsibility measure like a firm budget cap is still not
    applied to a program with such a storied history by some, not
    all, of the participants in the Lifeline Program?
        Mr. Pai. Thanks for the question, Congressman. I think the
    Lifeline Program like all of the Universal Service Programs are
    focused on one things, supplying digital opportunities to
    Americans who otherwise might not have them. And that is part
    of the reason why I think it is so important for the FCC to be
    a wise fiscal steward of all of the dollars that taxpayers put
    into that fund.
        Part of the reason why I supported a budget is that it was
    the only one of the four Universal Service Fund programs that
    wasn't budgeted. I think it tends to promote more wise and
    careful spending to make sure that those dollars go to the
    people in need, and I think that is something that all of us
    can agree on.
        Mr. Bilirakis. Definitely. Thank you very much. I
    appreciate it. I yield back, Mr. Chairman.
        Mr. Lance. Thank you very much. The Chair recognizes Mr.
    Yarmouth of Kentucky.
        Mr. Yarmuth. Thank you very much, Mr. Chairman, and I very
    much appreciate this hearing. I am not sure I could have gone
    another 2 months without an FCC fix.
        [Laughter]
        And I would also like to agree with Mr. Shimkus and Mr.
    Scalise about, I think, the desirability of rewriting the act,
    although I might suggest that it is going to be a lot harder
    given the pace of change in this field, it is going to be a lot
    harder than it was in '96 and certainly a lot harder than '34.
        I know you have all heard me say before, we are talking
    about the pace of change that innovation is requiring companies
    to make investments to support user demand. Just last weekend
    in my district it was reported that AT&T has finally built out
    their fiber footprint and it is great. It is great for my
    constituents and I know it has been said many times in this
    hearing already how important this is for the country and I
    commend the Commission on its work in expanding broadband so
    everyone can participate in the economy.
        That being said, the way we receive content from
    broadcasters, radio, and newspapers is changing rapidly and I
    remember when I was growing up we had two television stations
    in Louisville, two radio stations that reported news, and two
    newspapers that were owned by the same company that owned one
    of the television stations and one of the radio stations, so I
    really understood the--I would have understood the need for
    cross ownership regulation at that point. But now in today's
    world and I come from a media background. I owned a newspaper.
    My son now owns a newspaper, which he is also doing
    broadcasting. Every broadcaster is doing print media. They are
    not doing it in newsprint. But they are doing it online.
        Pew Research said 62 percent of Americans now get their
    news from social media. I saw a Nielsen report a couple of
    weeks ago. Among Millennials, only 24 percent watched any
    television last year, and I actually validated that with a
    group. I was with 30 Yale students. I said how many of you
    watch television this year. Everybody raised their hand. I said
    how many of you watched the television set? Two raised their
    hand.
        So as I think of all this, I am wondering and I read the
    fact sheet, the update on the Commission's plans on cross
    ownership rules. And I know Mr. O'Rielly, you have been
    outspoken about your opinion that we don't need it, we don't
    need them. I noticed in that update it says that the rule will
    reinforce the idea that is necessary in the public interest. So
    I am kind of curious, in the 2 minutes and 20 seconds I have
    left, let you take a shot first for a minute as to why you
    don't think they are necessary anymore, and then I would like
    to have somebody who believes, can explain to me where the
    public interest benefits from.
        Mr. O'Rielly. So I haven't said to eliminate. There are
    five rules, with different parts to each one. So I haven't said
    to eliminate them in total. There are definitely paths that I
    want to see us recognize that we should modernize. You
    highlight the experience of newspapers. The newspaper industry
    is in a very troubled state, but we are going to maintain--you
    will see soon enough our activity on our media ownership rules.
    I think you are going to find it is even stronger than what is
    on the fact sheet. It is actually in a more prescriptive and
    additional route requirements. So I think that is in the wrong
    direction.
        But based on where the media is today, where Millennials
    are taking their information, where consumers are taking their
    information, where news is being provided, so one of the
    arguments that I made and this is a point in my testimony is
    that we can't do anything on television because we have the
    incentive auction going, but that has no impact on the
    newspaper/radio side, and we make the point that those markets
    are not the same and they are not competing against each other
    in the item, so it is hard to me to fathom that we can't at
    least do some reform over here, but we are not planning to do
    so. So we are going to lock in the rules for another 4 years or
    longer, and it hasn't changed since 2004.
        I think that is very problematic given what has changed in
    that time frame for users' experience, for consumers'
    experience, and for producers' experience. And I just think
    that we have to thoughtfully change our rules, modernize them
    while still respecting localism, competition, diversity, and
    the public interest. We can do both. We are not doing it in
    this item.
        Mr. Yarmuth. Mr. Chairman, do you want to take a shot at
    that or any of the others?
        Mr. Wheeler. So thank you, Mr. Yarmuth. You know, I think
    we have to put this in perspective. This committee was very
    explicit and the court, Third Circuit, very explicit saying
    hey, it has been 8 years since you guys have made any kind of
    decision on this. It wasn't because we weren't trying. It was
    because there wasn't a majority that would coalesce around an
    idea.
        So step one is, is there a majority that will coalesce
    around an idea? Step two is, all of the Commissioners have not
    yet expressed themselves in this proceeding. And are there ways
    that those two groups can work together on this, and I think
    that is yet to be seen. But the point of the matter is that the
    reason we took this 2-year step is because for 8 years nobody
    has ever been able to figure out where is something we can all
    agree on, and that is still an item that is very much under
    discussion.
        Mr. O'Rielly. We are in the exact same spot as we were
    before. Nothing is going to change, yet the marketplace is
    changing before our very eyes.
        Mr. Wheeler. That is the key thing. The market is changing,
    even Pokemon.
        Mr. Lance. Thank you very much. The Chair recognizes Mr.
    Johnson of Ohio.
        Mr. Johnson. Thank you, Mr. Chairman, and I, too, thank the
    panel for being with us today.
        Chairman Wheeler, the FCC recently levied a $34.5 million
    fine against a Chinese company for selling equipment that is
    illegal in the United States, jammers. Did that Chinese company
    respond to the FCC in the course of the penalty proceeding to
    defend itself?
        Mr. Wheeler. I can't answer that with specificity.
        Mr. Johnson. Can you get back to me on that?
        Mr. Wheeler. Yes, sir.
        Mr. Johnson. OK, do you expect that the Treasury will ever
    see any of the $34.5 million fine that the FCC assessed?
        Mr. Wheeler. I quit hypothesizing some time ago.
        Mr. Johnson. Let us take a wild guess, because I don't
    think we will. And that being the case, does it not give you
    concern about the enforcement mechanisms proposed in your set-
    top box proposal that will likely result in offshore companies
    manufacturing and selling set-top boxes in the United States?
    Are you going to have repeats of this kind of thing?
        Mr. Wheeler. I understand your point. So one of the things
    that we are--this is on the table as we work through with the
    industry, what is the right kind of approach.
        Mr. Johnson. Do you have concerns about collecting the
    money and enforcing, though, with your proposal as it is? I
    mean, if we can't enforce it on China--and you have no
    certainty that we can--how does your proposal stack up?
        Mr. Wheeler. So the way the rulemaking works is----
        Mr. Johnson. I know how the rulemaking works. Do you have
    concerns about the enforcement mechanism? That is a very narrow
    question.
        Mr. Wheeler. And we are trying to resolve those concerns as
    we go through this process.
        Mr. Johnson. So you do have concerns?
        Mr. Wheeler. As we go through this process.
        Mr. Johnson. OK, great.
        Mr. Wheeler. It has been raised in----
        Mr. Johnson. One of the things that we focused on is the
    uncertainty that results from poor processes. On May 4th of
    this year, an opinion and order was released by the Enforcement
    Bureau in a complaint proceeding. The complaint was filed with
    the FCC on May 13, 2004. It took the FCC almost 12 years to
    resolve the complaint. Were you aware of this?
        Mr. Wheeler. Which proceeding are you speaking of, sir?
        Mr. Johnson. I can get you that information. I don't have
    which specific proceeding, but are you aware of that?
        Mr. Wheeler. I am not aware of that, sir.
        Mr. Johnson. OK, I will follow up with questions for the
    record.
        Mr. Wheeler. Great. Thank you.
        Mr. Johnson. Also, Chairman Wheeler, you recently submitted
    the FCC's management report on Inspector General and other
    audit reports to the committee. The report discloses that in
    March of last year the IG issued a report on the FCC's
    management of civil monetary penalties. I think the IG
    testified back in 2014 that he was going to do this and that
    the report found that the FCC had not collected all the
    penalties and fines that it could have.
        You reported to this committee that of the IG's 13
    recommendations, ten remain open. Is that correct? Do I have
    that number right?
        Mr. Wheeler. I don't know by the count, sir. I know that we
    submitted the report to you.
        Mr. Johnson. OK, but you reported to us that of the IG's 13
    recommendations, 10 remain open. Do you know how many of the
    recommendations still remain open?
        Mr. Wheeler. No, sir.
        Mr. Johnson. You do not?
        Mr. Wheeler. No, sir.
        Mr. Johnson. Do you have any idea when the remaining
    recommendations will be closed out?
        Mr. Wheeler. Working with the IG.
        Mr. Johnson. Well, there is a lot you don't know today,
    isn't it? Is your memory failing, or what? You don't remember
    the report and the recommendations? I mean, you testified
    before this committee on these matters.
        Mr. Wheeler. Yes, sir.
        Mr. Johnson. Yes, sir to what? You do remember or you don't
    remember?
        Mr. Wheeler. I am giving you straight and truthful answers.
        Mr. Johnson. Well, no, you are saying you don't know. Can
    you get back to the committee on these things?
        Mr. Wheeler. Yes, sir.
        Mr. Johnson. I will turn these questions in as well.
    Commissioner O'Rielly, you blogged about the FCC's handling of
    penalties, is that correct?
        Mr. O'Rielly. That is accurate.
        Mr. Johnson. Did the Chairman's office share this report
    with you?
        Mr. O'Rielly. I am not aware of that report, no, sir.
        Mr. Johnson. You are not aware of the report.
        How can this be a commission, Mr. Wheeler, Chairman
    Wheeler, when the report is not even shared with all the
    members of the Commission? You testified earlier that the
    majority of decisions are made unanimously among the
    Commission. How can you make decisions when a critical report
    like this is not shared with all the members?
        Mr. Wheeler. No, I think it is shared with the members.
        Mr. Johnson. He just said it is not. So your opinion
    differs from theirs.
        Mr. Chairman, I yield back. We are not going to get to the
    bottom of this today. Thank you.
        Mr. Lance. Thank you very much. The Chair recognizes Mr.
    Rush of Illinois.
        Mr. Rush. I want to thank you, Mr. Chairman. It is always a
    pleasant time when the Commission comes before the subcommittee
    and I certainly want to welcome you all to this hearing.
        Commissioner Clyburn, can you explain to me how does your
    set-top box proposal requiring pay TV to provide free
    information for those the device makers when worked with the
    cable industries ask and fetch model?
        I heard from many in the cable industry that information
    flows does not exist in the network and that the FCC's set-top
    box proposal is impossible to comply with. Do you agree with
    this?
        Ms. Clyburn. So again, I am trying to wrap my head around
    your question. You are saying that there is a charge that our
    current proposal will not realize--if you could restate----
        Mr. Rush. There is no mechanism within the set-top box that
    will concur or will allow them to get the information that you
    are requesting from the manufacturers of the set-top boxes.
        Ms. Clyburn. So one of the things, if I am in sync with
    your question, one of the things that we are hoping for here is
    more competition and again, if there are either standards with
    the current set-top box ecosystem where there is a neutral
    agree-upon standard by a standard setting body, then I believe
    if I am answering your question, I am struggling a little bit,
    so forgive me if I am not understanding. A standard setting
    body would set the protocols that will enable the manufacturers
    to be in sync with what the ecosystem or what the protocols are
    in place. So if I am not reaching----
        Mr. Rush. I understand that the cable industry is saying
    that the information that you are requesting that it does not
    exist in their network and that your proposal that you have
    before--that you are considering is impossible because there is
    no way for them to gather the information.
        Ms. Clyburn. OK, so one of the things that we are
    discussing in this particular item is right now 99 percent of
    individuals rent their--get their set-top box, rent their set-
    top box from the particular provider whether it is a cable or a
    satellite provider.
        What we are putting forth is whether or not this should be
    a more competitive regime, a more neutral, possibly a more
    neutral regime which a lot of people, especially those who are
    independent programmers are saying would be needed in order for
    more people to take part. So again, I will follow up with you.
    I am not sure I am hitting the mark, but that is my----
        Mr. Rush. I really appreciate your answer. Chairman
    Wheeler, how did you come to the conclusion, or the Commission
    come to the conclusion, that the FCC does not have a basis for
    instituting race- and gender-based standard preferences?
    Specifically, I am interested in what information study was
    emphasized and was collected to reach this conclusion.
        Mr. Wheeler. Thank you very much, Congressman. This is one
    of the most vexing issues that the Commission faces. The
    Supreme Court in the Adarand decision was very strict in terms
    of what it said was possible. We have been trying to work our
    way through that.
        What we did--an approach, I can't speak specifically to a
    specific item at this point in time, but an approach to that is
    to view things on a revenue basis and how is it that you can
    provide incentives to small businesses and should the
    Commission's policies follow that. And also then, how do we do
    things such as our JSA order, which has resulted in an increase
    in minority ownership of broadcast.
        Mr. Rush. Mr. Chairman, earlier there was an initial 30
    seconds granted to a member.
        Mr. Long [presiding]. OK, that is fine. We do have a vote,
    so we need to wrap it up pretty quick.
        Mr. Rush. I just want to ask a simple question. Chairman,
    what would be your response to a request for the FCC to review
    all of the research into the health risk of non-thermal
    exposure to RF radiation? I am concerned about that because as
    you know I am a cancer survivor.
        Mr. Wheeler. Thank you, Congressman. We would be very
    receptive to the input from the scientific agencies of the
    Government, but for us to say that we are a scientific agency
    is a stretch.
        Mr. Rush. OK. Thank you. I yield back.
        Mr. Long. I thank the gentleman for yielding back and I now
    recognize myself for 5 minutes of questioning.
        Chairman Wheeler, earlier Commissioner Pai was talking
    about some facts and figures and you referred to them as not--
    so-called facts, I think was your term. What I am going to
    refer to is not so-called, so I would like your response. The
    FCC's recent enforcement action against Total Call Mobile is
    the latest example of pervasive and ongoing waste, fraud, and
    abuse in the Lifeline Program. As part of that proceeding, the
    FCC directed Total Call to explain why Lifeline payments should
    not be suspended. Total Call failed to do so and you issued a
    second order temporarily suspending payments until it does
    comply. That tells me that in spite of everything Total Call is
    still participating in the Lifeline Program.
        What does the FCC have to do to stop paying these
    companies? And what does the FCC have to do to kick them out of
    the program?
        Mr. Wheeler. Thank you, Congressman. We have stopped to put
    them on notice that from May forward, they are not going to get
    paid. There are due process issues in here. They have rights.
    We have to make sure that those rights are followed, but we
    have, as of middle of June, end of June, I guess, put them on
    notice that we are not going to be funding.
        Mr. Long. OK, because I know that on March 7th which
    predates the middle of May, you were talking about, they were
    clearly aware of pending enforcement action for defrauding the
    program against them. Representatives of Total Call then met
    with Commission staff that discussed Total Call's development
    of Lifeline broadband products. They stated their plans on
    rolling out in California and eventually nationwide. What is
    the FCC doing to get the ratepayers' money back?
        Mr. Wheeler. So we have, as I have said, we have told them
    we will not fund going forward and we have levied a $57 million
    action against them.
        Mr. Long. OK. Thank you. Commissioner Rosenworcel----
        Mr. Wheeler. $51 million, I am sorry. $51 million.
        Mr. Long. I thought that is what he said the first time.
        Commissioner Rosenworcel, the Chairman has testified that
    the FCC is looking at the burdens placed on providers in order
    to make it easier for carriers to participate in the Lifeline
    Program. Given the near decade of waste, fraud, and abuse
    reached over $1 billion by the Chairman's estimate and with the
    recent enforcement action demonstrating that it continues,
    wouldn't it be fair for the American consumers and businesses
    that pay the bills to make it more difficult to ensure that
    these companies are going to play by the rules? Hasn't the FCC
    learned anything?
        Ms. Rosenworcel. Listen, I appreciate the question. I think
    that Lifeline is an essential program. You don't have a fair
    shot in the 21st century if you don't have modern
    communications and frankly, I think that access to data has
    become the dial tone of the digital age. We are trying to
    update this program to reflect that and at the same time, get
    rid of waste, fraud, and abuse. And if we have bad actors, and
    companies that abuse this program, we should throw the book at
    them. We should fine them, and we should kick them out of the
    program.
        Mr. Long. OK, Thank you. Chairman Wheeler, if someone is
    using your credit card illegally and charging $100 a month, let
    us say for a year when you discover and stop and stop those
    payments, do you consider that a savings or so when you stop
    finding illegal Lifeline subscribers, are they really saving
    American consumers and businesses that pay into the fund
    anything? Is there any savings there?
        Mr. Wheeler. I know that his has been characterized that
    way. I think the fact of the matter is, Congressman, that there
    are many things to celebrate here. And that is that offenders
    were caught. Offenders were prosecuted. And the offenses were
    stopped and that there continues ongoing investigations both at
    the criminal level and at the civil level.
        Mr. Long. OK, thank you. Thank you for your testimony
    today. I am going to yield back the remainder of my time and
    give Mr. Collins the Chair and his time seeing as we have a
    vote, so hopefully we can adjourn instead of recessing and
    calling you all back.
        Mr. Wheeler. Thank you, Congressman. The patient Mr.
    Collins.
        Mr. Collins [presiding]. Thank you, and just in case,
    Chairman, could I get a note of missing a vote in case I do
    miss it.
        Mr. Wheeler. To whom it may concern?
        Mr. Collins. Yes, give me a ``to whom it may concern,''
    just in case I miss the vote. It is a motion to adjourn, which
    is just a procedural thing. It will vote 430 to 0, so if I do,
    I do.
        And you know what, I don't have a question today on pirate
    radio.
        Mr. Wheeler. I was ready.
        Mr. Collins. I knew you were ready.
        Mr. Wheeler. I was ready. I want to tell you there are 91
    actions that have been taken through May of this year on pirate
    radio compared to 130 for all last year, and it is now taking
    up 20 percent of our field force time. We listened to you----
        Mr. Collins. I will call that a success. If nothing else,
    when you look at me you think pirate radio, and when you sit at
    that spot at the end of the dais, you just have to pick the
    issue. You can always know someone else won't ask about.
        Mr. Wheeler. But the other part about it--yes, you do have
    that certain image. But the other part about it is we weren't
    just looking at you. We are trying to listen to you and be
    responsive.
        Mr. Collins. Well, no, Mr. O'Rielly even went and busted
    somebody in Brooklyn.
        Mr. O'Rielly. I appreciate the chairman's comment.
        Mr. Collins. I wasn't even trying to bring up pirate radio.
    Actually, we all have the same issues and concerns. So let me
    just maybe end this hearing today talking about one issue that
    I think we would like some clarity on, and that is the issue of
    cell phones and the Telephone Consumer Protection Act. We
    always know that that came up when we had landlines. Now we
    have cell phones and the two in particular, one of them is I
    represent some folks that do the student debt collections on
    the Federal student loans. And I know recently the FCC did come
    out and I think took a step in clarifying that if someone is
    making a call on behalf of the Federal Government, then the
    TCPA does not apply other than the normal rules surrounding any
    call.
        And the debt collection people just wanted me to ask you,
    Chairman, kind of a yes or no, that if they are making phone
    calls collecting on student debt, they would like clarity that
    the TCPA does not apply to them.
        Mr. Wheeler. That is not what we said. We said the TCPA
    applies in that there are rules inside that. So the Congress,
    you all passed the statute saying that Federal debt collection
    should be allowed under TCPA. Then we said that there are
    several tests here under that. So for instance, is that the
    debt needs to be delinquent. OK?
        Mr. Collins. OK, yes.
        Mr. Wheeler. That there should be a limit on the number of
    calls that can be made a month.
        Mr. Collins. Is there just a reasonable test on that?
        Mr. Wheeler. No, it is three calls a month. That there
    ought to be a right to request the consumer to say stop. That
    is at the core of the TCPA, that I have got the right to say I
    don't want to harassed and if the consumer wants to say please
    don't be making these calls any more, that is at the core of
    TCPA.
        Mr. Collins. If they were delinquent. They abided by the
    three calls and the consumer had not asked to stop and they
    make a phone call, then they are fine.
        Mr. Wheeler. Yes, sir.
        Mr. Collins. That is good.
        Mr. Wheeler. There is a fourth component.
        Mr. Collins. OK.
        Mr. Wheeler. To be clear, which is a limit on the number of
    calls you make to a wrong number or to a reassigned number, but
    it is also a rational kind of a test.
        Mr. O'Rielly. I will just say I think the Chairman is
    talking about the one preceding, where it is responding to the
    act that Congress initiated in the budget piece. But we just
    recently issued and released an item on Broadnet that I think
    answers this particular issue because it gets to the point of
    whether the Federal Government is covered by TCPA and those
    collectors who are doing it on behalf of the Federal Government
    would not be covered and therefore we clarified that. So I
    think he is talking about the one item which we are going to
    clarify later this summer at some point, but I think it has
    been clarified----
        Mr. Wheeler. I didn't understand your question to be about
    robocalls or about teletownhall. I thought it was about debt
    collection.
        Mr. Collins. Debt collection on Federal student loans.
        Mr. Wheeler. Yes, which is what we just laid out.
        Mr. Collins. The four steps.
        Mr. Wheeler. Yes, sir.
        Mr. Collins. And again, just so I can be clear to my folks
    who may be watching this because they were actually saying they
    were afraid to make some phone calls because they would then be
    having a complaint, potential fines against them and they
    weren't--they were looking for some clarity, so again, if the
    loan is delinquent, they limit themselves to three phone calls.
    The consumer hasn't asked to stop and--what was the last one?
        Mr. Wheeler. And only for debt collection and wrong numbers
    and reassigned numbers.
        Mr. Collins. Then they are not subject to the TCPA.
        Mr. Wheeler. That is what we are proposing.
        Mr. Collins. The last issue is and the confusion again on
    the cell phone piece and the TCPA implied consent versus actual
    consent. So a consumer now fills out an application or
    registers on some Web site and one of the questions is can we
    have your cell phone number and they fill in the cell phone
    number. So some people are saying that is implied consent. You
    gave me your cell phone number, so I can call you. Others would
    say that no, maybe we should have an affirmative box they have
    to check, I hereby authorize you to call me.
        And I know the FCC is looking into that and that is one of
    those things that right now is a little bit of a quagmire. I
    can't believe we are nuancing that, well, you filled it in, but
    you didn't check a box.
        So really the question here is I am assuming that is an
    issue that the FCC is going to continue to work on and I just
    wondered if there is any time frame where that might be
    clarified?
        Mr. Wheeler. The threshold of the statute was to give the
    consumer control and the question then becomes what is control?
    And yes, sir, we are working on that issue.
        Mr. Collins. Very good. I am sure I did miss my vote, so if
    I could get that get-out-of-jail-free excuse from you when I
    leave.
        I want to thank you all for coming. You know, I am not sure
    how often we will get the five of you back in this room because
    we have such a limited schedule, but if by some chance we
    don't, I want to as a new member of this committee thank you
    for our opportunity, mine personally, the last year and a half,
    this Congress, to interact with you. So the hearing of the
    Subcommittee on Communications and Technology is now adjourned.
    And I would like to remind Members that they have 10 days to
    submit questions for the record.
        [Whereupon, at 1:34 p.m., the subcommittee was adjourned.]
        [Material submitted for inclusion in the record follows:]

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        [Mr. Wheeler's responses have been retained in committee
    files and also are available at  http://docs.house.gov/
    Committee/Calendar/ByEvent.aspx?EventID=105179.]

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