[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
FCC REAUTHORIZATION: OVERSIGHT OF THE COMMISSION
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
MARCH 19, 2015
__________
Serial No. 114-24
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
______
U.S. GOVERNMENT PUBLISHING OFFICE
95-817 WASHINGTON : 2016
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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, Missouri JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
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)
C O N T E N T S
----------
Page
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 2
Prepared statement........................................... 4
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 115
Witnesses
Tom Wheeler, Chairman, Federal Communications Commission......... 27
Prepared statement........................................... 30
Answers to submitted questions............................... 122
Mignon Clyburn, Commissioner, Federal Communications Commission.. 44
Prepared statement........................................... 46
Answers to submitted questions............................... 146
Jessica Rosenworcel, Commissioner, Federal Communications
Commission..................................................... 54
Prepared statement........................................... 56
Answers to submitted questions............................... 153
Ajit Pai, Commissioner, Federal Communications Commission........ 60
Prepared statement........................................... 62
Answers to submitted questions............................... 159
Michael O'Rielly, Commissioner, Federal Communications Commission 75
Prepared statement........................................... 77
Answers to submitted questions............................... 164
Submitted Material
H.R. --------.................................................... 5
Statement of various racial justice and civil rights
organizations, submitted by Ms. Eshoo.......................... 116
Statement of the Public Interest Spectrum Coalition and other
nonprofit groups, submitted by Mr. Doyle....................... 118
FCC REAUTHORIZATION: OVERSIGHT OF THE COMMISSION
----------
THURSDAY, MARCH 19, 2015
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 11:02 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Greg
Walden (chairman of the subcommittee) presiding.
Members present: Representatives Walden, Latta, Shimkus,
Blackburn, Scalise, Lance, Guthrie, Olson, Pompeo, Kinzinger,
Bilirakis, Johnson, Long, Collins, Cramer, Barton, Eshoo,
Doyle, Clarke, Loebsack, Rush, Butterfield, Matsui, McNerney,
Lujan, Cardenas, and Pallone (ex officio).
Staff present: Gary Andres, Staff Director; Ray Baum,
Senior Policy Advisor for Communications and Technology; Sean
Bonyun, Communications Director; Leighton Brown, Press
Assistant; Karen Christian, General Counsel; Andy Duberstein,
Deputy Press Secretary; Gene Fullano, Detailee, Telecom; Kelsey
Guyselman, Counsel, Telecom; Peter Kielty, Deputy General
Counsel; Grace Koh, Counsel, Telecom; David Redl, Counsel,
Telecom; Charlotte Savercool, Legislative Clerk; Jeff Carroll,
Democratic Staff Director; David Goldman, Democratic Chief
Counsel, Communications and Technology; Margaret McCarthy,
Democratic Professional Staff Member; Tim Robinson, Democratic
Chief Counsel; and Ryan Skukowski, Democratic Policy Analyst.
Mr. Walden. If everyone could take their seats. And while
they are, before we start the clock, as many of you know, I am
going to exert a little Chairman's prerogative here, because
Mr. Wheeler and I have not always gotten along. And I have my
opening statement here, but I am just sick and tired of your
third string approach to winning, and the way you are willing
to tackle and run over the top of people, and score points just
for scoring points.
Now, now that the U of O/OU game is over in the national
football championship, I want everybody to know I have kept my
promise and worn the Ohio State tie. So----
Mr. Wheeler. Mr. Chairman, I----
Mr. Walden. No, you are out of order.
Mr. Wheeler. I hope we----
Mr. Walden. I am just going to say that right now. Mute the
mics--nothing.
Mr. Wheeler. I hope we are on the record, because I just
want to say two things. Number one, you are an honorable man,
and----
Mr. Walden. Thank you.
Mr. Wheeler [continuing]. You had the wrong side, and we
were pleased to beat you with our backup to the backup
quarterback.
Mr. Walden. You think this is going to go better for you?
Mr. Wheeler. But I do think that the color is very becoming
on you.
Mr. Walden. Now, just so you know, I have now fulfilled my
bet that I would wear the Ohio State tie if they beat my Ducks,
and vice versa. I also want you to know there is a pending
matter to be settled. I did offer up dates for lunch, which I
will buy, and I suggested February 26 might have been a
wonderful day for the Chairman to have lunch with me. He
suggested he had other matters to attend to. All right. Enough
of fun and frivolity. Thank you all for being here, and I thank
our FCC Commissioners for being here, and my colleagues. I know
this is a ``go away day'', and we will probably interrupt it by
votes, so we will try and move through this. But this is really
important business we are going to take up, as we always do in
this committee, and so on to the serious matters.
OPENING STATEMENT OF HON. GREG WALDEN
Mr. Walden. It was just over 2 weeks ago that we had the
Commission's managing director present us with his rationale
for the largest budget request in history for the Federal
Communications Commission. We were able to discuss with him
whether the funding levels requested would actually yield an
effective and credible agency. Today we have the opportunity to
ask the Commissioners themselves whether this agency is
functioning as it should, whether it is producing the high
caliber policymaking that American society requires and
deserves, and I, for one, have to confess, I am skeptical.
I think I have a good reason for my skepticism. The Federal
Communications Commission was once a transparent, predictable
agency, presiding with a light touch over an explosion of
mobile and Internet investment and innovation that has greatly
benefitted consumers. Today that agency, in my opinion, has
evolved into a place where statutory obligations are left to
languish in favor of scoring points.
The agency's capitulation to the President's demands comes
at the end of a proceeding mired in what I say is procedural
failures, and the White House's behind the scenes influence on
the FCC's process has been well documented by credible news
sources, including the Wall Street Journal, through e-mails
from Senator Reid's office last May as well. It is the
responsibility of an expert independent agency to issue
detailed notice to the public when it intends to act, and to
apply its expertise to resolve the hard questions of law and
policy. This process should be transparent, and every effort
should be made to resist calls to politicize the outcome.
Perhaps in this respect, the FCC should learn a thing or two
from the Federal Trade Commission, an agency the FCC rendered
moot in protecting ISP consumers.
A properly functioning commission doesn't work behind
closed doors with the President to bypass the administrative
process, and a properly functioning commission doesn't make
decisions based on the number of click and bait e-mails that
interest groups can generate. A properly functioning commission
focuses on law and facts to generate thoughtful and legally
sound analysis, rather than being carried away by politically
generated populous furor.
The Open Internet proceeding is not the only place where
the FCC seems to have abandoned good process. I am also
concerned about the use of delegated authority. Commissioners
have the responsibility for dealing with matters that are
controversial or make new policy, and should not simply
delegate a decision to bury the result. I am concerned that
transparency has suffered between the Commissioners. Lack of
agreement should not mean that decisional documents are kept
from other Commissioners until the 11th hour. And I am
concerned that an excessive number practical proceedings remain
unresolved, and thousands of businesses wait in the wings while
the Commission focuses on extending its regulatory reach.
But mostly I am concerned that the FCC has overstepped its
jurisdiction too regularly, net neutrality, the obvious example
here, but there are others. An agency only has the authority
given to it by statute, and I can't see how any reading of the
Communications Act would give the impression that Congress
granted the FCC authority to be the ultimate arbiter of the use
of personal information. I cannot see how the
Telecommunications Act could be read to gut the 10th Amendment,
place the FCC in the position of deciding how states can spend
their tax dollars. I cannot see how the FCC could possibly
interpret its governing statutes to wrest control of content
from the creators and mandate its presentation on the Internet.
But for the fact that I only have 5 minutes for my
statement, we could keep going. A bidding credit waiver for
grain management, government researchers in newsrooms adopting
trouble damages without notice, excessive and unfunded merger
conditions, last minute data dumps into the record. The FCC
appears to believe it is authorized to take the Potter Stewart
approach to its authority. I know it when I see it.
To be fair, some of the responsibility lies right here in
Congress. We have not updated the Communications Act for
decades, and technology has out-evolved its regulatory
framework. The FCC does not have the tools to do its job, but
this doesn't mean the agency should distort or ignore the
current law, or worse, threaten to manufacture authority out of
whole cloth, should regulated industries have the temerity to
resist the Commission's demands. Instead it should work with
Congress. We have offered a way forward on net neutrality that
is more certain, and less costly for society, and it is not
clear to me that the objections to our legislation are based on
policy.
But if we could work together on fixing the net neutrality
situation, I think we would be able to chalk up a victory for
all of us, and for all our consumers, and for the American
economy. So it starts today with trying to fix the agency
itself. It is our job to do our due diligence and reauthorize
this agency for the first time since 1995. I thank our
Commissioners, and Chairman Wheeler, for their attendance
today, and I look forward to our productive session ahead.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
It was just over 2 weeks ago that we had the commission's
Managing Director present us with his rationale for the largest
budget request in history for the FCC. We were able to discuss
with him whether the funding levels requested would actually
yield an effective and credible agency. Today we have the
opportunity to ask the Commissioners themselves whether this
agency is functioning as it should--whether it is producing the
high-caliber policymaking that the American society requires
and deserves. I, for one, am skeptical that this is the case.
I think I have good reason for my skepticism. The Federal
Communications Commission was once a transparent and
predictable agency presiding with a light-touch over an
explosion of mobile and Internet investment and innovation that
has greatly benefited consumers. Today that agency has devolved
into a place where statutory obligations are left to languish
in favor of scoring political points.
The agency's capitulation to the president's demands comes
at the end of a proceeding mired in procedural failures and the
White House's behind-the-scenes influence on the FCC's process
has been well documented by the Wall Street Journal and through
emails from Senator Harry Reid's office last May.
It is the responsibility of an expert independent agency to
issue detailed notice to the public when it intends to act and
to apply its expertise to resolve the hard questions of law and
policy. This process should be transparent and every effort
should be made to resist calls to politicize the outcome.
Perhaps in this respect the FCC could learn something from the
Federal Trade Commission--an agency the FCC recently rendered
moot in protecting ISP customers.
A properly functioning commission doesn't work behind
closed doors with the president to bypass the administrative
process and a properly functioning commission doesn't make
decisions based on the number of click-bait emails that
interest groups can generate. A properly functioning commission
focuses on law and facts to generate thoughtful and legally
sound analysis rather than being carried away by politically
generated populist furor.
The Open Internet proceeding is not the only place where
the FCC seems to have abandoned good process. I'm also
concerned about the use of delegated authority. Commissioners
have the responsibility for dealing with matters that are
controversial or make new policy and should not simply delegate
a decision to bury the result. I am concerned that transparency
has suffered between the Commissioners; a lack of agreement
should not mean that decisional documents are kept from other
Commissioners until the eleventh hour. And I'm concerned that
an excessive number of practical proceedings remain
unresolved--and thousands of businesses wait in the wings--
while the commission focuses on extending its regulatory reach.
But mostly, I'm concerned that the FCC oversteps its
jurisdiction too regularly. Net neutrality is the obvious
example here, but there are others. An agency only has the
authority given to it by statute, and I cannot see how any
reading of the Communications Act would give the impression
that Congress granted the FCC authority to be the ultimate
arbiter of the use of personal information; I cannot see how
the Telecommunications Act could be read to gut the 10th
Amendment and place the FCC in the position of deciding how
states can spend tax dollars; and I cannot see how the FCC
could possibly interpret its governing statutes to wrest
control of content from the creators and mandate its
presentation on the Internet.
But for the fact that I only have 5 minutes for my
statement, we could keep doing this all day. A bidding credit
waiver for Grain Management; government researchers in
newsrooms; adopting treble damages without notice; excessive
and unfounded merger conditions; and last minute data dumps
into the record. The FCC appears to believe that it is
authorized to take the Potter Stewart approach to its
authority: ``I know it when I see it.''
To be fair, some of the responsibility here lies with
Congress. We haven't updated the Communications Act for
decades, and technology has out-evolved its regulatory
framework. The FCC doesn't have the tools to do its job. But
this doesn't mean that the agency should distort or ignore the
current law or worse threaten to manufacture authority in whole
cloth should regulated industries have the temerity to resist
the commission's demands. Instead, it should work with
Congress. We have offered a way forward on net neutrality that
is more certain and less costly for society, and it's not clear
to me that the objections to our legislation are based on
policy. But if we could work together on fixing the net
neutrality situation, I think we would be able chalk up a
victory for all of us, for all consumers, and for the American
economy.
It starts today with trying to fix the agency itself.
[H.R. -------- follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. I would yield the remaining 30 seconds to the
vice chair, Mr. Latta.
Mr. Latta. Well, thank you, Mr. Chairman, and I appreciate
you for yielding, and holding today's hearing. I thank the
Commissioners for being here. The success and productivity of
the communications and technology industry never ceases to
amaze me, as it has been, and is a constant bright spot in our
economy as it rapidly advances and evolves to meet consumer
demands.
Given the FCC's integral role in the marketplace, it is
critical that the agency is transparent, efficient, and
accountable. That is why I am concerned with the FCC's decision
to reclassify broadband Internet service as a
telecommunications service under Title II. Despite the fact
that the order goes against a light touch regulatory approach
that was fundamental for providing the industry with
flexibility it needed to invest, innovate, and create jobs, the
order process was not transparent, and represents a regulatory
overreach that will have lasting negative consequences.
Today's hearing is a step in the right direction in an
effort to make the agency more efficient and effective by
reviewing the Commission's policy decision and processes. I
look forward to hearing from the Commissioners.
Mr. Chairman, I yield back with a point of personal
privilege. From an Ohioan, I think your tie looks great.
Mr. Walden. Sure glad I yielded time to you. With that, I
will turn to my friend from California, part of the Pac-12, Ms.
Eshoo.
Ms. Eshoo. Thank you, Mr. Chairman. I don't have any sports
analogies, so--and obviously I hold a much different view, and
so I want to express that view with an intensity that I think
needs to be brought to really what this issue is all about. And
I appreciate having the hearing, but I think that the main
point is that on February 26 the American people finally won
one, and it was big. The regular guys and gals across our
country, part of the beleaguered middle class, were heard. It
was a historic day when the FCC voted for bright line Open
Internet rules to protect the ability of consumers, students,
and entrepreneurs to learn and explore, create and market, all
on equal footing. This is about net equality.
The FCC decision ensures that the Internet remains open and
accessible to everyone, a source of intellectual enrichment,
and an engine for economic growth and prosperity in our
country. The Internet is the public library of our time, a
laboratory in the most robust marketplace imaginable, and the
FCC declared it open to all, and for all. I think this is
nothing short of extraordinary.
It was a day when the average person witnessed something
very rare. The big shots in Washington, D.C. sided with them.
Decision makers actually took in and considered the advice of
over four million Americans. I remember watching TV when Dr.
King addressed a million people on the Mall. It was a sea of
humanity. Well, put a multiplier on that. It is over four
million people that weighed in, and I think that kind of public
engagement with our government should be celebrated, and not
rolled over and disrespected.
Today the majority has offered a legislative discussion
draft intended to reauthorize the FCC. I have reviewed the
draft legislation, and concluded that, in effect, it is meant
to squeeze an agency that is already operating at the lowest
number of full time staff in 30 years. The FCC has to have the
means to fulfill its mission, to protect consumers, promote
competition, and advance innovation. That is their mission.
This includes huge issues, and they are huge, like freeing up
additional spectrum, promoting municipal broadband deployment,
and enhancing 911 services. Any attempt to overhaul the FCC's
funding structure should be fully analyzed, and the
implications of these changes should be fully understood. We
shouldn't be horsing around with it, in plain English, and a 48
hour review is simply insufficient.
So I find myself wondering, why are we having this hearing
today? I hope it isn't a fishing expedition. By compelling the
FCC Chairman and Commissioners to testify five times over the
course of 8 days, it seems to me that the majority seems to
have chosen to ignore a glaring fact. Four million--over four
million Americans did something. They, and countless more,
contacted their members of Congress to say, we don't want to
pay more for less. We don't think any kind of discrimination,
blocking, or throttling is good or fair. We are tired of poor
service from providers, confusing bills, and having to wait for
a half hour or more on hold to try and talk to a human being,
and we don't want any gatekeepers.
So I think that is really what this is all about. I welcome
the debate. I welcome the discussion with the Commissioners.
And I yield the remainder of my time to Congresswoman Matsui.
Ms. Matsui. Thank you very much, Ranking Member. I would
also like to welcome the Chairman and the Commissioners here
today. We know over the last year the debate over the future of
the Internet has not been an easy one. There have been many
twists and turns. But in the end, I was specifically pleased
that the FCC's net neutrality rules ensure that paid
prioritization schemes, or so-called Internet fast lanes never
see the light of day in our economy. Americans will not
experience Internet slow lanes or gatekeepers hindering
traffic. We know, however, the fight to preserve net neutrality
is not over.
That said, it is time for us to really get back to working
on issues that advance our Internet economy. I think spectrum
should be at the top of that list. The AWS3 option demonstrated
the massive appetite for spectrum. I look forward to re-
introducing bipartisan legislation with Congressman Guthrie
that would create the first ever incentive auction for Federal
agencies.
With that, I yield back the balance of my time.
Mr. Walden. The gentlelady yields back. Chair recognizes
the Vice Chairman of the full committee, Ms. Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman. And to the
Commission, I want to say thank you for being here and offering
your testimony. As you all know, we have got questions, and we
want to move right on to them. I think that the recent actions
taken by the FCC have really raised more questions about your
scope, and your reach, and your authority, and I will also say
about transparency. Chairman Wheeler, I will tell you, I do not
think it is acceptable for the Commission to pass a net
neutrality rule before the American people have the opportunity
to find out what is in it, and that was disappointing to us.
Releasing a draft final order should have been a part of the
rulemaking process, and it is disappointing that it was not.
Every dollar you spend is a taxpayer dollar. Every action that
you take affects the American taxpayer, so that lack of
transparency is incredibly disappointing.
I am sure that also you are hearing from Netflix, and some
of the other stakeholders who have been very disappointed on
what they found out once they started to read the 322 word-
filled pages. I will tell you also, as a former State Senator
from Tennessee, and someone that worked on the
telecommunications and interactive technology issues there, I
was terribly disappointed to see the action of the Commission,
to choose to take a vote, and choose to preempt state laws in
Tennessee and North Carolina that restrict municipal broadband
entry. These are decisions that should be made by their state
legislators. Your actions there are disappointing, and we have
questions about them.
And, Mr. Chairman, I yield back my time.
Mr. Walden. Anyone else on the Republican side seeking
time? If not, gentlelady yields back. Chair now recognizes the
Ranking Member of the full Committee, the gentleman from New
Jersey, Mr. Pallone, for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman. Over the past few
days we have heard quite a bit about process, fairness, and
transparency at the FCC. We just heard it again from my
previous colleague. But given what has transpired in this
subcommittee over the last 48 hours, I wonder whether we first
have to make sure our own house is in order. As witness
testimony was already being submitted, the Republicans
released, with no notice, a partisan discussion draft that
would completely overhaul the FCC's funding, and this
maneuvering is unfair to the witnesses, and unfair to the
members of the subcommittee, Mr. Chairman. Unfortunately----
Mr. Walden. Gentleman yield?
Mr. Pallone. Yes?
Mr. Walden. Yes. So the discussion draft was put out at
least an hour and a half before any testimony came in. I
realize that is still not enough time, but this isn't a markup.
This is a hearing. We followed all the committee rules. We have
circulated drafts, and always tried to be open and transparent.
We will continue to be. We are not marking up a bill.
Mr. Pallone. Well, Mr. Chairman, unfortunately, in this
Congress, we seem to have halted a tradition. I am not sure it
is in the rules, but we have had a long tradition of sharing
text with all members of the subcommittee at least a week prior
to a legislative hearing, and we have seen these same partisan
tactics----
Mr. Walden. Will the gentleman yield on that point?
Mr. Pallone. Sure.
Mr. Walden. Because actually, when you all were in charge,
I have got a list here of examples where that wasn't the case.
I agree we should be more transparent----
Mr. Pallone. Well, let us just say, if I can take back my
time, I would like to see us go back to a tradition, process,
whatever it was, that we have at least a week prior to a
legislative hearing. I mean, the same thing happened in the
Commerce, Manufacturing, and Trade subcommittee in the last
couple days, and it just, you know, I understand--maybe give
examples of things that were done in the past by us, but I just
think that, Mr. Upton, yourself, the subcommittee chairs have
all said that they want to act in a bipartisan way, they want
bipartisan bills, and I appreciate that. But if you are going
to do that, then we need to have more time than just the 48
hours that occurred here today. And we had the same thing
yesterday in the other subcommittee. If we are going to really
move forward, we are trying to do bills on a bipartisan basis,
we need to have more than the 48 hours.
In addition to that, I have yet to hear a convincing
explanation for why this legislation is a good idea. Given what
we just went through with the Department of Homeland Security,
I doubt our constituents are clamoring for us to create another
funding cliff, especially for an agency that just netted $41
billion for public safety and deficit reduction without raising
a dime in taxes. I just think this agency is too important to
play these types of games with its funding.
And nonetheless, I am grateful that we are having the
hearing today. It gives us the opportunity to show our
appreciation in person and in public to the FCC for its work.
So thank you, Chairman Wheeler, and to his fellow Commissioners
for all that you have accomplished. This has been an eventful
year for the FCC. The Commission has certainly received more
than its fair share of attention, and also an unprecedented
level of civic engagement. Four million Americans weighed in,
overwhelmingly calling for strong Network Neutrality rules. 140
members of Congress engaged in the process. And, of course, the
President expressed his opinion as well, which is not something
that we should be embarrassed about, by the way.
Yet despite the withering glare of the spotlight, the
Commission stood tall. The Commissioners, and the entire staff
of the FCC, have shown a steadfast dedication to serving the
public interest. You showed everyone who called in, who wrote
in, who came in to support net neutrality that the FCC and the
rest of Washington know how to listen, so thank you.
Now, I have repeatedly said that I welcome the majority's
change of heart, and their offer to legislate on this issue of
net neutrality, and I remain open to looking for truly
bipartisan ways to enshrine the FCC's Network Neutrality
protections into law. But after what has taken place over the
past few days, I wonder if bipartisanship may only be in the
eye of the beholder.
If we are able to find a real partner in this process, we
must make sure that our efforts do not come at the expense of
all the other work the Commission does. The FCC must remain an
effective cop on the beat to protect consumers. The FCC must
continue to promote universal service to all Americans. The FCC
must ensure that the telecommunications and media markets are
competitive. And the FCC must maintain the vitality of our
public safety communications. And that is why I look forward to
hearing today how the FCC can continue to serve an important
role in the broadband age. And so, to the Commissioners, thank
you for coming here today, and thank you for your public
service.
May I just ask--I know, because I yielded time to you, Mr.
Chairman, I wanted to yield a minute of my time to Mr. Lujan,
but I don't have it now. But if I could ask unanimous consent--
--
Mr. Walden. Without objection.
Mr. Pallone. Thank you.
Mr. Lujan. Thank you, Ranking Member Pallone, and let me
second your comments about the need for us to work together.
Telecommunications policy has a long history of being made on a
bipartisan basis, and I would hate to see the polarization that
defined so many of our policy debates dominate our efforts on
this Subcommittee.
Before us are real challenges. We still have 77 percent of
New Mexicans living in rural areas that lack access to fixed
high speed broadband. And as I have shared with Chairman
Wheeler before, if we can have Internet access at 30,000 feet
on an airplane, we should be able to have Internet access all
across rural America, including New Mexico.
Today I am especially interested in hearing from
Commissioner Rosenworcel on the innovative potential of
unlicensed spectrum, and I am also excited to hear from a
former public utility commissioner, a colleague of mine as
well, Commissioner Clyburn's ideas to modernize the Lifeline
program in the broadband era. And I want to hear from all
Commissioners on how we can work with the FCC, including
strengthening the information and technology systems that
collapsed under the weight of millions of comments generated
last year when a friend of ours, John Oliver, and four million
others filed comment to the FCC, which crashed its servers.
Four million comments is a lot, but surely the agency that is
charged with overseeing the Internet should be able to handle
the traffic.
And with that, Mr. Chairman, I want to thank everyone for
being here today, and I look forward to this important
conversation today.
Mr. Walden. Thank the gentleman for his comments. We will
go now to the Chairman of the FCC for an opening statement. Mr.
Wheeler, thank you for being here. We know you have a tough
job, and we look forward to your comments, sir.
STATEMENTS OF THE HONORABLE TOM WHEELER, CHAIRMAN, FEDERAL
COMMUNICATIONS COMMISSION; THE HONORABLE MIGNON CLYBURN,
COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION; THE HONORABLE
JESSICA ROSENWORCEL, COMMISSIONER, FEDERAL COMMUNICATIONS
COMMISSION; THE HONORABLE AJIT PAI, COMMISSIONER, FEDERAL
COMMUNICATIONS COMMISSION; AND THE HONORABLE MICHAEL O'RIELLY,
COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION
STATEMENT OF TOM WHEELER
Mr. Wheeler. Thank you very much, Mr. Chairman, Ranking
Member Eshoo. It is a privilege to be here with all of my
colleagues. There has been some reference up here about the
Open Internet. I am sure we will discuss it more today. Clearly
the decision that we made was a watershed.
You, in your legislation, Mr. Chairman, and we in our
regulation, identify a challenge, a problem that needs to be
solved. We take different approaches, to be sure, and no doubt
we are going to be discussing those, now and in the future.
There is common agreement that the Internet is too important to
ignore, and too important to not have a set of yardsticks and
rules. We have completed our work, now Open Internet rules will
be in place.
Now let me move on to another couple of issues that I think
are important to the committee, and one is that there is a
national emergency in emergency services, and Congress holds
the key to the solution. Ms. Eshoo referenced the public safety
challenges. The vast majority of calls to 911 come from mobile
devices. In a unanimous decision of this entire Commission, we
have established rules for wireless carriers to provide
location information as to where that call is coming from. The
carriers are stepping up. But delivering that information is
only the front end of the challenge.
Mr. Shimkus, about 15 years ago, led legislation making 911
a national number. Amazing it had never been that. The calls
now go through, but many times it is like a tree falling in the
forest. There was a recent tragic example in Georgia, when a
lady by the name of Shanelle Anderson called as she was
drowning in her car. The signal was received by an antenna that
happened to be an adjacent PSAP, public safety answering point,
that had decided not to have maps of the area next door.
I have listened to the call, and it is heartbreaking. She
keeps saying, ``well, here is where I am,'' and the dispatcher
keeps saying, ``I can't find it on the map. I can't find it, I
don't know where you are,'' and didn't know where to send
somebody. There are 6,500 different PSAPs in this country. They
are all staffed by incredibly dedicated individuals, but there
needs to be some kind of set of standards, and only Congress
can deal with it. We have dealt with the front end, but now it
is necessary to do something about the back end. This is not a
power grab. I don't care how it gets done, or what agency is
responsible, but we owe this to the American people.
The second quick issue that I would like to raise is, Mr.
Chairman, both you and I want a Commission that works openly,
fairly, and efficiently. While three-to-two votes always get
the attention, about 90 percent of our decisions during my
tenure have been unanimous. About two percent have been four to
one, and there have been 21 out of 253 votes that have been
three to two.
We also have, during my tenure, the best record of any full
commission this century for getting decisions out quickly.
Seventy three percent of our decisions are released in one
business day or less. The measure of that is the last
Republican-led commission, it took a week before they could hit
that number. We also have the lowest number, and percentage, of
actions made on delegated authority of any commission,
Republican or Democrat, in the last 15 years. But regardless of
this, we should be constantly striving for improvement.
Commissioner O'Rielly has raised some really good questions
about longstanding processes. He and I were in the same
position. We walked in the door at the same time, and we found
processes in place that had been typical for both Republican
and Democratic administrations. As I say, he raised some really
good questions, and to address these questions, I am going to
be asking each Commissioner to appoint one staff person to work
on a task force to be headed by Diane Cornell, who ran our
Process Reform Task Force. I have already asked her to begin a
review of all similarly situated independent agencies so that
we know what the procedures are for those agencies, and that
can be a baseline against which we can measure our procedures
and move forward to address what I think are some of the
legitimate issues that Commissioner O'Rielly has raised. Thank
you, Mr. Chairman.
[The prepared statement of Mr. Wheeler follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Thank you, Mr. Chairman. We will now move to
the Honorable Mignon Clyburn, Commissioner of Federal
Communications Commission. It is a delight to have you back
here, former Chairwoman. We are delighted to have you here.
Please go ahead.
STATEMENT OF MIGNON CLYBURN
Ms. Clyburn. Thank you, Chairman Walden, Ranking Member
Eshoo, distinguished members of the Committee. Thank you for
the opportunity to share my perspectives with you this morning.
In my written testimony for the record, I discussed the
Commission's work in several policy areas. This morning I will
focus on spectrum auctions and inmate calling services reform.
In March of 2014 we unanimously adopted licensing and
service rules to auction 65 megahertz of spectrum in the AWS-3
bands. This was not only important for wireless seeking to meet
skyrocketing consumer demand on their networks, but it was
critical for the promotion of more competitive options. My
colleagues and I agreed on a plan with smaller license blocks,
and geographic licensed areas. We also agreed on the need for
interoperability between the AWS-1 and AWS-3 bands. Such rules
encourage participation by smaller carriers, promote
competition in local markets, and ensure the auction allocates
spectrum to the highest and best use.
Most experts predicted intense bidding in this auction, but
no one forecasted that the total gross amount of winning bids
would be a record setting $44.89 billion. The success of this
auction was due in large part to a painstaking effort to pair
the AWS-3 spectrum bands that involve the broadcast and
wireless industries, Federal agencies, and members of this
Committee, and for that I thank you. We should follow a similar
collaborative approach in the voluntary incentive auction.
Robust participation by small and large wireless carriers
in the forward auction will encourage broadcast television
stations to take part in the reverse auction. A unanimously
adopted notice of proposed rulemaking seeks to strike a proper
balance between licensed and unlicensed services. We also
initiated a proceeding to reform our competitive bidding rules
in advance of the incentive auction. We proposed comprehensive
reforms so small businesses can compete more effectively in
auctions, and sought comment on how to deter unjust enrichment.
An example of how the markets do not always work, and a
regulatory backstop is sometimes necessary, is inmate calling
services. While a petition requested relief from egregious
inmate calling rates remained pending at the FCC for nearly a
decade, rates and fees continue to increase. Calls made by deaf
and hard of hearing inmates have topped $2.26 per minute. Add
to that an endless array of fees. $3.95 to initiate a call, a
fee to set up an account, another fee to close an account.
There is even a fee charged to users to get a refund from their
own money. These fees are imposing devastating societal impacts
that should concern us all. There are 2.7 million children with
at least one parent incarcerated, and they are the ones most
likely to do poorly in school, and suffer severe economic and
personal hardships, all exacerbated by an unreasonable rate
regime.
Studies consistently show that meaningful contact beyond
prison walls can make a real difference in maintaining
community ties, promoting rehabilitation, successful
reintegration back into society, and reducing recidivism.
Ultimately, the downstream costs of these inequalities are
borne by us all.
We have had caps on interstate inmate calling rates since
February of last year, and despite dire predictions of losing
phone service and lapses in security, we have witnessed nothing
of the sort. What we have seen is increased call volumes,
ranging from 70 percent to as high as 300 percent, and letters
expressing how this relief has impacted lives.
I look forward to working with the chairman and my
colleagues to finally bring this issue over the finish line, my
sports reference, the best I am going to do this morning, by
reforming all rates, while taking into account robust security
protections.
Mr. Chairman, and Ranking Member, and others of the
committee, I appreciate the opportunity to appear before you
today, and I look forward to any questions you may have.
[The prepared statement of Mr. Clyburn follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. I think you have a winner there. OK, we are
going to go now to Commissioner Jessica Rosenworcel. We are
delighted to have you back before the subcommittee. Look
forward to your comments as well, Commissioner. Thank you for
being here.
STATEMENT OF JESSICA ROSENWORCEL
Ms. Rosenworcel. Good morning, Chairman Walden.
Mr. Walden. I don't think that microphone stayed on.
Ms. Rosenworcel. Have I got it now?
Mr. Walden. There you go.
Ms. Rosenworcel. OK. Good morning Chairman Walden, Ranking
Member Eshoo, and distinguished members of the Committee.
Today communications technologies account for \1/6\ of the
economy, and they are changing at a breathtaking pace. How
fast? Well, consider this. It took the telephone 75 years
before it reached 50 million users. To reach the same number of
users, it took television 13 years, and the Internet 4 years.
More recently, to reach the same number of users it took Angry
Birds 35 days.
So we know the future is coming at us faster than ever
before. We also know the future involves the Internet, and our
Internet economy is the envy of the world. It was built on a
foundation of openness. That is why Open Internet policies
matter, and that is why I support network neutrality.
As you have undoubtedly heard, four million Americans wrote
the FCC to make known their ideas, thoughts, and deeply held
opinions about Internet openness. They lit up our phone lines,
clogged our e-mail inboxes, and jammed our online comment
system. That might be messy, but whatever our disagreements on
network neutrality, I hope we can agree that is democracy in
action and something we can all support.
Now, with an eye to the future, I want to talk about two
other things today, the need for more wi-fi and the need to
bridge the Homework Gap.
First, wi-fi. Few of us go anywhere today without mobile
devices in our palms, pockets, or purses. That is because every
day, in countless ways, our lives are dependent on wireless
connectivity. While the demand for our airwaves grows, the bulk
of our policy conversations are about increasing the supply of
licensed airwaves available for auction. This is good, but we
also need to give unlicensed services and wi-fi its proper due.
After all, wi-fi is how we get online in public and at home.
Wi-fi is also how our wireless carriers manage their
networks. In fact, today nearly one-half of all wireless data
connections are at some point offloaded onto unlicensed
spectrum.
Wi-fi is also how we foster innovation. That is because the
low barriers to entry for unlicensed airwaves make them perfect
sandboxes for experimentation.
And wi-fi is a boon to the economy. The economic impact of
unlicensed activity has been estimated at more than $140
billion annually. By any measure, that is big.
So we need to make unlicensed services like wi-fi a
priority in our spectrum policy, and at the FCC, we are doing
just that with our upcoming work in the 3.5 gigahertz band, and
in guard bands in the 600 megahertz band. But it is going to
take more than this to keep up with demand. That is why I think
the time is right to explore greater unlicensed use in the
upper portion of the five gigahertz band. And I think, going
forward, we are going to have to be on guard to find more
places for wi-fi to flourish.
Now, second, I want to talk about another issue that
matters for the future, and that is the Homework Gap. Today,
roughly 7 in 10 teachers assign homework that requires
broadband access, but FCC data suggests that as many as one in
three households today lack access to broadband at any speed.
Think about those numbers. Where they overlap is what I
call the Homework Gap. And if you are a student in a household
without broadband, just getting homework done is hard. Applying
for a scholarship is challenging. And while some students may
have access to a smartphone, let me submit to you that a phone
is just not how you want to research and type a paper, apply
for jobs, or further your education.
This is a loss to our collective human capital, and to all
of us, because it involves a shared economic future that we
need to address.
That is why the homework gap is the cruelest part of our
new digital divide. But it is within our power to bridge it.
More wi-fi can help, as will our recent efforts to upgrade wi-
fi connectivity--through the e-rate program, but more work
remains. I think the FCC needs to take a hard look at
modernizing its program to support connectivity in low-income
households, especially those with school-age children. And I
think the sooner we act, the sooner we bridge this gap, and
give more students a fair shot at 21st century success. Thank
you.
[The prepared statement of Ms. Rosenworcel follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Thank you, Commissioner. We appreciate your
testimony. Those bells that went off, or buzzer, as we so
lovingly say--we have got two votes, but we should have time to
get through both the other Commissioners' testimony, and then
we will probably break to go vote, and then we will come back
immediately after votes to resume questioning.
So welcome, Commissioner Pai. Thank you for being here.
Please go ahead with your testimony.
STATEMENT OF AJIT PAI
Mr. Pai. Chairman Walden, Ranking Member Eshoo, members of
the subcommittee, thank you for giving me the opportunity to
testify here today. It has been an honor to work with the
members of the Subcommittee on a wide variety of issues, from
making available more spectrum for mobile broadband to
improving the Nation's 911 system.
I last testified in front of the subcommittee more than a
year ago, and since that hearing on December 12, 2013, things
have changed dramatically at the FCC. I wish I could say that
these changes, on balance, have been for the better, but
unfortunately, that has not been the case. The foremost
example, of course, is the FCC's decision last month to apply
Title II to the Internet.
The Internet is not broken. The FCC didn't need to fix it.
But our party line vote overturned a 20-year bipartisan
consensus in favor of a free and Open Internet. With the Title
II decision, the FCC voted to give itself the power to
micromanage virtually every aspect of how the Internet works.
The FCC's decision will hurt consumers by increasing their
broadband bills and reducing competition. A Title II order was
not the result of a transparent rulemaking process. The FCC has
already lost in court twice, and its latest order has glaring
legal flaws that are guaranteed to mire the agency in
litigation for a long time.
Turning to the designated entity program, the FCC must take
immediate action to end its abuse. What was once a well-
intentioned program designed to help small businesses has
become a playpen for corporate giants. The recent AWS-3 auction
is a shocking case in point. DISH, which has annual revenues of
$14 billion, and a market cap of over $34 billion, holds an 85
percent equity stake in two companies that are now claiming
$3.3 billion in taxpayer subsidies. That makes a mockery of the
small business program. The $3.3 billion at stake is real
money. It could be used to underwrite over 580,000 Pell grants,
fund school lunches for over six million schoolchildren, or
incentivize the hiring of over 138,000 veterans for a decade.
The abuse had an enormous impact on small and disadvantaged
businesses, from Nebraska to Vermont. It denied them spectrum
licenses they would have used to provide consumers with
competitive wireless alternative. The FCC should quickly adopt
a further notice of proposed rulemaking so that we can close
these loopholes in our rules before our next auction.
Turning next to process, the FCC is at its best when it
acts in a bipartisan collaborative manner. During my service
under Chairman Genachowski and Chairwoman Clyburn, 89 percent
of votes on FCC meeting items, where the agency votes on the
most high profile, significant matters affecting the country,
were unanimous. Since November 2013, however, only 50 percent
of votes at FCC meetings have been unanimous. This level of
discord is unprecedented. Indeed, there have been 40 percent
more party-line votes at the FCC in the last 17 months than
there were under the entire chairmanships of Chairmen Martin,
Copps, Genachowski, and Clyburn combined.
I am also concerned that the Commission's longstanding
procedures and norms are being abused in order to freeze out
Commissioners. For example, it has been customary at the FCC
for Bureaus planning to issue significant orders on delegated
authority to provide those items to Commissioners 48 hours
prior to their scheduled release. Back then, if a Commissioner
asked for the order to be brought up for a Commission-level
vote, that request from a single Commissioner would be honored.
Recently, however, the leadership has refused to let the
Commission vote on items where two Commissioners have made such
a request. Given this trend, as well as others, I commend the
subcommittee for focusing on the issue of FCC process reform,
and I welcome the Chairman's announcement this morning.
Finally, I would like to conclude by discussing an issue
where it should be easy to reach consensus. When you dial 911,
you should be able to reach emergency personnel wherever you
are. But, unfortunately, many properties that use multi-line
telephone systems require callers to press nine, or some other
access code, before dialing 911, and this problem has led to
tragedy.
Unfortunately, the phone systems at many Federal buildings
are not configured to allow direct 911 dialing. Recognizing
this problem, Congress directed the General Service
Administration to issue a report on the 911 capabilities of
telephone systems in all Federal buildings by November 18 of
2012. I recently wrote to GSA to inquire about the status of
that report, and I was disturbed to learn through a press
report just a couple of days ago that the GSA never completed
it.
The FCC's headquarters is one such Federal building where
direct 911 dialing does not work. But as Ranking Member Eshoo
recently observed, when it comes to emergency calling, the FCC
should be the example not only for the rest of the Federal
government, but for the entire country. I commend her and
Congressman Shimkus for their leadership on this issue.
Chairman Walden, Ranking Member Eshoo, and members of the
subcommittee, thank you once again for inviting me to testify.
I look forward to your questions, and to working with you and
your staffs in the days to come.
[The prepared statement of Mr. Pai follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Thank you, Mr. Pai.
We now turn to the fifth Commissioner, or fourth
Commissioner and the Chairman, Commissioner O'Rielly. We are
delighted to have you here. Please go ahead with your full
testimony.
STATEMENT OF MICHAEL O'RIELLY
Mr. O'Rielly. Thank you Mr. Chairman, Ranking Member Eshoo,
Ranking Member Pallone, and members of the subcommittee for the
opportunity to deliver testimony today. I have always held the
Energy and Commerce Committee in the highest regard, given my
past involvement as a congressional staffer, with oversight
hearings and responsibilities that you have to face every day.
I applaud the subcommittee for focusing on this issue of
reauthorizing the FCC and improving its process, and I recommit
myself to being available of any resource I can in the future.
In my time at the Commission, I have enjoyed the many
intellectual and policy challenges presented by the innovative
and ever challenging communications sector. It is my goal to
maintain friendships, even when we disagree, and seek out
opportunities where we can work together. To provide a brief
snapshot, I voted with the Chairman on approximately 90 percent
of all items. Unfortunately, this percentage drops
significantly, to approximately 62 percent, for the higher
profile open meeting items.
One of the policies I have not been able to support is the
insertion of the Commission into every aspect of the Internet.
As you may have heard, the Commission pursued an ends justifies
the means approach to subject broadband providers to a new
Title II regime without a shred of evidence that it is even
necessary, solely to check the boxes on a partisan agenda. Even
worse, the order punts authority to FCC staff to review current
and future Internet practices under vague standards such as
just and reasonable, unreasonable interference or disadvantage,
and reasonable network management. This is a recipe for
uncertainty for our nation's broadband providers, and
ultimately edge--providers.
Nonetheless, I continue to suggest creative ideas to
modernize the regulatory environment to reflect the current
marketplace, often through my public blog. I have written
extensively on the need to reform numerous outdated and
inappropriate Commission procedures. For instance, I have
advocated that any document to be considered at an open meeting
should be made publicly available on the Commission's Web site
at the same time it is circulated to the Commissioners,
typically 3 weeks in advance. This fix is not tied to a net
neutrality item, although it provides a great example why
change is needed.
Under the current process, I meet with numerous outside
parties prior to an open meeting, but I am precluded from
telling them, for example, having read the document, that their
concerns are misguided, or already addressed. This could be a
huge waste of time and effort for everyone involved, and allows
some favored parties an unfair advantage in the hunt for scarce
and highly prized information nuggets. The stated objections to
this approach, presented under the cloak of procedural law, are
really grounded in resistance to change, and concerns about
resource management. In addition, the Commission has a
questionable post-adoption process that deserves significant
attention.
While I generally refrain from commenting on legislation, I
appreciate the ideas approved by this subcommittee, and
ultimately the full House last Congress, which would address a
number of Commission practices that keep the public out of the
critical end stages of the deliberative process. I believe that
these proposed changes, as well as others, would improve the
functionality of the Commission, and improve consumer access to
information.
In addition, I would turn the subcommittee's attention to a
host of other Commission practices that I believe deserve
attention. The 48-hour notification that my friend mentioned,
testimony provided by outside witnesses at the Commission open
meetings, delegating vast authority to staff to make critical
decisions or set policy, the Regulatory Flexibility Act and
Paperwork Reduction Act compliance, and accounting for the
Enforcement Bureau's assessed penalties.
Separately, I have also been outspoken on many substantive
issues, such as the need to free up spectrum resources for
wireless broadband, both licensed and unlicensed. I look
forward to working with my colleagues on this issue, and so
many more in the months ahead. I stand ready to answer any
questions you may have.
[The prepared statement of Mr. O'Rielly follows:]
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Thank you, Commissioner. We appreciate your
input as well.
Mr. O'Rielly. Thank you.
Mr. Walden. We will recess now so that Members can go to
the House floor and vote. Please return as promptly as
possible, as we will begin our questioning thereafter. We stand
in recess. We have two quick votes.
[Recess.]
Mr. Walden. Public and Commissioners to please resume their
places. We will get restarted here in the hearing in just a
second, when everybody gets settled.
All right. Thank you very much, and we will resume the
Subcommittee on Communications and Technology. We are now into
the questioning phase from the members of the committee. And,
again, we want to thank all of you for your testimony today,
and the work that you do with all of us every day, so we do
appreciate that.
You know, throughout the debate on the Internet proceeding,
I was amused--there were some comparisons to what former
Chairman Kevin Martin did or didn't do with respect to his
media ownership proceeding. Yes, he wrote a late in the day op-
ed, put out a public notice, testified before Congress, but he
didn't do a further notice of proposed rulemaking, and that
seems to be precisely why the Third Circuit threw his
newspaper/broadcast cross-ownership rule out. I guess Federal
Appellate Judges don't think much of op-eds, news releases, or
even congressional testimony when it comes to satisfying APA
notice and comment requirements. They actually think the agency
should go through the procedural steps to make sure that all
interested parties, even those outside D.C. policy circles, get
a real opportunity to understand a significant shift in
direction, and have a reasonable amount of time to comment.
So I have got just a couple of questions, and perhaps I
will just direct them to Mr. Pai. How many of the Commission's
tentative conclusions found in the NPRM were reversed in the
final order?
Mr. Pai. Mr. Chairman, virtually all of them.
Mr. Walden. What number paragraph in the NPRM says that the
Commission planned to assert its authority over IP addressing?
Was that in the NPRM?
Mr. Pai. It was not, sir.
Mr. Walden. And what number paragraph of the NPRM put the
public on notice that the Commission intended to redefine the
term public switched network?
Mr. Pai. There is no such paragraph.
Mr. Walden. That is what I was concerned about. I didn't
see that either. There are a number of issues that are pending
at the Commission, and I know Chairman has had a lot on his
plate. You all have, I get that. It is a rapidly changing
environment, and you have limited resources and all. Some of
you have heard me talk about our little applications for FM
translators when I was in the radio business, 10 years waiting,
30 days to satisfy the requirements and all. And we get a lot
of input here from constituencies out across the country. Just
because of limited time, has the Commission acted on the AM
modernization order yet?
Mr. Pai. Mr. Chairman, it has not yet, and the NPRM, as you
know, was adopted about a year and a half ago. The record is
complete, unanimous support from the public.
Mr. Walden. There is another issue that came up, I was
speaking at a group, and it involves this issue to allow small
cable operators to operate as a buying group for the purchase
of content. Has that been acted on yet? That has been pending
for some time, I am told.
Mr. Pai. It has not. I voted on the NPRM about--I want to
say 3 years ago, but----
Mr. Walden. Three years ago?
Mr. Pai. If I recall, it was the summer of 2012, and I am
not sure what the status of it is. But I stand ready to vote
whenever it is teed up for a vote.
Mr. Walden. And my understanding is the Commission has not
yet issued its quadrennial review of media ownership rules for
2010. I believe that is about 5 years ago, is that correct?
Mr. Pai. Five years ago, but December of 2007 was the last
time the actual rules were adopted.
Mr. Walden. So it has been 8 years since----
Mr. Pai. Correct.
Mr. Walden. And isn't that a statutory obligation?
Mr. Pai. It is, and that is why I said we need to put the
quad back in quadrennial.
Mr. Walden. And what about the work on the Connect America
Fund? Has the Commission finished its work on how Connect
America will work in supporting mobile?
Mr. Pai. My understanding is not yet, but that work is
underway.
Mr. Walden. These are some of the things that trouble us,
to say the least. We also had an issue come to our attention
involving the Western Amateur Radio Friendship Association
interference case, and maybe, Chairman, I could direct this to
you. I understand it has been going on for quite a while, and
it is quite disturbing. I have been told about some of the
audio recordings, allegedly that there is this jamming that is
included. Really awful, repulsive racial epithets, and threats
against a female member. And it has come to our attention this
has been sitting there for a while, where these operators are
jamming and using really awful, awful language. Do you know the
status of that? Can you give us some update on that? Anybody on
the----Commission.
Mr. Wheeler. I can give you an update on that, Mr.
Chairman. I will----
Mr. Walden. If you could get back to us? Yes, I think it is
called the Western Amateur Radio Friendship Association
interference case. I guess there are a couple of these
involving pirate radio operators. Which leads into a
discussion, and I am going to run out of time here, about the
closing of the regional office.
When we had the CFO, I guess would be close, managing
director here, we weren't really brought up to speed, or
advance noticed at least, of this notion that you are going to
close these regional offices. Isn't that where this enforcement
activity generally takes place?
Mr. Pai. Mr. Chairman----
Mr. Walden. That is fine, whoever. Commissioner Pai?
Mr. Pai. Yes. Indeed, I think the field offices of the
Enforcement Bureau perform one of the core functions, which is
to protect the public interest by, among other things,
resolving interference concerns, and protecting public safety.
And while, obviously, I am still studying the issue, I have had
a chance to meet with our union representatives. And I know
members of this Committee, such as Congresswoman Clarke, have
recently expressed concern about the field offices' function.
Mr. Walden. Yes.
Mr. Pai. We want to make sure that, however it is
reorganized, we protect the public interest.
Mr. Walden. And I will quit here in a second, but we
clearly don't have--it would leave only two offices, one in
L.A. and San Francisco, nothing for the west coast, which I am
hearing from various entities. And I was pleased----
Mr. Wheeler. Can I at least----
Mr. Walden. Sure.
Mr. Wheeler [continuing]. So there are multiple things
going on there. First of all, we need to make sure that, in
flat budgets or reduced budgets, that we are spending our money
efficiently. When you have more trucks than you have agents,
which is the reality that exists today----
Mr. Walden. I would sell some trucks.
Mr. Wheeler [continuing]. You have got to ask yourself the
question, are you distributing resources as they ought to be
distributed? When you have got one manager for every four
people, you say to yourself, is this the right kind of
structure?
Mr. Walden. I fully agree, and I understand----
Mr. Wheeler. Then how do you fix that?
Mr. Walden. So what we would like to have is the backup for
this, because I understand that wasn't what----
Mr. Wheeler. Happy to.
Mr. Walden [continuing]. And I think we have a request
pending for that, and we are told----
Mr. Wheeler. Yes.
Mr. Walden [continuing]. Well, I don't know whether we were
told we can't get it or whatever, but we would like to see----
Mr. Wheeler. No, if my understanding is correct, you asked
for the consultant's report. The final consultant's report is--
and----
Mr. Walden. Yes.
Mr. Wheeler [continuing]. You will have it when I have it.
I have seen a draft of the----
Mr. Walden. OK.
Mr. Wheeler [continuing]. Structures, but have also----
Mr. Walden. All right.
Mr. Wheeler [continuing]. Sent it back for some more
detailed information.
Mr. Walden. All right.
Mr. Wheeler. You will have that.
Mr. Walden. Thank you.
Mr. Wheeler. You will----
Mr. Walden. I have far exceeded my time. I appreciate the
indulgence, Committee. I recognize the gentlelady from
California.
Ms. Eshoo. It is OK, because I will ask you for the same.
Thank you, Mr. Chairman. Welcome again to the entire
Commission. It is obvious that we have different takes on the
issues, but I sincerely thank you for your public service. And,
to Commissioner O'Rielly, this is a graduate of this committee.
You were here under Chairman Bliley, whom I had the pleasure of
working with, and getting a lot of things done together, so
welcome back.
Commissioner Pai, thank you for your advocacy on the 911
issues. You know that the mother and father, the mommy and
daddy of this are right here at the committee. Congressman
Shimkus and myself founded that caucus, and then helped----
Mr. Pai. This----
Ms. Eshoo. Well, we did. What is so funny about that? I
think it is terrific. And it was when no one was paying
attention to those issues, but it was before our country was
attacked. Commissioner Rosenworcel, thank you for your clarity,
and your passion when you speak. And Commissioner Clyburn, go
get them. Just go get them. And to the distinguished Chairman,
I don't know how many people realize this about the Chairman,
but he is a man of history, and so I want to pick on the vein
of history. Because I think it is very important for us--around
here, life is incremental. It is incremental anyway. God gives
us life a day at a time, so those are increments. But I think
what I would like to do is to have you, and I want to say a few
things about it first, to widen the lens of what is before us
today, in terms of history.
Now, the majority has defined, or tries to define, net
neutrality with some very scary things. They call it railroad
regulation, billions of dollars in taxes, new taxes are going
to be levied, no investment is going to be made, the market is
going to be chilled. In terms of history, we have been through
the Stone Age, the Bronze Age, the Iron Age, the Age of
Invention, the Industrial Revolution, the Technology Age, and
now the Information Age.
And I think why this is difficult for some to actually
see--and when you see something, you either get it or you miss
it. We are at a moment in our nation's history where we are
moving to a new age. And I would say that those that are on the
other side of this issue are back in an older age, where you
have huge corporations, gatekeepers, duopolies. That is not
what the Internet is all about. So what I would like you to--as
a historian, to address what this moment is, and place it on
the stage of history.
Mr. Wheeler. Thank you, Ms. Eshoo. You get me started on
history, and this--we----
Ms. Eshoo. Well, we don't have very much time.
Mr. Wheeler. We could----
Ms. Eshoo. I have got a minute and 40 seconds left. Yes.
Mr. Wheeler. I think that we are living through the fourth
great network revolution in history.
Ms. Eshoo. Yes.
Mr. Wheeler. And if you look at those, what you will find
is that every single time it was the end of Western
civilization----
Ms. Eshoo. Yes.
Mr. Wheeler [continuing]. As we know it that----
Ms. Eshoo. Yes.
Mr. Wheeler [continuing]. Was being--people who didn't want
to embrace the change was like, this is awful. I have hanging
in my office a poster from 1839 that was put out by people who
were against the interconnection of railroads. It was all
patterned around, women and children are going to be hurt by
this. It was paid for by all the people whose businesses would
be affected because the railroads would interconnect. Yet that
interconnection drove the 19th and 20th century.
We always hear these imaginary horribles about the awful
things that are going to result, and we also always end up
saying, as a society, we need rules. We need to have a known
set of rules. We need to have a referee on the field who can
throw the flag. That is the process that we have gone through
since time immemorial, every time there is a new network
revolution. We have the privilege of living through that, and
trying to deal with those realities today.
Ms. Eshoo. Well, I think that that is magnificent in a
short period of time. I wish I could question--I have questions
for all of you. I am going to submit them to you. And, with
that, Mr. Chairman, I would like to ask unanimous consent that
Congressman Cardenas's questions be submitted for the record.
He is a guest of our subcommittee today----
Mr. Latta [presiding]. Without objection.
Ms. Eshoo [continuing]. And demonstrates his great interest
in the issues at hand. And another from many, many--I don't
know, maybe 50 racial justice and civil rights organizations
who have addressed a letter to the Chairman and myself in
support of net neutrality.
Mr. Latta. Without objection.
[The information appears at the conclusion of the hearing.]
Ms. Eshoo. Thank you, Mr. Chairman.
Mr. Latta. The lady yields back. The next questioner will
be the gentlelady from Tennessee, Ms. Blackburn, for 5 minutes.
Mrs. Blackburn. Thank you, Mr. Chairman, I appreciate that.
Chairman Wheeler, I will just add my viewpoint of, when you
look at our economic revolutions in society, whether it was the
Agricultural or the Industrial, the Technology, the
Information, successful revolutions are about freeing up, not
restricting. And what we are looking at right now is the
vantage point from--that you all are coming from is taking away
and restricting, not freeing up.
Chairman--Mr. O'Rielly--Commissioner O'Rielly, let me come
to you for a moment and talk taxes. You and I penned an op-ed
back in July, calling for the need for a cost benefit analysis,
and really looking at what had been said by PPI, Free Pressed,
Professor Farber, and what they thought would happen with
taxes. New York Times agreed with that. I want to hear from you
a little bit, 30 seconds' worth, about why we should have had a
cost benefit analysis, and what you think the outlook is.
Mr. O'Rielly. So I believe that we should do better at the
FCC on cost benefit analysis, and this is a perfect case. I
think the----
Mrs. Blackburn. None was done.
Mr. O'Rielly. This is a woeful job that was done in this
instance. We are talking about hypothetical harms and real
world impacts on business.
Mrs. Blackburn. Yes.
Mr. O'Rielly. But in terms of your question on taxes, I
would say--I would switch it more to taxes and fees, because
the question has been on universal fees, and what happens in
universal service going forward? The Chairman has been very
clear that the item in and of itself before us does not impose
universal service. That is something we are going to punt for
about a month or two, and we are waiting for the joint board--
--
Mrs. Blackburn. OK.
Mr. O'Rielly [continuing]. This is something that has to go
forward. We are going to see those fees in the months ahead.
Mrs. Blackburn. OK. Commissioner Pai, you gave an interview
this week and stated that there was going to be a tax on
broadband, and the Commission is waiting for a joint board to
decide April 7 how large that tax is going to be. You want to
expand on that?
Mr. Pai. Thank you for the question, Congresswoman. The
order suggests that the joint board is going to make a
recommendation on April 7. The order also says that a ``short
extension'' might be appropriate. So at some point very soon
the joint board is going to recommend whether and how to
increase these fees that are----
Mrs. Blackburn. OK.
Mr. Pai [continuing]. Going to be assessed on broadband for
the first time. In addition, it is not just the USF fees, as
Commissioner O'Rielly has pointed out. It is also state and
local fees. For example, state property taxes. Localities also
impose taxes. The District of Columbia imposes an 11 percent
tax on gross receipts. These are all fees that are going to
have to be paid by someone. It is going to be paid by the
consumer at the----
Mrs. Blackburn. OK. Chairman Wheeler, rate regulation. I
read something from Professor Lyons at Boston College, and he
said Title II is fundamentally a regime for rate regulation.
And then we are looking at another thing which he said about a
person, which might include a large company, can file a
complaint with the FCC under Section 208 if they don't think
their charges are just and reasonable.
So you have denied that the FCC is going to get into rate
regulation through this net neutrality order, but--I understand
that the order does not explicitly state that the FCC will be
regulating rates on the date the rules are effective, but what
about the first time that a complaint is filed with the FCC
under Section 208 because a party feels that their rates are
not just and reasonable? What is the remedy going to be, and
isn't it true that the FCC will be engaged thereby in de fact
rate regulation?
Mr. Wheeler. Thank you, Congresswoman. I hope somebody
files that kind of a complaint. As you know, there hasn't been
a complaint filed for 22 years in the wireless voice space,
despite the fact that this same kind of authority exists. If
somebody files that kind of a complaint, and I don't want to
prejudice a decision, but I will assure you that there will be
a process that will look at that, and will develop, I would
hope, a record that would make it very clear that the FCC is
not in the consumer rate regulation business.
Mrs. Blackburn. Mr. Chairman, don't you think what you just
said about there hasn't been a complaint filed in that space
for 22 years proves the point that the Internet is not broken,
this space is not broken, and it does not need your oversight
and guidance?
Mr. Wheeler. No, I was referring to wireless voice, not to
broadband. I think the key thing is, you said in your----
Mrs. Blackburn. OK, let me cut you off there. I have got
one question for Commissioner Clyburn. And I want to go to the
Lifeline and USAC Program----
Ms. Clyburn. Yes.
Mrs. Blackburn [continuing]. With you. You have advocated
restructuring and rebooting that program, and you have had
several supply-side reforms, and did eliminate incentives for
waste, fraud, and abuse. And the FCC's Inspector General, as
you know, has performed a review of the verification process on
this, and recommended that the FCC may improve the
effectiveness of the warnings that it gives subscribers, and
reduce the level of fraud in that program. We have had hearings
on this, and I want to work with you on it.
Ms. Clyburn. Thank you.
Mrs. Blackburn. And is it true that, under the current
system, the penalty for a subscriber defrauding the program by
having multiple phones is to lose the subsidy for those phones,
all but one? They get to keep one, and then the carrier is
prosecuted. And I will tell you why your answer is important.
You all are talking about getting into broadband, and in
addition to the phones, and you have got to reform all of this
before you talk about expanding.
Ms. Clyburn. I totally agree. And one of the reasons why I
set out five points for reform is because I recognize two
things. One, we need to eliminate all incentives, and all
existing waste, fraud, and those abuses. We need to do that,
and the key way to do that is to get those providers out of the
certification business. They will no longer greenlight
customers----
Mrs. Blackburn. We need to prosecute the user----
Ms. Clyburn. And----
Mrs. Blackburn [continuing]. Not the----
Ms. Clyburn. And we have----
Mrs. Blackburn [continuing]. You know, not the----
Ms. Clyburn. With guidance from my colleagues, and while I
was acting Chair----
Mrs. Blackburn. I yield back. My time is expired.
Ms. Clyburn. I am sorry.
Mrs. Blackburn. Thank you, Mr. Chair.
Mr. Latta. Thank you. The gentlelady yields back. The Chair
now recognizes the gentleman from New Jersey, the Ranking
Member, for 5 minutes.
Mr. Pallone. Thank you, Mr. Chairman. I just want the
Commissioners to know, my district was ravaged by Hurricane
Sandy in 2012, and one of the most concerning impacts of the
storm was the loss of communications services. A lot of people
couldn't call their friends, their family, and 40 percent of
our cell towers were knocked out in the state. A lot of people
there basically learned the hard way that when the power lines
go down, communications services go down along with
electricity.
So I wanted to ask Commissioner Rosenworcel, I know that
you toured New Jersey after Sandy, and I ask what lessons did
you learn about how to prevent these kinds of communication
failures during future emergencies?
Ms. Rosenworcel. Thank you for the question. I did tour the
New Jersey shore with public safety officials following
Hurricane Sandy, and I won't long forget what I saw. A lot of
broken homes and businesses, and cars and boulders strewn this
way and that, and piles of sand many blocks from where the
ocean is because wind and water had delivered it there.
But I also saw a lot of people who were very committed to
rebuilding, and I learned a lot about how communications
succeeded and failed during that storm. What stuck with me was
that many of the wireless towers in the affected areas went
out. Now, throughout the 10 states that were impacted by the
storm, about a quarter of the wireless cell towers went out of
service. In New Jersey, as you mentioned, it was about 40
percent. But I would bet the number was significantly higher on
the New Jersey shore.
And in the aftermath of learning those things, we were
able, at the agency, to start a rulemaking to ask, how can we
fix this going forward? Because we know that 40 percent of all
households in this country are wireless only, and in the middle
of a storm, at the very least, they should be able to connect
and get the help they need.
So we issued a rulemaking in 2013, and among the issues
discussed in that was the question of how much backup power is
necessary at cell sites, and how much of a reporting duty our
wireless carriers should have when these sites go out of
service. I hope that we can turn around and deliver a decision
on that in short order because we don't know when the next
storm is going to hit. But I am pretty sure people are going to
try to use communications when it does.
Mr. Pallone. Well, thank you. Let me ask Chairman Wheeler,
I understand the FCC, as was mentioned, is considering updates
to its rules to ensure that consumers have access to essential
communications during disasters. Can you commit to updating
those rules this year?
Mr. Wheeler. Absolutely. The issue that Commissioner
Rosenworcel raised is a paramount issue. There are broader
issues too, and that is the whole issue of copper retirement,
which got forced by Sandy, and how do we make sure that, when
the power goes down, and you are relying on fiber, which
doesn't carry its own power, that you have got the ability to
make a 911 call?
We have a rulemaking going on that literally just closed
last week. All of these issues interrelate, but first and
foremost in our responsibility, which was why I focused on the
911 location issue in my statement, is public safety.
Mr. Pallone. I wanted to ask you about the designated
entity rules, Mr. Chairman. Obviously small businesses are so
important in my state and elsewhere, and I just don't think
small businesses can survive in capital intensive industries,
like telecommunications, without some smart public policy. I am
concerned that the current rules for small businesses still
contain Bush era loopholes that allow large corporations to
game the system, and so I actually introduced today the Small
Business Access to Spectrum Act to update the FCC's rules, and
give small businesses a fair shot at accessing the nation's
airwaves.
Well, there is not much time left, but I will start with
Chairman Wheeler, if the others want to chime in. Would you
commit to working to maintain a robust designated entity
program focused on genuine small businesses?
Mr. Wheeler. You wrote us and asked us that. I replied yes,
we will, and yes, we are. We have had a rulemaking going on,
and we will issue shortly a public notice, making sure that the
discussion is broadened out, and the record is built on the
question of the recent AWS-3 auction, and some of the very
legitimate concerns that have been raised about that.
The thing that is frustrating to me, Congressman--you say
yes, these were Bush era rules, they haven't been reviewed
since then, and it is time to review them. What is really
upsetting is the way in which slick lawyers come in and take
advantage of rules that this committee created. I was in the
room when this committee created designated entities. And, as
you say, the world changes dramatically in how a designated
entity can be structured and can play in now what is a big
market, whereas before it was a much smaller market.
Our rules have not kept up, but the slick lawyers sure have
figured out how to do it. And we want to make sure, whether it
is in this, or whether it is in slick lawyers playing around
with broadcast licenses, that there is no way that we keep our
rules current. And we are going to do that on this issue. The
commitment that I will ironclad give you, sir, is that we want
to make sure that we have a new set of DE rules in place before
the spectrum auction takes place early next year.
Mr. Pallone. Thank you.
Mr. Latta. Gentleman's time is expired, and yields back.
The Chair now recognizes himself for 5 minutes. Again, thanks
very much to the Commissioners for being here today.
Commissioner Pai, in January the FCC voted to update the
broadband benchmark speeds to 25 megabits per second for
downloads and 3 megabits per second for uploads. The speeds had
previously been set at 4 megabits per second and 1 megabits per
second.
While I understand the need to update the broadband speeds,
I am kind of curious as to the process the Commission chose the
speeds of 25 megabits and the three megabits. It seems, to an
outside observer, that an arbitrary number was picked,
especially considering that recently the Commission voted to
spend $10.8 billion over the next 6 years through the Connect
America Fund to employ 10 megabits per second broadband.
According to the Commission's new benchmark, 10 megabits per
second is going to no longer even be considered broadband.
Can you walk us through how the agency came to these new
benchmarks? And then also if you could follow up--and how does
it still plan to spend over $10 billion on those 10 megabits
per second deployment in light of that new definition?
Mr. Pai. Thank you for the question, Mr. Chairman. I think
the problem is that the agency has viewed each of these issues
in a vacuum, and so, in December, when we were talking about
rural broadband deployment, we agreed to spend, over the course
of a decade, billions of dollars to establish what we
considered to be broadband at the time, which was 10 Megabits
per second. Flash forward 1 month, all of a sudden we learn
that actually isn't broadband. Broadband is 25 megabits per
second, under which standard there is no such thing as mobile
broadband, because even the fastest LG--4G LTE connection can't
get you to 25 megabits per second. Flash forward 1 month more,
all of a sudden we learn that there is such a thing as mobile
broadband, and it is going to be classified as a Title II
service.
And I think the schizophrenia that we have seen over the
last several months from the Commission as to what is broadband
illustrates the basic point. We need intellectual consistency
that is grounded in the facts. And the facts in this case
basically stem from the question, what do people use broadband
for? And by and large, if you look at my statement with respect
to the January order, I was trying to look at patterns of
usage. And obviously there are going to be some folks who use
the Internet for very high bandwidth applications, others who
use it for less.
The goal of the FCC shouldn't be to artificially pick a
number so that it can declare that the broadband marketplace is
uncompetitive, and thus justify regulation. It should be to try
to tailor, with some forward thinking, what broadband means in
the current era. And that is why I think the problem with the
25 megabits per second standard, which I forecast would be
jettisoned soon, I didn't know it would be 1 month from then,
is that it was more grasping for press headlines, as opposed to
what actually was in the record.
Mr. Wheeler. Can I----
Mr. Latta. Let me follow up. I am also concerned that this
new threshold would reduce the broadband investment in rural
areas. You know, if you look at my district, and you have seen
it, is that it could ultimately deter the competitive entry
into the broadband market. Do you foresee any of these
benchmark speeds unfairly impacting consumers and businesses in
the rural areas?
Mr. Pai. That is a great question, Congressman, and coming
from a rural area myself, that is something that I take very
personally. The FCC heard from a great number of small
providers, and that is service providers in rural areas, who
told us that Title II, ironically, would take us in the
opposite direction of getting more competition. A lot of folks
in rural areas, if they have an option, it is going to be from
one of these smaller providers.
And so we heard, for instance, from 43 municipal broadband
providers, who said that Title II regulation ``will undermine
our business model that supports our network, raise our costs,
and hinder our ability to further deploy broadband.'' We even
heard from 24 small broadband providers on February 17, who
said that Title II ``will badly strain our limited resources,
because we have no in-house attorneys and no budget line items
for counsel.
And those ISPs, by the way, include very small ISPs,
including one called Main Street Broadband that serves four
customers in Cannon Falls. The notion that Main Street
Broadband in Cannon Falls exerts some kind of anti-competitive
monopoly vis-a AE2-vis edge providers like Netflix, Google, and
Facebook is absurd, but I think that is part of the reason why
the Obama Administration's Small Business Administration was
exactly on point when it urged the FCC last year to take a
careful look at how these rules would affect small businesses,
because, ultimately, that is where the digital divide is going
to open up. It is for the rural Americans, who have a tough
enough time getting a broadband option as it is.
Mr. Latta. Well, thank you. I would like to ask the
question now--the Chairman mentioned, in his opening statement,
about the task force starting the agency process, and I am just
curious, Commissioner Clyburn, when did you find out about the
task force?
Ms. Clyburn. When did I find out about the actual task
force? To the best of my knowledge, last quarter of last year.
It issued a report in February. There was a very interactive
process. They asked each office to weigh in, and that is when--
subject to check. My memory is sometimes challenged, but last
quarter of last year, with a February----
Mr. Latta. All right. Thank you.
Ms. Clyburn. Thank you.
Mr. Latta. Commissioner Rosenworcel? Excuse me.
Ms. Rosenworcel. I believe they issued a report sometime
last year. I would have to go back and check.
Mr. Latta. Commissioner Pai?
Mr. Pai. If you are referring to the task force that the
Chairman announced this morning, is that the one?
Mr. Latta. Right, he asked about--that he spoke about in
his opening testimony.
Mr. Pai. Then I learned about it this morning, when he
announced it.
Mr. Latta. Commissioner O'Rielly?
Mr. O'Rielly. Well, I appreciate the kind words from the
Chairman on the ideas that I put forward. I just learned about
it this morning.
Mr. Latta. Thank you. My time has expired, and the Chair
now recognizes Mr. Doyle.
Mr. Doyle. Thank you, Mr. Chairman. I want to take a moment
and recognize, along with my colleague, Ms. Eshoo, the historic
step forward the Commission has made in its Open Internet
Order, and the order on municipal broadband. Taken together,
these actions by the Commission represent incredible wins for
consumers, entrepreneurs, and millions of Americans who called
on the Commission to take action. Innovators shouldn't need to
ask permission, or pay gatekeepers to deploy new products and
services, and the FCC's actions will ensure that this remains
true.
And I want to point out one more thing too. My colleagues
on the other side of the aisle have been talking about Title II
like it is the end of the world. Well, up until 2002, the
Internet was treated as a Title II service. It was a Republican
FCC Chairman, and a Republican Commission, that acted to re-
classify the Internet as an information service. I see this
rule as the FCC finally setting things straight.
Chairman Wheeler, last September you testified before the
House Small Business Committee. You were asked about net
neutrality proceedings, and you stated Title II is on the
table. Now, my Republican colleagues are making the allegation
that you only started looking at Title II as a result of White
House interference in November of 2014. Was the FCC considering
using its Title II authority before President Obama joined
millions of Americans in calling on the FCC to take that course
of action?
Mr. Wheeler. Yes, sir, and the Small Business Committee
that you cite there was one member who was saying to me,
``don't you dare do Title II,'' and I was saying, ``we are
seriously considering Title II.'' And there was one member who
was saying, ``we want you to do Title II,'' and I said, ``yes,
we are considering doing Title II.''
Mr. Doyle. Thank you, Mr. Chairman. Let me ask you another
question. The Open Internet Order makes great strides to
protect consumers and innovators, but in particular by
including interconnection and protections for consumer privacy
through Section 222 in this order. I want to get your
commitment that the Commission will move quickly to complete
the rulemaking on Section 222, and ensure that the Commission
has rules in place to protect consumer privacy online. And I
would also like your commitment that the Commission will take
seriously this new responsibility on interconnection. With all
of the recent announcements by over the top providers releasing
new streaming video services, I think it is more important than
ever that gatekeepers do not restrict these new services access
to consumers.
And also, Mr. Chairman, while I have got you here, I would
be remiss if I didn't take the opportunity to mention special
access. I understand that the data collection component is
complete. I would encourage you to move forward as quickly as
possible to complete analysis of that data, and to take action
to address any harms taking place. Fixing this situation is a
great opportunity to improve competition and economic growth
across this country.
Mr. Wheeler. So let me see if I can go through it one, two,
three. One, on privacy, absolutely, sir, and it starts next
month, when we are holding the workshop that gets the parties
together and says, ``OK, let us talk specifically about how
Section 222 exists in this new reality.''
Secondly, with regard to interconnection, I could not agree
more with your point about how over the top services are
revolutionizing, and are going to be the consumers' savior. I
sat before this committee before this and other committees
before, and it is a bipartisan belief that something has to be
done about cable prices. That starts with alternatives. Those
alternatives are delivered over the top via the Internet. That
is why the Internet has to be open, so there are competitive
alternatives for people.
Mr. Wheeler. Special access. My hair was not gray when I
first started asking the Commission about special access.
Actually, we have just gotten permission and have begun the
data collection on special access. Special access is an
incredibly important issue that is particularly essential to
those who are bringing competition to communications. My goal
is that we are going to have this whole special access issue on
the table and dealt with before the end of the year.
Mr. Doyle. Thank you, and one last thing. And I--this
question, it is on the AWS-3 auction. It raised $45 billion in
revenue, meeting all the funding targets, including fully
funding First Net and next gen 911. Considering this new
reality, and the massive appetite for spectrum by wireless
carriers, hasn't the FCC been liberated from these fully funded
objections, and its reconsideration of its previous decision on
the size of the spectrum reserve, and the incentive auction?
Mr. Wheeler. Well, that is one of the issues that we are
going to be addressing again as we put together the final rules
for the auction. I understand your point, that we have now
lived up to our committed obligations, and this is an issue
that we will be dealing with in the next couple of months.
Mr. Doyle. Commissioner Clyburn, Rosenworcel, do you have
comments on that too, very briefly?
Ms. Clyburn. One of the things that I joke about, and this
is a positive joke, is that all predictions were wrong, that--
--
Ms. Rosenworcel. Right.
Ms. Clyburn [continuing]. Two and a half, three times the
amount of money that was predicted was raised. You were right
to say that we have met our obligations, and we will continue
through other auctions, including incentive auction, to deliver
spectrum to the American people.
Mr. Doyle. Yes.
Ms. Rosenworcel. I agree with the chairman. We will be
looking at this in the next few months. It is important we
follow the statute, and it is also important that we make sure
that everyone has opportunities to bid in this upcoming
auction, and that no single player walks away with all the
spectrum.
Mr. Doyle. All right. Mr. Chairman, I appreciate your
indulgence, then. I would just like to include in the record
this letter from the Public Interest Spectrum Coalition in
regards to the incentive auction.
Mr. Latta. Without objection.
Mr. Doyle. Thank you. I yield back.
Mr. Latta. The yields back. The gentleman's time has
expired. The Chair now recognizes the gentleman from Illinois,
Mr. Shimkus, for 5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. Welcome to the
Commissioners. It is great to have you here. I want to be
careful because history does tell us a lot of things. I was
fortunate to be on the committee during September 11. Chairman
Upton of the subcommittee, at that time, took us to Ground Zero
because we had the Verizon switching station right across the
street. And what I learned in walking through that process, it
was really only a big company that could get Wall Street back
online after that catastrophic attack. And it is true. I mean,
I have still got pictures of it. The basement was flooded. You
had wires going up to the third floor. You had individuals hand
tying the copper lines. So as we talk about our great country,
and competition, and large entities, sometimes large entities
are very important in the security of this country.
The--and I want to also--thanks for kind words on 911. It
is really a team effort. Anna and I have been fortunate to work
on this, but it is a process that you have got to stay vigilant
on, as, Chairman Wheeler, you mentioned. First we dealt with
911 over cell, then really went to location, then we went to
voice over Internet. Now we are back into location, because I
am being told by some PSAPs that there is really too many right
now, and that they maybe should centralize those. Any comments,
briefly, if you can?
Mr. Wheeler. One of the interesting things that was in your
bill that you and Ms. Eshoo had was--you asked states to
voluntarily have state level coordination of their PSAPs, and
by and large, that has been observed in the breach. It hasn't
existed. There is no state level coordination in Georgia.
Introducing mobile means that the people on the right and on
the left side of the map need to be able to talk to each other.
They need to have similar standards.
You ticked off some of the issues in terms of the
technologies. The other is text to 911, which we have required
carriers to do. Out of the 6,500 PSAPs in the country, 200 have
implemented it. That means that America's deaf and hard of
hearing community, which, thanks to the unanimous action of
this Commission, has text to 911 capabilities provided by
carriers. They can text away, and there is nobody who hears it.
Mr. Shimkus. And I guess the other thing that we also
didn't talk about was the testing that you did on the
elevation--I would say the elevation----
Mr. Wheeler. Yes, sir. The ability to get the Y coordinate.
Mr. Shimkus [continuing]. Stuff like that, and--very
excited about that opportunity. Of course, I don't have much
high rises----
Mr. Wheeler. The Z coordinate.
Mr. Shimkus [continuing]. In----
Mr. Wheeler. Yes.
Mr. Shimkus [continuing]. In my congressional district, but
I know it is probably important in large metropolitan areas.
Give me some comfort--my concern with the rule being
presented is, one, litigation. Two, I have this concern about
how do you incentivize build-out of the pipes when it looks
like you are moving back to re-regulation?
Mr. Wheeler. Yes.
Mr. Shimkus. And that, if you are re-regulating, then you
have to have a fee. That is where this fee debate comes from.
So how do you get a fee to help build out? And maybe I am a
simplistic view, but--and then the other question I have is
really about the megabit debate, 10, 25. How do you encourage
in this new venue, and then I will end, and if you all can--
how--the individual consumer decide what speed they want versus
being forced to buy a speed which they will never use, like my
mother-in-law?
Mr. Wheeler. Right. It is interesting, Congressman,
everybody cites their mother or their mother-in-law in that
example. There is nothing in here that regulates or established
tariffs for the rates for consumer services. There is nothing
in here that says that a company can't have multiple levels of
services. So your mother-in-law gets e-mail only, and the
person next----
Mr. Shimkus. And will pay for that----
Mr. Wheeler. And will pay----
Mr. Shimkus [continuing]. Simple service----
Mr. Wheeler [continuing]. For that kind of----
Mr. Shimkus [continuing]. Versus what----
Mr. Wheeler. And the person next door wants----
Mr. Shimkus. Just so I can have a contrary debate, can I
have Commissioner Pai or Commissioner O'Rielly address those
before I run out of time, which I am about ready to do?
Mr. Pai. Well, a couple different issues, Congressman. One,
I think the order explicitly opens the door to ex-post rate
regulation. Anyone can file a complaint under Section 208,
either with the Commission, or with any Federal court across
the country, and that Commission or court will have to
adjudicate whether or not the rate is just or reasonable. And
the fact that, while on the surface you might allow for
differential prices based on different services, nonetheless it
is ultimately up to the caprice of any given Commission or
court to decide after the fact whether the rate is just and
reasonable, and that is the essence of rate regulation.
Additionally, you pointed out the incentive--or the effect
that this would have on deployment. We have heard from
companies that were responsible for the largest capital
expenditures in our country when it comes to broadband, and
companies that represent very small market areas, and they have
told us that the impact of this kind of rate regulation, and
other Title II regulations, is going to impede them from
delivering some of those advanced services to anybody, whether
it is a high bandwidth user or your mother-in-law.
Mr. Shimkus. With respect to my colleagues and everybody
else, I will just yield back now. Thank you very much.
Mr. Latta. Well, thank you very much. The gentleman yields
back. The Chair now recognizes, for 5 minutes, the gentleman
from Iowa, Mr. Loebsack, for 5 minutes.
Mr. Loebsack. Thank you, Mr. Chair. Thanks to all of you
for being here today. Great discussion about various issues. I
guess I will start out by saying--I don't want to be too
presumptuous about this, but I think a lot of us up here have a
lot of concerns about rural broadband in particular. I know
that that is a big concern for all of you. I have 24 counties,
and although the Committee Chairman reminded me that his
district is a lot larger than mine--I don't mean the current
chair, I mean Chairman Walden, and we have got some from North
Dakota, that is a lot bigger than my district too.
But I have 24 counties, and I have a lot of rural broadband
carriers, a lot of small ISPs, as you mentioned, Commissioner
Pai. But a lot of folks who need rural broadband for education,
educational opportunities, for health opportunities--we are
going to see a lot more tele-health, I think, in rural areas
going forward. We are going to need that. For farmers, who have
to access GPS so they can plant, and do it efficiently, and
make a living, and for economic development, there is no
question, and a lot of other reasons as well.
I have one quick statistical question for you, Commissioner
Pai. You gave us some numbers as far as--I think it was
municipal providers and small providers. Can you repeat those
numbers? You had two numbers, I believe.
Mr. Pai. Sure. We received a letter from 43 municipal
broadband providers on February 10, and we also received a
letter from 24 small broadband providers, each of which serves
less than 1,000 customers, on February 17.
Mr. Loebsack. Thank you for those numbers. How many small
providers are there in the country? You received 20--from 24.
Do you know what the number is total?
Mr. Pai. I am not sure of the total number----
Mr. Loebsack. We have a lot in Iowa alone.
Mr. Pai. Yes, I am not sure what the overall number is, but
this is very representative----
Mr. Wheeler. About 800, sir.
Mr. Loebsack. About 800? Thank you.
Mr. Pai. We also----
Mr. Loebsack. Thank you, Mr. Pai. Thank you, Commissioner.
Chairman Wheeler, as I am sure you are aware, the FCC
reauthorization bill draft that we had before us on this
committee that has been offered by the majority would make the
Universal Service Fund subject to the appropriations process. I
have been here 9 years, my 9th year, and things are pretty
dysfunctional here, as we all know, when it comes to the
appropriations process.
In this current environment, where Congress seems utterly
incapable, if you will, of passing a bill through regular
order, we saw this with the last minute--with the DHS, tying
USF funding, which is so important for rural areas, as you
know, to the appropriations process, I think, does risk a lot
of instability down the road. I know you may not be willing to
weigh in on this, but my question to you is do you support
attaching USF funding to the appropriations process?
Mr. Wheeler. Well, let me see if I can answer that,
Congressman, by talking about what we hear from the kind of
carriers you were talking about the small rural carriers. They
say, ``we need certainty. You are asking us to deploy capital,
and we need to know that the capital from you is going to come
behind that. We need to know with 5, 7 years of certainty that
this money is going to be there.'' That is the way the
Universal Service Program has been run to provide that kind of
certainty.
Clearly a serious concern is that if, all of a sudden, that
certainty is impacted because the appropriations move like
this, or don't move----
Mr. Loebsack. Yes.
Mr. Wheeler [continuing]. And we are dealing with CRs, or
whatever the ability of these rural carriers to make the
investments that are necessary to provide service in high cost
areas will be significantly impaired.
Mr. Loebsack. Not to mention putting a cap on such a fund
as well, which I think is something that is called for as well.
This is just a really huge concern for so many of us, the rural
broadband issue, as I mentioned. And I have had concerns in the
past about how the USF is administered as well.
I want to make sure--and I would be happy to hear from any
of you here, I want to make sure that the USF fund actually
goes to where it is supposed to go as well, and that those
folks who can access that, and provide that kind of broadband
that is necessary in those rural areas can have access to those
funds. Because we also know that a lot of those folks are the
ones who are paying into it in the first place, and I have just
heard complaints that sometimes the funding doesn't come back
to them, they feel as though they are being disproportionately
put upon, if you will, in terms of contributing to that fund,
and then not getting back, you know, in a proportionate way
what they have been putting into it. Would any of you care to
respond to that?
Mr. Wheeler. So if I can pick up on that, Congressman?
Particularly for the smaller rate of return carriers, we are
going to be putting into effect this year a revision of the
Universal Service Program for them. We are going to deal with
the QRS, the hated regression analysis. We are going to come up
with a model that says, ``here is what you can base your
business decisions on.''
If I can pause for a self-interested commercial for a
second, we do need those carriers to help us come together. The
reason I knew there were 800 is because we hear multiple voices
talking about what they need, and everybody sits in a slightly
different position, and if the industry could come together and
say, ``here is a common approach,'' that would be very helpful.
Mr. Loebsack. Thank you.
Mr. Wheeler. I also need to correct the record on something
that Mr. Pai said. He was talking about making a broad brush
statement about small carriers. The NTCA represents these small
carriers, has said--so the track records of RLEX rural carriers
makes clear, Title II can provide a useful framework, and does
not need to be an impediment to investment in ongoing operation
of broadband networks. In a statement, the small rural wireless
carriers also said that they will not object to this. So we
have got to be careful that we don't haul out a handful of
people and make great generalizations from it.
Mr. Latta. The gentleman's time is expired.
Mr. Loebsack. Thank the Chair for indulging me----
Mr. Latta. The Chair now recognizes for 5 minutes the
gentleman from New Jersey, Mr. Lance, for 5 minutes.
Mr. Lance. Thank you very much. Commissioner Pai, would you
like to respond to that?
Mr. Pai. Thank you, Congressman, for the opportunity. I
think, first, it is significant to remember that, number one,
one of those folks who submitted the comments about Title II
were conceiving of Title II in terms of just the last mile
connectivity between the ISP and the customer. They had no
idea, because the FCC never published the proposal, that this
would go all the way to the far reaches of the Internet,
including interconnection.
Mr. Wheeler. That is not correct.
Mr. Pai. Well, Mr. Chairman, please, if I could respond to
the Congressman? Second, among the municipal broadband
providers who--these are folks who, by definition, represent
the public interest in their communities. Indeed, one of the
municipal broadband providers was visited by the President
himself in the weeks leading up to our vote. They themselves
said, please don't fall prey to what they called the ``facile
argument'' that Title II won't have an effect.
Third, I think it is important to remember that, with
respect to the effect that Title II will have on investment and
opportunity, none of these services have been subjected to
Title II previously. At the very most you can make the argument
that last mile connectivity was, but I think it is critical for
us to remember that regulation does have an effect.
We have heard from members of the American Cable
Association, from small ISPs, from municipal broadband
providers, and we can all debate about the numbers. What is
indisputable is that these providers have thrived with light-
touch regulation, and I think that is part of the reason why
just yesterday we heard from a major broadband provider, ``we
have benefitted from, essentially, government staying out of
the Internet, and I am worried that we are now on a path to
starting to regulate an awful lot of things on the Internet.''
Who was that? That was Google's Executive Chairman Eric
Schmidt----
Mr. Lance. Thank----
Mr. Pai [continuing]. In Washington.
Mr. Lance. Thank you. Commissioner Pai, in your dissenting
statement you state, I see no legal path for the FCC to
prohibit paid prioritization or the development of a two-sided
market, which appears to be the--objection by many to the
Chairman's proposal. The NPRM frankly acknowledges Section 706
of the Telecommunications Act could not be used for such a ban,
and while the NPRM resists saying it outright, neither could
Title II. After all, Title II only authorizes the FCC to
prohibit unjust or unreasonable discrimination, and both the
Commission and the Courts have consistently interpreted
provision to allow carriers to charge different prices for
different services. Could you elaborate on that----
Mr. Pai. Thank you for the question, Congressman. It has
been textbook law since Title II and its antecedents were
adopted, and this goes back to the 1880s, when----
Mr. Lance. Yes.
Mr. Pai [continuing]. You are regulating railroads, that
differential services could be assessed at different prices by
common carriers. Extending that toward the Telecommunications
Age, it has long been the case, as I pointed out in my dissent,
that you cannot ban paid prioritization. And in that regard, I
completely agree with the Chairman's statement on May 20 of
last year that there is, ``nothing in Title II that bans paid
prioritization.''
Mr. Lance. Given that, how long do you think that this is
likely to be litigated in the courts? And I ask that because
businesses need certainty as to what the rules of the road will
be long term.
Mr. Pai. I think whether you support or oppose the FCC's
order, the unfortunate aspect, everyone can agree on, is this
will be litigated for a long time.
Mr. Lance. And this goes first, I guess, to the District
Court here in the District of Columbia? Is----
Mr. Pai. Well, it will depend on where a petition for
review is filed. It could be filed in any of the regional
courts of----
Mr. Lance. Yes.
Mr. Pai [continuing]. Appeals. And then, if there are
multiple appeals, it will have to be chosen by a lottery.
Mr. Lance. And is it your opinion that this will eventually
reach the Supreme Court of the United States?
Mr. Pai. I think it will. It presents a very substantial
question, on which I could easily imagine the Supreme Court
granting writ of certiorari.
Mr. Lance. Commissioner O'Rielly, your views as to the
length of a litigation?
Mr. O'Rielly. I agree wholeheartedly with my colleague on
this. This is a 3 plus year debate that we are going to have in
the court system.
Mr. Lance. Commissioner Rosenworcel, your views on that,
please?
Ms. Rosenworcel. I believe we will see litigation, yes.
Mr. Lance. And Commissioner Clyburn? And it is certainly an
honor to serve with your father in Congress.
Ms. Clyburn. Thank you, I appreciate that. I am 99.99
percent sure that bill will be a legal----
Mr. Lance. So this is even purer than Ivory soap?
Mr. Wheeler. Wait a minute, I will go better than my
colleague, OK? Because the big dogs have promised they are
going to----
Mr. Lance. I see.
Mr. Wheeler [continuing]. Their word.
Mr. Lance. I do think that we need certainty going forward,
and I am deeply concerned regarding that.
Commissioner Clyburn, in a speech you gave several years
ago, you said, without forbearance, there can be no
reclassification, and I believe you went on to compare it as
peanut butter and jelly, salt and pepper, Batman and Robin.
Would you have supported reclassification under Title II
without forbearance?
Ms. Clyburn. Without forbearance?
Mr. Lance. Yes.
Ms. Clyburn. One of the things that I think we did right
was recognize the current dynamics of the day.
Mr. Lance. Yes.
Ms. Clyburn. This is not your father's or your mother's
Title II. We forbore from 27 provisions, over 700 rules and
regulations, so I am very comfortable in saying this is looking
at a current construct, and that is you looking at me. My
seconds are up. Thank you.
Mr. Lance. Thank you. I think you should have compared it
to Bogart and Bacall myself.
Ms. Clyburn. That will be the next----
Mr. Lance. Thank you very much, Mr. Chairman. I yield back
my time.
Mr. Latta. Well, thank you very much. The gentleman yields
back. The Chair now recognizes the gentleman from California,
Mr. McNerney, for 5 minutes.
Mr. McNerney. Well, I thank the Commissioners for your hard
work on this. Regarding the litigation issue, is there any
decision you could make whatsoever on net neutrality that
wouldn't involve significant litigation?
Mr. Wheeler. I think you have just hit the nail on the
head, sir.
Mr. McNerney. OK. Just wanted to make sure about that. I
believe most or all stakeholders believe that it is important
to meet the big three of net neutrality, no throttling, no paid
prioritization, and no blocking, but there is other stuff that
might be controversial in your recent decisions. Anything that
you want to bring up that might be of interest?
Mr. Wheeler. Thank you, sir. Actually, there are only four
regulations in here: no throttling, no blocking, no paid
prioritization, and transparency. You have got to tell the
consumers what you are doing, so they have a fair choice. The
other thing that we do is to establish general conduct rule
that says you will not harm consumers; you will not harm
innovators and you will not harm the functioning of the
Internet and the public interest.
Now, it is really interesting because people come in and
say, ``I don't know what that means.'' Well, that is exactly
the way the FTC operates, and the way that the carriers have
been saying, ``well, let us take things away from the FCC, and
give it to the FTC, because we like this case by case analysis
better than somebody coming in and having a rulemaking.'' So we
are not having a rulemaking that says we know best, this is the
way you are supposed to operate. What we are saying is that
there needs to be a judgment capability that says, ``is there
harm?'' There needs to be the ability, if harm is found, to do
something about it, but never to pre-judge, and always to be in
a situation where you are weighing all of the interests.
Mr. McNerney. OK. Commissioner Rosenworcel, does the FCC
have the power to regulate broadband providers, consumer
privacy practices that are unrelated to their phone services?
Ms. Rosenworcel. No. Not if they are unrelated to their
telecommunications.
Mr. McNerney. Right.
Ms. Rosenworcel. No.
Mr. McNerney. No. Is that something that would be of value?
Ms. Rosenworcel. Well, obviously privacy is an important
issue to all Americans, and privacy in the digital age is an
evolving thing. Our statute, which dates back to 1996, involves
customer proprietary network information under Section 222, and
that is where the bulk of our privacy authority comes from,
with respect to telecommunications services.
Mr. McNerney. Are there enough engineers at the FCC to help
you do your job?
Ms. Rosenworcel. I think we have terrific engineers at the
FCC, but in revamping the agency, I think we should make it a
priority to have more. It is clear that wireless technologies
are exploding. The demand for our equipment authorization
process is also multiplying exponentially. And if we had more
engineers, I believe we would be in a position to help
facilitate more innovation getting to the market faster.
Mr. McNerney. Do engineers tend to stay out of the politics
of the Commission, or are they like other human beings and want
to get into it once in a while?
Ms. Rosenworcel. Well, that is a kind of metaphysical
question. I am not sure I want to answer that one.
Mr. McNerney. All right. Let us see. You mentioned that
there should be greater use for the upper portion of the 5-
gigahertz band. Could you expand that a little bit, please?
Ms. Rosenworcel. Absolutely. We benefit immensely from wi-
fi in this country. About 50 percent of us use it to go online
regularly in public places, and 60 percent of us use wi-fi at
home. The bulk of our wi-fi activity takes place on the 2.4
Gigahertz band, but that place is getting mighty crowded. We
also have spectrum in the five Gigahertz band that we use for
wi-fi. Many of us, for instance, our home wi-fi systems are
based on it. But only a portion of the five Gigahertz band is
dedicated to unlicensed and wi-fi services. We have got some
other uses in there, and I think we should start studying those
other uses, and find out if we can free up more spectrum in the
5-gigahertz band so more people have more access to unlicensed
and wi-fi service.
Mr. McNerney. Well, what are the physical limitations of
the 5-gigahertz band? Line of sight, or what are the physical
limitations?
Ms. Rosenworcel. So the easy way to describe it is the
higher you go, you get more capacity, but it doesn't travel as
far. So five Gigahertz is really good inside buildings, inside
households. And as more of us use devices that are not tethered
to a cord, having that functionality is really important.
Mr. McNerney. Thank you. I yield back, Mr. Chairman.
Mr. Latta. Thank you very much. The gentleman yields back.
The Chair now recognizes the gentleman from Texas for 5
minutes.
Mr. Olson. I thank the Chair, and welcome to all the
Commissioners. Folks back home noticed that Commissioner Pai
and Commissioner O'Rielly weren't at the rollout of the new
rules on February 26 this past year. They have got some
questions they want answered, and want to know what you guys
would answer if you had been at that rollout.
I know there are claims about these Open Internet rules,
that they do not violate the Fifth Amendment by ``taking''
broadband providers' property. The Commission states that the
rules do not break the Fifth Amendment because they ``actually
enhance the value of broadband networks'' by protecting
innovation. If these rules enhance the value of these networks,
as the FCC's majority claims, why do broadband providers large
and small, wired and wireless, oppose the rules? Any thoughts,
Commissioner Pai?
Mr. Pai. Congressman, thank you for the question. I think
part of the reason why established broadband providers oppose
these rules is that they have invested literally hundreds of
billions, if not trillions of dollars since the inception of
the Internet in reliance on the bipartisan consensus, started
in the Clinton Administration, that the Internet would ``remain
unfettered from Federal and state regulation''. That same
combination of President Clinton and Congress agreed that
access to the Internet would be an information service in
Section 230 of the Act.
In reliance on that determination, a lot of these providers
went to the capital markets, spent a lot of money, took a lot
of risk, to build out what I consider to be the best Internet
environment in the world. As Commissioner Rosenworcel has said,
our Internet is the envy of the world. And part of the reason
why they have a concern about regulatory takings is, under the
leading case of Pension Benefit Corporation vs. Connolly, there
is a question about whether reliance expectations have been
disturbed by the exertion of these Title II regulations, and
that is something that a court is going to have to work out and
take very seriously.
Mr. Olson. So they think it is taking it, it sounds like.
Mr. O'Rielly, your thoughts, Commissioner O'Rielly?
Mr. O'Rielly. So I would suspect that there will be an
argument made and challenged on the Fifth Amendment, and the
assumptions made by the Commission are likely to be put to test
in court.
Mr. Wheeler. Congressman?
Mr. Olson. Yes, sir. One question for Commissioner Pai,
hold on a second, if I have some time, but I have got some
questions my people back home want me to answer.
Commissioner Pai, let us talk about transparency, how the
Committee works behind the scenes. You wrote in your testimony
that your edits in the e-rate proceedings were rejected, and
yet miraculously they came back when another Commissioner
introduced those same edits. Is that true, false? Can you
elaborate on what happened there?
Mr. Pai. Thank you for the question, Congressman. I put my
own proposal for E-Rate on the table 2 years ago. When the FCC
teed up its own proposal last year, I suggested, OK, I don't
need to go with my proposal. Working within your framework,
here are a number of suggestions that would get my vote. I was
told no, a lot of these are all red lines, we don't want your
vote.
One of the suggestions I had obviously didn't go to the
core of the item. It said, I want to allow schools and
libraries to be able to use e-rate funds for caching servers.
Doesn't seem too ideologically troublesome to me, but that was
rejected explicitly as what was ``a red line''. Miraculously,
when the order was ultimately adopted, and when my colleagues
on the other side suggested it, it was agreed to. Same thing on
the incentive option. I made 12 different asks. I was told no
to 11, and maybe on the 12th.
One of the ones that was deemed a red line was extending
the comment deadlines, because we had put some very complex
proposals on the table, we might want to understand what the
public thought about it. I was told no, that was a red line,
that would risk delaying the incentive auction. Lo and behold,
now the Bureau on delegated authority has extended those very
comment deadlines twice. These are just some of the pretty non-
ideological proposals I have made that have been rejected.
Mr. Olson. Is that standard practice?
Mr. Pai. It has not been historically. I can tell you that,
based on my first year-and-a-half with the Commission, while I
might have disagreed with some parts of an order that were
ultimately adopted, nonetheless there was a spirit of
collaboration and consensus that ultimately gained buy-in from
all the Commissioners. And that, I think, ultimately really
makes our product stand the test of time. It gains us
legitimacy among the American public and gives us more
insulation from litigation risk.
Mr. Olson. One final question. There are some parties out
there that have said this action has been essential because the
Internet is so essential to our life, the American life, and
that the current situation is outdated, and it must be changed.
This is a change. Should that agent of change be you all, or
Congress, the elected officials for the American people, our
voices, as opposed to, not an offense, but five unelected
Commissioners? I am going to go home today and take some heat,
good and bad, about what has happened here. You guys will go
home to your families and be OK. How about us being in control,
as opposed to you all? Any thoughts?
Mr. Pai. Congressman, that is precisely why, when the D.C.
Circuit rendered its decision last year, I said, without
knowing how this would turn out, we should go to Congress for
guidance. You wrote the Communications Act. You have updated it
over the years. You are the elected officials who should decide
how the Internet economy should proceed. On a matter this
important, with laws that essentially constrain our authority,
we should turn to the experts, which is Congress.
Mr. Olson. Constitution. Yield back.
Mr. Latta. Thank you very much. The gentleman yields back.
The Chair recognizes for 5 minutes the gentlelady from
California.
Ms. Matsui [continuing]. Mr. Chairman, I would like to
yield my time, and we are going to switch our time.
Mr. Latta. Well, in that case, the gentlelady yields her
time to the gentlelady from New York.
Ms. Matsui. Thank you.
Mr. Latta. Five minutes.
Ms. Clarke. Thank you very much, Mr. Chairman, and I would
like to yield a few seconds to my Ranking Member, Ms. Eshoo.
Ms. Eshoo. Thank you for your time, appreciate it. To
Commissioner Pai, as you went through the litany of your ideas,
and you didn't get your way, welcome to the minority.
Ms. Clarke. Thank you. Let me just ask a few questions of
our distinguished Commissioners. And the first question is to
Chairman Wheeler.
Chairman Wheeler, I am concerned about multilingual
broadcasting alerts, and the FCC's urgency around this issue.
In addition to 911 upgrades, what is being done to ensure that
the EAS reflects the growing ethnic and language diversity of
our nation?
Mr. Wheeler. Thank you, Congresswoman, I am glad you asked
that question. Literally yesterday I was meeting with our
public safety and security body that is an advisory group, and
talking with them about the importance of updating EAS, and the
recommendations that they have put out, insofar as making sure
that those updates are communicated to all the parties. Yes, we
have an EAS system that hasn't been updated since the Cold War.
We have to fix it to represent not only new technology, but
also increased diversity.
Ms. Clarke. And I hope that we will make that a priority
because, you know, with the challenges that we are facing, 21st
century challenges of climate change, of flooding, of,
unfortunately, terrorist attacks, it is becoming more and more
of a pressing need, a current day need.
The next question I have to you has to do with the Section
257 report. Congress requires the FCC to report on market entry
barriers every 3 years, but your latest report to Congress, the
257 report, was due December 31, 2012, and it is still
forthcoming. Would you give us an idea, or share with us how
the FCC will prioritize this as a process reform to ensure more
diversity and inclusion in the media and telecom industries?
Mr. Wheeler. Thank you. This has been an item of
contention. My colleague, Commissioner Clyburn, was moving this
process forward when she was acting Chair. I think it is fair
to say that it ran into some difficulties inside of the
Commission amongst the Commissioners. She did an admirable and
excellent job that I am attempting to pick up on, and to move
forward on, because these kinds of issues are important to not
only the future of how we build out telecommunications, but the
future economic opportunities and structure in our country.
Ms. Clarke. Very well, I appreciate that. And 2 years ago I
sent a letter to then FCC Chairman Julius Genachowski, asking
that the issue of activated FM chips in cell phones be
examined. I also understand that you, Chairman Wheeler, are
interested in this issue. What progress has been made to ensure
that my constituents have every tool at their disposal to
receive life-saving information in the event of another
terrorist attack, power grid outage, or weather emergency?
Mr. Wheeler. So FM chips are a great idea, and they are in
an increasing number of phones. They bring with them a couple
of technological challenges. One is antenna size. They need a
bigger antenna to get the FM signal that that becomes an issue
in a tiny device. They also can drain battery power. But they
are increasingly showing up, consumers have the ability to
purchase them, and some carriers specifically focus on them.
I think the broader question is whether or not the
Commission should be forcing wireless carriers to activate
these chips, or whether they ought to be leaving that to
consumer choice. I know that broadcasters around the country
are running commercials----
Ms. Clarke. Yes.
Mr. Wheeler [continuing]. Saying write the FCC, write your
Congressperson, and make them do it. I think this is something
that is being resolved in the marketplace, and that we ought to
monitor that, and watch what happens.
Ms. Clarke. I appreciate it. I have a few more questions. I
will submit them to the record, Mr. Chairman, but I thank you,
and I thank all of you Commissioners for your hard work and
diligence.
Mr. Latta. Well, thank you very much. The gentlelady's time
has expired. The gentleman from Illinois is now recognized for
5 minutes.
Mr. Kinzinger. Thank you, Mr. Chairman. Thank you all for
being here. Thanks for serving your country, and spending all
afternoon with us. We appreciate it. Hopefully not overly much
longer.
Commissioner Pai, I have to tell you, when you were asked
by Mr. Olson about your suggestions to the Commissioner were
ignored, and then other folks made the same suggestion, and
they were taken in, that was actually pretty mind blowing to
me, to be honest with you. And, you know, the joke was made
earlier, and I chuckled too, about welcome to the minority, but
I hope the Commission doesn't become like Congress, because I
think the intention of the Commission was not to be overtly
partisan. That is Congress's job. We battle issues, we debate
them. I mean, that is what happens. We look for compromise. I
hope the Commission doesn't follow our lead on that.
Commissioner Pai, in your statement of dissent on the Open
Internet Order, you spent some time talking about the procedure
surrounding the Notice of Proposed Rulemaking. Specifically,
you talked about how much the order changed from its initial
creation, and stated that the standard is whether all
interested parties should have anticipated the final rule, not
that they could have anticipated the final rule. Could you
explain a bit further the problems you see with what was
originally proposed by the Commission, as compared to what was
eventually adopted?
Mr. Pai. Thank you for the question, Congressman, and for
the kind words about some of the bipartisan efforts I have made
at the Commission to reach consensus. I think the problem with
respect to notice is substantial. I think the FCC teed up, in
May of 2014, a very different proposal from the one it
ultimately adopted.
The May proposal, for example, was based on Section 706,
and never mentioned such things as redefining the public
switched network. It never mentioned the extent of forbearance,
or even what specific sections would be forborne from. It never
mentioned a whole host of other things, and I think the problem
is that, once the FCC teed up this plan in--on February 5, and
voted on February 26--a lot of the things in there,
unfortunately, have not--there is no record sufficient to
support them. Forbearance is the best example of that. There is
no evidence in the record, certainly not on a geographic market
basis, to support a finding sufficient to grant forbearance on
a lot of these things.
And that is part of the reason why the FCC completely
recast its forbearance analysis, created this new analysis that
junked a lot of the previous FCC precedents in order to find
forbearance. And I think there are going to be substantial
legal problems with this.
Mr. Kinzinger. Thank you. Chairman Wheeler, earlier you
said that if asked to regulate rates, that the Commission would
make it clear that the Commission will not regulate retail
rates on broadband. Would you agree that a prohibition on the
Commission regulating broadband rates is consistent with your
views?
Mr. Wheeler. So I have said repeatedly that we are not
trying to regulate rates, and that, again, if Congress wants to
do something in that----
Mr. Kinzinger. Sure.
Mr. Wheeler [continuing]. Regard, that is Congress's
authority. I would----
Mr. Kinzinger. So, wait, you are not interested in, but
what about the next FCC Commissioner? Do you believe that under
Title II that they have the authority to regulate rates? Now,
you--I mean, and I respect that you don't want to, but you have
created something that will now be passed down through
generations of FCC Commissioners.
Mr. Wheeler. Well, as I said in my earlier response, if
this comes before us while I am there, I hope that, without
pre-judging the issue, that we can build a record that will
make it difficult for that to happen.
Mr. Kinzinger. But you could understand, then----
Mr. Wheeler. Congress clearly has the authority to do----
Mr. Kinzinger. You could understand----
Mr. Wheeler [continuing]. Like to----
Mr. Kinzinger. You could understand our concern, you know,
again, we respect when you say, I have no intention of doing
it. That is great. But you can understand the concern of
Congress, where you implement a rule, and then, in essence,
say, I don't have any intention of regulating rates, but I am
not going to prevent--I mean, I, you know, the next----
Mr. Wheeler. So----
Mr. Kinzinger [continuing]. Commissioner could do it.
Mr. Wheeler. Yes. One of the things that we did was we
patterned this after Section 332 and the regulation of mobile
voice. For 22 years this exact same authority has rested at the
Commission for mobile voice service and never been used.
Mr. Kinzinger. So if legislation that said, notwithstanding
any provision of law, the Federal Communication Commission may
not regulate the rates charged for broadband Internet access
service, that would be consistent with that view?
Mr. Wheeler. That is what we are trying to accomplish.
Mr. Kinzinger. OK. Commissioner Pai, we have heard Chairman
Wheeler assert that his decision to apply Title II to mobile
broadband services will have no impact on investment because
mobile voice service has been subject to Title II, and we have
seen substantial investment in mobile voice under that regime.
Do you agree?
Mr. Pai. I do not, Congressman, for a couple of different
reasons. First, it is critical to remember that the reason rate
regulation for mobile voice didn't occur was because the FCC,
from the inception, determined that competition was sufficient
in the voice marketplace so that there wasn't any need for rate
regulation. Here, by contrast, the FCC explicitly finds that
the broadband market is not competitive, so it explicitly opens
the door to the kind of rate regulation that was not
contemplated for mobile voice.
Secondly, with respect to mobile investment, one of the
reasons why we have seen such huge investment since 2007 was
because of the inception of the smartphone, and the huge
increase in mobile data traffic that was generated as a result.
Wireless carriers now, big and small, have to spend to keep up
in terms of infrastructure and spectrum to deliver some of that
mobile data traffic. Mobile data traffic has never been
classified as a Title II service. That is what has driven
mobile investment, not Title I's application to mobile voice.
Mr. Kinzinger. Thank you, and thank you all again for your
service, and I yield back.
Mr. Walden. Thank the gentleman. We now turn to the
gentlelady from California, Ms. Matsui, for----
Ms. Matsui. Thank you, Mr. Chairman. I want to thank you,
Commissioners, for being here. Question for Commissioner
Rosenworcel. One of the keys to innovation is spectrum, and
more spectrum, and I believe we need a national spectrum plan,
actually, a plan that considers both licensed and unlicensed
spectrum. Now, you have done a lot in this space, I know, so
can you share with us briefly some of your ideas to generate
revenue from spectrum sharing, and the ways to incentivize
Federal agencies to relocate?
Ms. Rosenworcel. Thank you for this question, I know, along
with Congressman Guthrie, you have done a lot of work in this
area. The fuel for our wireless revolution is spectrum, and if
we want to have a modern spectrum economy, we are going to need
a more consistent spectrum pipeline. Today, as you probably
know, when we need more airwaves for commercial mobile use, we
knock on the door of Federal authorities----
Ms. Matsui. Yes.
Ms. Rosenworcel [continuing]. And we beg, coax, and cajole,
and over time they will give us some scraps. And then Congress
will direct those Federal authorities to clear out of that
spectrum, relocate, and then you will ask the FCC to auction
off those airwaves. This process is slow, it is clunky, it is
not reliable, and it is not the pipeline that a modern wireless
economy needs.
That is why I think it is really important that we develop
a system of structured incentives for Federal spectrum
authorities so that, when we try to secure more airwaves for
commercial use, they see benefits in reallocation and not just
loss. That could, obviously, include anything from changes in
their budgets to benefits through the appropriations process,
to the ability to actually secure what sequestration might have
taken away. But in any event, I think that this type of
pipeline would actually make our spectrum markets more
effective, fast, and efficient.
Ms. Matsui. Well, thank you very much for those comments.
Chairman Wheeler, I have a question for you.
Mr. Wheeler. Yes, ma'am.
Ms. Matsui. I remain very concerned about the Stingray
surveillance devices that are used by a number of local law
enforcement agencies, without which appear--there doesn't seem
to be any Federal oversight, and the public should actually
have more access to the information about the Stingray device,
including what it is being used for, its surveillance
capabilities, and who has access to the sensitive information
that it collects. And despite some assurances to the contrary,
it is unclear to me, and many others, how the Stingray device
does not collect data on innocent Americans.
And so, Mr. Chairman, in August you announced the creation
of a task force on the Stingray device and similar technology.
I would like to know the status of this task force, and why
haven't we seen anything come out of it, and what--a series of
questions--and what you are doing to address the real concern
about the lack of oversight over this device.
Mr. Wheeler. Thank you, Congresswoman. The task force did
look into the situation, and what we found was as follows: our
jurisdiction, and our authority, is to certify the electronics
and the RF components for such devices for interference
questions, and that if the application was being made in
conjunction with law enforcement, then we would approve it.
This is for the technology. This is not for who buys it.
Ms. Matsui. Right.
Mr. Wheeler [continuing]. In general, we would approve it.
And from that point on, its usage was a matter of law
enforcement, not a matter of the technological question of
whether or not a piece of hardware interfered with other RF
devices.
Ms. Matsui. So you are saying that it is out of your
jurisdiction, and we have to go to other Federal agencies,
including law enforcement? Because I am concerned about the
device being sold on the market, or over the Internet, to non-
law enforcement organizations, or the general public. So this
is something we have to follow up with law enforcement, Federal
law enforcement?
Mr. Wheeler. We would--on the broad issue, it is follow up
with--I think that we would have enforcement jurisdiction in an
unauthorized use of an RF device if, in fact, it were being
sold illegally.
Ms. Matsui. OK. Thank you. I just want to bring up another
issue here. More consumers, particularly the millennials, are
opting for online subscriptions to buy the TV channels and
programming content they want, and we are really clearly seeing
the market react. HBO and Apple streaming agreement, CBS is
offering monthly online subscriptions, and on and on.
I really think this is the future, and no doubt it is a
complex issue, however, cable video is going IP, and soon the
consumer will be basically paying for bandwidth, and we should
look for ways to empower the consumer to be able to pay for
programming they want to watch. So I think this is something
our subcommittee should explore moving forward in a bipartisan
manner, and I just put that out there, and I will yield back
the balance of my time.
Mr. Walden. Gentlelady yields back the balance of time.
Chair recognize the gentleman from Florida, Mr. Bilirakis, for
questions.
Mr. Bilirakis. Thank you. Thank you, Mr. Chairman, I
appreciate it. And I want to thank the Commission for their
patience today, and also for their testimony.
Mr. Chairman, Chairman Wheeler, there was an unfortunate
accident in the Tampa Bay area, the area that I represent in
Congress, last April involving Mr. Humphries. It seems that he
had a powerful jammer in his SUV, powerful enough to jam local
law enforcement radios and calls to 911. He had been doing this
for over 2 years. When a local cell phone company reported
interference, the field agents in the Tampa office quickly
tracked him down, and ended the significant threat to the
safety of the folks in the Tampa Bay area.
It is my understanding you are planning to close this
enforcement office in my area. As a former chairman of the
Homeland Security, Emergency Preparedness, Response, and
Communications Subcommittee, I have a few questions. How many
offices, if you are closing any, do you plan to close, sir?
Mr. Wheeler. Sixteen.
Mr. Bilirakis. Sixteen? Will the job slots say from the
Tampa Bay area be moved to the Washington, D.C. area, yes or
no?
Mr. Wheeler. No.
Mr. Bilirakis. OK. Are you closing the field offices and
laying off staff to support the Enforcement Bureau's new work
under the net neutrality order?
Mr. Wheeler. No. We are doing it to increase productivity.
What we are finding is it costs two to three times what a
centralized operation would cost, that we have got too many
people doing too few things in a specific area, not meaning
there aren't issues there, but that we can get greater
productivity if we follow the kind of model the FAA has been
doing, where you have strike forces. So we would leave in
place, in Tampa, for instance, necessary equipment, and would
bring people in out of the Miami office to deal with the kind
of situations that you are talking about, and that is a more
cost efficient way of accomplishing the kind of goals you are
talking about.
Mr. Bilirakis. Florida is a big state, sir. According to
the budget request, page 50, the agency will preserve the
integrity of public safety communications infrastructure by
taking action on 99 percent of complaints of interference to
public safety communications within 1 day. Will you commit to
ensuring that this metric has been met historically according
to the performance report the Commission has issued over the
years? Will you commit that this metric will be met----
Mr. Wheeler. We believe that we can do this without a
diminution in quality, sir.
Mr. Bilirakis. OK. Will you provide the committee a
quarterly report detailing the Enforcement Bureau's success in
meeting that metric, including a list of actions taken through
the remainder of your Chairmanship, sir?
Mr. Wheeler. Good idea.
Mr. Bilirakis. OK. Very good. What do you want me to tell
the deputies--I know you talked about it. If you can elaborate
a little bit more, what would you like me to tell the deputies
and other first responders in the Tampa Bay area who may be in
danger? This is a very important issue, as you know, public
safety, by the delayed response inevitable, and losing an
Enforcement Bureau field office, which, again, Florida is a big
state, and I know other members probably have questions with
regard to the offices that are being closed, 16 nationwide.
Mr. Wheeler. So I think the reality that we face is that we
have a flat or diminishing budget, we have unfunded mandates
imposed by the Congress, and we have to say, ``how can we
increase efficiency?'' Do I want to close these offices? I
don't want to hear what you are saying, I don't want other
folks who are representing areas that are going to lose
offices, and hear their complaints. But I have got a fixed
amount of dollars to work with.
Mr. Bilirakis. I will go on----
Mr. Wheeler [continuing]. So the question becomes how do
you become efficient? And that's what we're trying to do.
Mr. Bilirakis. Thank you. Commissioner O'Rielly, how do we,
the United States, have any credibility telling other
countries, like China or Iran, not to control network
management practices within their borders if we are taking
large steps in that direction, with the recent overreaching
broadband reclassification?
Mr. O'Rielly. So I think there is an extreme trouble that
we are setting our stage by passage of this item on net
neutrality. I think it sends the wrong message internationally.
That matches up with my conversations internationally, when I
went to both Spain recently, and I was in South Korea for the
ITU. They are interested in engaging on issues of the
broadband. They would like to get as much involvement as they
can.
Those regimes you speak of obviously have greater
government control on the practices of Internet in their
nations. So it is a bifurcated message that we were able to
send before the passage of this item, that we shouldn't do it
here, and you shouldn't do it there. Now we are saying, well,
we are willing to do some things on regulating broadband, but
you shouldn't do them over there, or that it is OK, acceptable
practice across the world, which I think is just a terrible
message for them to send----
Mr. Bilirakis. Mr. Pai, what are your thoughts on this
issue?
Mr. Pai. Congressman, thanks for the question. I agree with
my colleague, Commissioner O'Rielly, and I would associate
myself with the State Department's views 5 years ago, when they
represented, ``We are concerned that in some countries net
neutrality may be used as a justification for blocking access
for purposes of preventing unwelcome political, social, or
cultural information from being disseminated to their
citizens.'' And I think this is a bipartisan issue on which the
U.S. has historically stood together, and I hope,
notwithstanding the February 26 order, that would continue into
the future.
Mr. Walden. Gentleman's time----
Mr. Wheeler. Congressman----
Mr. Bilirakis. Thank you.
Mr. Wheeler. Mr. Chairman, could I just say, for the sake
of the record, could we submit for the record----
Mr. Walden. Sure.
Mr. Wheeler [continuing]. The full quote that was just
excerpted by Commissioner Pai?
Mr. Walden. Absolutely.
Mr. Wheeler. Great. Thank you. Because it is really taken
out of context.
Mr. Pai. It is not.
Mr. Walden. Yes. We now recognize the gentleman from Ohio,
Mr. Johnson, for 5 minutes.
Mr. Johnson. From the great state of Ohio----
Mr. Walden. Stop it.
Mr. Johnson. Chairman Wheeler, I want to tell you how
honored I am that you have chosen to join with our Chairman in
paying tribute to----
Mr. Wheeler. You----
Mr. Johnson [continuing]. Ohio State today.
Mr. Wheeler. You picked up on this, sir, the----
Mr. Walden. Is this button the one I use to mute?
Mr. Johnson. OK. Commissioner Rosenworcel, in your opening
testimony, I want to associate myself with something you said.
You said we rarely go anywhere these days without our mobile
devices on us. I couldn't agree with you more. I was in
information technology for over 30 years, long before there was
any such thing as the Internet as we know it today, and I
submit that the reason we have these things is because we have
had unregulated, by the Federal Government, Internet and
information services, which has allowed for the innovators to
blossom. So I agree with you.
Chairman Wheeler, this committee has requested a number of
documents that have been denied under the claim of deliberative
process privilege. For the deliberative process privilege to
apply, an agency must show that a communication was a ``direct
part of the deliberative process, and that it makes
recommendations or expresses opinion on legal or policy
matters''. And in proceedings like the Open Internet
proceeding, ex parte filings are required to disclose
communications between the FCC and the executive branch, or its
staff, if those discussions are, I quote, ``of substantial
significance and clearly intended to affect the ultimate
decision''.
Now, I am trying to figure out how these two different
concepts apply here. In withholding certain communications
between the White House and the FCC, you have asserted the
deliberative process privilege. If those communications were
relevant to the Commission's deliberation, several questions
emerge. Weren't they subject to the Commission's ex parte
rules? Are the contents of those meetings memorialized in any
docket at the Commission? How could these conversations with
the White House have been both a direct part of the
deliberative process, but not have been of substantial
significance in that proceeding? Those are questions that are
rolling around in my mind. Now I will get to a question for
you.
I know that you have indicated in your written testimony
that you received no secret instructions from the White House.
But, of course, secret instructions are not the standard for
determining when ex partes are available. Here is my question.
In the 10 meetings that you had with the White House in advance
of the FCC's action on the Open Internet, is it your opinion
that the only meeting that addressed the merits of the
Commission's Open Internet proceeding occurred last November?
Mr. Wheeler. Yes, sir, and----
Mr. Johnson. Did you say yes?
Mr. Wheeler. Yes, and the 10 meetings, just to be clear,
were not meetings that were necessarily on Open Internet. We
had trade issues, we had national security issues, we had cyber
issues, we had auction issues----
Mr. Johnson. But in the 10 meetings that came in advance of
the FCC's action on the Open Internet, you are saying that
there was no information or discussions of substantial
significance and clearly intended to affect the ultimate
decision, which would require the disclosure of that
information?
Mr. Wheeler. There are----
Mr. Johnson. Is it your opinion that----
Mr. Wheeler. There are two parts here. One, you have----
Mr. Johnson. No, that is a yes or a no answer----
Mr. Wheeler. No, you correctly identified what the test----
Mr. Johnson. So is it yes or no?
Mr. Wheeler [continuing]. And I did not get instructions in
those meetings.
Mr. Johnson. No, I am not talking about that. I said do
they qualify under ex parte, or how do they qualify for both--I
am asking you a question----
Mr. Wheeler. And there is an exemption----
Mr. Johnson. Mr. Wheeler, I am--my time.
Mr. Wheeler. And----
Mr. Johnson. How do they qualify under both? If they are in
discussion with the White House, my goodness, that is the
highest office in our land. I find that the American taxpayer
does see that as significant and substantial. How can they not
be significant and substantial, clearly intended to affect the
ultimate decision, and yet you deny them under a deliberative
process claim?
Mr. Wheeler. Well, there are multiple parts to that. You
asked how. One is there were not instructions given to me. I
have been on the record on that, and been clear. Second is
that----
Mr. Johnson. That is not the determination.
Mr. Wheeler. I am about to--the determination also is that,
specifically, interactions with Congress and the White House
are excluded from ex parte, and have been since 1991. But I am
going beyond that, and saying that is a non ex parte
conversation, if there was a conversation that was taking place
in that kind of a construct, and two, that--I will even go----
Mr. Johnson. Under what basis?
Mr. Wheeler [continuing]. I got no instructions----
Mr. Johnson. Under what basis? I mean, you can't just make
that up. The law says what is required to be revealed and what
is not to be revealed, and a deliberative process privilege
applies when you can show a direct part of the deliberative
process, and that it makes recommendations, or expresses
opinion in legal or policy matters, rather than substantial
significance and clearly intended to affect the ultimate
decision.
Mr. Wheeler. I am quoting the----
Mr. Johnson. Well, I am disagreeing with you, Mr. Chairman,
and I think it is irresponsible that you are withholding
information that rightfully should be openly disclosed to this
Committee, and to the American people. And, Mr. Chairman, I
have----
Mr. Walden. Gentleman's time----
Mr. Johnson [continuing]. Exhausted my time.
Mr. Walden. Chair now recognize the gentleman from New
York, Mr. Collins, for 5 minutes
Mr. Collins. Thank you, Mr. Chairman. Before I get to my
questions for Commissioners O'Rielly and Pai, one follow up to
Mr. Johnson's question, Chairman Wheeler. There were 10
meetings, and we do understand there was, on the ex parte side,
disclosure on one of those 10 meetings. It is my understanding
that on the other nine meetings there was nothing of
significance discussed relative to the FCC, where, under the
rules of ex parte, that you should have, or would be required
to otherwise disclose those. Is it true there was nothing
disclosed on nine of the 10 meetings?
Mr. Wheeler. No, the test is----
Mr. Collins. No, I am not asking you for the test.
Mr. Wheeler. No, there is a----
Mr. Collins. Was there anything disclosed?
Mr. Wheeler. There is----
Mr. Collins. Sir, I am asking the questions.
Mr. Wheeler. OK.
Mr. Collins. Was there anything disclosed on the other nine
meetings? That is a yes or a no.
Mr. Wheeler. I had no----
Mr. Collins. That is a yes or no.
Mr. Wheeler [continuing]. Instructions. No. I had no
instructions.
Mr. Collins. Well, I guess I am befuddled that in nine of
the 10 meetings in the White House there was nothing of any
consequence discussed relative to the FCC that would require
disclosure. I will take you at your word, and just say I am
befuddled by that.
Now, one thing that we were clear about today is the
importance of certainty. And Chairman Wheeler, more than
anyone, stressed the importance to the providers in the
Internet space of certainty, certainty, certainty, and I can't
agree more, with my life in the private sector. Certainty
drives investment and returns, and with certainty you invest in
innovation. And I would say it is pretty obvious today, the way
things have worked has been pretty good, the light touch.
We have the number one service in the world. The
investments have been billions, and, as Commissioner Pai said,
maybe trillions of dollars. We lead the world today. Now, here
is my concern. We have also heard unanimous agreement by the
Commissioners litigation is coming, and likely to take 3 years.
It is guaranteed. Chairman Wheeler said guaranteed there is
litigation coming for 3 years. Well, if that is not the
definition of uncertainty, I don't know what is.
For the next 3 years the folks looking to invest and
innovate in this world have to live under the ultimate
uncertainty of which court is going to rule how, and when does
it move, and what do you do? So, to me, there is a real issue
here, a very genuine issue of inconsistency with the Chairman
stressing importance of certainty, and then saying, and one
thing is certain, we are going to court, which guarantees
uncertainty.
So I guess, Commissioner Pai, I would like to say again, to
me, lack of certainty is a wet blanket on investment. Lack of
certainty is a wet blanket on innovation. And my worry is, with
less innovation, and less investment, we will someday wake up
and not be the leaders in the world relative to what we think
and know is probably one of the most important aspects of where
we are headed. Could you briefly comment on that, and perhaps
take a minute, and then I would like Mr. O'Rielly to fill in
the remaining time.
Mr. Pai. Thank you for the question, Congressman. I
couldn't agree with you more that uncertainty is the bane not
only of the private sector, but ultimately consumers, who won't
get the benefit of some of that private sector risk. I will
give you just two instances of uncertainty that this order
generates.
First, with respect to the so-called Internet conduct
standard, which lays out seven vaguely worded non-exhaustive
factors under which the FCC is going to determine what is
allowed and what isn't allowed. And the FCC, after the vote,
conceded ``we don't know where things go next''. The FCC ``will
sit there as a referee and be able to throw the flag.'' The
Electronic Frontier Foundation targeted this particular rule
and said the problem with a rule this vague is that neither
ISPs, nor Internet users, can know in advance what kind of
practices will run afoul of the rule.
Second example, the Enforcement Bureau advisory opinion
process. Nobody knows exactly how it is going to work.
Commissioners aren't going to have the ability to have input
into that. And when you pair the Enforcement Bureau advisory
opinion process with this Internet conduct standard,
essentially the entrepreneurial spirit of American is going to
be funneled through this regulatory bottleneck, and nobody is
going to know in advance until they get permission from
Washington what is allowed and what isn't.
Mr. Collins. I couldn't agree more that the only thing
certain is uncertainty for the next 3 years. Commissioner
O'Rielly?
Mr. O'Rielly. I couldn't agree with my colleague any more.
I think he has hit it right on the head. I would say I was in
St. Louis not but a couple months ago and talked to wireless
ISPs, and talked about what could happen under this item, and
what it would mean for their business. And these are the guys
that are the small guys. We talk about 800 other providers,
well, these are 800 wireless ISPs trying to serve in the most
rural parts of America, and they are stringing together
networks under unlicensed bands, and they are asking for more
spectrum, and they are like, what does this mean for me? And I
am like, it means more paperwork, it means more compliance, it
means you don't know what you can do for your business for a
number of years. And they were just frustrated beyond belief.
Mr. Collins. Well, I share your concerns, and I think
America will too, and we will have to see where that heads. Mr.
Chairman, my time is up, and I yield back.
Mr. Walden. Thank the gentleman from New York, and our
witnesses. And I have heard some of the same things from small
Internet providers in my district. They are feeling like they
are going to be overwhelmed by this, and so I am meeting with
some of them as well.
I know Mr. Scalise is on his way here, the Whip of the
House, so we will try to accommodate his questioning.
Ms. Eshoo. Mr. Chairman, I am going to have to leave. I
have to catch a flight, and I don't know if that has an effect
on--if I leave, can you keep the hearing open?
Mr. Walden. We can seek counsel on that. But, obviously, we
should try to accommodate the third ranking member of the----
Ms. Eshoo. No, I know, but I----
Mr. Walden [continuing]. Of our committee, who is on his
way.
Ms. Eshoo. We started at 11 o'clock, so, I mean, he could--
--
Mr. Walden. I----
Ms. Eshoo. He has had some time to get here.
Mr. Walden. I understand.
Ms. Eshoo. I am a patient person, but I don't want to miss
my flight, so----
Mr. Walden. What time is your flight?
Ms. Eshoo. I have to go out to Dulles.
Mr. Walden. So while we----
Ms. Eshoo. It doesn't leave from the Rayburn horseshoe,
unfortunately.
Mr. Walden. So while he comes in the door here--we are now
going to let him get settled, but, as he is--first of all, if I
could ask all of the witnesses there will be some follow-up
questions. Some of them you have all taken down. Because of the
nature of our work, we would like to have prompt responses to
the questions. I know you have probably had questions from
other Committees as well, I get that, but the extent to which
you can respond promptly, that would be helpful. Thank you,
Anna. And we would like your feedback on the draft legislation
that we put out there. All of your feedback would be most
helpful. It is not a rush job. We are trying to get this right,
and we think it is very important.
So, with that, I would now recognize the gentleman from
Louisiana, the Whip of the United States House of
Representatives, allowing him to catch his breath fully, Mr.
Scalise.
Mr. Scalise. Thank you, Mr. Chairman, and I tested my 40
speed getting here, but I appreciate the Commissioners being
here, coming to testify about their Commission, also about this
net neutrality proposal that I know I have strong concerns
about, and a lot of my other colleagues have expressed real
strong concerns about as well.
I guess when you get back to the basic question of what has
worked so well with the Internet, and the technology community
as a whole, somebody who graduated in computer science, who has
worked in the technology industry, I have always felt that the
reason that the industry has been so successful is because the
Federal government hadn't figured out a way to regulate it, to
slow it down. And then yet here you come with an answer to a
problem that doesn't exist, a heavy handed role of government,
and the FCC's traditional role has not been to have a heavy
hand.
And this, when you look at the proposal that has come out,
my goodness, I mean, over 300 pages of regulations. And this is
just the first round, before the proposal is even been put into
effect. I guess anybody is looking for a free and Open
Internet, I am sure they looked to the over 300 pages of
regulations from the Federal Government to start that process.
It is not broken. Why is the Federal Government here to fix
something that has been working incredibly well? Especially
when you look at the role of Federal regulations over the
years, and just what they have done to harm our economy.
I do want to ask you, Commissioner Pai, because you made
some comments earlier about the potential taxes and fees that
can come with this Title II classification, and when you look
at Section 202 of the law, it clearly gives that ability for
the FCC to get involved in regulating costs for the Internet.
And so if you could share with me just what kind of impact this
can have on both fees being implemented, higher prices that
consumers will ultimately pay from this new classification?
Mr. Pai. Thank you for the question, Congressman. I think a
multitude of fees and taxes are going to be levied on broadband
in a way that is ultimately going down to the consumer's
detriment. Just to give you one example, now that broadband has
been reclassified as a telecommunications service, that order
explicitly opens the door to billions of taxes and fees being
assessed through the Universal Service Fund. So now, in
addition to that line item you see on your phone bill which
only applies to your voice, the Universal Service Fee, you are
going to be paying a fee on broadband, and that will happen, I
would imagine, in the next several weeks or months.
Secondly, and critically, there are all sorts of other fees
that are going to be assessed. For example, currently a lot of
broadband providers that had not been classified as telecom
providers paid a lower rate for the equipment that they
attached to the utility poles, known as pole attachments. They
paid a rate under Section 224(d). Now, because they are all
telecom providers, they will have to pay a much higher rate at
Section 224(e), and smaller providers in particular will have
to pay $150 to $200 million a year just for those higher pole
attachment rates. Then you add on top of that the higher state
and local property taxes that a lot of these companies will
have to pay, because they are now telecom providers. All of
these costs have to come out of somewhere, and it is going to
be the consumer's wallet, and that is one of the reasons why I
am concerned.
Mr. Scalise. Yes, and we have seen this time and time
again, that these kind of regulations, and ultimately these new
fees and taxes that would be paid are ultimately going to be
paid by consumers, by people that have been enjoying the
benefits of the investments that have been made by private
companies. This isn't the Federal Government investing. This is
private investment, to the tune of billions of dollars.
I will read you this quote, and maybe I will let you answer
it. ``There is nothing worse for investment, innovation, job
creation, all things that flow from investment, than businesses
not knowing what the rules are.'' You want to comment on that?
Mr. Pai. I think that is, as I have pointed out many times,
the bane of not just the private sector, but the consumer, to
not know what is going to be allowed and what isn't. And it is
exactly in that environment where the private sector is the
least likely to take the risk, to raise the capital, to build
the infrastructure that is going to connect Americans with
digital opportunities.
And I believe, as you pointed out eloquently in your
statement, that part of the reason why we enjoy the best
Internet experience in the world is because we have had this
historic bipartisan commitment, dating back to the Clinton
Administration, that the Internet would be free from state and
Federal regulation.
Mr. Scalise. That quote, by the way, was Chairman Wheeler
at his confirmation hearing. I do want to ask you, Commissioner
O'Rielly, because you commented on this order that it will
negatively impact edge providers. Of course, many of the edge
providers have been proponents of these net neutrality
regulations, but you have raised some concerns about how even
they would be negatively impacted, people that even asked for
this. So if you could comment on that?
Mr. O'Rielly. Yes. A number of people have highlighted on
this fact, is that the lines between an edge provider and a
telecommunications provider under our new definition are
blurring over time. And so today you may be an edge provider,
tomorrow you may be something else. You may have multiple parts
to your business, and that is problematic as you try to figure
out how best to comply with our rules.
More importantly, I believe that the Commission is going to
continue to push its regulations up the chain. And so today is
about telecommunications providers, and we talked about that
under our new definition. And then we are going to, we now are
having a debate in terms of--we are going to have some kind of
structure to deal with interconnection, or the middle mile,
what used to be known as peering. In my conversation, we are
bleeding right into the backbone of the Internet, and I think
that only leads us to edge providers over time.
Mr. Scalise. I see I am out of time, but I appreciate your
answers, and hopefully this does go forward. But, with that, I
yield back the balance of my time.
Mr. Walden. Gentleman yields back, and now that I know the
rules only require two members of either party to be here, we
could go five or six more rounds.
Mr. Scalise. Let us go. I am sure they would love to stay
around longer, and----
Mr. O'Rielly. Could we order in?
Mr. Walden. I want to thank our witnesses. I know you have
a tough job, and we may disagree, but we are all trying to do
the right thing for the country, so thanks for testifying.
Again, if you can promptly respond to our questions, that would
be appreciated, and we look forward to your return visit in the
not too distant future, we hope. So, with that, the committee
stands adjourned.
[Whereupon, at 2:15 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
Reauthorization of the Federal Communications Commission is
long overdue as the agency was last reauthorized nearly a
quarter of a century ago. A lot has changed over the last 25
years, and reauthorization provides an important opportunity to
refocus the commission for the innovation era on its core
purpose and responsibility to administer the policies set by
Congress for the American people. I intend to see that we
deliver.
The commission has an obligation to conduct its business in
the open and in accordance with the law in the public's
interest. The FCC's recent Open Internet proceeding, however,
has been plagued by process failures. Very few people
understood the extent of the FCC's new rules regulating the
Internet until they were actually showcased by the FCC. And if
press reports are accurate, nearly all of those who were looped
in work at the White House. Impacted parties must be given the
opportunity to review and understand the regulations the FCC
proposes before they are adopted. That didn't happen here.
Worse still, this is not the only proceeding that has raised
questions of the FCC's process integrity.
In addition to the lack of transparency, I fear that the
FCC has neglected other duties in favor of moving a politically
motivated net neutrality decision. At last year's oversight
hearing, I expressed my concern at the delay in completing the
2010 Quadrennial Review of Media Ownership rules. To date, the
commission still has not done the statutorily mandated work and
unfortunately, there are many more proceedings languishing at
the FCC.
This reauthorization process also provides the opportunity
to clarify the commission's jurisdiction. Of late, the FCC
seems to be intent on expanding its authority to be the
regulator of all things privacy. This is not the commission's
role. Rather, it shares responsibility for privacy with the
Federal Trade Commission. But the FCC's recent decision to
reclassify broadband has taken broadband providers out of the
FTC's jurisdiction. As we heard from the FTC at yesterday's
hearing on data breach, this action has made consumers less
safe.
The American people and our nation's economy deserve better
and the commission has a lot of highly technical work ahead.
These complex and difficult issues will require the best
efforts of us all. I hope that we can work together to bring
back an effective, transparent, and apolitical government
agency that produces fair outcomes and good policy. Let's get
the train back on the tracks.
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