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



                               BEFORE THE


                                 OF THE

                        HOUSE OF REPRESENTATIVES


                             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


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                          FRED UPTON, Michigan
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
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
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
RICHARD HUDSON, North Carolina
KEVIN CRAMER, North Dakota
             Subcommittee on Communications and Technology

                          GREG WALDEN, Oregon
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
FRED UPTON, Michigan (ex officio)

                             C O N T E N T S

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


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



                        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 
    Mr. Wheeler. I hope we are on the record, because I just 
want to say two things. Number one, you are an honorable man, 
    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 
    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.


    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 
    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 
    It starts today with trying to fix the agency itself.

    [H.R. -------- follows:]
    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 
    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. 
    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 
    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 
    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 
    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.


                    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:]
    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.


    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 
    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 
    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:]
    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.


    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 
    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 
    [The prepared statement of Ms. Rosenworcel follows:]
    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 
    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 
    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:]
    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 


    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 
    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 
    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:]
    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.
    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 
    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 
    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 
    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--
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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, 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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 
    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, 
    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. 
    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 
    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 
    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 
    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.