[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
NEXT STEPS FOR SPECTRUM POLICY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
FIRST SESSION
__________
THURSDAY, MARCH 26, 2015
__________
Serial No. 114-28
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
JOE BARTON, Texas FRANK PALLONE, Jr., New Jersey
Chairman Emeritus Ranking Member
ED WHITFIELD, Kentucky BOBBY L. RUSH, Illinois
JOHN SHIMKUS, Illinois ANNA G. ESHOO, California
JOSEPH R. PITTS, Pennsylvania ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
TIM MURPHY, Pennsylvania DIANA DeGETTE, Colorado
MICHAEL C. BURGESS, Texas LOIS CAPPS, California
MARSHA BLACKBURN, Tennessee MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
STEVE SCALISE, Louisiana G.K. BUTTERFIELD, North Carolina
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington KATHY CASTOR, Florida
GREGG HARPER, Mississippi JOHN P. SARBANES, Maryland
LEONARD LANCE, New Jersey JERRY McNERNEY, California
BRETT GUTHRIE, Kentucky PETER WELCH, Vermont
PETE OLSON, Texas BEN RAY LUJAN, New Mexico
DAVID B. McKINLEY, West Virginia PAUL TONKO, New York
MIKE POMPEO, Kansas JOHN A. YARMUTH, Kentucky
ADAM KINZINGER, Illinois YVETTE D. CLARKE, New York
H. MORGAN GRIFFITH, Virginia DAVID LOEBSACK, Iowa
GUS M. BILIRAKIS, Florida KURT SCHRADER, Oregon
BILL JOHNSON, Missouri JOSEPH P. KENNEDY, III,
BILLY LONG, Missouri Massachusetts
RENEE L. ELLMERS, North Carolina TONY CARDENAS, California
LARRY BUCSHON, Indiana
BILL FLORES, Texas
SUSAN W. BROOKS, Indiana
MARKWAYNE MULLIN, Oklahoma
RICHARD HUDSON, North Carolina
CHRIS COLLINS, New York
KEVIN CRAMER, North Dakota
Subcommittee on Communications and Technology
GREG WALDEN, Oregon
Chairman
ROBERT E. LATTA, Ohio ANNA G. ESHOO, California
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee PETER WELCH, Vermont
STEVE SCALISE, Louisiana JOHN A. YARMUTH, Kentucky
LEONARD LANCE, New Jersey YVETTE D. CLARKE, New York
BRETT GUTHRIE, Kentucky DAVID LOEBSACK, Iowa
PETE OLSON, Texas BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas DIANA DeGETTE, Colorado
ADAM KINZINGER, Illinois G.K. BUTTERFIELD, North Carolina
GUS M. BILIRAKIS, Florida DORIS O. MATSUI, California
BILL JOHNSON, Missouri JERRY McNERNEY, California
BILLY LONG, Missouri BEN RAY LUJAN, New Mexico
RENEE L. ELLMERS, North Carolina FRANK PALLONE, Jr., New Jersey (ex
CHRIS COLLINS, New York officio)
KEVIN CRAMER, North Dakota
JOE BARTON, Texas
FRED UPTON, Michigan (ex officio)
C O N T E N T S
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Page
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 1
Prepared statement........................................... 3
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 4
Hon. Doris O. Matsui, a Representative in Congress from the State
of California, opening statement............................... 5
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 39
Witnesses
Roger Sherman, Chief, Wireless Telecommunications Bureau, Federal
Communications Commission...................................... 7
Prepared statement........................................... 10
Answers to submitted questions............................... 53
Gary Epstein, Chair, Incentive Auction Task Force, Federal
Communications Commission...................................... 7
Prepared statement........................................... 10
Answers to submitted questions............................... 53
Julius Knapp, Chief, Office of Engineering And Technology,
Federal Communications Commission.............................. 7
Prepared statement........................................... 10
Answers to submitted questions............................... 53
John Leibovitz, Deputy Bureau Chief, Wireless Telecommunications
Bureau, Federal Communications Commission...................... 7
Prepared statement........................................... 10
Answers to submitted questions............................... 53
Submitted Material
Article entitled, ``FTC's Hot Mess of a Database May Not Bode
Well for Future Airwaves Sharing,'' Re/code, March 17, 2015,
submitted by Mr. Long.......................................... 40
Statement of National Association of Black Owned Broadcasters,
submitted by Mr. Walden........................................ 47
AWS-3 Auction Results, submitted by Ms. Eshoo.................... 49
NEXT STEPS FOR SPECTRUM POLICY
----------
THURSDAY, MARCH 26, 2015
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:16 a.m., in
room 2322 of the Rayburn House Office Building, Hon. Greg
Walden (chairman of the subcommittee) presiding.
Members present: Representatives Walden, Latta, Shimkus,
Lance, Guthrie, Olson, Pompeo, Bilirakis, Johnson, Long,
Collins, Cramer, Eshoo, Yarmuth, Clarke, Loebsack, Rush,
Butterfield, Matsui, and McNerney.
Staff present: Ray Baum, Senior Policy Advisor for
Communications and Technology; Andy Duberstein, Deputy Press
Secretary; Gene Fullano, Detailee, Telecom; Kelsey Guyselman,
Counsel, Telecom; Grace Koh, Counsel, Telecom; David Redl,
Counsel, Telecom; Charlotte Savercool, Legislative Clerk; David
Goldman, Democratic Chief Counsel, Communications and
Technology; Margaret McCarthy, Democratic Senior Professional
Staff Member; and Ryan Skukowski, Democratic Policy Analyst.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. We are going to go ahead and call to order the
subcommittee on Communications and Technology, and welcome our
Members and our witnesses here today. Since this is a go-away
day and we have votes coming up in about an hour or so, we are
going to go ahead and get started.
There is no question that mobile technology is one of the
key components of the economy of both today and of the future.
Americans have wholeheartedly embraced the role of mobile in
their lives. In fact, there are more wireless devices in the
country than there are people in the country. Mobile is even
more critical in developing nations for whom mobile is the
first national network for connectivity. Time and again, as the
country that pioneered spectrum auctions once, and is the
process of doing it again, the world looks to the United States
to lead spectrum policy and answer the challenge of meeting
spectrum demand. We must continue to rise to that challenge.
Demand for connectivity will only continue to grow as the
Internet of Things becomes a ubiquitous part of our daily
lives. People rely on spectrum to stay connected to friends and
family, conduct business, engage with the government, and
access resources for things like healthcare and education.
This committee has long been a leader in freeing up
spectrum for commercial and unlicensed use to meet demand and
feed the innovation that has been the hallmark of U.S. spectrum
policy. In just the last few Congresses we have brought forth
bipartisan legislation to authorize a first-of-its-kind
broadcast television incentive auction, formed working groups
that Ms. Matsui and Mr. Guthrie co-chaired that we organized to
look at how do we modernize the federal spectrum, how do we
work together to ensure that this vital national resource is
put the most efficient and effective use. By the way, going
into that legislation, the Congressional Budget Office said it
would never happen, and they gave us a zero score, or something
like that. And after the fine work of you all at the FCC and
the people who actually arrived with checkbooks, I think the
net is somewhere around $41 billion, paying fully for the
interoperable system for public safety, as well as 911 enhanced
process, and paying down debt. And that is just the first part
of the auction with AWS-3.
Now, as we go forward, we need to make sure that there
continues to be good cooperation and understanding about all
the parties as we go into the broadcast incentive auction. I
know our broadcasters were involved in this auction with some
of the spectrum they had with the Defense Department and other
federal agencies, so it was more than just the Federal
Government, and I commend the broadcasters for their
involvement. But the model can hopefully be recreated in other
spectrum bands through the Federal Spectrum Incentive Act. This
was introduced, by the way, by Congressman Guthrie and
Congresswoman Matsui, as the broadcast incentive auction is
doing for broadcasters, this legislation would allow
participating government agencies to receive a portion of the
proceeds from the auction of spectrum assigned to it. That
makes sense. It incentivizes agencies to take a hard look at
the modern spectrum needs and consider alternatives, free up
even more spectrum for commercial or unlicensed use.
Now, in the past, there has been a great deal of focus on
so-called beachfront spectrum, the spectrum with the best
propagation characteristics for commercial mobile use. Some of
this will be auctioned off in the upcoming incentive auction of
the 600 megahertz band currently used for UHF broadcasting. But
these types of opportunities are going to be even more scarce
in the future and it means we have to start looking outside of
the traditionally desirable spectrum bands. There is only so
much spectrum out there, so we need to work together with what
we have and that means expanding use into the spectrum
frontiers.
The FCC began a proceeding last fall to examine the use of
frequencies above 24 gigahertz. To put that in perspective,
most commercial use happens below 6 gigahertz, and most mobile
use is in the 3 gigahertz level. Development of technologies
that can utilize higher frequencies to meet current and future
needs could be a real game-changer. I look forward to hearing
more about the FCC's work in the space from our witnesses.
So how do we achieve these goals and ensure that America
remains a leader in wireless technology, development and
deployment of mobile innovations? It will require a great deal
of working together to leverage industry and engineering know-
how, government authority, and agency implementation. To
achieve this, both Congress and the FCC must be flexible and
forward-looking stewards of our public spectrum asset.
So I look forward to hearing from our witnesses today. And
with that, I will turn over the remaining time to my vice
chair, Mr. Latta.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
There's no question that mobile technology is one of the
key components of the economy of both today and of the future.
Americans have wholeheartedly embraced the role of mobile in
their lives-in fact, there are more wireless devices in this
country than people--and mobile is even more critical in
developing nations for whom mobile is the first national
network for connectivity. Time and again, as the country that
pioneered spectrum auctions once, and is the process of doing
it again, the world looks to the United States to lead spectrum
policy and answer the challenge of meeting spectrum demand. We
must continue to rise to that challenge.
Demand for connectivity will only continue to grow as the
``Internet of Things'' becomes a ubiquitous part of our daily
lives. People rely on spectrum to stay connected to friends and
family, conduct business, engage with government, and access
resources for things like healthcare and education.
This committee has long been a leader in freeing up
spectrum for commercial and unlicensed use to meet demand and
feed the innovation that has been the hallmark of U.S. spectrum
policy. In just the past few congresses we have brought forth
legislation to authorize a first-of-its-kind broadcast TV
incentive auction legislation, formed working groups focused on
modernizing federal spectrum, and worked together to ensure
that this vital national resource is put the most efficient and
effective use.
The most recent example of this committee's spectrum
leadership came just a few months ago with the successful
auction of 65 MHz of AWS-3 spectrum for more than $44 billion.
This is particularly significant not only because this single
auction raised enough to fully fund FirstNet, but perhaps more
strangely, because some said that this auction would never
happen. The spectrum auctioned was occupied by the U.S.
Department of Defense and other federal agencies, but thanks to
bipartisan leadership of this committee and cooperation between
industry and government, we were able to bring more spectrum to
market to meet demand without adversely impacting government
operations. This success is a terrific example of what can be
achieved when we work together.
This model can hopefully be recreated in other spectrum
bands through the Federal Spectrum Incentive Act. Introduced by
Mr. Guthrie and Ms. Matsui, as the broadcast incentive auction
is doing for broadcasters, this legislation would allow
participating government agencies to receive a portion of the
proceeds from the auction of spectrum assigned to it. By
incentivizing agencies to take a hard look at their modern
spectrum needs and consider alternatives, we can free up even
more spectrum for commercial or unlicensed use.
In the past, there has been a great deal of focus on so-
called ``beachfront'' spectrum-the spectrum with the best
propagation characteristics for commercial mobile use. Some of
this will be auctioned off in the upcoming incentive auction of
the 600 MHz band currently used for UHF broadcasting. But these
types of opportunities are going to be even more scarce in the
future and it means we're going to have to start looking
outside of the traditionally desirable spectrum bands. There's
only so much spectrum out there, so we need to work with what
we have and that means expanding use into the ``spectrum
frontiers.'' The FCC began a proceeding last fall to examine
the use of frequencies above 24 GHz--to put that in
perspective, most commercial use happens below 6 GHz, and most
mobile use is below 3 GHz. Development of technologies that can
utilize higher frequencies to meet current and future needs
could be a real game-changer. I look forward to hearing more
about the FCC's work in the space from our witnesses.
So how do we achieve these goals and ensure that America
remains a leader in wireless technology, and development and
deployment of mobile innovations? It will require a great deal
of working together to leverage industry and engineering know-
how, government authority, and agency implementation. To
achieve this, both Congress and the FCC must be flexible and
forward-looking stewards of our public spectrum asset. I look
forward to hearing from our witnesses how the commission is
working to ensure a successful incentive auction, as well as
their hard work to ensure we can meet spectrum demand in the
future.
Mr. Latta. Well, thanks, Mr. Chairman, for yielding. And
thank you for our witnesses for being here with us today.
The demand for wireless spectrum capacity is growing daily,
as technologically advanced devices and products are
increasingly using unlicensed spectrum instead of cellular
networks to connect to the Internet. There is no doubt that
spectrum has become an integral part of our everyday lives, and
contributes greatly to economic growth and innovation. It is
vital that the capacity of our Nation's airways is able to
accommodate advanced mobile innovation, therefore, we must
examine all ways to expand access to spectrum. That is why I
introduced H.R. 821, the Wi-Fi Innovation Act, which would
examine ways to maximize the use of spectrum in the upper 5
gigahertz band, without creating harmful interference with
incumbent users. My bill also recognizes that unlicensed
spectrum is a critical component of promoting continued
economic development, increased connectivity, and greater
productivity.
Mr. Chairman, I look forward to hearing from today's
witnesses, and I thank you for yielding. And I yield back.
Mr. Walden. Mr. Latta, we appreciate your participation and
your comments.
We will turn now to Ms. Eshoo from California for an
opening statement.
OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Eshoo. Thank you, Mr. Chairman. And good morning to all
of our witnesses. It is wonderful to see you. Roger, is this
the first time you have ever testified? It is.
Mr. Walden. Oh, boy.
Ms. Eshoo. Isn't that great? Yes. Well, we miss you, but we
are proud of you.
$41.3 billion. How would you like to have that in your
checking account? That is a lot of money. It is really
unprecedented in terms--that it was raised from the AWS-3
auction. It is a huge win, and I think that it is instructive
to all of us in the value of spectrum. Spectrum is gold. Some
is 18 karat, some is 24 karat, there are different levels of
gold, but it is still gold. And we know that these funds are
going to be used to reduce the deficit by some $20 billion. I
don't know what other committee is producing that, but everyone
here should pat themselves on the back. It is going to pay for
the build-out of the first ever nationwide interoperable public
safety network. That was the only recommendation of the 9/11
Commission that the Congress had not made good on, and it is
going to upgrade our 911 call centers across the country to
support next-generation technology. So this is, I think anyone
that takes a look at this would say this is a success story.
Now, less than 2 years ago, Chairman Walden and I began
regular meetings with NTIA, with the FCC, with the DoD, to
ensure that our efforts to relocate or share spectrum held by
federal agencies really stayed on track. And those were
important informal meetings as well as hearings, but it really
paid off. Many thought that the DoD wouldn't cooperate, but
thanks in part, I think, to this bipartisan process and their
cooperation that we established in June of 2013, 65 megahertz
of spectrum will be brought to market to support America's
insatiable appetite for wireless broadband. But our work is far
from complete, because our goal is to free-up 500 megahertz of
spectrum, and ensure that every American has access to 4G high-
speed wireless broadband.
According to Cisco's latest forecast, global mobile data
traffic will increase nearly tenfold over the next 4 years.
That is a lot; increasing tenfold over the next 4 years,
reaching an estimated 24.3 X-bits per month by 2019. So as a
finite resource, we have to think big in our approach to
spectrum management.
I think a 21st century spectrum policy should recognize the
following. The complimentary benefits of both licensed and
unlicensed spectrum. The need for competitive safeguards to
prevent excessive concentration of spectrum, particularly
within the prime beachfront bands below 1 gigahertz. And the
need to utilize new sharing technologies to enhance efficiency
and better manage spectrum.
The upcoming incentive auction can achieve, I think, each
of these policy goals, while generously compensating
broadcasters who voluntarily chose to participate. And I salute
the broadcasters for cooperating. I want this to work very well
for them because when it does, it is going to compliment the
rest of the system. Similarly, freeing up additional unlicensed
spectrum in the 5 gigahertz band will unlock immense economic
value in our country, promote access to broadband, and expand
the digital sandbox used by innovators and entrepreneurs.
So it is a pleasure for me to welcome all of you here, the
experts, and as I said before I began my opening statement, to
see our former Chief Democratic Counsel, Roger Sherman, you are
a great source of pride to us, Roger. So I look forward to your
testimony and the conversation that we are going to have, and
the input that you will give to us.
And with that, I yield back.
Mr. Walden. Gentlelady yields back.
Anyone on the Republican side want to make an opening
comment, or should we move on to our witnesses? OK.
We will go to Ms. Matsui now, using Mr. Pallone's time as
the senior Member on their side.
OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Matsui. Thank you, Mr. Chairman, for yielding me time.
And I also would like to welcome Roger Sherman. It is great to
see you.
The future of American innovation would be fueled by
spectrum, and more and more spectrum. Never has this been more
evident than the record-breaking AWS-3 auction which generated
nearly $42 billion. That is more than four times the reserve
price that the FCC put on the sale, and more than double the
previous record of $18.9 billion set in the 2008 wireless
auction.
The planning for the AWS-3 auction did not happen
overnight. There were many skeptics who doubted this auction
would ever occur. But as a result of years of bipartisan
congressional collaboration with the Department of Defense, the
FCC and the NTIA, along with our Nation's broadcasters, the
final product of the AWS-3 auction was truly historic for the
wireless market and for consumers. The major investments put
forth all provides us with fresh evidence of the increasing
consumer demand for Internet access by smartphones, tablets and
devices. Spectrum has become one of the lynchpins in our
economy. 4G speeds will soon become 5G speeds. New cars rely on
spectrum to improve driver safety. Wi-Fi hotspots are popping
up across the country. Innovative healthcare devices are being
introduced utilizing spectrum to monitor blood pressure, oxygen
levels, and activity levels. Technologies that allow consumers
to control home energy consumption from mobile devices also
rely on spectrum.
To more efficiently utilize our Nation's airwaves, America
needs a national spectrum plan, one that would require a
healthy mix of licensed and unlicensed spectrum bands. To that
end, Congress must look for creative ways to produce more
spectrum and create a pipeline for spectrum reallocation or
sharing. That is why today I join Congressman Guthrie in
introducing legislation that would create the first ever
incentive auction for federal agencies, and for once, offer
revenue to federal spectrum users in exchange for federal
spectrum. It is a game-changer.
I thank Chairman Walden and Ranking Member Eshoo for
cosponsoring this bill. I also welcome the Senate Companion
Bill also introduced today by Senators Ed Markey and Deb
Fischer.
Moving forward, I also believe that unlicensed spectrum
should be part of our spectrum plan. It is important for the
FCC to develop a testing process on the upper 5 gigahertz band
this year. It is time for the FCC to bring together in one room
engineers from both the auto and technology sectors to see if
they can coexist without interference in the 5 gigahertz band.
That was the underlying principle of the bipartisan law passed
in 2012.
I look forward to continuing to work in a bipartisan manner
on spectrum issues. It is one of the key issues for our
economy.
I would now like to yield the balance of my time to the
gentlelady from New York, Ms. Clarke.
Ms. Clarke. I thank the gentlelady from California.
Chairman Walden and Ranking Member Eshoo, thanks for
convening this hearing. Thank you once again to Congresswoman
Matsui for yielding time.
For years, we have been discussing the Nation's spectrum
crunch, and it is good to see the progress in this area,
particularly as consumers are increasingly becoming dependent
on their mobile devices. The world is going wireless, needless
to say. Most of us couldn't even imagine going through the day
without our mobile devices. But it is more than having our
phones in our pockets. Our kids are using connected textbooks,
our cars are equipped with fourth-generation wireless
technology, our doctors treat us faster, at lower cost, by
using wireless equipment, and everyone expects to watch what
they want, when they want to, where they want it, and with
whatever wireless devices they have handy.
Americans are clearly more engaged in the wireless
ecosystem, and we need to ensure that our Nation has the
capacity to accommodate current and future wireless needs. But
all of this innovation does not happen alone. Our hunger for
all things mobile is driving our insatiable demand for the
airwaves that feed our devices. These airwaves are the
invisible infrastructure that is all around us. It powers the
devices and services we use every day. That is why Congress
charged the FCC with managing this scarce public resource on
our behalf, and that is why we directed the FCC to conduct
spectrum auctions that make more spectrum available for
wireless carriers, and to supercharge the Nation's supply of
spectrum of Wi-Fi.
The FCC has taken the ball and ran with it. Earlier this
year, the agency completed the most successful auction in
history. It raised over $41 billion for public safety and
wireless, and made a significant slice of the airwaves
available for mobile broadband. The FCC also gearing--is also
gearing up for the broadcast incentive auction next year, but
if we want the United States to continue to lead the world in
wireless, there is a lot more to be done.
I look forward to the hearing from--to hearing from our
expert panelists today about what is next in the spectrum
pipeline, and I yield back.
Mr. Walden. Gentlelady yields back. We appreciate her
comments.
And now we will go to our witnesses. We want to thank each
of you for being here, not only before our committee but also
the work you do not far away at the FCC. So thanks for being
here.
And we will start out with Mr. Roger Sherman, he is the
Chief of the Wireless Telecommunications Bureau of the Federal
Communications Commission. Mr. Sherman, we are delighted to
have you back here. I have 23 yes-or-no questions Mr. Dingell
submitted, but go ahead with your testimony.
STATEMENT OF ROGER SHERMAN, CHIEF, WIRELESS TELECOMMUNICATIONS
BUREAU, FEDERAL COMMUNICATIONS COMMISSION; ACCOMPANIED BY GARY
EPSTEIN, CHAIR, INCENTIVE AUCTION TASK FORCE, FEDERAL
COMMUNICATIONS COMMISSION; JULIUS KNAPP, CHIEF, OFFICE OF
ENGINEERING AND TECHNOLOGY, FEDERAL COMMUNICATIONS COMMISSION;
AND JOHN LEIBOVITZ, DEPUTY BUREAU CHIEF, WIRELESS
TELECOMMUNICATIONS BUREAU, FEDERAL COMMUNICATIONS COMMISSION
Mr. Sherman. Thank you. Good morning, Chairman Walden,
Ranking Member Eshoo, and members of the subcommittee. We
appreciate the opportunity to discuss next steps for spectrum
policy, and welcome your interest in this topic.
At the table with me today are three experts well known to
this committee; Julie Knapp, the Chief of the Office of
Engineering and Technology; Gary Epstein, the Chair of the
Incentive Auction Task Force; and John Leibovitz, the Deputy
Chief of the Wireless Bureau, and Special Advisor to the
Chairman for Spectrum Policy.
We know that time is limited and you are probably anxious
to ask questions, so I won't reiterate our testimony, but
instead briefly highlight three basic points. First, the demand
for spectrum continues to grow exponentially, and as a nation,
we need to maintain our collective focus on this resource to
continue to be the world leader in wireless. There is no debate
that wireless is an engine of economic growth and progress in
the United States, and there is no debate that spectrum fuels
this engine.
As Chairman Walden and Chairman Wheeler pointed out in a
recent op-ed upon the close of Auction 97, there is direct
linkage between spectrum, jobs and economic growth, not to
mention innovation, competition and consumer choice. You can be
sure FCC staff is focused on making licensed and unlicensed
spectrum available for mobile broadband to meet consumer and
business demands. This has certainly been a key area of focus
for Chairman Wheeler and all of the commissioners.
Second, we are actively bringing more spectrum online.
Since Chairman Wheeler's arrival at the FCC, we have auctioned
the 10 megahertz H block, and 65 megahertz of AWS-3 spectrum.
We have also made other spectrum newly available and useable
for wireless broadband and unlicensed uses. Of course, we are
working towards the incentive auction early next year.
A couple of quick observations about AWS-3, many points
that you have already raised in your statements. AWS-3 was a
team effort, and it is well known that it was a success in
large part due to the important work of NTIA, DoD, and other
Federal agencies. What is less well known, at least outside the
Rayburn Building, is that full engagement of the Energy and
Commerce Committee was a critical element of this success.
Members of this subcommittee in particular took a personal
interest in the success of this effort, and did everything
possible to bring along other stakeholders with interest in
this spectrum. These collective efforts yielded a great result.
More spectrum is available for wireless broadband, federal
agency transitions are paid for, and a number of congressional
priorities have received critical funding, including the
nationwide broadband public safety network, public safety
research, next generation 911 implementation, and more than $20
billion for federal deficit reduction. As you are well aware,
these priorities came directly from legislation authored by
this subcommittee.
Third, and finally, the FCC is continuing to think hard and
creatively about how to ensure a continuing supply of spectrum
is in the pipeline. We all know how long it takes to ready
spectrum for auction, or otherwise make it available for
commercial use. The agency intends to use the tools Congress
has provided towards this end. We will also continue to working
closely with this committee and our federal partners going
forward. Along these lines, I am pleased to report that
tomorrow Chairman Wheeler plans to circulate with the
commissioners draft final rules to create a new service in the
3.5 gigahertz band, the Citizens Broadband Radio Service. This
is an exciting opportunity to use new innovative technologies
and policies to leverage 150 megahertz for wireless broadband.
We have also initiated a proceeding aptly titled Spectrum
Frontiers. This Notice of Inquiry examines spectrum high up on
the spectrum chart, the bands above 24 gigahertz. This
proceeding will help us understand better the future of
wireless services, and hopefully create a regulatory
environment in which new innovative technologies can flourish
for the benefit of consumers.
On behalf of my colleagues here today and at the FCC, we
thank the subcommittee for the opportunity to testify, and
stand ready to answer your questions. Thank you.
[The prepared statement of Mr. Sherman follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]
Mr. Walden. Mr. Sherman, thank you for your testimony. We
thank the other witnesses for being here today for the
committee.
Mr. Sherman is the only one presenting testimony today, so
we will go right into our questions and then he told me he is
more like the point guard, he will hand it off to the other
experts on the panel as well, but feel free to ask him
questions too.
So we will start with--please, lots of questions, Mr.
Sherman. We will start with Mr. Epstein.
The FCC's budget requests include $2.4 million to engage an
administrator to manage the broadband relocation fund. Is that
engagement going to be awarded through competitive bidding, and
if not, why, and is this a one-time request or do you think
additional funding will be necessary? I have a couple of other
follow-up questions, but----
Mr. Epstein. Well, thank you, Mr. Chairman.
Mr. Walden. And, yes, turn on that mic. There you go.
Mr. Epstein. Yes. Thank you very much, Mr. Chairman, for
the opportunity to testify today. The broadcast administrator
is going to be a crucial part of the transition post-auction,
and yes, we do anticipate it as being a fair and open compete,
and we do anticipate that it will be a one-time-only request.
Mr. Walden. All right. And where will those funds come
from, the $2.4 million estimated cost?
Mr. Epstein. I am not an expert in the budget aspects of
things. My anticipation is it will come out of auction
proceeds, but I will confirm that with our Office of Managing
Director.
Mr. Walden. OK. And the commission has engaged
clearinghouses before to manage cost sharing in the clearing of
spectrum bands. Do you know how much it costs those entities to
manage a clearinghouse?
Mr. Epstein. Mr. Chairman, I don't have those numbers.
Mr. Walden. Yes, if other members on the panel have answers
to any of these questions our Members have, please feel free to
speak up.
Voice. We will get that back to you.
Mr. Walden. All right.
Mr. Epstein. We will get that information back to you.
Mr. Walden. Perfect. OK. And, Mr. Knapp, welcome, by the
way. We are always delighted to have you in the room, and
helping us on the technical side of these issues. And so I want
to talk about performance requirements for receivers. Do you
think that a sort of one-size-fits-all rule setting performance
requirements for receivers or defining the interference
environment will solve the problems across many different types
of radio devices, and if not, how would you tailor an
appropriate framework?
Mr. Knapp. Thanks, Mr. Chairman. We have had our
technological advisory council look at this issue. One of the
things that came out of that is a proposed new approach for
dealing with receivers. It is based on something called
interference harm threshold.
Mr. Walden. Yes.
Mr. Knapp. Rather than setting standards for receivers,
which as we got into it, found that a one-size-fits-all would
be really difficult----
Mr. Walden. Right.
Mr. Knapp [continuing]. To come up with. In fact, I was at
a conference earlier this week where I heard another idea that
is coming out of a multi-stakeholder group that is a variation
on that, which talks about more of a generic mask. So the
receiver issue continues to come up. We are still working with
the industry on approaches that we can take to this without
moving quickly to mandatory standards.
Mr. Walden. All right. I will go to this next question. Mr.
Knapp and Mr. Sherman, the proposed use of heightened receiver
performance standards as a solution to interference problems
has long been of interest to our subcommittee, as you all know.
However, we recognize requiring more stringent standards for
receivers can result in over-engineering and higher consumer
prices, which I think is what you are alluding to there. So how
do we balance this? Is there a way to improve receiver
performance without concurrent increase in price or device
size? And then I still have people asking me about, you know,
spectrum is limited, are there ways to maximize use, and that
leads to a discussion about FM chips in cell phones and all of
that. So, Mr. Knapp, do you want to address that?
Mr. Knapp. So the problem is a lot easier to deal with when
introducing new services. In the spectrum that Roger referred
to, the proceeding on Citizens Broadband Radio Service, one of
the things that we are looking to a multi-stakeholder group to
do is to try to address the receiver issues at the start. That
is how we are trying to approach this. It is difficult to do
something about receivers that are already out there, but we
think----
Mr. Walden. I think we learned that with LightSquared and
GPS and all of that, right?
Mr. Knapp. Right. Absolutely.
Mr. Walden. Mr. Sherman?
Mr. Sherman. On the question about FM chips thatyou----
Mr. Walden. Right.
Mr. Sherman [continuing]. Asked earlier, I think Chairman
Wheeler spoke about that last week at one of his hearings.
Mr. Walden. I heard he was on the Hill.
Mr. Sherman. I think he indicated that he thinks the market
seems to be working, and if consumers want their FM chips, they
can let their carriers know, and that the market should solve
that problem. I probably don't have anything to add to that.
Mr. Walden. All right. Those are the only questions I have,
so I will yield back the balance of my time.
And I will turn now to my friend from California, Ms.
Eshoo.
Ms. Eshoo. Thank you, Mr. Chairman.
I am going to go as quickly as I can because I have a lot
of questions, and I doubt I will get them all in, but the ones
that I don't, we will submit them to you in writing for a
response.
To Roger, I think, very well that it has been a long-held
belief of mine that the upcoming incentive auction rules really
have to be sufficient to prevent excessive concentration of
spectrum among the Nation's largest wireless providers. Now,
today, approximately 73 percent of the highly desirable
spectrum below 1 gigahertz is held by two companies in the
country. Is it the commission's view that wireless carriers who
lack substantial low frequency spectrum are at a competitive
disadvantage?
Mr. Sherman. Thanks for the question, Ms. Eshoo. I think
the commission has been wrestling with this issue for the last
several years in various competition reports.
Ms. Eshoo. Yes. It is a sticky wicket, yes.
Mr. Sherman. And last year----
Ms. Eshoo. Yes.
Mr. Sherman [continuing]. About a year ago, when it adopted
the incentive auction order, it also adopted a companion order
of mobile spectrum holdings in which it recognized that a
complimentary mix of spectrum, including low band spectrum,
because of its special properties, was critical to competition.
And it took steps in that order to recognize the unique
characteristics of low band, which as you know, is better for
rural coverage because it propagates over further distances----
Ms. Eshoo. Yes.
Mr. Sherman [continuing]. And it also is great for urban
areas where it can go through buildings and walls. So the
commission took action in that item to recognize the special
qualities of low band, and in transactions it gives special
deference to the amount of low band spectrum being transferred.
And then importantly, in the incentive auction, it established
what we call a market-based reserve, which is a real balancing
act to try to make sure that nobody can get all of it----
Ms. Eshoo. Yes.
Mr. Sherman [continuing]. And make sure it is available to
the smaller providers, because as you mentioned, it is
disproportionately held by a couple of large carriers. Not
suggesting those carriers did anything wrong, it is just a
historic fact.
Ms. Eshoo. No, they didn't, but the whole issue is that we
have competition in our country.
Mr. Sherman. Right. Right.
Ms. Eshoo. We have free markets, but competition is one of
the essential ingredients in our national economy. Thank you.
Mr. Knapp, it is great to see you. I have fought very hard
for unlicensed in the TV white spaces, which is why I was
concerned to hear that the FCC recently received a petition to
suspend the TV white spaces database. Can you explain to the
committee exactly what is going on with this, and if you are
aware of any instances of interference as a result of the
database problems raised by the NAB?
Mr. Knapp. Sure. These are databases that were set up
through private providers where only fixed users, the people
who do things like wireless broadband and provide service to
businesses, can register their locations and some related
information into the databases. We are aware there are some
anomalies in the databases, and we have been working with the
database providers and the other stakeholders to take care of
any housekeeping that needs to be done, as well as continuing
to work with the broadcasters to correct any problems that we
find. But we have not----
Ms. Eshoo. What is the upshot of it though? Is this going
to be settled, is it going to be left hanging in limbo, what is
going to happen to the TV white spaces?
Mr. Knapp. So I am confident that this can be easily
corrected.
Ms. Eshoo. That is great.
Mr. Knapp. It is things like missing phone numbers.
Ms. Eshoo. I like the word easily. OK, good. Moving on.
Both to Mr. Leibovitz and to Mr. Knapp, the prospect of 5G
technology is very exciting. It is very exciting for consumers.
I think for everyone on the committee, we understand what
superfast speeds will bring about for people in our country,
and that is the cause of excitement. It is my understanding
that the commission is currently examining which bands of
spectrum would best be suited for 5G services. When can
consumers expect to see 5G deployed in our country?
Mr. Leibovitz. Thank you, Congresswoman, and thanks for the
invitation to speak today.
Ms. Eshoo. Yes.
Mr. Leibovitz. 5G is a topic of growing interest in the
wireless industry.
Ms. Eshoo. Yes.
Mr. Leibovitz. As I think Members know here, in the U.S.
our policy is not to earmark spectrum for certain technologies.
We have a strong policy of technology neutrality and we intend
to continue that.
Ms. Eshoo. And I think that is a sound policy.
Mr. Leibovitz. At the same time, we recognize that some of
the new technologies that are coming down the pipe have the
potential to use very wide channels, and use spectrum that
otherwise is previously thought unusable for terrestrial
service. We put out the NOI last fall on spectrum frontiers
which teed-up a number of different bands above 24 gigahertz
for both licensed and unlicensed 5G-type service. There are
also incumbents in those bands. Some of those bands that we
have to think about protecting their users, satellite users and
others, but the technology itself is not really ready yet, it
is still in the lab. I think most people anticipate that these
technologies would happen in the 2020-plus time frame. If you
look at the history of wireless, the schedules sometimes tend
to slip a little bit. We want America to be the first country
to have it, and the place where the technology gets developed
and thrives.
Ms. Eshoo. Speed it up.
Mr. Leibovitz. Is that my testimony, or are you----
Ms. Eshoo. No, your testimony is over. My time is up.
Mr. Walden. Gentlelady's time has expired. We have to move
now to the gentleman from Ohio, Mr. Latta.
Mr. Latta. Thank you very much, Mr. Chairman. Again,
gentlemen, thanks very much for being here today to testify.
Mr. Knapp, if I could just start questioning with you. The
FCC has done very good work in facilitating compromise
solutions so that the 5.1 gigahertz band can be shared to the
benefit of Wi-Fi consumers. We now need more such compromise
solutions to enable efficient use of the 5.9 gigahertz band to
keep up with consumer Wi-Fi demand. Wi-Fi can share the band
with future intelligent transportation systems if those systems
are ever deployed. What is your timeline do you think for
allowing Wi-Fi operations in this band?
Mr. Knapp. We brought together the stakeholders for the two
bands that are in play. One is a band of 120 megahertz that is
used primarily by the Department of Defense. We have set up a
working group with Department of Defense, NTIA, NASA, and
industry stakeholders. There have been studies done on the
required protections. We are not quite there on the ability of
the equipment to meet what the requirements would be. So we are
still working on that. Once we get to a point where we have a
solution, there will need to be prototype devices from industry
to be tested to make sure it works.
So it is a little bit hard to give you a firm timeline. I
can tell you that we are trying to accelerate this as fast as
we can.
Mr. Latta. Let me ask, when did the working groups first
form----
Mr. Knapp. So most of the work had been going on
internationally. So that has been going on actually probably a
year and a half, 2 years. We reached a point where it was clear
we were not going to be able to have everything necessary in
place to succeed internationally, so we created the work group,
I think we started late last summer, and then we picked up the
pace with meetings once a month earlier this year.
Mr. Latta. So you are meeting with the working groups about
every month that you are working----
Mr. Knapp. Every month.
Mr. Latta. OK.
Mr. Knapp. We created a technical subgroup that is meeting
in between. So we have all the players there trying to find an
answer here.
Mr. Latta. OK. Let me ask also, given the tremendous
advance in the wireless technology over the last decade, should
the commission review its DSRC spectrum designation to
determine in the public interest if there are other more
advanced vehicle-to-vehicle safety technologies using services
like the LTE advance 5G or Wi-Fi?
Mr. Knapp. So this is the other portion of the spectrum, 75
megahertz, that we have been looking at. There, the technology
is very similar to Wi-Fi, and so the IEEE, which is basically
the developer of both the Wi-Fi standard and the DSRC standard,
put together a tiger team to try to find a solution. They are
nearing the completion of a report. There are a couple of
proposals on the table to be looked at, plus we have been
meeting separately with the NTIA and Department of
Transportation, and one of the things I think that we have
agreed we need to look at is the broader scope of
communications for vehicles beyond just the DSRC.
Mr. Latta. Thank you.
Mr. Leibovitz, if I could ask you quickly, how can we move
forward and ensure shared use of the upper 5 gigahertz band,
and would it be beneficial for the FCC to hold routine meetings
with the committee in order to accomplish the goal?
Mr. Leibovitz. So I would like to yield to Mr. Knapp on
that question.
Mr. Latta. OK, that is fine, if you want to do that. He is
on the hot seat then.
Mr. Knapp. We would be more than happy to meet if you would
like and keep you apprised of the progress.
Mr. Latta. Yes, we would appreciate that.
Mr. Sherman, as stated in your joint testimony, in 2010,
the FCC analyzed spectrum demands and determined that the 300
megahertz would be needed by 2015. It is now 2015, and as you
have outlined, the FCC has released 145 megahertz of spectrum
for wireless broadband use.
What is the plan for our Nation to meet the skyrocketing
consumer demand for wireless services?
Mr. Sherman. Thanks for the question, Mr. Latta. I think he
announcement about the 3.5 gigahertz item that is being
circulated will make progress, but I would defer to my
colleague, John Leibovitz, because he has been working on this
plan for several years, and he probably can give you more up-
to-date information.
Mr. Latta. Thank you.
Mr. Leibovitz. Yes, so the National Broadband Plan, which
of course, was authorized and directed by Congress, which came
out in 2010, talked about 2 goals. One was 300 megahertz for
mobile use in 5 years, and then 500 megahertz within 10 years.
Towards the first goal, as you mentioned, we have succeeded in
getting close to 150 megahertz out already, which if you look
at the history of spectrum release, is very fast actually. The
3.5 gigahertz item, which looks to be voted in the April
meeting, would add another 100 megahertz of new spectrum. And
then, of course, we have the incentive auction coming in early
2016. So it might not exactly be in the 5-year time frame, but
it is pretty close, that we actually have a roadmap to get to
the 300 megahertz.
Beyond that, we would be looking at other bands. We have
talked about some of them today for both unlicensed and
licensed broadband use, which would take the Nation to 500
megahertz.
Mr. Latta. Thank you.
Mr. Chairman, my time has expired, and I yield back.
Mr. Walden. And we will now turn to the gentleman from
Kentucky, Mr. Yarmuth, for 5 minutes.
Mr. Yarmuth. Thank you very much, Mr. Chairman. Thanks to
the witnesses for being here today.
I know there are some stakeholders who think the FCC should
focus exclusively on allowing opportunities for licensed
spectrum. And, Mr. Sherman, I think in your testimony you
referenced the commission's commitment to both licensed and
unlicensed, which I think is a good idea. Could you explain why
it is important to allow the opportunities for unlicensed
spectrum?
Mr. Sherman. Sure, I would be happy to. And I would ask if
my colleagues, Julie Knapp or John Leibovitz, have anything to
add, but I think the agency recognizes that in this
environment, licensed spectrum and unlicensed spectrum are
complementary and support each other in a lot of ways.
Consumers use both and consumers want both, and there are
benefits to licensed users and licensees by having unlicensed,
and vice-versa. Congress recognized this in the Middle Class
Tax Relief and Job Creation Act by allowing for unlicensed uses
in the 600 megahertz. So I think everybody is very comfortable
with the symbiotic relationship between licensed and
unlicensed.
I would ask if Julie or John have anything to add.
Mr. Knapp. No, I completely agree with what Roger said, and
we are working hard on both fronts to provide spectrum and
opportunities for growth of both licenses and unlicensed
services.
Mr. Yarmuth. I know that unlicensed spectrum is really
important for innovation and for small business and so forth.
How do some of the larger wireless carriers use unlicensed?
Mr. Sherman. Well, I think the most obvious way is
unlicensed--a lot of people in their everyday use of their
smartphones will be on a licensed network, so to speak, as they
travel from their office to their house. When they get into
their house, a lot of times their phone will transfer onto a
Wi-Fi network within the residence, and they will be using data
on an unlicensed Wi-Fi network.
Mr. Yarmuth. OK.
Mr. Knapp. Yes, I would just add that certainly, Wi-Fi gets
all the attention, but in those same devices are Bluetooth to
connect to your headphones and the Near Field Communications
for the automatic payment that is emerging. All that is
unlicensed.
Mr. Yarmuth. OK. Thank you for that.
And one of my kind of personal obsessions now is how we
make policy in real time with as fast as the world is changing,
and certainly, in this area, that kind of dilemma is certainly
relevant. You talked about research on 5G and so forth, is
there anything going on out there, research and so forth, that
actually scares you, and might be so disruptive that the world
as you know it, and we know it, will change?
Mr. Sherman. Well, if you are talking about research, I
should probably defer to the engineer.
Mr. Yarmuth. For instance, I read something a few weeks ago
where somebody has invented a way to transmit electricity
through sound waves to appliances, and I think that, if it is
scalable and if it actually works, that is a disruptive
technology because then we have to say, well, should we really
be investing trillions of dollars in the grid if we are going
to have another way to transmit electricity. I was just curious
whether in your specific area there are things that promise
that kind of disruption. I mean it is fine if you say no.
Mr. Leibovitz. I would just add, I would just say that I
think this is a big policy challenge that we always face about
how do you prepare for the next disruptive technology. I think
it is instructive and reinforces the policy of technology
neutrality, of flexibility, as much as possible so that we
don't, as much as possible that we don't lock certain types of
uses categorically into the rules, we allow lots of different
applications to thrive. Our 3.5 gigahertz proceeding actually
is an attempt to try to push the boundary of flexibility even
farther. So in some ways it is a hybrid between licensed and
unlicensed uses, and I think there is a lot more we can do
looking forward to 5G and so forth.
Mr. Yarmuth. Yes. I have no other questions. I yield back,
Mr. Chairman. Thank you.
Mr. Walden. Gentleman yields back.
And we now turn to the gentleman from New Jersey, Mr.
Lance.
Mr. Lance. Thank you very much. Good morning to you all.
The incentive auction will be the first time the FCC
auctions a band plan that is not set in advance of the auction,
using a new auction mechanism, ascending clock, that includes a
separate round to assign licenses after the main auction is
over. It will also include a spectrum reserve triggered when
bidding reaches a certain level, impaired licenses and
something called intra-round bidding. As I understand it, all
of this new, even for those wireless carriers who have
participated in traditional auctions.
To the panel in general, and perhaps to Mr. Epstein and Mr.
Leibovitz, what steps will you take to help prepare carriers
for bidding in this first of its kind auction? For example,
will there be multiple mock auctions and seminars?
Mr. Epstein. Thank you very much, Congressman. You are
absolutely right. Outreach is extremely important in this
auction on both sides of it; both the reverse auction side and
on the forward auction side.
On the reverse auction side, broadcasters are really not
used to bidding in an auction, and especially in a new auction,
a voluntary auction like this. And so I can go into detail
later, but we have taken many new steps to encourage and to
inform broadcasters.
On the forward auction side are--wireless providers are
more familiar with auctions, they are expert, but you are
exactly right, there are several new features of this auction.
We have been working with them on a daily and on a weekly basis
to help formulate the appropriate policy, and we will have
outreach and we will have mock auctions as part of the planning
to go forward before the auction.
Mr. Lance. Thank you. Would others like to address the
issue?
Voice. No, thank you.
Mr. Lance. Thank you. The FCC's incentive auction public
notice proposes to sell both impaired and unimpaired licenses.
As I understand it, a license is impaired when a carrier cannot
serve the entire geographic market due to interference from
television broadcasts. Before bidding on a license, carriers
will need to know the extent to which licenses are impaired,
meaning which parts of their license area they may not serve or
may be subject to interference.
What kind of information will carriers have prior to
bidding regarding the geographic areas that may be impaired?
Mr. Epstein. This concept of impairment, Congressman, comes
from the fact that the commission made the policy decision that
it really doesn't want to go to what is called the least common
denominator. And, you know, if we can't get a reasonable amount
of spectrum in certain congested areas, we don't want the whole
country to have that limited amount of spectrum. And what that
means is, as you said, you are exactly right, we may have
broadcasters in that particular band which will mean that
hopefully in some limited areas, bordering congested areas,
that certain blocks in the auction will be subject to
interference.
What we have said in the public notice that you have talked
about, and what the commission will decide in the summer when
it resolves that, is the amount of detail, what we have talked
to the carriers about, is very specific detail so that they
will know exactly what they are bidding on in the forward
auction, almost on a 2 by 2 sale level.
Mr. Lance. Thank you. Anyone else on the panel like to
comment?
Thank you very much, Mr. Chairman. I yield back the balance
of my time.
Mr. Walden. Gentleman yields back the balance of his time.
Now turn to the gentleman from Iowa for 5 minutes.
Mr. Loebsack. I was not expecting to speak this soon. Thank
you, Mr. Chair.
I want to be pretty brief just because some of the things
that I wanted to ask about have already been covered, but I
would like to just--and I may be repeating, and that is fine,
but refer to the unlicensed issue, and this is to any of the
witnesses. Some stakeholders argue that the FCC should focus
exclusively on maximizing opportunities for licensed spectrum.
I believe, however, that the FCC should pursue a balanced
spectrum policy that includes more spectrum for both licensed
and unlicensed. I know unlicensed spectrum has lower barriers
to entry which can help startups, I think that was mentioned
already, and small businesses get access to this platform for
innovation. How do larger wireless carriers use unlicensed
spectrum? And that is really for anybody here.
Mr. Sherman. Well, I think we would agree that there is a
symbiotic relationship between licensed and unlicensed
spectrum, and they are not mutually exclusive; you can have
both. And I think the Congress has recognized that, and the FCC
strives to implement a policy that recognizes that.
I mentioned earlier the example of offloading data usage
onto an unlicensed network to ease capacity, and there are
other new innovations that are coming down that use both
licensed and unlicensed technology, and seamlessly between
unlicensed and licensed services.
I don't know if John or Julie have anything to add.
Mr. Knapp. Yes, I mentioned some before, and I think most
people appreciate where we had the arguments years ago about
should be one or the other or more, that the two win when there
is spectrum for both.
I mentioned a couple of things before, even on the medical
front, we have got glucose monitors that use unlicensed
spectrum, or lightly licensed spectrum, to collect data. They
feed it to the wireless device, and then the information can go
back to the doctor, so there are things that are being
accomplished and innovations that are occurring because we have
both, and we need to continue to provide for both.
Mr. Loebsack. Thank you. Anyone else? OK. Just one--go
ahead.
Mr. Sherman. I just wanted to add one other thing. We often
look at it also, consumers don't really care if it is licensed
or unlicensed----
Mr. Loebsack. Right.
Mr. Sherman [continuing]. They just want their device to
work and the services----
Mr. Loebsack. Right.
Mr. Sherman [continuing]. To perform. So I think at the end
of the day, consumers are going to want services in both the
required to make things robust.
Mr. Loebsack. And I think that is the bottom line for us
here in Congress too. We have to make sure that that access is
there.
Mr. Sherman, paying for a broadband connection, including
wireless broadband, can be a major challenge obviously for many
of my constituents, many of the folks here on the dais today,
and competition in the wireless industry is critical, no doubt,
if we are going to help low-income Americans get connected. And
I have a particular concern about rural America, I have to say,
not just because I represent a lot of rural areas, but a lot of
folks on this committee now who have that particular concern as
well.
How does access to spectrum impact the level of competition
in the wireless industry, because competition, hopefully, would
lead to, you know, lower prices or at least more competitive
prices, and providing the same kind of access as well. And so
if you could speak specifically to the rural areas, I think
that would be important for a lot of us here.
Mr. Sherman. Thanks for that question. It is also very
important to the Commission on a bipartisan basis. And there
are a number of policies that the Commission has adopted over
time to incent rural deployment and build out. We need to do
more but there are a lot of things already in place.
One thing that is critical is low band spectrum, which we
talked briefly about before.
Mr. Loebsack. You mentioned that earlier. Can you elaborate
on that a little bit?
Mr. Sherman. The low band spectrum, because of its
propagation characteristics----
Mr. Loebsack. Yes.
Mr. Sherman [continuing]. Is really well suited for rural
areas. It goes farther with less infrastructure----
Mr. Loebsack. Yes.
Mr. Sherman [continuing]. So that it costs less and can
serve those areas where people live longer distances apart. Or
in congested cities oftentimes you can have multiple sites
attached to buildings and serve lots of densely populated
areas, but rural areas you have bigger distances, so low band
spectrum is particularly well suited. We want to make sure that
there is lots of low band spectrum in rural areas with lots of
providers having options, so rural consumers have the same
benefit of competition that----
Mr. Loebsack. Right.
Mr. Sherman [continuing]. That urban consumers have. We
also have incentives for building out--we have build-out
requirements. There are, right now in looking at small business
preferences and incentives in an open NPRM, the question of
rural build-out incentives is also keyed up and the commission
is very sensitive to those issues.
But I think in everything we do with competition policy,
rural is a big part of it.
Mr. Loebsack. It is. And again, I cited a lot of examples
where it is just really hard for folks in a rural area to--
because there isn't that much competition. And in the end, they
end up paying a lot of money and they are not getting as good a
service often as is the case in urban areas. So how we can
incentivize that is the question.
Mr. Sherman. Well, one other thing I should mention in the
incentive option, one thing the commission did is it changed
the standard license size to what is called a PEA----
Mr. Loebsack. Yes.
Mr. Sherman [continuing]. And it was a compromise amongst
various stakeholders, but it allows smaller providers to have
access to a smaller license area, which might not be as
expensive as a large, nationwide or regional license----
Mr. Loebsack. OK.
Mr. Sherman [continuing]. And a lot of the small rural
providers that we talked with and engaged in that proceeding
were really pleased that the commission came up with a way that
they can get into the auction----
Mr. Loebsack. Thank you.
Mr. Sherman [continuing]. At a reasonable basis.
Mr. Loebsack. Thank you.
Mr. Chair, I see my time has expired. I yield back.
Mr. Walden. The gentleman yields back. And I just concur
with what he said about the rural areas. I have a town,
Mitchell, Oregon, 130 people in 2010, now to 129. The local
city had to pay to put in a payphone because there is no cell
coverage, and you have a highway going by, and people have a
problem, break down, knock on somebody's door. We still have
these areas, like Mitchell, Oregon, that need coverage.
Ms. Eshoo. Would you just yield for a moment----
Mr. Walden. Yes, sure.
Ms. Eshoo [continuing]. Mr. Chairman?
Mr. Walden. I don't know whose time I am on.
Ms. Eshoo. Yes, I--sure. You have the best time. It is the
chairman's time. But it is great spectrum, yes.
Mr. Walden. Yes.
Ms. Eshoo. On this issue of rural, in the last Congress, I
had counted how many members of the Energy and Commerce
Committee represented rural areas, and a combined from both
sides of the aisle there were 18 members. So, the rural
representation could take over this entire committee. I don't
know how many----
Mr. Walden. We just haven't told you we have them.
Ms. Eshoo [continuing]. I haven't counted. I haven't
counted for this Congress, but this issue is sweeping in terms
of--and it has excellent representation here. So it is very
important to highlight it.
Mr. Walden. Yes.
Ms. Eshoo. Thank you.
Mr. Walden. Yes, actually in this county, there is one
person for every 9 miles of power line. So it is hard to find
the economic--anyway.
We will go now to Mr. Guthrie, who helped lead our
bipartisan task force on this issue. Thanks for your
leadership, you and the rest of the Members did a terrific job.
So please go ahead.
Mr. Guthrie. Thank you, and I appreciate that, and I think
people who have heard this will get tired of hearing me say
this but it is true that now that we are having these spectrum
meetings, it is interesting when you get into public service,
things you get involved in you never thought about. I have said
I didn't walk around Kentucky going, ``send me to Washington
and I will deliver you spectrum,'' but that is something that
people want and expect, and so it is really good that we are
here doing this. And so I would just kind of make a statement
for a few minutes and then ask a couple of questions. But I
would like to thank all you guys for testifying. It is very
important. And I also want to mention my appreciation for
working with Doris Matsui and for all of her efforts working
with me on the spectrum issues, as co-chairs of the
Congressional Spectrum Caucus, it was a bipartisan effort and
worked well together. And, in fact, today we have reintroduced
together the Federal Spectrum Incentives Act, a bill that would
provide financial incentives to encourage government agencies
to relocate from their existing spectrum bands in order to free
up additional spectrum for other uses. And I look forward to
working with all of you to move this forward.
As we have already discussed at length today, spectrum is
an important limited resource, and by encouraging federal
agencies to make additional spectrum available, we can invest
in innovation and ensure spectrum is available to meet the
demands of our critical emergency needs and commercial uses.
And this bill received strong bipartisan support last Congress,
and I look forward to working at the same again this time.
And just what my friend from Iowa, Mr. Loebsack, just said,
I was going to mention that we also want to recognize the
commission's work to create rules for the upcoming incentive
auction that does use the partial economic areas for geographic
support in Kentucky. I am one of those 18. I have a couple of
good-sized cities, but I do have a lot of rural area, and it
will aid my constituents and it will aid better participation
in the auction, so we appreciate that.
I just have a couple of questions with the couple of
minutes I have left. Mr. Epstein, for you, I have heard
concerns that the $1.7 billion relocation fund for broadcaster
expenses may be inadequate for the true cost of relocating
stations. What is your opinion on this, and assuming that it
could be inadequate, what are potential solutions?
Mr. Epstein. Yes, we too, Congressman, are concerned about
both the amount and the process, so we commissioned an expert
report called the Widelity Report, that was out there, and they
came back with the conclusion that it was challenging but
feasible to do so if we were careful and took certain steps. So
we have no reason to believe that the $1.75 billion which
Congress set forth will be insufficient to be able to do the
relocation, but we are working with the NAB, with broadcasters,
with the industry generally, and we are also taking certain
other steps such as building into the software ways to minimize
relocation costs. And that includes, you know, minimizing the
number of stations that have to change channels, or taking
special account of those stations which have really expensive
relocations new--and minimizing those. So we look forward to
working with the industry and with everybody else, but at this
point we have no reason to believe the $1.75 billion won't be
sufficient.
Mr. Guthrie. Yes, it was just pointed out to me, I said
$1.75 million. We couldn't do it for that, could we?
Mr. Epstein. Billion.
Mr. Guthrie. If we could do it for that, we could use the
money for the deficit----
Mr. Epstein. Yes, sir.
Mr. Guthrie [continuing]. Couldn't we? And I will ask Mr.
Sherman, we are talking about referring spectrum through
broadcasting, trying to free the bill to free spectrum through
government spectrum, but outside of the crunch for procurement
of more spectrum, is FCC doing to encourage more spectrum,
and--don't create spectrum, better use of spectrum, maybe
sharing, efficiencies, those types of things? I have about a
minute left, if you could elaborate on what you guys are doing
to create more spectrum than what we have----
Mr. Sherman. I----
Mr. Guthrie [continuing]. Or more availability.
Mr. Sherman. I can initially respond, but then will ask
John to elaborate. But I think all of the above is what the FCC
is doing. Unlicensed, licensed, sharing, exclusive use, we are
exploring everything because we have to be as efficient as
possible. And I know John has spent a lot of time working on
that.
Mr. Leibovitz. Yes, I will come back to the theme of
flexibility. Obviously, the unlicensed spectrum is the ultimate
in flexibility, and sharing and unlicensed spectrum today is
where most of the spectrum sharing happens, and people don't
even realize it, Wi-Fi is intensive sharing with Bluetooth and
other technologies. We have secondary market rules which allow
people to transfer spectrum to others. They can essentially
sell the rights so the market can work, which is really
important. And then we are looking at ways to push the rules to
even be more flexible. I mentioned the 3.5 gigahertz item in
some ways will encourage not only sharing between commercial
and federal users, but also among different types of commercial
users so that, for example, maybe in the future some very large
industries, including some that are well known by the
committee, energy, and so forth, will have access to a 150
megahertz band that they can use for LTE to do lots of smart
grid, deployments, other types of things.
Mr. Guthrie. Thank you. My time has expired. Thank you, Mr.
Chairman.
Mr. Walden. Thank the gentleman for his good work and good
questions.
We will now turn to the gentleman from California, Mr.
McNerney, for 5 minutes.
Mr. McNerney. Thank you, Mr. Chairman. And I thank the
witnesses.
Mr. Leibovitz, is there any language in the current
regulations that discuss how new technologies in the unlicensed
spectrum should interact so that existing technologies are not
unfairly hampered?
Mr. Leibovitz. I think Mr. Knapp is probably the----
Mr. McNerney. OK, sure.
Mr. Leibovitz [continuing]. Best person to answer that.
Mr. Knapp. So the way unlicensed works is the devices, they
all have a little label on them that says they are not
protected against interference, but obviously they are serving
a wide public good. So when new technologies--the beauty of it
is it allows flexibility for cutting-edge technologies to be
introduced, but we also try to keep an eye on that so there is
not something that disrupts all of the good applications----
Mr. McNerney. Yes.
Mr. Knapp [continuing]. That are out there now.
Mr. McNerney. So that was kind of vague. I mean----
Mr. Knapp. Yes.
Mr. McNerney [continuing]. When we expect some new
technologies to come in, can't they be disruptive to existing
technology like Wi-Fi?
Mr. Knapp. What we try to do, because there is freedom
there, is just keep an eye on what is going on. There is not a
specific benchmark like in the licensed service where there is
protection. And most of those technologies are built to be
robust and operate in a shared environment.
Mr. McNerney. Yes, I am little worried though that some of
the new technology can come in and be very dominant, like the
LightSquared problem.
Mr. Knapp. Yes, I think we are always keeping an eye on
what is coming in the way of new technologies and those bands,
and we have been encouraging the industries, because they
normally sort out the details of the sharing, to work those
things out before a new technology is introduced that is
disruptive.
Mr. McNerney. OK. I am not sure who to ask this question,
but is there any portion of the spectrum that will be reserved
for small bidders in future auctions? Mr. Sherman?
Mr. Sherman. Well, I think the question is about the
ability of small bidders in future auctions?
Mr. McNerney. Right.
Mr. Sherman. The way the FCC has approached that in the
last few years is through something called our competitive
bidding rules where we have small business discounts, and that
is an issue that is currently open before the commission,
evaluating whether the current rules make sense or we should
update them. And there are some proposals in the record to
update the rules to allow small bidders to get a more realistic
opportunity to bid for a spectrum, which is pretty expensive.
So that is an active proceeding that the commissioners are all
engaged in.
Mr. McNerney. OK. I don't understand exactly what is going
on with the incentive auction. What are the current holders of
the 600 megahertz band and how are they going to be treated in
an auction?
Mr. Epstein. Well, most generally, the current holders of
the 600 megahertz band are UHF broadcast television stations,
and the act that Congress passed was an innovative act, a way
to look at spectrum in a different way, and what we are charged
with by this subcommittee and the Congress and the commission
with doing is having a workable back-to-back auction, and by
that I mean is a reverse auction where the broadcasters will
voluntarily submit their spectrum for compensation for a share
of the proceeds that we will get in the forward auction from
the wireless providers. And that is the challenge that Congress
has put before us.
There are other present users of the 600 megahertz band
such as wireless microphones and unlicensed, and as part of our
overall planning, we have to make transition and other plans
for them. So it is a complex of items which is part of the
Spectrum Act which we are charged with implementing.
Mr. McNerney. OK, thank you.
Mr. Chairman, I yield back.
Mr. Walden. Gentleman yields back.
Chair now recognizes, let us see, Mr. Pompeo has left, the
gentleman from Ohio, Mr. Johnson, for 5 minutes.
Mr. Johnson. Well, thank you very much, Mr. Chairman.
Mr. Epstein, given the success of AWS-3 and the feedback
that you have received, do you feel that you have a better idea
of how much spectrum might be reallocated as a result of the
incentive auction?
Mr. Epstein. Congressman, I think we are more optimistic,
we are comfortable. The success of the AWS-3 auction may not be
directly transferrable or relatable, but it is an optimistic
and good thing, and we are noticing it not by any kind of
administrative decision that the commission makes, but by the
increased interest of the broadcasters in participating.
Mr. Johnson. Sure.
Mr. Epstein. We have a very strong broadcaster outreach
program, and we are seeing a lot of interest.
Mr. Johnson. Maybe this has already been asked, and if it
has just say so and we will move on. How did you come up, or
how are you coming up with the calculations on how much
spectrum is to be auctioned?
Mr. Epstein. It is really a market-based decision that
Congress put before us. We don't have a predetermination. We
have put out a bunch of sample band plans, but the challenge of
this auction and the new innovative thing that Congress put
before the commission is it is market-based. So we will know
how much spectrum when the broadcasters show up.
Mr. Johnson. OK. Can you be specific about maybe some of
the lessons learned from AWS-3 that can be applied to this
upcoming incentive auction? Mr. Epstein, that is for you.
Mr. Epstein. OK. One of the lessons is that, as Roger
noted, we have an ongoing proceeding about entities that are
considered small businesses, and we are looking at that issue.
We have to see whether there are any lessons learned, and the
Wireless Bureau and the commission has said that that will be
resolved prior to the start of the incentive auction. We are
looking at some of the financial results, and seeing whether
any of the metrics we have in the incentive auction should be
tweaked and modified. And I am sure there are other lessons
that we will look at and we will learn from that very
successful auction.
Mr. Johnson. So is it safe to say that your experience with
AWS-3 informs the agency's actions as you move forward with
this major undertaking?
Mr. Epstein. Yes, sir, to some extent, yes, it does.
Mr. Johnson. OK. Mr. Sherman and Mr. Knapp, what industry
initiatives have you encountered that effectively attempt to
use spectrum more efficiently and with less impact on adjacent
users? Mr. Sherman, you can go first.
Mr. Sherman. I am not aware of specific industry
initiatives. I know that industry is always working to be more
efficient and do more with less, and are constantly changing
out equipment and building more facilities to be more efficient
with their spectrum use, but I would defer to Julie's expertise
on how it happens technically.
Mr. Johnson. Mr. Knapp?
Mr. Knapp. Thanks, Roger. As I sit here thinking about it,
we are seeing innovation as a result of flexible rules on
multiple fronts. On the unlicensed front, one of the things
that doesn't get much attention is that there is spectrum that
we have opened up, way up, at 60 gigahertz. You are going to
see what I think is a result of an industry developed standard,
new unlicensed equipment that will be called Wi-Gig. So it is
trying to use spectrum more efficiently. In the existing
unlicensed bands, all of the development in the standards that
have gone from the slower standards to the more faster and
improved products you are seeing on the shelf has been a
progression of industry initiatives. And on the licensed front,
as we are sitting here just talking about the success of an
auction that has occurred, we are just moving through 4G, and
we are already talking about 5G. And so I think across industry
and on all fronts you are seeing lots of innovation and trying
to use spectrum more efficiently for new services and products.
Mr. Johnson. Yes, as a 30-year IT professional myself, one
of the questions that continues to go around in my head is that
with current technology there is only so much spectrum. I am
wondering what the industry is doing to explore the unknown.
How do we create more spectrum? What is the next big advance in
technology that will get us there? Anybody?
Mr. Leibovitz. I will take that. So, I think there are two
big trends to keep an eye on. One is the densification of the
network. So using a spectrum with smaller and smaller cells,
both on the license and unlicensed sides of the equation, so
that the spectrum gets reused more effectively. And the other
is, as Julie mentioned, looking at higher spectrum bands and
using new technologies which I think mainly have to do with
smart antennas to focus energy using those higher-up bands in
ways that were not practical beforehand. And that we are
looking at technologies that can produce 10 gigabit speeds in
the lab by using very wide channels, of course, shorter
distance. So there are some really exciting things happening,
and that is really the subject of the 5G----
Mr. Johnson. We could have some great conversations over
dinner but I have run out of time.
Mr. Chairman, I yield back.
Mr. Walden. Thank the gentleman for his questions and
comments.
We will now go to the gentlelady from New York, Ms. Clarke.
Thank you for being here and for your participation.
Ms. Clarke. Thank you very much, Mr. Chairman. And I thank
the ranking member and our panelists as well.
Mr. Sherman, I wanted to ask, what is the plan to ensure
that broadcasters adequately participate in the auction, and
what incentives are the FCC offering to increase their
engagement? Much of the incentive auction's success is based on
broadcaster participation so that they will in turn provide the
demand for the auction's next stage.
Can you give us some insights there?
Mr. Sherman. Sure, I can tell you that we do have a plan,
and we are in the process of implementing it. And Gary Epstein
is leading that effort and I think he can walk you through a
number of the steps the commission is taking.
Mr. Epstein. Yes. Thank you very much, Congresswoman. Your
point is absolutely the most crucial one. We won't have an
auction unless we have broadcaster participation. And so we
have done what we usually do which is meet with broadcasters
and have Webinars and seminars, but we have taken two special
extra steps, and we intend to take more.
One of those steps is, in response to requests from
broadcasters, we have released 2 broadcaster information
packages, made them available to every licensee in the country,
and they contain both business information and estimated
pricing information. And that, combined with the AWS-3 auction
figures, has piqued a lot of interest by broadcasters.
And the second major effort we have undertaken is we are
going around the country on broadcaster information trips, OK,
and visiting, both in general sessions and in private sessions,
we are getting out of Washington, we are visiting 50 cities, we
are going around the country and meeting with broadcasters in
order to inform them so that they can make decisions on whether
to participate.
Ms. Clarke. Have you begun receiving any feedback as of
yet? I am concerned about averting any unintended consequences
to smaller, perhaps rural broadcasters, and maintaining an
inclusive and diverse broadcast ownership and offerings that
perhaps repackaging and channel shifting that is being proposed
may inadvertently create some consternation out there. What
kind of feedback are you getting?
Mr. Epstein. Congresswoman, an excellent point. We have
gotten a lot of positive feedback from a lot of stations who
are interested in participating in the auction and in allowing
the commission to reclaim their spectrum, and that is from
small broadcasters and large broadcasters alike, but with some
other broadcasters like the broadcasters you are talking about,
there are other options to participate in the auction, such as
channel sharing and going from U to V, which Congress has as an
option in the statute. So what we have done is we have
emphasized those alternatives with these other broadcasters.
They can get proceeds from the auction, but continue the
broadcast even after the action is over.
Ms. Clarke. That is good news. Can you share with us how
the FCC proposes to engage in repacking and channel shifting,
and ensure that consumers are adequately informed about the
impacts?
Mr. Epstein. We have learned lessons from the digital
transition, and if you look at the report and order that the
commission adopted in May, there is a whole section on consumer
outreach. And so we have delegated to part of the commission,
the CGB part, the consumer governmental part, with the
responsibility to come up with an overall comprehensive plan to
engage with consumers and make sure that people do not lose
service.
Ms. Clarke. Well, on that very point of consumer outreach,
that will be necessary to minimize confusion and disruption of
the stations after they are repacked. Is there any discussion
currently at the FCC about how to work that out logistically?
Mr. Epstein. Yes, there is. OK, there is planning going on.
There is a specific obligation in the commission's report and
order for--at the appropriate time for the commission to come
up with a specific plan. And we are at the beginning stages of
that because the auction is a year away. I don't want to go
beyond that, but it is an important part of our outreach
efforts.
Ms. Clarke. Very well. Thank you very much, Mr. Chairman,
and I yield back.
Mr. Walden. Good questions. I thank the gentlelady.
We will now go to the gentleman from Missouri, Mr. Long,
for 5 minutes.
Mr. Long. Thank you, Mr. Chairman. I thank you all for
being here today.
Mr. Knapp, I have a story here that appeared in the
publication Re/code on March the 17th, and I would like to have
that added to the record. And----
Mr. Walden. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Long. Thank you, Mr. Chairman. The first couple of
paragraphs, he is among dozens--let us see, John Doe of 123
Jump Street has some explaining to do. He is among dozens of
questionable characters in a Federal Government database that
is supposed to keep unlicensed Wi-Fi devices from knocking
broadcast TV signals off the air. There are actually four John
Does in the system, along with six entries for Sue Q. Public of
Any Town, USA, and two from John Q. Public of the ever-popular
location None/None. Even a quick look at the database suggests
there is something not quite right. Is there really a company
called Acme at 1600 Amphitheater Parkway, an address more
generally associated with Google, and does Lin Su really own 59
unregistered--or, excuse me, registered, unlicensed Wi-Fi
devices, or have actual owners simply copied that name from the
installer's guide of the devices that they bought? Is it
possible to go to the white space databases and enter fake
addresses?
Mr. Knapp. So I think what we did is we went through the
databases. We did find the four John Does. It appears to us
that these may have been for testing purposes when this was
rolled out. There are some things, these databases are cutting-
edge, and I think from anything, there are some things that you
can improve upon, and one of them maybe is the authentication
of the individuals that we can work on with the database
providers. But out of roughly 550 records, we only found four
John Does and one John Q. Public, and they are easily taken
out.
Mr. Long. OK, so Lin Su----
Mr. Knapp. Lin Su is with Acme Company.
Mr. Long. Or Sun--excuse me, Lin Sun.
Mr. Knapp. Yes, he is an employee of a company that makes
these products, and so it would not be unreasonable for them to
be testing them at their location.
Mr. Long. What is the effect of entering a fake address?
Mr. Knapp. So bear in mind that the way the database works,
the device can't operate because it has to get the available
channels from the database. The database was a tool to just
help us locate a source of interference if it occurred. Even if
the information wasn't right, we could still find the
interference and take enforcement action if we needed to.
Mr. Long. Well, is requiring GPSs for fixed white space
devices, would that fix it?
Mr. Knapp. So the things that were referred to were things
like a phone number wasn't right, or there was an incomplete e-
mail address. So these weren't incorrect locations, so just
having the GPS location alone is not going to address some of
these other issues. But we are working with the database
providers to make sure that you can't enter in something that
is just erroneous.
Mr. Walden. Would the gentleman yield?
Mr. Long. Yes.
Mr. Walden. How will closing so many field offices help
deal with interference issues in a timely manner?
Mr. Knapp. So the restructuring of the field offices that
is being contemplated, at the same time we would be looking at
alternative ways that we could more effectively get out and
locate and diagnose the interference cases. There are tools
that are available now to actually have sensors in place and do
the outreach, and I think we are also looking at things like
tiger teams that we could send out when we had an interference
case. So we are mindful of that in that exercise as well. And,
of course, it is pending with the commissioners.
Mr. Walden. Thank you. I yield back to Mr. Long.
Mr. Long. And I yield back also, Mr. Chairman.
Mr. Walden. Gentleman yields back.
We will now go to Mr. Rush, it appears is next. We are glad
you are here and----
Mr. Rush. Good morning.
Mr. Walden [continuing]. Please go ahead.
Mr. Rush. Thank you, Mr. Chairman. And I certainly want to
welcome the witnesses.
I must be quite frank, I sit here as an angry, black
American male. We are all aware of the scarcity of spectrum,
and we just witnessed a successful AWS-3 auction where again
the millionaires were able to buy up valuable so-called
beachfront property. And soon we will be witnessing another
auction, the broadcast incentive auction where it seems as
though, unless something drastically changes, we will have a--
the same outcome.
I have been on this committee for 22 years, and 20 years I
have sat on this subcommittee. I was a part of the subcommittee
that worked on legislation to grant the FCC its competitive
bidding authority back in 1993. I was here, I was present,
sitting in these very same seats. And all the major auctions,
going all the way back to the C block auction, H block auction,
the AWS-3, and seem to be ill-designed to enable small and
minority businesses to bid and to win.
The question still looms large for the FCC. In light of the
abysmal failures of these last three auctions, to be fair and
equitable to minority and small businesses, what can you say to
us this very morning that can assure us that this next auction
will give us an opportunity for small and minority bidders to
fair better and to have different and better outcomes? Again,
in my opinion, where some might say these auctions have been
successful, success is in the eye of the beholder, and from my
vantage point, my eyes, my constituents, they are an abysmal
failure. Reassure me please if you can.
Mr. Chairman, with that, I think that we ought to really
have some hearing in the future on the status of these auctions
as it relates to the minority and small business bidding
process isn't fair and equitable, some time in the near future.
With that, I will ask--Mr. Epstein, maybe you can answer
the question that I have.
Mr. Sherman. Thanks for that question, Mr. Rush. This is a
priority for the Commission, and last year the Commission
issued a Notice of Proposed Rulemaking to focus on the issue of
empowering small businesses, including businesses owned by
women and minority groups. The Notice of Proposed Rulemaking
recognizes that the wireless industry has changed dramatically
since the rules were last updated, and that our current rules
may not work anymore to get people into the business. And so
what it proposed, through a number of specific proposals, was
allowing more flexibility and maybe looking at updating
business models to reflect the reality that 95 percent of
wireless consumers are served by four carriers. In such a
capital-intensive business, how do you allow small entities to
get into the market, and how do you allow them to acquire
spectrum? That has been teed-up.
In the interim, we had AWS-3 which also raised a number of
questions about the designated entity program and bidding
practices. So just this week, Chairman Wheeler circulated with
the other commissioners a public notice asking a number of
additional questions about this issue; how do we promote and
empower small businesses while preserving the integrity of the
auction process. And it is open, and once that is voted on by
the commissioners, there will be an additional comment period.
And it is something that we are going to wrap up before the
incentive auctions start. So there are proposals on the table.
There is a vigorous debate in the record by various
stakeholders.
One of the things that was in the Notice of Proposed
Rulemaking was a proposal that has been put forth by a number
of groups that have been active in the designated entity space.
I think it was MMTC that had a proposal about the attributable
material relationship rule, and one of the proposals was to
change the way we apply that so that a small company that might
have a business relationship with a big company isn't
automatically excluded.
These are complicated issues, and we need to make sure we
do them in a way that doesn't allow for gaming of the system,
but all of these topics are on the table.
Mr. Walden. Gentleman's time has expired.
Mr. Rush. Thank you, Mr. Chairman.
Mr. Walden. Thank the gentleman.
We will go now to the gentleman from North Dakota, Mr.
Cramer.
Mr. Cramer. Thank you, Mr. Chairman. I thank the witnesses.
I am just going to throw it out for discussion because I
have to admit, you might have to bring it down a level or two
for me to really grasp this. But I come from one of these rural
places, yes. You can make it 19 now if you--I don't know we
lost, but anyway it is--North Dakota is very rural, right, and
so my small market, broadcasters have expressed, of course,
this concern about the repacking cost. And we have talked about
whether $1.7 billion is inadequate and whether you need more,
and where it would come from, and that has been fascinating,
but my question more is a step even further back, and that is
if a small market TV broadcaster, for example, in Fargo
declines to participate, can we be assured that they then won't
have to also then participate later in the repacking? In other
words, hear conflicting messages about that, so somebody really
smart explain to me how either we avoid that, or secondly, what
do we do to mitigate it?
Mr. Epstein. Well, I won't claim to be real smart, I will
defer to Julie on that.
Mr. Cramer. I have set the bar very low, just so you know.
Mr. Epstein. But let me start and Julie can pick up.
Mr. Cramer. Sure.
Mr. Epstein. What we are seeking to do in this auction is
to have a near nationwide contiguous band of spectrum, and that
is the key, so that when you have your cellphone and you move
from Fargo to New York, to New Jersey, or anywhere else, it
works.
Mr. Cramer. Yes.
Mr. Epstein. And so two things have to happen. One, we have
to get volunteers, stations to participate in the auction,
especially in crowded areas, but in some smaller markets too.
And then everywhere, if we cleared down from channel 51, and a
station even in a rural market is at channel 47 or channel 46,
we won't get that contiguous band of spectrum unless we repack
them----
Mr. Cramer. Yes.
Mr. Epstein [continuing]. Even though we may have room to
do that. And what Congress did--what you did in the act is you
said, yes, we have the authority to repack it, but we have to
repay your expenses.
Mr. Cramer. Yes.
Mr. Epstein. And that is just from an overview standpoint
why somebody in a smaller market would have to move. So we have
this contiguous band of spectrum for the wireless providers in
the forward auction.
Mr. Cramer. Thank you for that very nice clarification.
Then that does bring up the rest of the questions that we
have already tried to sort of ask, and that is how much is
enough, and if it is not enough, how do we do it differently,
but I suspect we are going to continue discover that through
this process. But thank you for that 101 for the guy from North
Dakota.
With that, I yield back, Mr. Chairman.
Mr. Walden. Thank the gentleman.
And we will now go to Mr. Butterfield for questions.
Mr. Butterfield. Thank you very much, Mr. Chairman. Looks
like we are getting very close to votes and so I am going to
forego some of the formalities that I normally would go through
in the early part of my remarks, and get right to the meat of
the point that I want to make.
Let me just begin by associating myself with the remarks
made by my good friend, Mr. Rush, from Illinois. I agree with
him completely. I am the chairman of the Congressional Black
Caucus, and the CBC takes the position that Mr. Rush just
articulated a few moments ago.
One of our top priorities in the CBC is to increase
representation of African-Americans at all levels of corporate
America. That includes the Boards of Directors, that includes
executive leadership, the workforce, vendors, contractors, and
even community reimbursement. And so the CBC will not only be
focused on increasing diversity in general, but we are focused
on African-American representation in particular. So this is
not only about spectrum, this is about corporate diversity as
well.
And so it is in this context that I want to ask, I guess
Mr. Epstein, the following question about diversity and
specifically how it relates to the companies who come before
the commission for a variety of matters, including those who
seek to acquire spectrum. As chair of the CBC, and as a member
of this committee now for 22 years, one of my priorities is to
encourage companies to have both leadership and rank and file
employees who better represent the makeup of their communities
and their customers and our country. However, when you look
closer at many of the entities that come before your
commission, they do not have a very good diversity profile.
That is just a fact, they do not have a good diversity profile
in either the internal or external operations. And so I am
wondering, how do you and other members of the panel today
think we can better address the lack of diversity in the
companies that are competing for spectrum?
Mr. Epstein. OK. Well, let me start. My specialty and what
I do 24/7 is the incentive auction, and to focus on your
questions and Congressman Rush's questions, it is the
proceeding--the general proceeding that Roger Sherman talked
about, OK, where we are looking very seriously about generally,
in auctions throughout the commission, and specifically, with
respect to the incentive auction, how do we do exactly what you
are talking about. How do we increase diversity? We have done
things like have smaller geographic areas, and we are looking
at the bidding issues which Roger talked about, but
specifically with the incentive auction, those are some of the
initiatives that we are undertaking.
Mr. Butterfield. But you do acknowledge the lack of
diversity.
Mr. Epstein. We acknowledge the need for small business and
diversity. This Commission does, yes.
Mr. Butterfield. Yes, all right. All right.
In the interest of time, Mr. Chairman, I am going to ask
unanimous consent to enter into the record a letter regarding
the FCC's designated entity program, and the letter was written
to you and Ranking Member Eshoo----
Mr. Walden. Yes.
Mr. Butterfield [continuing]. On March 25 by the National
Association of Black Owned Broadcasters. I ask to put it in the
record.
Mr. Walden. I have read the letter. Without objection, it
will be entered into the record, sir.
[The information appears at the conclusion of the hearing.]
Mr. Butterfield. Thank you. I yield back.
Mr. Walden. And I appreciate the gentleman.
And will now move on to Mr. Shimkus of the great State of
Illinois.
Mr. Shimkus. Yes, thank you, Mr. Chairman. It is great to
have you all here, and we are getting close to getting out of
town. So, Roger, welcome back. It is good to see you.
And the points raised by my two colleagues, Mr. Butterfield
and Mr. Rush, just brings me to, a lot of us extolled the
success of the AS-3 auction, everybody being pleased.
Obviously, we find out not everyone is pleased, and that there
are bidding rules in this process. Has the FCC done an after-
action review on to do a lessons learned, and can you say
everyone is pleased? You know, in an auction, I think there are
disappointed people, right, if they don't win the auction, but
are there--does anyone storm away angry, that they felt that
the bidding rules may not have been adequately exercised?
Mr. Sherman. Well, the way the process works, after the
auction we always do an after-auction review of things, and in
fact, as the auction was ongoing I mentioned this proceeding
that we were asking for comments on updating the competitive
bidding rules. We were watching the auction develop, and we
thought there might be some lessons learned, so we, on our own
motion, delayed the comment period 3 times to make sure people
had a chance to bring in lessons that is all public from
bidding activity, that they may want to enter into the record.
And I mentioned Chairman Wheeler circulated something earlier
this week asking additional questions about that specific
issue. There are 2 tracks. That is 1 track, the sort of
forward-looking rulemaking, and what changes or tweaks we might
consider in response to what happened in the auction to empower
small business and make sure nobody is getting an unfair
advantage through the rules through technicalities. I am not
saying that occurred, but those were the questions.
The other track is to evaluate the applications from the
winning bidders. And a number of the winning bidders applied
for a designated entity credit, and the Commission has a
longstanding process whereby we evaluate those requests. We put
them out basically for comment and for people who might object
to weigh-in and file a petition to deny. We haven't--I am not
aware of any petitions to deny being filed yet, although we
have not completed our review where we put them out for public
comment. We are doing that, but it is a very time-intensive
process because these applications are complicated, and we want
to make sure we are being very thorough.
Mr. Shimkus. Yes, because this broad--the whole--now moving
into the broadcast debate with the next round, it is kind of
different. It is almost regional, the old UHF, now the 600
megahertz, and then how do you cobble that together, which
raises issues of package bidding and other ways to try to put
together something that makes sense to different entities. So I
think an after action review on the success or that issue will
help us as we move forward. I just find it very interesting. A
lot of new members on the committee. I have always said, you
all have heard me say, the great thing about this subcommittee
is really technology moves faster than we can regulate. And
then you all have to be involved in trying to mitigate the
interference issues or some of the complexities, but this is
probably the greatest example of free and open market
competition, and the ability for great minds to do great
things, and--that I have experienced I think in any other area.
So I enjoyed that.
And final question, really directed to Roger again, is
these, the fragmented management process between the FCC and
the NTIA on spectrum. Is there any talk about how we get that
all cobbled together where, when we have hearings, we are
dealing with 1 and maybe not 2, and the different processes?
Mr. Sherman. Well, I will make an observation, and then I
would defer to John and Julie who spend a lot of time with the
agencies and NTIA, but in my experience since I have been at
the Commission, the relationship with NTIA is great, and there
is a lot of collaboration and coordination going on, everybody
moving towards the same goal. I know John and Juli have been
engaged for years, and everybody sort of has their
responsibilities under the respective statutes, but I think it
is all working towards getting more spectrum out there.
I don't know if John or Julie have anything to add to that.
Mr. Knapp. No, just ditto to everything that Roger said. We
know that our responsibilities overlap, and that we have to
work together for the good of the country, and that is what we
try to do.
Mr. Shimkus. There is no--or issues that--duplication
that--in this process?
Mr. Knapp. I don't think so much duplication because
they've got different systems that they are overseeing,
military, justice, et cetera. What we try to do through a lot
of good work, both formally and informally, is break down the
barriers.
Mr. Walden. All right.
Mr. Shimkus. Great.
Mr. Walden. Gentleman's time has expired.
Apparently, we have had votes on, I am sorry, I didn't
realize we were to that point. There are 6 minutes left, but I
will be happy to go to----
Mr. Collins. Yes.
Mr. Walden [continuing]. Mr. Collins.
Mr. Collins. Mr. Chairman, I appreciate that. Mine may only
take 30 seconds. It is for Mr. Epstein.
I represent Buffalo and then the Rochester area. Our
broadcasters, many of the Canadians, are getting our signal.
And in spending 24/7 on the spectrum, I hope that includes some
time on border coordination. And I just wondered where do we
stand on border coordination specifically between the U.S. and
Canada, and when do we anticipate an agreement being reached?
Mr. Epstein. We have been working on this for a couple of
years. It is really important that we do this. We have been
working with Industry Canada, we have had meetings almost
weekly with them. We were most pleased by about 4 months ago
they put out a band plan which was analogous to our band plan,
and we are hopefully getting reasonably close. They have just
got comments in what they call a consultation, which is like
our rulemaking, where it is to our mutual benefit to reach
agreement----
Ms. Eshoo. Yes.
Mr. Epstein [continuing]. Because we will get spectrum on
both sides of the border and coordination. And we are hoping
well before the auction, within a matter of months, we will be
able to reach--that is our goal.
Ms. Eshoo. Yes.
Mr. Epstein. Can't promise it will happen because it is a
sovereign country----
Ms. Eshoo. Right.
Mr. Epstein [continuing]. But that is our goal.
Ms. Eshoo. Would the gentleman yield just for a moment?
Mr. Collins. Yes, certainly.
Ms. Eshoo. One of the questions that I didn't get to ask
was what you just raised, and it was an issue that Mr. Dingell
raised over and over again. So we will get a written response
and I will share that with you----
Mr. Collins. Yes, we appreciate that.
Ms. Eshoo [continuing]. When we get it. Thank you.
Mr. Collins. I mean as bad as the Buffalo Bills are, the
Canadians still watch our team play.
Mr. Walden. Wow. You may want to revise and extend those
remarks.
We will go now to Mrs. Ellmers for final questions.
Mrs. Ellmers. Thank you, Mr. Chairman. Thank you to our
panel. And I apologize for coming in late, so if the questions
I ask have already been answered, if you can just indulge me.
Mr. Knapp, the commission looks at the 3.5 gigahertz and
the 600 megahertz unlicensed bands. Will the commission be
placing any new restrictions on unlicensed users?
Mr. Knapp. I don't think so in terms of placing new
restrictions, it is just we will develop a framework that will
include the technical standards to make sure that everything
works together without interfering.
Mrs. Ellmers. OK. Thank you, Mr. Knapp.
Mr. Leibovitz, the subcommittee has heard time and time
again about the value of innovation and experimentation within
the unlicensed technologies. We have all been concerned that
the mantra innovation without permission be applied to improve
all aspects of connectivity. Is the commission planning to
prohibit the use of LTE-U in any unlicensed bands?
Mr. Leibovitz. The answer is no at this time. We are
working with the parties and trying to ensure that people talk
to each other so that the technical----
Ms. Ellmers. Yes.
Mr. Leibovitz [continuing]. Issues don't become something
that needs any involvement from the Government.
Mrs. Ellmers. Great. Well, thank you. My work is done, and
I yield back the remainder of my time.
Mr. Walden. Appreciate that.
I recognize the gentlelady from California.
Ms. Eshoo. Thank you, Mr. Chairman. Thank you to the panel.
Mr. Chairman, I would like unanimous consent to place this in
the record. I asked the question about competition, and these
are the results of who did what AWS-3 auction. Thank you.
Mr. Walden. Without objection.
[The information appears at the conclusion of the hearing.]
Mr. Walden. That will be entered into the record.
And with that, I thank the witnesses for being here today,
and the good work you do at the FCC. We appreciate it.
And we are adjourned.
[Whereupon, at 11:54 a.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]
Prepared statement of Hon. Fred Upton
Today the future of spectrum use and availability takes
center stage--an issue that this subcommittee has rightly spent
significant time considering. With the rise of mobile devices
and the Internet of Things, American consumers' appetite for
spectrum will only continue to grow. Some of the most important
and successful work this committee has accomplished has
centered on spectrum. We have examined many ways to make
spectrum available and ensure that both federal users and
commercial licensees are using it efficiently and effectively.
We've passed legislation that gives the FCC the tools it
needs to conduct auctions and help meet the growing demand for
low-band spectrum. We've also asked the FCC to report back on
opportunities and challenges in other bands, particularly the 5
gigahertz (GHz) band. We look forward to hearing how work has
progressed on finding solutions that allow for the expansion of
unlicensed use in that band, without harming the blossoming
Intelligent Transportation System technologies that will make
driving safer.
The incentive auction legislation was achieved through
bipartisan collaboration with the input of industry, engineers,
and so many others. It's been more than three years since the
Middle Class Tax Relief and Job Creation Act was passed and the
FCC has made good progress in the implementation of the
legislation. This first of its kind auction will undoubtedly
spur innovation, create jobs, and enable new technologies. If
the recent AWS-3 auction is any indication of the level of
success we'll see in the incentive auction--this will surely be
a job well done. But there are still hurdles to be addressed
before the auction can move forward, including border
coordination. Representing a state that borders Canada, I am
concerned that a failure to adequately solve cross-border
coordination issues will mean less spectrum cleared for auction
and reallocated for commercial use, and potentially impair the
ability of folks in Michigan to receive broadcast signals over-
the-air. As we ask broadcasters to make major decisions about
the future of their stations, we need to be sure that we have
answers for their valid questions about interference, signal
protection, and their potential new station location.
Spectrum is a vital resource for the future of our economy
and sound policy will ensure the continued leadership of the
United States in the mobile space. As the committee responsible
for this sector, it's essential that we continue to keep an eye
on the status of the spectrum in the pipeline and what is being
done to make it available for consumer use. If we do our jobs
right, the future for consumers, jobs, and our economy is very
bright.
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