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




 
      CONTINUED OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION

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

                                HEARING

                               BEFORE THE

             SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

                                 OF THE

                    COMMITTEE ON ENERGY AND COMMERCE
                        HOUSE OF REPRESENTATIVES

                    ONE HUNDRED FOURTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 28, 2015

                               __________

                           Serial No. 114-70
                           
                           
                           
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                            
                           
                           
                           


      Printed for the use of the Committee on Energy and Commerce
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                    COMMITTEE ON ENERGY AND COMMERCE

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

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


  
                             C O N T E N T S

                              ----------                              
                                                                   Page
Hon. Greg Walden, a Representative in Congress from the State of 
  Oregon, opening statement......................................     1
    Prepared statement...........................................     3
Hon. Anna G. Eshoo, a Representative in Congress from the State 
  of California, opening statement...............................     4
Hon. Marsha Blackburn, a Representative in Congress from the 
  State of Tennessee, opening statement..........................     5
Hon. Frank Pallone, Jr., a Representative in Congress from the 
  State of New Jersey, opening statement.........................     6
Hon. Fred Upton, a Representative in Congress from the State of 
  Michigan, prepared statement...................................    74

                               Witnesses

Tom Wheeler, Chairman, Federal Communications Commission.........     8
    Prepared statement...........................................    10
    Answers to submitted questions...............................   106
Ajit Pai, Commissioner, Federal Communications Commission........    18
    Prepared statement...........................................    20
    Answers to submitted questions...............................   118

                           Submitted Material

Article entitled, ``How the FCC saved me $1800,'' Forbes, July 6, 
  2015, submitted by Ms. Eshoo...................................    76
Statement of the American Hospital Association, submitted by Mr. 
  Latta..........................................................    79
Letter of July 24, 2015, from Carepayment to the subcommittee, 
  submitted by Mr. Walden........................................    89
Statement of CTIA--The Wireless Association, submitted by Mrs. 
  Blackburn......................................................    92


      CONTINUED OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION

                              ----------                              


                         TUESDAY, JULY 28, 2015

                  House of Representatives,
     Subcommittee on Communications and Technology,
                          Committee on Energy and Commerce,
                                                    Washington, DC.
    The subcommittee met, pursuant to call, at 10:20 a.m., in 
room 2322 of the Rayburn House Office Building, Hon. Greg 
Walden (chairman of the subcommittee) presiding.
    Members present: Representatives Walden, Latta, Barton, 
Shimkus, Blackburn, Lance, Guthrie, Olson, Kinzinger, 
Bilirakis, Johnson, Long, Ellmers, Collins, Cramer, Eshoo, 
Doyle, Welch, Clarke, Loebsack, Rush, Matsui, Lujan, and 
Pallone (ex officio).
    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; Tim Pataki, 
Professional Staff Member; David Redl, Counsel, Telecom; 
Charlotte Savercool, Legislative Clerk; Christine Brennan, 
Democratic Press Secretary; Jeff Carroll, Democratic Staff 
Director; David Goldman, Democratic Chief Counsel, 
Communications and Technology; Ashley Jones, Democratic 
Director of Communications, Member Services and Outreach; Lori 
Maarbjerg, Democratic FCC Detailee; Tim Robinson, Democratic 
Chief Counsel; and Ryan Skukowski, Democratic Policy Analyst.

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

    Mr. Walden. We will call to order the subcommittee on 
Communications and Technology, and I want to welcome everyone 
here today, and wish a very good morning to Chairman Wheeler 
and Commissioner Pai. Delighted to have you back before the 
subcommittee again this year. We appreciate the work you are 
doing at the FCC, and look forward to your testimony, and our 
opportunities to pursue some issues. At the risk of sounding a 
bit like a broken record, however, I continue to be concerned 
with the Commission's failure to adhere to sound regulatory 
process.
    For the nearly 5 years that I have had the opportunity to 
Chair this subcommittee, as you all know, I have consistently 
pushed to make the FCC a better, more transparent agency, and 
yet it seems like the chasm between Commissioners deepens over 
time. When the Committee considered process reform legislation 
a few months ago, I had hope we had reached the bottom of that 
well, that the Commission would begin to find its way back to 
the collegiality and honest policy debates and compromises that 
have characterized it since 1934. Unfortunately, that appears 
not to be the case. And if Commissioner Pai's testimony is any 
indication, things might actually be getting worse at the 
Commission, and that is disappointing, to say the least.
    With all that is going on at the Commission, and in the 
world of communications, we have much ground to cover in 
today's hearing, which likely will necessitate a second round 
of questioning. To get things started, let me highlight five 
areas of policy concern that I, and some other members of this 
Committee, have. First, the auction. For a successful auction 
we all know that the sellers and buyers need to fully 
understand and support the rules. Yet, when it comes to the 
band plan, questions and uncertainty still abound. Layered on 
top is growing concern regarding how the re-pack will work, 
including as it relates to the future of low powered television 
stations and translators. Now, it was never our intent that 
these diverse voices in the marketplace would get fully 
silenced. And then there are the issues of potential 
interference which have come up, which, as we all know, when 
mishandled, can doom an auction, as has occurred in the past.
    Second, the FCC's action on the designated entity issue 
raises some concerns for many of us. While the FCC majority 
claims that its changes will strengthen the integrity of the 
program, a goal we all share, sadly, I am afraid they simply 
replace one set of rules that were gamed with a new set yet to 
be gamed. The Commission's new rules remove the obligation to 
provide facilities-based service, and permit leasing of 100 
percent of the spectrum purchased. Now, that sets the stage for 
sophisticated spectrum arbitragers, financed by taxpayer 
dollars, to participate in the next spectrum auction, bringing 
nothing to the competitive market. The Chairman's advocacy for 
this outcome is puzzling, given the assurances that the changes 
would protect the program from ``slick lawyers taking advantage 
of loopholes in the program to unjustly enrich their 
sophisticated clientele.''
    Third, the Telephone Consumer Protection Act. My colleague 
from New Mexico and I have had serious bipartisan discussions 
about the approach the FCC has taken as it relates to the 
fundamental nature of democracy and American practical 
communications in a wireless ago. Beyond that, members of the 
Subcommittee are just beginning to hear from adversely affected 
users about the disruption this new ruling will have on a 
variety of companies, and the consumers they try to serve.
    Fourth, expansion of the Lifeline Program. All one has to 
do is read today's story in Politico regarding the problems 
over at the Department of Agriculture's Rural Utility Service 
to understand why it is so essential, before any agency moves 
to spend money, it should have tight control and a budget. 
Unfortunately for ratepayers, in a party line vote the FCC 
decided to rush forward to expand the Lifeline Program into 
broadband with little reform, and no limit on the spending.
    Fifth, admit the swirl of controversy that continues to 
surround the actions the Commission takes, let us not lose 
sight of what is not getting done. For example, the AM 
revitalization proceeding has been described by some as 
grinding to a halt, despite the Chairman's assurances to this 
subcommittee. The quadrennial review of the limitations on 
ownership of broadcast properties continues to languish, in 
open violation of the Commission's legal obligation.
    Let me close with this. Each member of the Commission is 
very bright, talented, and thoroughly passionate. And yet, as 
evidenced by recent public comments of Commissioner O'Reilly, 
and the testimony today of Commissioner Pai, it is clear that 
they believe the process at the FCC too often fails to include 
them in a meaningful and substantive way. And we hear similar 
complaints from stakeholders who feel ignored or shut out 
altogether. This is neither necessary nor helpful, as the 
Commission, and all of us in Congress, try to work through the 
complicated issues in today's rapidly involving communications 
world.
    And on a final note, on the good news side of things, at 
least if you have the background I have, I am pleased to note 
that AT&T today announced that they reached an agreement to 
allow FM chips in cell phones, making at least the second 
carrier to do so, and we hope that other carriers will follow 
suit.
    [The prepared statement of Mr. Walden follows:]

                 Prepared statement of Hon. Greg Walden

    Good morning everyone. Good morning Chairman Wheeler. Good 
morning Commissioner Pai. Thank you both for joining us this 
morning.
    At the risk of sounding like a broken record, I continue to 
be concerned with the Commission's failure to adhere to sound 
regulatory process. For the nearly 5 years that I have chaired 
this subcommittee, I have consistently pushed to make the FCC a 
better, more transparent agency, only to see the chasm between 
the Commissioners deepen over that time. When this Committee 
considered process reform legislation a few months ago, I had 
hoped that we had reached the bottom of the well. That the 
Commission would begin to find its way back to the collegiality 
and honest policy debates and compromises that have 
characterized the FCC since 1934. Unfortunately, that hasn't 
been the case. And if Commissioner Pai's testimony is any 
indication, things might actually be getting worse. This is 
disappointing, to say the least.
    With all that is going on at the Commission and in the 
world of communications, we have much ground to cover in 
today's hearing which likely will necessitate a second round of 
questioning. To get things started, let me highlight five areas 
of policy concern that I, and other members of this 
Subcommittee, have:
    First, the auction. For a successful auction, we all know 
that the sellers and buyers need to fully understand and 
support the rules. Yet when it comes to the band plan, 
questions and uncertainty abound. Layered on top is growing 
concern regarding how the repack will work, including as it 
relates to the future of low power television stations and 
translators. It was never our intent that these diverse voices 
in the marketplace would get fully silenced. And then there are 
the issues of potential interference, which as we all know when 
mishandled can doom the auction, as has happened in the past.
    Second, the FCC's action on the designated entity issue 
raises concerns for many of us. While the FCC majority claims 
that its changes will strengthen the integrity of the program, 
sadly they simply replace one set of rules that were ``gamed'' 
with a new set to be gamed. The Commission's new rules remove 
the obligation to provide facilities-based service and permit 
leasing of 100% of the spectrum purchased, setting the stage 
for sophisticated spectrum arbitragers financed by taxpayer 
dollars to participate in the next spectrum auction bringing 
nothing to the competitive market. The Chairman's advocacy for 
this outcome is puzzling given his assurances that the changes 
would protect the program from ``slick lawyers'' taking 
advantage of loopholes in the program to unjustly enrich their 
sophisticated clientele.
    Third, Telephone Consumer Protection Act. My colleague from 
New Mexico and I have had serious, bipartisan discussions about 
the approach the FCC has taken as it relates to the fundamental 
nature of democracy in America and practical communications in 
the wireless age. Beyond that, members of this Subcommittee are 
just beginning to hear from adversely affected users about the 
disruption this new ruling will have on a variety of companies 
and the consumers they try to serve.
    Fourth, expansion of the Lifeline program. All one has to 
do is read today's story in Politico regarding the problems 
over at the Department of Agriculture's Rural Utility Service 
to understand why it is essential before any agency moves to 
spend money it should have tight control and a budget. 
Unfortunately for ratepayers, in a party line vote, the FCC 
decided to rush forward to expand the Lifeline program into 
broadband with little reform and no limit on the spending.
    Fifth, amid the swirl of controversy that continues to 
surround the actions the Commission takes, let us not lose 
sight of what is not getting done. For example, the AM 
revitalization proceeding has been described by some as 
``grinding to a halt'' despite the Chairman's assurances to 
this subcommittee. The quadrennial review of the limitations on 
ownership of broadcast properties continues to languish in open 
violation of the Commission's legal obligation.
    And let me close with this: Each member of the Commission 
is very bright, talented and passionate. And yet, as evidenced 
by recent public comments of Commissioner O'Rielly and the 
testimony today of Commissioner Pai, it is clear that they 
believe the process at the FCC too often fails to include them 
in a meaningful, substantive way. And we hear similar 
complaints from stakeholders who feel ignored or shutout 
altogether. This is neither necessary, nor helpful, as the 
Commission-and all of us in Congress-try to work through the 
complicated issues in today's rapidly evolving communications 
world.

    Mr. Walden. With that, I have used up my time, and turn to 
the gentlelady from California.

 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 
Chairman Wheeler, Commissioner Pai. Welcome back to the 
Committee. We are happy to see you, and as I said, we welcome 
you back.
    Today's hearing marks the Chairman's third appearance 
before our Subcommittee in just over 4 months. In fact, the 
Congressional Research Service tells me that the Chairman's 
eight appearances before Congress this year marks a new record. 
So congratulations, Mr. Chairman. Put that one up on your wall. 
In the past 14 years no FCC Chair has testified more times 
before Congress in a single calendar year, and of course we are 
only in the seventh month of 2015. It is our subcommittee's 
responsibility to conduct robust oversight, and in so doing we 
should hear regularly from the Chairman and his fellow 
Commissioners.
    Responsible oversight includes recognition that the FCC--
and I think that we should be doing this. There are many things 
to raise that are legitimate, at least in the minds of those 
that raise them, but we should include a recognition that the 
FCC is undertaking an unprecedented series of steps to promote 
competition, enhance public safety, and ensure that consumers 
are protected against deceptive or misleading billing 
practices. Here are a few highlights of the Commission's work 
over the past year. Modernize the E-rate Program to increase 
the presence of Wi-Fi in classrooms, and bolster higher 
capacity Internet connections to the anchor institutions in our 
communities across the country, our schools and our libraries. 
Raised a record 44.9 billion, with a B, dollars from the AWS-3 
auction. Repealed the outdated and anti-consumer sports 
blackout rules which, for 4 decades, 40 years, prevented fans 
from watching games on television when they were not sold out. 
I think there are a lot of people in the country that are 
really thrilled about that. Launched a new consumer help center 
to streamline the complaint process, and improve how consumers 
interact with the FCC. And at this point, Mr. Chairman, I would 
like to ask unanimous consent to place into the record a really 
terrific article from Forbes entitled, ``How the FCC Saved Me 
$1,800''. If you haven't read it, everyone should, so I ask----
    Mr. Walden. Without objection.
    [The information apears at the conclusion of the hearing.]
    Ms. Eshoo. Thank you. Freed up 150 megahertz of spectrum in 
the 3.5 gigahertz brand for mobile broadband. Established 
indoor location accuracy rules for wireless calls made to 911. 
That could be a lifesaving step right there. Adopted bright 
line rules that prevent broadband providers from engaging in 
blocking, throttling, and paid prioritization. Levied a $100 
million against a major telecommunications provider for 
misleading consumers about their unlimited data plans. Pre-
empted state laws in Tennessee and North Carolina that 
prevented local communities from deploying broadband, which 
they want to do across the country.
    All of this and more in just one year, and there is much 
more ahead as the FCC prepares to undertake the world's first 
voluntary incentive auction, and a technology transition to an 
all IP world that preserves the core values of competition, 
public safety, and consumer protection. So I thank both the 
Chairman and the Commissioner for your continuing commitment to 
a modern telecommunications marketplace, and I yield the 
remainder of my time to the gentleman from Vermont, Mr. Welch.
    Mr. Welch. Thank you very much. Welcome, Chairman Wheeler 
and Commissioner Pai. We really appreciate the work that you 
are doing. Just a couple of points. I am very encouraged by the 
tech transitions progress that you have been making. That is 
going to be very helpful to many more businesses that need 
efficiencies, and this is going to be helpful to consumers. I 
hope you don't stop there. One of my main concerns, I know a 
concern of many of us, is to have competition as much as 
possible in this area. We really do believe that that leads to 
innovation, and better prices for the consumers. So the special 
access issues continue to be of top concern to me.
    And then finally I would like to just remind you of the 
bipartisan rural working group that Mr. Latta and I have set 
up, because there is so many of us, even if we represent urban 
areas, that have rural districts that have special problems, 
and oftentimes aren't the big markets, so we want to continue 
to work with the entire Commission to try to make certain that 
the rural service is there, and will be there, and will be the 
highest quality. Thank you very much, and I yield back the 
balance of my time.
    Mr. Walden. The gentleman yields back, the gentlelady 
yields back. The Chair recognizes the gentlelady from 
Tennessee, Mrs. Blackburn.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN 
              CONGRESS FROM THE STATE OF TENNESSEE

    Mrs. Blackburn. Thank you, Mr. Chairman, and I want to 
welcome you both. We appreciate that you are here. I will say I 
disagree with my colleague from California, as she talked about 
Tennessee. We saw that as stepping on states' rights, Mr. 
Chairman, and you know that you and I disagree on that. I am 
pleased that you all are here. I know you all saw the CTIA 
report last week, and I am sure you have read the op-ed in 
today's paper by each of your predecessors, Mr. Janikowski and 
Mr. McDowell. Getting spectrum to the marketplace is where we 
need to have our focus. And rather than getting off into all 
these tangential issues, your focus should be the core of your 
mission, which is dealing with spectrum deployment and usage. 
And when you look at the expected increase in the wireless 
arena, it draws more attention to this.
    I was thinking, as I was preparing for this hearing, when 
you go back and look at the industrial revolutions that we have 
had in this country, looking at the agricultural and the 
industrial mechanization revolutions, when you look at 
technology, information, we are almost at a point of being able 
to say there is this wireless revolution that is going on, 
because business transactions, health care, so many things are 
going to depend on this spectrum, and we want to make certain 
that you are focused on this. So we welcome you. We know that 
we have to be diligent in this. We look at what South Korea is 
already talking about doing, South Korea, and Japan, and the 
5G, and recapturing the momentum that at one point they had. 
And we don't want them to be the world leader. We want to be 
the world leader, and we have got to have you work with us on 
this.
    At this time I yield the balance of my time to Mr. Latta.
    Mr. Latta. Well, thank you very much, and I thank the 
gentlelady for yielding. And I want to thank Chairman Wheeler 
and Commissioner Pai for being with us again. It is great to 
see you both, and I look forward to your statements, and also 
to our questions today.
    The communications and technology industry is a very 
productive and dynamic sector of economy. This is largely due 
to bright, innovative minds, and in part because this industry 
has been lightly regulated, with the ability to grow and evolve 
to the demands of the consumers. Therefore, we cannot afford to 
overlook the significance of the regulatory policies and how 
the FCC's decisions impact the industry's success. This is why 
I am concerned with many of the actions proposed--by the FCC, 
and the general lack of transparency, efficiency, and 
accountability at the agency. I hope today's hearing will 
provide us with an opportunity to discuss in more detail the 
Commission's policies, decisions, and processes. And I thank 
the gentlelady for yielding, and I yield back.
    Mrs. Blackburn. Yield back my time.
    Mr. Walden. The gentlelady yields back. The Chair 
recognizes the gentleman from New Jersey, Mr. Pallone, for 5 
minutes.

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

    Mr. Pallone. Thank you, Mr. Chairman, and thank you to 
Chairman Wheeler and Commissioner Pai for coming back here 
today. I know it has been a busy few months since you last 
testified before this Subcommittee, and I appreciate your 
willingness to come and give us an update.
    I am particularly grateful for this opportunity to hear 
from Chairman Wheeler about how he is addressing the priorities 
of the Democratic members of the subcommittee, many of which 
are shared by our Republican colleagues. Our members are 
champions for improving universal access to broadband in the 
many underserved rural areas of our country. They have also 
been tireless advocates for the rights of residents of our vast 
tribal lands, and too often those living on tribal lands are 
unfairly left on the wrong side of the digital divide. I hope 
to hear how the FCC can help our efforts to improve deployment 
to these areas where the economics along are not enough.
    Our members have also been devoted to improving public 
safety communications. This is especially meaningful for those 
of us whose districts were impacted by disasters like Hurricane 
Sandy, who believe that everyone should be able to call for 
help in an emergency, and I hope we hear more about what the 
Commission is doing to make our vision into a reality.
    Our members also share Chairman Wheeler's commitment to 
competition. That is why we led the charge to overhaul the 
FCC's designated entity program. Under the new rules that the 
FCC recently adopted, the program encourages robust 
participation from bona fide small businesses, while allowing 
innovative business models more in line with today's dynamic 
wireless market. And we have also stood with our Ranking Member 
Eshoo in her battle to free up more spectrum for unlicensed 
use. These airwaves can lower barriers to entry, and allow for 
more vigorous competition.
    And finally I hope to learn more about what the Commission 
can do to support our work to protect consumers. For instance, 
I know several members of the Subcommittee have been focused on 
the FCC's recent actions to address robocalls. We all agree 
that more needs to be done to crack down on unwanted commercial 
calls, and I hope to hear what the Commission can do to address 
the issues our members have raised.
    I would like to yield 1 minute each of the time--well, I 
guess a minute and a half to Mr. Doyle, and then a minute and a 
half to Ms. Matsui.
    Mr. Doyle. Thank you very much, Mr. Pallone, for yielding. 
Thank you, Mr. Chairman, for holding this hearing, and to 
Commissioner Wheeler and Commissioner Pai, thank you both for 
being here today.
    Mr. Chairman, I would like to recognize the accomplishments 
of the Commission, and of this Chairman. Since Tom Wheeler took 
over as Chairman, the FCC has done much to advance our nation's 
telecommunications agenda. From establishing the FCC's open 
Internet order, to keeping the incentive action on track, 
updating the Lifeline Program for the Internet age, and meting 
out steep fines to telecommunication companies that abuse 
consumers.
    I also want to comment the Chairman for advancing a pro-
competitive agenda, both in wire line and wireless service. The 
Commission's upcoming vote on tech transitions, its action on 
special access, and the establishment of the spectrum reserve 
in the incentive auction are all important steps towards 
preserving and promoting competition. Mr. Chairman, keep up the 
good work, thank you. And I will yield to our colleague, Ms. 
Matsui.
    Ms. Matsui. Thank you very much for yielding to me. Welcome 
back, Chairman Wheeler and Commissioner Pai. It is great to see 
you again. I know you have a busy agenda, and I want to briefly 
highlight two priorities that I know we are all interested in.
    The first is making more spectrum available. Spectrum is 
our nation's invisible infrastructure of the 21st century. It 
is critical to keep our wireless economy growing. We need to 
talk about how to put more spectrum into the pipeline so we can 
continue to meet the demand. Congressman Guthrie and I have a 
bipartisan bill to create new incentives for Federal users. We 
need to continue to explore these solutions.
    The second is making broadband access more affordable. 
Millions of Americans are still on the wrong side of the 
digital divide. The Lifeline Program can, and should, help 
these Americans get, and stay, connected. I know the FCC has 
started work on these very important reforms, but we need to 
finish the job.
    I look forward to working with the whole Commission as we 
talk about these matters, and hopefully make progress on this. 
And I yield back the balance of my time. Thank you.
    Mr. Walden. The gentlelady yields back, the gentleman 
yields back. And I think all time has now expired. So now we 
will go to our two distinguished witnesses, the Chairman of the 
Federal Communications Commission, Mr. Wheeler. We are 
delighted to have you back. Apparently we are really delighted, 
because we have you a lot, and that is a good thing. And so we 
welcome you and Commissioner Pai, but Mr. Wheeler, why don't 
you go ahead and lead off? Yes, it is a modern technology 
thing.

  STATEMENTS OF THE HONORABLE TOM WHEELER, CHAIRMAN, FEDERAL 
    COMMUNICATIONS COMMISSION; AND THE HONORABLE AJIT PAI, 
        COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION.

                    STATEMENT OF TOM WHEELER

    Mr. Wheeler. I am tempted to make some comment about being 
national champion of appearances before, but I wouldn't want--
--
    Mr. Walden. We can arrange that.
    Mr. Wheeler. I wouldn't want to go down that route. But in 
the 10 weeks--in all seriousness, in the 10 weeks since I was 
last before this Committee, there has been a lot happening, and 
I look forward to discussing it with you today. We have made 
significant progress to begin the incentive auction on March 
29, 8 months from tomorrow, so there is a lot of pressure on 
here. We have continued to grapple with the tech transitions 
issues that were raised by the movement from analog to IP 
networks. And we have approved one merger, with conditions. 
Another was withdrawn, and a new one was added. And then, of 
course, on top of that, the Appeals Court denied the request 
for a stay for the open Internet rules.
    But one issue which, frankly, caught me by surprise was 
that which was raised by a letter signed by every member of 
this subcommittee having to do with local number portability, 
and I wanted to report directly to you on that. Our rules 
require that local number portability be ubiquitous, but it 
looks as though the manner in which the industry has set up the 
system does not fulfill that requirement, and I appreciate this 
committee bringing this to our attention. Implementation of the 
rule apparently requires that a mobile carrier have a presence 
in the home market of the ported phone number before the 
transition can occur. And this is something, of course, that is 
not possible for smaller regional carriers.
    So the effect of this is that if I were to move from 
Washington to a market served by a carrier not in Washington, 
and to choose that carrier in a competitive choice process, I 
couldn't port my number. That is contrary to our rules, and I 
have asked that it be fixed. Yesterday I wrote the four major 
carriers, as well as their trade associations, asking that they 
identify a solution and report back within 60 days. I believe 
the carriers are in the best position to fix this, and I look 
forward to their response. But I do want to say to this 
Committee, after raising this issue in unanimity, that if this 
approach doesn't fix it with dispatch, we will have to find 
other approaches that do. But I really appreciate the way that 
this Committee called that to our attention, because we had not 
seen that previously.
    On another matter frequently raised by the Committee, I am 
pleased to report that the FCC has completed an exchange of 
letters with the Telecommunications Agency of Mexico, IFT, to 
harmonize TV and wireless spectrum on both sides of the border. 
Mexico is in the midst of its DTV transition, and we, as you 
know, are heading into an incentive auction and relocation of 
broadcast and mobile licenses. Where on the spectrum Mexico 
places its DTV licenses could, therefore, affect us, and our 
U.S. licenses, and where we place our licenses could affect 
them. But thanks to the hard work of the International Bureau 
and the Spectrum Auction Task Force, and the good faith 
negotiations of the Mexican IFT, this major hurdle has been 
vaulted. And I want to especially thank my counterpart in 
Mexico, Chairman Contreras Saldivar, and his Commissioners, for 
their leadership on this matter. To the North, we have been 
making similarly productive progress with our friends the 
Canadians. I believe that once we have a decision next week on 
incentive auction procedures that we will be able to conclude 
that coordination as well.
    And finally, we have had frequent discussions with this 
Committee about the open Internet rule. Now that the D.C. 
Circuit has put it on an expedited track for judicial review, 
we are only 6 months or so away from that ruling, which I know 
we all have been waiting for. So thank you, Mr. Chairman, 
Ranking Member. I look forward to discussing these, and any 
other issues you may want to raise.
    [The prepared statement of Mr. Wheeler follows:]
    
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    Mr. Walden. Thank you, Chairman, appreciate the update. We 
will now go to Commission Pai. We are delighted to have you 
before the subcommittee again, and please go ahead with your 
testimony.

                     STATEMENT OF AJIT PAI

    Mr. Pai. Thank you, Mr. Chairman. Chairman Walden, Ranking 
Member Eshoo, members of the subcommittee, thank you for 
inviting me to testify. This hearing comes at a critical time. 
The FCC is making judgments that will shape the communications 
landscape for years to come. I will start with the broadcast 
incentive auction. The FCC is empowered to conduct this auction 
because of your bipartisan efforts. It is therefore 
disappointing that this proceeding has been run in a partisan 
manner. Time and again Commissioner Mike O'Rielly and I have 
offered common sense ideas for improving auction rules and 
procedures. Often, we receive no response at all. When we do 
receive a response, it is almost always no.
    Fortunately, it isn't too late to change course. 
Broadcasters, wireless carriers, and unlicensed advocates all 
agree that the Commission's current band plan is seriously 
flawed. I stand ready to work with these stakeholders, and my 
fellow Commissioners, to do what Congress did when it passed 
the landmark incentive auction legislation: compromise to find 
a consensus solution.
    Here specifically is what we should focus on. The proposed 
band plan allows for too much variability, and would put too 
many broadcast stations in the wireless portion of the 600 
megahertz band. This will both impair spectrum that will be 
sold in the forward auction, and cause interference between 
broadcast and wireless services. In my view, the Commission 
should try to minimize band plan variability. If broadcast 
stations must be placed in the wireless portion of the band, 
they should go in the uplink spectrum, not the downlink, or the 
duplex gap. And, in order to reach a compromise, we also need 
to make more information public. Right now, stakeholders and 
Commissioners alike are essentially being asked to take on 
faith that, unless we adopt every aspect of the Commission's 
proposals, the incentive auction will end in an apocalyptic 
failure. But I prefer the Reagan approach: trust, but verify.
    Next, I would like to discuss the FCC's Designated Entity, 
or DE, Program, which has been plagued with abuse. Even though 
the program is supposed to help small businesses, large 
corporations routinely try to game the system. And that is why 
I was disappointed when the FCC recently voted to make it 
easier for big companies to profit from the program. We were 
promised FCC action to close loopholes that could be exploited 
by slick lawyers. Instead, the Commission re-opened loopholes 
that it had closed on a bipartisan basis years ago, loopholes 
through which a minimally competent attorney could drive a 
truck. Specifically, the FCC paved the way for DEs to obtain a 
35 percent discount on auctioned spectrum, and then turn around 
and immediately lease 100 percent of it to a large incumbent 
carrier.
    Now, at the time we were told that opening up new loopholes 
in our DE rules was an ``attack on economic inequality'', but 
this assertion is baffling. So let us be clear, those who will 
profit from these new DE loopholes are speculators who are 
already firmly ensconced in the famed one percent. Case in 
point, under the new rules Donald Trump would be allowed to own 
most of a DE, get a taxpayer funded discount on spectrum, and 
then lease all of that spectrum to AT&T or Verizon. So, during 
the Commission's deliberations, I made simple proposals to 
prevent this kind of abuse of the DE Program. For example, I 
proposed that anyone making over $55 million a year should be 
prohibited from owning a DE and getting taxpayer funded 
benefits. Unfortunately, the majority rejected this, and other 
common sense reforms.
    Shifting gears, when it comes to broadband, as Congressman 
Welch pointed out, too many rural areas are being left behind. 
Specifically, we are failing areas served by small 
telecommunications carriers. That is because of a quirk of 
regulatory history. Our rules governing these carriers give 
universal service support only to companies that offer 
telephone service, not standalone broadband service. That is 
why I put forward earlier this month a specific plan for 
correcting this historical accident. My plan is based on the 
principles set forth in a May letter by 115 members of the 
House of Representatives, led by Congressman Kevin Cramer. This 
group urged the FCC to adopt an immediate, targeted solution to 
the standalone broadband problem, and to implement a much 
simpler and straightforward plan for rate of return carriers 
than was adopted for price-cap carriers.
    I humbly submit that is exactly what my plan does. It 
implements a single page of rule changes to existing universal 
service regulations to solve the standalone broadband problem. 
These simple amendments would let rural consumers choose 
broadband as a standalone service. It would give carriers the 
assurance they need to increase broadband deployment. And, 
critically, they would do all of this within the existing 
budget.
    Chairman Walden, Ranking Member Eshoo, members of the 
subcommittee, thank you once again for inviting me to testify. 
I look forward to answering your questions, and continuing to 
work with you, and your staff, in the time to come.
    [The prepared statement of Mr. Pai follows:]
    
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    Mr. Walden. Thank you, Commissioner Pai. We appreciate your 
testimony as well.
    Chairman Wheeler, as you know, LPTV and translators play an 
important role in providing important information and 
programming to consumers and businesses, and especially when it 
comes to the translators serving difficult to reach terrain and 
rural communities. What do you plan to do to minimize the 
impacts of re-packing on LPTV and translators to help ensure 
that their important programming continues to reach viewers?
    Mr. Wheeler. Thank you, Mr. Chairman, and we share your 
interest in making sure that this voice continues. As you know, 
the spectrum legislation does not create a re-packing role, a 
role in re-packing, for translators. So the question becomes, 
what do you do about it? So here is what we are going to do. 
One, there are channels--we are going to help them find 
channels, if they get displaced as a part of the auction.
    Mr. Walden. OK.
    Mr. Wheeler. One of the things that is the reality of an 
auction is you don't really know where the displacement is 
going to happen, because you don't know the outcome of the 
auction. So step one is we will work through that. Step two is 
that we are going to begin a rulemaking that will allow for 
channel sharing by LPTV stations. Just as we are counting on 
channel sharing----
    Mr. Walden. Right.
    Mr. Wheeler [continuing]. In the broadcast auction. And 
that kind of technology should provide the similar kind of 
solution. And thirdly, the rule is constructed in such a way 
that they don't have to vacate until the wireless carrier, in 
fact, is ready to turn off service. So there is a significant 
buffer of time in there. But we believe that, as we help them 
find new channels, and as we have a new rule that allows for 
channel sharing, that that will be able to mitigate the kind of 
impact that you are concerned about.
    Mr. Walden. And aren't you going to also give them--like in 
the DTV transition there was an opportunity to apply, they got 
some preference to move.
    Mr. Wheeler. I am----
    Mr. Walden. In the application process. I will get back to 
you.
    Mr. Wheeler. Let me get back to you on----
    Mr. Walden. It was the displacement relief.
    Mr. Wheeler. Yes. We are laying out a whole process that 
will help them through this process in finding those kind of 
new channels.
    Mr. Walden. All right. Thank you. I want to talk about some 
of the financial issues, because you have spoken about them 
eloquently before the Appropriations Committee, and publicly, 
and I know that you addressed field agents during a recent 
agenda meeting regarding the issue of closing the field 
offices. And you seemed to take special point that your budget 
comes from Congress and all, which is true.
    And I want to ask Commissioner Pai, is it true that the 
Enforcement Bureau's front office management staff has more 
than doubled size since 2008?
    Mr. Pai. That is my understanding, yes.
    Mr. Walden. Is that true, Mr. Wheeler?
    Mr. Wheeler. No, sir.
    Mr. Walden. It is not?
    Mr. Wheeler. No, sir. The enforcement staff is now--I can 
give you the exact statistic--20 percent smaller than it was 
under Chairman Martin, and that, since I have come into office, 
we have reduced the front office staff by 14 percent.
    Mr. Walden. OK. Yes, we want to follow up, because 
obviously there is a disagreement among you two on this----
    Mr. Wheeler. Yes.
    Mr. Walden [continuing]. Matter. Isn't it also a fact that 
the Enforcement Bureau has more vehicles than field agents?
    Mr. Wheeler. Yes, sir.
    Mr. Walden. All right.
    Mr. Wheeler. I went to Anchorage--I have been trying to 
visit----
    Mr. Walden. Yes.
    Mr. Wheeler [continuing]. The offices. We have a policy 
that says you have to have two employees in each vehicle--one 
that is driving, and one that is working the equipment. It is 
like texting and driving. We have two people in the Anchorage 
office, and we have two vehicles.
    Mr. Walden. Is that--but we are talking----
    Mr. Wheeler. That----
    Mr. Walden [continuing]. Across the--it is more than just 
Anchorage----
    Mr. Wheeler. This was one of the problems that we inherited 
when we walked into the door, that there had been this 
purchasing. So what we're trying to do now is reposition those 
vehicles----
    Mr. Walden. Right.
    Mr. Wheeler [continuing]. So they will be available for the 
strike teams when they come in.
    Mr. Walden. And what about--we keep hearing stories that 
you all have cars and drivers, and all that sort of thing at 
the Commission. Is that true? Actually, I don't know about you 
all, I don't have a car and driver, other than my little Prius 
out there. But is that true? Don't you----
    Mr. Pai. Mr. Chairman, it is true----
    Mr. Walden. Yes?
    Mr. Pai [continuing]. Although I do try to walk whenever I 
can.
    Mr. Walden. It shows. Yes.
    Mr. Wheeler. And I have got a----
    Mr. Walden. All right.
    Mr. Wheeler [continuing]. Fitbit to try to----
    Mr. Walden. Yes. All right. My time has run out.
    Mr. Pai. It is not my walking, but----
    Mr. Walden. Turn to the gentlelady from----
    Ms. Eshoo. Thank you. I want to start with Chairman 
Wheeler. I just want to ask my questions, and then you can 
respond to them. And I have----
    Mr. Wheeler. Yes, ma'am.
    Ms. Eshoo [continuing]. One for Commissioner Pai. You said 
in your opening statement that the upcoming incentive auction 
has ``more moving parts than a Swiss watch'', and I agree. And 
one example is the reserve trigger, which I think is really 
very, very important. And it is critical that we get it right, 
because we want to ensure that competitive providers have real 
access to spectrum. So can you commit to addressing the 
concerns of the competitive carriers prior to the start of the 
auction? So that is my first question.
    My second question is, some of the medical community have 
suggested that the FCC delay implementation or consideration of 
its technical rules for the use of channel 37 by unlicensed TV 
white space devices. Now, delay is, I think, highly concerning, 
because this is one of the three channels that tech companies 
say are, at a minimum, needed in this band to stimulate and 
sustain investment in enhanced Wi-Fi. So do you think that your 
proposal already adequately protects patients, and will prevent 
harmful interference to hospitals? I could ask a lot of 
questions, but I think that those two are really important.
    And also this year, Mr. Chairman, there have been eight 
broadcast television blackouts involving almost 30 U.S. cities. 
Can you tell us when the FCC will complete its review of the 
good faith rules, and when we can expect new rules to be put in 
place to better protect consumers? So those are my questions to 
you, and a quick one to Commissioner Pai.
    I read recently, and he is not here, but--something that 
Commissioner O'Reilly said, and it is a quote of his, but it 
does deal with the FCC's governing principles. And he stated 
that one of the FCC's governing principles should be that the 
Internet is not a necessity in the everyday lives of Americans. 
And I know that he brought up that it is not even close to 
being a human right. I don't think that is the jurisdiction of 
this committee, human rights, but it is disturbing to me that 
we would move away from that, relative to a principle, and I 
wanted to know if you agree or disagree, you want to add or 
subtract from it. So I will go to Chairman Wheeler first, and 
then to Commissioner Pai.
    Mr. Wheeler. Thank you, Ms. Eshoo. Let me see if I can hit 
those one, two, three.
    What we have tried to do is to make sure that there is 
reserve spectrum available. It has never before been done. As 
Mr. Welch and others have pointed out, it is an important 
component of delivering service to rural areas. The question 
then becomes, after you do that, do you want to create rules 
that allow people to withdraw from the auction early, and not 
have to pay as much as if an auction had been ongoing? And that 
is what is being requested. That is not what is currently in 
our proposal. We don't think that there should be a quick out, 
I have got what I want, let me stop the bidding right now for 
reserve spectrum.
    Secondly, we have changed, from 180 meters to 380 meters, 
the distance that an unlicensed device would be allowed close 
to these facilities that are using channel 37. That number was 
arrived at as a result of some studies that were done by the 
medical telemetry folks, and so that is why that number was 
increased.
    There is a failsafe in here, however, and that is, as you 
know, that all unlicensed spectrum has to go through a 
coordination process that involves a database, where you----
    Ms. Eshoo. Yes.
    Mr. Wheeler [continuing]. Get permission to use it, if you 
go by--knowing that there is nobody there. If that 380 meters 
is insufficient in a particular area because of some rare 
equipment they have got that database can be adjusted to say, 
``no, you can't do it here.'' So I think that what we have 
done, in regard to medical equipment, is two-fold. One, to 
expand the absolute blackout area, and two, then to have in 
there a flexible system that will reflect what reality is and 
shut down if there is a situation that would cause 
interference.
    In regard to your third question, regarding TV blackouts 
and good faith negotiations, we intend to have an NPRM out by 
September the 4th, as this Committee has told us to do, on that 
topic, and to be discussing exactly what are the full set of 
issues that should be involved in good faith.
    Ms. Eshoo. Yes.
    Mr. Pai. Thank you, Congresswoman, for the question. I 
embrace the FCC's charge as given by Congress. In fact, the 
first charge in the Communications Act is to make available, so 
far as possible, to all the people in the United States rapid, 
efficient nationwide communication services. And in the digital 
age that increasingly, as you know, means broadband. And I 
believe that not only because I am a son of rural America, 
whose parents currently live on the opposite side of the 
digital divide, but I also have seen it as a Commissioner 
across this country.
    A few weeks ago I was in Dillard, Nebraska, population 287, 
where I visited C and C Processing, a husband and wife owned 
meat processing plant that, 20 years ago, was literally a two-
person operation, and now, thanks to a broadband connection, 
they export at retail to every state in the country, and around 
the world. They have exported wholesale to Whole Foods and----
    Ms. Eshoo. So you are saying you disagree with----
    Mr. Pai. Well, what I am saying is that I embrace different 
policies to make sure that broadband deployment is as wide and 
as deep as possible. I will leave the semantics for others to 
debate. I am focused on our job, as enmeshed in Section----
    Mr. Walden. The gentlewoman's time----
    Ms. Eshoo. Thank you very much.
    Mr. Walden. The gentlewoman's----
    Ms. Eshoo. Thank you----
    Mr. Walden [continuing]. Time has expired.
    Ms. Eshoo [continuing]. Mr. Chairman.
    Mr. Walden. The Chair now recognizes the gentlelady from 
Tennessee, Mrs. Blackburn.
    Mrs. Blackburn. Thank you, Mr. Chairman. OK, Commissioner 
Wheeler, I want to thank you for your letter dealing with the 
spectrum auction in small businesses. We got it yesterday, and 
I may come back to you with a couple of more questions on that. 
You know my concern, and I appreciate your responses. All 
right. I think we can all agree that we are for a successful 
spectrum auction. Everybody agree for that?
    Mr. Wheeler. Yes.
    Mrs. Blackburn. OK. I am so happy we are all on the same 
page. Make your day, right? Let us talk about the steps. And, 
Commissioner, you were just laying out some of the steps you 
thought were necessary. Let us back it up a little bit. And I 
think when you look at the CTIA report that came out--I want to 
submit that for the record, if no one has put that into the 
record.
    Mr. Walden. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mrs. Blackburn. OK. I think that the prelude to a 
successful auction, and to the steps that you just articulated, 
is to know how much spectrum that you have. And we know Federal 
agencies are squatting on a lot of spectrum, and that they are 
not utilizing it. They are sitting on it just in case they 
think they might want to do something with it. And when you 
look at 13 years between the auction and the deployment, that 
is a lot of time. And you look at the increased usage that we 
are expecting, I think that it is dangerous to, first of all, 
not inventory and know exactly what you have got. So, Mr. 
Chairman, to you, have you inventoried the Federal agencies, 
and do you know how much spectrum they are squatting on, and 
what you can recoup?
    Mr. Wheeler. First off, Mrs. Blackburn, I would like to 
identify with exactly what you are talking about.
    Mrs. Blackburn. OK.
    Mr. Wheeler. We share the same goals.
    Mrs. Blackburn. I am so excited that we agree on something.
    Mr. Wheeler. Well, this is--we could be----
    Mrs. Blackburn. This is a good day.
    Mr. Wheeler [continuing]. Violent agreement as well.
    Mrs. Blackburn. Good.
    Mr. Wheeler. You know, I----
    Mrs. Blackburn. Good.
    Mr. Wheeler. When I was President of CTIA, I happened to be 
the guy that negotiated the first deal with the government to 
repurpose Defense Department spectrum. Here is what I found, as 
a way of answering your question about squatting. The Corps of 
Engineers, for instance, said they were fully utilizing a piece 
of spectrum because once a month it took a reading on a dam 
level.
    Mrs. Blackburn. Right.
    Mr. Wheeler. I don't think that is fully utilizing. So the 
question we have to work through is how do you encourage 
Federal agencies, and all users, to think in terms of what is 
full application? So the answer to your question is we know who 
uses what spectrum. The specific use inside that spectrum, 
however----
    Mrs. Blackburn. OK.
    Mr. Wheeler [continuing]. Is something that the licensee 
controls.
    Mrs. Blackburn. OK. I don't want to run out of time. Now, 
if you know who has how much spectrum, have you put this into 
one report? Mr. Pai, Commissioner Pai, have you seen a report 
that says this is how much that is out there? Could you 
quantify a number----
    Mr. Pai. I have not seen a particular report about how 
Federal users are actually using the spectrum that they have, 
and I do agree----
    Mrs. Blackburn. And how much they have?
    Mr. Pai. And it would be very helpful to have that.
    Mrs. Blackburn. I think it would too, before we get too far 
down this road. What I would like to ask you to do is quantify 
this. And you and I know, all of us know, the way you can re-
pack this, and tighten it up, you can better utilize the 
spectrum, but these Federal agencies--yes, I have got to tell 
you, we have just done an IG report on wasteful spending, and 
not following what the IG has asked them to do, looking at 4 
years of these IG reports. If you don't force the issue, they 
are not going to take the action. And spectrum is a very 
valuable commodity right now, and we cannot allow Federal 
agencies, through laziness, or lack of creativity, or lack of 
innovation, to squat on this spectrum.
    So, before we get too far afield with the 350 megahertz 
auction and further, I would like for you to come back to us 
and say, this is what each of these different departments has, 
and this is what their utilization is, and this is how we can 
pull that back and re-deploy this into the marketplace and 
auction it. Because if we need a Federal override for 
something, just like with the AM band, come back and do 
something like that, but don't let them squat on this spectrum.
    Mr. Pai, before my time has run out. I will come back for 
the second round. Yield----
    Mr. Walden. All right, the gentlelady's time has expired. 
We will now go to the gentleman from New Jersey, Mr. Pallone.
    Mr. Pallone. Thank you, Mr. Chairman. Chairman Wheeler, I 
have three questions in three different areas I want to try to 
get in, so I am going to ask you to respond fairly quickly, if 
you can. You committed that the FCC would complete a proceeding 
by the end of this year to make our wireless networks more 
resilient--this deals with communications and emergencies--and 
I wanted to thank you again for that commitment. Last week 
former Commissioner Adelstein promised that the tower industry 
would work closely with your staff to install new rules for 
network resiliency. We are approaching the heart of hurricane 
season, and the third anniversary of Sandy is almost upon us, 
so what is the status of the FCC's proceeding on network 
resiliency?
    Mr. Wheeler. So we are working with the industry on that, 
Mr. Pallone. It is essential that a tower be able to stand up. 
I think we probably also have to address the backup power issue 
because if you don't--if the tower is standing, but there is no 
juice to it, so it is not worth anything, so these all fit 
together into a total package. And I would be happy to do a 
more detailed response on that, if you would like.
    Mr. Pallone. OK. If you do have something you could update 
us with now, through the Chairman, I would like to maybe have a 
written response, if we could, without objection.
    Mr. Walden. All right.
    Mr. Pallone. Thank you. Then the second question is, with 
regard to designated entities, in my opening statement I 
mentioned I support your recent decision to modify the FCC's 
designated entity rules, and since the rules have passed, 
however, I have heard criticism that just as the FCC closed 
some loopholes, it opened others. So how do you respond to 
those critics that question these decisions?
    Mr. Wheeler. I think that we have tightened up the rules 
substantially, and would be happy to discuss the specific ways 
in which we have done that. I have got to be real careful at 
how I talk about this, because it is a pending proceeding, but 
if you look at what is currently on the record with regard to 
the DEs and their relationship with Dish in the AWS-3 auction, 
we used a totality of circumstances test that had never been 
applied before to say, we don't think that that is a good idea, 
at a staff level. That is coming to the Commission, so, again, 
I have to rule on that, so I won't go any further.
    The fact of the matter is that we then took that totality 
of the circumstances and put it into the DE rules in this re-
write that we just did. So I think that we have shown that 
there is a total picture you have to look at, one, and two, 
that we have whatever it takes to step up and blow the whistle 
and say, ``that is not right.''
    Mr. Pallone. OK. With regard to the incentive auction and 
consumer outreach, as we head towards the incentive auction in 
the early part of next year, I become concerned about whether 
consumers will be prepared for the transition. In many ways, 
this education effort will be even more difficult than the one 
we faced with the digital TV transition, because we don't have 
funding for consumer outreach this time, and we will have to 
deal with a flash cut.
    So I raised this issue with the National Association of 
Broadcasters, and I can say that they committed to working with 
us to start planning on how best to reach out to consumers. My 
question is, can you commit to working with us and the 
broadcasters to devise a comprehensive plan to ensure that 
consumers will know what they need to do to continue to watch 
over the air TV?
    Mr. Wheeler. Yes, sir.
    Mr. Pallone. OK. You have actually answered all this in 4 
minutes, so I will yield back the balance of my time.
    Mr. Walden. Well done.
    The Chairman now recognizes the gentleman from Texas, Mr. 
Barton, up next.
    Mr. Barton. Thank you, Mr. Chairman, and thank you and the 
Ranking Member for this hearing. Thank our two Commissioners, 
the Chairman, Commissioner Pai, for being here.
    I am one of the advocates for low power television, and, as 
we all know, they don't have any real standing in this 
repackaging of the spectrum, if the mainline broadcasters give 
it back. But they do have a product. They have provided 
valuable service to the country, and I would like to see them 
helped in some way, if at all possible. So my question to both 
of you, we will start with the Chairman, and then Commissioner 
Pai, what can be done to ensure that we still have low power 
television once this repackaging is complete?
    Mr. Wheeler. Thank you, Mr. Barton, and I would like to 
associate myself with this position that you have taken. Low 
power is an important voice in the community, and translators 
as well. I set up a special meeting with low power operators 
out at the NAB last year, at their big convention, to make sure 
that I was hearing from them, and we were talking about it. I 
think that there are multiple things that we can do inside the 
statutory constraint that you referenced. One is that we will 
help them find new channels after the moving of the--firstly, 
we don't know which low powers are going to be affected, 
because we don't know what is----
    Mr. Barton. Right.
    Mr. Wheeler [continuing]. Going to happen in the auction. 
We don't know what is going to be available for them to move, 
so we don't know what is going to happen there. So we all have 
to kind of sit in limbo, and watch for that. But then, even 
beyond that, we are going to begin a rulemaking from which we 
will allow low power and translators to share a channel, just 
like we are allowing licensees--broadcast licensees, full power 
licensees, to share a channel. That will take advantage of the 
benefits of digital, and create another path.
    Mr. Barton. So you do see that there will still be a role 
for low power television?
    Mr. Wheeler. Yes, sir.
    Mr. Barton. OK. Mr. Pai?
    Mr. Pai. Congressman, I share your assessment, and the 
Chairman's assessment, that low power television provides 
valuable service in Texas, Utah, Nebraska, all across this 
country. And that is why I flagged, almost 3 years ago, the 
importance of making sure that, within the statutory 
constraints, the FCC does what it can, in the context of the 
incentive auction, especially in markets where we don't need 
spectrum, to help them stay in business.
    My concern is, however, that certain of the policy cuts 
that we are on the brink of making might end up impairing LPTV, 
and the vacant channel proceeding is one example of that, where 
the FCC has said, OK, if there is a vacant channel, or two 
vacant channels available after the incentive auction, then we 
will reserve those from unlicensed uses. And, not to denigrate, 
obviously, the importance of unlicensed, but nonetheless, this 
is the TV band that we are talking about, and if LPTV stations 
don't have a place to go, it seems to me that we should do what 
we can to prioritize their staying in business.
    Mr. Barton. Thank you. Thank the both of you, and with 
that, Mr. Chairman, I yield back.
    Mr. Walden. The gentleman yields back. The Chair now 
recognizes the gentlelady from California, Ms. Matsui, for 5 
minutes.
    Ms. Matsui. Thank you, Mr. Chairman.
    Mr. Doyle. Mr. Chairman----
    Ms. Eshoo. Mr. Doyle.
    Mr. Walden. I am just going by the list that your staff----
    Mr. Doyle. I was here well before the gavel----
    Mr. Walden. Well----
    Mr. Barton. I will give my 2 minutes to Mr. Doyle. I had a 
minute 55.
    Mr. Walden. I am just going by the list your staff 
provided, so----
    Ms. Matsui. I don't want to get in the middle of this.
    Mr. Walden. We will go with whatever you want.
    Mr. Doyle. You don't go in order?
    Mr. Barton. If Mr. Doyle will vote for my bill----
    Mr. Doyle. I will yield to Ms.----
    Mr. Barton [continuing]. To repeal the ban on crude oil 
exports----
    Mr. Doyle. I am going to yield to Ms. Matsui. Go ahead.
    Mr. Walden. I am just going by your list, so go ahead, Ms. 
Matsui.
    Ms. Matsui. Thank you very much, and Mr. Doyle, thank you 
very much too.
    Chairman Wheeler, after next year's incentive auction the 
FCC would have implemented the last auction Congress identified 
in the 2012 Spectrum Act, yet consumer demand for wireless 
services that rely on spectrum continues to explode, and we 
know it takes a long time to plan for any new spectrum auction. 
Mr. Chairman, do you agree that we need to create a spectrum 
pipeline for the next decade?
    Mr. Wheeler. Yes, ma'am.
    Ms. Matsui. OK. Now, what do you think are the first steps 
for the policymakers to consider?
    Mr. Wheeler. Well, I think that you and Mr. Guthrie have 
pointed a way towards that by providing some Congressional 
oversight and encouragement in the process. As Mrs. Blackburn 
indicated, clearly the FCC has a role to say, ``OK, where are 
the current allocations?'' But it then goes to the Executive 
Branch to determine the allocation within----
    Ms. Matsui. Yes.
    Mr. Wheeler [continuing]. Specific executive agencies, and 
to answer those questions. I would look forward to working 
with--and we do have a good working relationship with NTIA 
and--to try and address these issues. I think that this is 
something that both NTIA and the FCC can work together on.
    But I also need to be really candid and say that the kind 
of leadership that you and Mr. Guthrie are showing, that this 
Committee has shown, in keeping the spotlight on, and keeping 
the pressure on, is essential to paying attention to things 
downtown.
    Ms. Matsui. Well, we intend to keep the spotlight on, so 
thank you. Congress tasked the FCC with balancing many 
priorities in the upcoming incentive auction, unleashing new 
spectrum for licensed mobile broadband, protecting consumer 
access to local broadcasting, and creating new opportunities 
for unlicensed spectrum use. If done right, the FCC can ensure 
that the incentive auction clears a significant amount of 
beachfront spectrum needed to fuel our wireless economy, while 
protecting over the air broadcasting, and preserving the chance 
for unlicensed innovation.
    I know a lot of concerns have been raised, and that the FCC 
is scheduled to make some key decisions at your August meeting. 
Chairman Wheeler, what is the FCC doing to make sure 
stakeholders can feel confident in the incentive auction?
    Mr. Wheeler. Well, thank you, Congresswoman. The challenge 
of the incentive auction is like a very complex crossword 
puzzle, except for the fact that there is no picture on the 
front of the box, OK?
    Ms. Matsui. Yes.
    Mr. Wheeler. And so what we have been trying to do is to 
make sure that, of all the parties that are interested, that 
they can walk away with a solution. It may not be what they 
have come in and asked for. And as a person who used to also go 
in and ask the FCC to do things my way on spectrum auctions, I 
know it doesn't always have to be that way, but you need to 
make sure that, for instance, as Ms. Eshoo and I discussed for 
medical devices, that you have an answer there, that you have 
an answer for wireless mics, that you have an answer for 
unlicensed spectrum. And all of these have to balance out. And 
I believe that the item that we are bringing forward contains 
that kind of balance. Would I like to tweak it here or tweak it 
there, certainly, but you push here, and something----
    Ms. Matsui. Yes.
    Mr. Wheeler [continuing]. Busts over here. And so I think 
that the spectrum auction team, headed by Gary Epstein and 
Howard Symons, have done an excellent job in wading through all 
of this.
    Ms. Matsui. OK. I am going to ask you too, are we on track 
to see the incentive auction successfully completed next year 
in a way that preserves the goals that Congress intended?
    Mr. Wheeler. Yes, ma'am.
    Ms. Matsui. OK. I am a longtime advocate for modernization 
of the Lifeline Program. Broadband is a necessity, whether it 
is applying for a job, growing a small business, or parents 
helping their kids with homework, and I applaud the FCC for 
starting a rulemaking earlier this year to bring Lifeline into 
the 21st century. Mr. Chairman, what are the next steps for 
Lifeline reform?
    Mr. Wheeler. I hope that we will have a rulemaking to 
follow up on the Notice of Proposed Rulemaking as soon as 
comments are closed, and we can sift through them and move 
forward. Let me address an issue that Commissioner Pai was 
dealing with a moment ago. Broadband is the information 
pathway----
    Ms. Matsui. Yes.
    Mr. Wheeler [continuing]. Of the 21st century, and to deny 
access to that is to deny access to the 21st century.
    Ms. Matsui. Right.
    Mr. Wheeler. I think we need to have policies that make 
sure that everyone in America has access to that essential 
pathway of the 21st century.
    Ms. Matsui. I agree with you. Thank you very much, and I 
yield back.
    Mr. Walden. The gentlelady's time has expired, and yields 
back. The Chair now recognizes the Vice-Chair of the 
subcommittee, the gentleman from Ohio, Mr. Latta.
    Mr. Latta. Thank you very much, Mr. Chairman, and again, 
gentlemen, thanks for being here. Commissioner Pai, if I could 
start my questions with you. We all know that consumers are 
offered an array of video choices today, and new Internet 
delivered options are also complimented by the growing use of 
consumer apps to watch traditional TV on mobile devices. As a 
result, it seems that more online entertainment options, such 
as Netflix, and other over the top providers have transformed 
the marketplace. I am going to ask these couple questions. With 
that said, Commissioner, what is your assessment of the video 
marketplace, and can you remember a time when consumers have 
had so much choice in that market?
    Mr. Pai. Congressman, thanks for the question. I can't 
think of a time when consumers of video services have ever had 
it better. Having grown up in the era of three broadcast 
stations, and no satellite, and no cable, I can tell you that 
now, when I can power up Crackle on my laptop wherever I want, 
on whatever device I want, it is really a benefit. And I think 
that is part of the reason why I came out a couple weeks ago, 
and said that I don't think that the FCC needs to regulate so-
called over the top video. And that is consistent with what the 
Digital Media Association, which represents Apple, Amazon, 
Pandora, Sony, YouTube, and others, said just last week. This 
is not a marketplace that has failed. It is thriving, and let 
us leave well enough alone.
    Mr. Latta. So, in your opinion, that is what is driving 
innovation?
    Mr. Pai. Absolutely, and that is one of the great things 
about the broadband revolution, that all these business models 
are thriving because everyone can deliver these services over 
the Internet.
    Mr. Latta. OK. Let me follow up with this. Should the 
government be out there picking winners and losers in this 
space, or trying to impose new technology mandates to 
potentially so that--slow that innovation and limit that 
choice?
    Mr. Pai. Absolutely not. I think the worst thing the 
government could do would be to regulate either the entire 
marketplace, or pick out particular business models for 
disparate regulatory treatment. That will simply serve to 
distort the marketplace, and we will never know which business 
model consumers really would prefer.
    Mr. Latta. Thank you. Turning to you, Mr. Chairman, if I 
may, my district is Northwest/West Central Ohio, and you are 
kind of familiar with it in your days back in Ohio. I have a 
lot of general community hospitals, and other larger hospital 
associations in my district, and a number of these hospitals 
have expressed a very serious concern to the Commission 
regarding the technical rules for the use of the channel 37 by 
unlicensed TV white spaces devices.
    It has already been decided that channel 37 will be 
available for use by unlicensed devices in part of the 
incentive auction proceedings, however, technical rules that 
protect wireless medical telemetry service, WMTS, systems and 
also allow for the safe use of the TV white spaces devices that 
have not been mutually agreed upon. Let me ask you, do you 
agree that because wireless devices could cause harmful 
interference to hospital operations, and jeopardize patient 
safety, it is vitally important that all parties have the 
opportunity to work cooperatively to reach a consensus industry 
agreement on this issue before the Commission considers it in 
the August open meeting?
    Mr. Wheeler. So I agree that there is a technological 
challenge that we have to make sure that we deal with, and I 
believe that we have a belt and suspenders approach to that. 
The belt is to say that 380 meters from such a site is a no-go 
zone, which is essentially tripling of where we were before in 
response to what the WMTS folks have said, and some of the 
trials they have run up in Minnesota.
    But the suspenders are also that the coordination database, 
that must be used for unlicensed purposes, gets information fed 
into it if there is a problem in Northern Ohio or a particular 
area, and that then becomes a no-fly zone. And so what we have 
put in place is hard rock, and flexibility, that is going to 
deliver the kind of security that I think that both you and we 
are looking for.
    Mr. Latta. But do you think they have enough time to make 
sure they get that information to the Commission before your 
August meeting? Do you think there is enough time? Because, 
here we are on the 27th of July, or 28th that we are right at 
that point?
    Mr. Wheeler. So they have just submitted to us additional 
information from these field tests, and it was based upon that 
that we altered what our proposal is. This is not an issue that 
hasn't been dealt with since you passed the Spectrum Act. This 
is something that has been going on for multiple years. Their 
tests were really helpful in that regard. That is why we tried 
to make sure that we harmonize with the kinds of things that 
they discovered in those tests, and provide the flexibility to 
move in and do something if, in fact, there is an aberration.
    This kind of goes to Mrs. Blackburn's point about sharing. 
This is the whole reality about sharing, that we want to create 
a structure that says that you can deal with the aberrations. 
And this Committee told us in statute to do that, and that was 
a wise decision on your part, and we are following through on 
that.
    Mr. Latta. Well, thank you. Mr. Chairman, if I may, I would 
like to submit for the record a statement from the American 
Hospital Association.
    Mr. Walden. Without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Latta. Thank you.
    Mr. Walden. The Chair now recognizes the gentleman from 
Vermont. Just kidding. Mr. Doyle from----
    Mr. Doyle. Boy, that----
    Mr. Walden [continuing]. Pennsylvania.
    Mr. Doyle. That would have really gone bad.
    Mr. Welch. Mr. Chairman, if your goal was to get his 
attention, you succeeded.
    Mr. Walden. Just wanted to make sure he was awake. Mr. 
Doyle.
    Mr. Doyle. Thank you, Mr. Chairman. Gentlemen, welcome. 
Commissioner Pai, I was just listening to your opening 
statement, where you were lamenting how you and Commissioner 
O'Reilly have all these wonderful ideas that are met with 
either no response, or no. And I just want you to know, we on 
the Democratic side, we are feeling your pain. It is called 
being in the minority.
    Mr. Walden. Would the gentleman----
    Mr. Doyle. We know that feeling.
    Mr. Walden [continuing]. Just for a second. We have been 
informed by the folks that do the streaming, Mr. Wheeler, if 
you could pull that microphone closer? In the Internet Age, 
they are not able to hear you quite as well, so----
    Mr. Doyle. Thank you, Mr.--we feel your pain, I just want 
you to know. Chairman Wheeler, I have questions for you. I 
know, like me, you are a strong advocate for a competitive 
telecommunications marketplace, and you have been a great 
advocate in moving these long stalled issues forward. I have a 
number of questions and concerns about the special access 
proceeding. First, I am concerned that the window for moving 
forward on special access reform is narrowing, particularly 
with this latest extension of the comment window. Additionally, 
I have heard that the FCC still hasn't made the data from the 
special access data request available to the stakeholders. With 
the comment deadline looming, when will the stakeholders be 
able to access this data in order to make fully informed 
comments for the proceeding?
    Mr. Wheeler. Thank you, Mr. Doyle. I don't know the 
specific date. We will announce a specific date. I can't free 
form it here, but obviously there have been multiple challenges 
with special access that start with a collection of data that 
was thwarted for years, and we were finally able to begin 
collecting that data. Insofar as--we will make sure that data 
is on the record, and on the record in a timely manner. And I 
share your interest in wanting to make sure that we have an 
opportunity to address the special access question, but it 
needs to be fact-based.
    Mr. Doyle. Yes. I mean, can you give us any idea when you 
anticipate the Commission taking action on the proceeding? Is 
it going to be in my lifetime?
    Mr. Wheeler. Sir, I hope it is while I am Chairman, and 
that that is a shorter period than your lifetime.
    Mr. Doyle. Let me ask you another thing. And, like a lot of 
people on this Committee, and our Ranking Member, Ms. Eshoo, I 
also have concerns about the trigger for the spectrum reserve 
in the incentive auction. We have all been working hard to 
ensure that this auction will enhance competition for wireless 
broadband, and that consumers will reap the benefits of lower 
prices and greater innovation. To that end, what is the 
Commission doing to address the concerns that many of us have 
about the reserve trigger, particularly in regard to the 
trigger coming into play so late in the auction?
    Mr. Wheeler. Well, let me be sure which trigger you are 
talking about. Are you triggering the assignment round issue?
    Mr. Doyle. No, the reserve.
    Mr. Wheeler. The reserve? So the question then becomes, 
``are you going to cut back on the amount of bidding that goes 
on for reserve spectrum?'' And we have taken the position that 
you should not. That, first of all, the reserve has been 
created. That in itself is a huge step, that there are a lot of 
people on this Committee, and on the Commission, disagree with.
    Then the question becomes, ``do you want the auction to 
function through the whole process, or do you want to truncate 
it for a quicker trigger for this spectrum, while the other 
spectrum auction keeps going?'' And it seems to me that what 
that ends up doing is reducing participation in the auction. It 
probably reduces the prices people will pay, because it means 
that, here in the reserve you stop, while the bidding keeps 
going on up here in the unreserved. And I think an auction is 
something that proceeds to a conclusion, not an auction that 
gets terminated to favor one party or another. So the 
establishment of the reserve is a huge point. I think what we 
should not be doing is picking winners and losers inside that 
reserve.
    Mr. Doyle. Yes. Thank you, Mr. Chairman. I will yield back.
    Mr. Walden. The gentleman yields back. The Chair now 
recognize the gentleman from Illinois, Mr. Shimkus, for 5 
minutes.
    Mr. Shimkus. Thank you, Mr. Chairman. Welcome. You both 
agree that, to facilitate rural broadband deployment really is 
going to take USF reform, is that correct? Would you----
    Mr. Wheeler. Yes, sir, we both----
    Mr. Shimkus. And Commissioner Pai?
    Mr. Pai. Yes, sir.
    Mr. Shimkus. And, Commissioner Pai, in your opening 
statement you mentioned some principles. Can you re-state those 
real quickly again for me? I caught a couple of them, but I 
didn't----
    Mr. Pai. So with respect to my rural broadband plan, it 
would be a two-fold plan. First and foremost would be targeted 
changes to our universal service rules to allow essentially 
rate-of-return carriers to get universal service support for 
the costs that they incur for deploying broadband in rural 
areas. And so currently that support only extends to voice 
service. I would let them get that support if they offered 
broadband as a standalone service.
    Secondly, creating a voluntary path where rate-of-return 
carriers could, at their option, get into a similar Connect 
America Fund that we have for price cap carriers. And obviously 
the so-called ACAN model in that regard isn't perfect, but 
nonetheless, if rate of return carriers find it to be 
preferable, they should be given a limited window to be able to 
do that.
    Mr. Shimkus. Thank you. Chairman Wheeler, these are all 
kind of rural questions for rural service, so it is really 
appealing to the constituary representing about a third of the 
State of Illinois, so it is like a lot of the rural areas. So 
this is on this dropped call issue still. I mean, I go to some 
of my either family-owned phone----
    Mr. Wheeler. Yes, sir.
    Mr. Shimkus [continuing]. Companies, or the co-ops that I 
still have out there, and I think we talked about the last 
couple hearings----
    Mr. Wheeler. Yes.
    Mr. Shimkus [continuing]. That we have been with, and the 
intermediary carriers called the least cost routers, they----
    Mr. Wheeler. Right.
    Mr. Shimkus [continuing]. Seem to be the problem. Can you 
tell me how we are going to--because you know these companies. 
They get blamed if the call gets dropped. It is an intermediary 
carrier that is doing it, and it causes all sorts of problems.
    Mr. Wheeler. Thank you, Congressman. Yes, and you put your 
finger on--it is the intermediate carrier, and it is the 
failure on the part of the major carriers to police their 
subcontractors, if you will. So we have done several things. 
First of all, there used to be a game that got played where 
they would give a false ring to pretend the call was being 
completed, when it really wasn't. We have got a rule in place 
saying that is out of business.
    Secondly is that we have been enforcing this. Within the 
last few weeks we fined Verizon $2 million, and required them 
to do $3 million of additional improvements to stop this, 
because in 26 rural areas they weren't paying attention to 
this, which is the heart of the problem. It is this going to 
what you call the intermediate carriers that they need to be 
paying attention to.
    And thirdly is that we have a data survey out there right 
now to try and identify exactly what the extent and other 
causes might be so that we can take additional action, if 
warranted. But yes, sir, we understand that the call completion 
is a serious issue, and we want to be all over it.
    Mr. Shimkus. Well, that is good, because we are going into 
the August break, and I know they will have----
    Mr. Wheeler. You are going to hear about it.
    Mr. Shimkus. They are going to come visit me again during 
the break, and they are going to ask, and so I am glad I got a 
chance to ask the question, and continue to address this issue.
    Last question, Commissioner Pai, when it comes to the IP 
transition, and the ability to upgrade technologies, we kind of 
talked about that earlier, do all providers face a regulatory 
level playing field when it comes to making upgrades and 
provide their customers with the newest technology?
    Mr. Pai. Congressman, I don't think they do. I think that 
some segments of the industry face no barrier to deciding to 
deploy next generation infrastructure that connects people to 
digital opportunities. On the other hand, another segment faces 
antiquated rules that essentially require them to maintain the 
networks of yesterday, the copper-based TDM networks. And 
obviously every dollar they have to spend maintaining those 
networks is by definition a dollar they can't spend deploying 
fiber that would allow them to compete with others.
    And so that is why I have said that, look, if we want to 
have more broadband competition, let us have a level playing 
field, regulatorily speaking, in which every single provider 
has the strongest possible incentive to deploy fiber to the 
home to compete for that customer's attention.
    Mr. Shimkus. Great. And I will just end on--Chairman 
Wheeler, thank you for your work on 911. I am glad we talked 
prior, and I look forward to getting together with Ranking 
Member Eshoo to----
    Mr. Wheeler. Thank you, sir.
    Mr. Shimkus. There is always work to be done in this----
    Ms. Eshoo. Right.
    Mr. Shimkus [continuing]. Field, and----
    Ms. Eshoo. Would you yield just----
    Mr. Shimkus. I would----
    Ms. Eshoo [continuing]. For----
    Mr. Shimkus. Yes.
    Ms. Eshoo [continuing]. Ten seconds? Thank you. I thank the 
gentleman, and we are going to work together on that. How does 
the Commission come up with the amount of what a fine is going 
to be? I mean, in one case it is $100 million. You just 
mentioned $2 million. These are considerable sums, so how do 
you--do you have a set of rules around that, or----
    Mr. Wheeler. For some kinds of issues, such as Lifeline, 
there is a schedule. For others it is, again, a totality of the 
circumstances kind of a situation, where you make a judgment 
call.
    Ms. Eshoo. And your department----
    Mr. Shimkus. My time has expired.
    Ms. Eshoo [continuing]. Makes the call?
    Mr. Wheeler. Yes, ma'am.
    Mr. Walden. Time has expired. Now go to the gentleman from 
Vermont, Mr. Welch, for 5 minutes.
    Mr. Welch. Thank you very much. I thank both of you for 
joining us today.
    Chairman Wheeler, universal service, a really important 
issue, and I know that you have been implementing some reforms, 
and I am asking you to tell us what is the status of that, and 
what are you doing to make sure at the FCC that public 
resources are being responsibly used? And, actually, you can 
both answer that.
    Mr. Wheeler. Thank you, Congressman, because Commissioner 
Pai and I share the belief that he has been talking about here, 
insofar as the dichotomy between narrow band and broadband, and 
that needs to be fixed. I think I go a little further in my 
approach than Commissioner Pai does. I have developed what I 
have now started calling the Walden Rule, because----
    Mr. Walden. Please.
    Mr. Wheeler. Because I read the other day that you said, 
Mr. Chairman, ``that USF should spend money where no one else 
will spend''. And that is a core principle. And as this 
Committee has been telling us so often, you need to review what 
our rules are.
    Mr. Welch. Right.
    Mr. Wheeler. The fact that we are spending money to 
subsidize the telephone company around Disney World, just 
because we always have, doesn't make a lot of sense. We just 
had a man in Hawaii go to jail for tax fraud. He is a recipient 
of rural universal service funds, and it ended up that he was 
charging his family's education expenses to universal service, 
and people were having to pay for it. We ought to have some 
standards for what is in OPEX. We ought to have some standards 
for what is in CAPEX.
    I was just asked the other day to approve a waiver for a 
universal service trial to a company that could not produce 
audited financial statements. That is wrong. This isn't my 
money. This is the people's money. We need to get it out. That 
is why Commissioner O'Reilly, Commissioner Clyburn, and I are 
working together on a bipartisan package of reforms for how we 
are going to deal with making sure that rate of return carriers 
have what Commissioner Pai I think has called a two track 
solution, and that is that we have a model that deals with the 
new broadband realities, and then we have a review of what the 
standards ought to be for the old system.
    Mr. Welch. Right.
    Mr. Wheeler. And we are moving down that path.
    Mr. Welch. Let me hear a little from Commissioner Pai. 
Thank you, Mr. Chairman.
    Mr. Pai. Congressman, I think you captured the sentiment 
perfectly in your opening remarks, when you said that, when it 
comes to broadband, rural service should be there, and be high 
quality. And that is exactly why I have proposed this plan, to 
make sure that, when it comes to rural Americans, we don't 
leave them on a so-called slow lane when it comes to broadband. 
We give them the exact same opportunity they would have whether 
they were in Montpelier or in New York City.
    And my concern, however, is that, given the timeframe that 
we have committed to, which is to get this done by the end of 
the year, I think it would be better to embrace the approach 
that Congressman Cramer, and over 100 other members, including 
20 members of this Committee, embrace, which is to have a 
targeted solution to the standalone broadband problem. I 
completely agree with the Chairman, there are abuses in the 
system that need to be corrected, and I stand willing and able 
to work with him and the other Commissioners to change that, 
but we can't let the necessary and the perfect be the enemy of 
the good.
    Mr. Welch. Well, thank you very much. The other thing, 
Lifeline, my view is that it is a really important program, but 
there is fraud, there is abuse. And one of the things that 
happens around here is that, out of frustration, when there is 
fraud and abuse, sometimes we attack the very existence of the 
program, rather than reform it. And I think where there is 
bipartisan agreement is that anything we can do to limit fraud 
and abuse, obviously, we want to do. What is the progress on 
Lifeline?
    Mr. Wheeler. Thank you, Mr. Welch. The----
    Mr. Welch. And that is for both of you.
    Mr. Wheeler. We are going to have a rulemaking on Lifeline 
hopefully before the year is out. It depends on the comments 
and everything that we receive. And it begins with overhaul. 
There are two problems with Lifeline. One, it was designed 
wrong; and two, it was overseen wrong. Other than that, 
everything is fine. But it was designed wrong.
    I must say, this was put in place by a previous 
administration, which we have inherited. It is ridiculous to 
have the people who are benefiting from the receipt of the 
funds be those certifying that the folks--get them to the right 
folks. It is ridiculous that you not require those people who 
are receiving the funds to keep records. On the administration 
side, it is ridiculous that you not have a database for 
duplicates. So what we have done, since we came in, 25 percent 
reduction on expenditures on Lifeline. 20 million people who 
were inappropriately on it are no longer on it. And $100 
million in penalties.
    So we have done what we can to fix the oversight. What this 
rulemaking is going to do is continue that, and fix the 
underlying rule problems.
    Mr. Welch. Thank you. My time is up, but I don't know if 
you want to let Commissioner Pai add anything?
    Mr. Walden. He might address the eligibility database. I 
don't think we got to that. Commissioner Pai?
    Mr. Pai. Congressman, I obviously support the Chairman's 
vision, at least, of having a more fiscally responsible 
program. My problem, however, is that we didn't adopt some of 
the more basic reforms. For example, capping or putting a 
budget on the program, as every other universal service fund 
program has. Targeting broadband adoption, which is really the 
critical issue, we want these funds connecting people who are 
offline to help them get online. But currently 34 percent of 
American households, over 40 million households, are eligible 
for the program. And so if we are going to modernize the 
program to target broadband, let us make sure we have fiscal 
responsibility measures in place, and let us make sure we 
target the help to people who really need it. And that is, I 
think, an important conversation to have.
    Mr. Walden. What about the eligibility database? Where are 
you on that?
    Mr. Wheeler. So----
    Mr. Pai. Sorry, go ahead.
    Mr. Wheeler. Go ahead, no.
    Mr. Pai. No, after you.
    Mr. Wheeler. The duplication database is working quite 
well. Insofar as the eligibility database, the issue is our 
ability to get access to data held by state agencies, and we 
are in the process of working our way through that.
    Mr. Walden. That is something we need to get done, 
obviously.
    Mr. Wheeler. I agree.
    Mr. Walden. I will go now to the gentleman from New Jersey, 
Mr. Lance, for 5 minutes.
    Mr. Lance. Thank you, Mr. Chairman. Commissioner Pai, I 
want to speak with you about the FCC's recent order regarding 
TCPA. You stated in your dissent that the attempt to modernize 
it, ``is likely to leave the American consumer, not to mention 
American enterprise, worse off''. Can you elaborate to the 
Committee how you believe the Commission may not have gotten 
this correct, and what it should have done to protect the 
American consumer?
    Mr. Pai. Thank you, Congressman, for the question. I begin 
from the premise that unwanted robocallers are a plague on the 
American consumer. I don't want to get those calls, I know the 
Chairman doesn't want to get them. Nobody wants to get them. My 
problem, however, with the Commission's order is that it takes 
us in the opposite direction. For one thing, it exempted entire 
industries from the TCPA. So now, for example, the prison pay 
phone industry can robocall you. Additionally, it dramatically 
expanded the range of devices that are now considered to be 
auto-dialers. So now, if you use your smartphone to make a 
telephone call, that is technically an auto-dialer, subject to 
the TCPA.
    Similarly, it opened the loopholes for reassigned numbers. 
There are 37 million numbers that are re-assigned every single 
year. A lot of legitimate businesses have no reason to know if 
they have that number in stock, and they have the prior phone 
number's owner--the consent of that owner--they have no reason 
to know that that number has been reassigned, unless they can 
face TCPA liability. Those are the kinds of loopholes that I 
think are simply going to generate even more litigation, and 
litigation has already become a flood. There were 14 class 
actions filed in 2008. Last year alone there were something 
like 1,918. And so my concern is that we are opening up a lot 
of these loopholes.
    At the same time, we are not cracking down on the really 
bad actors, which are the unwanted robocallers. For example, we 
didn't create, contrary to what I would have preferred, a safe 
harbor for carriers to allow them to develop technology to 
block foreign robocallers. We didn't take more aggressive 
enforcement measures, despite the fact that we got 96,000 
complaints last year for violations of the Do Not Call 
registry. In the first 7 months of this year, even though I 
called for it in January, we have had one citation from the 
Enforcement Bureau against the Do Not Call registry violators, 
and that is unacceptable to me.
    Mr. Lance. Why do you think the Commission did not have a 
safe harbor rule?
    Mr. Pai. I am not sure why, to be honest with you. But what 
I can tell you is that it has created tremendous uncertainty 
among the host of legitimate businesses that have their 
consumers' consent, and want to communicate important 
information. Everyone from restaurants to the Los Angeles 
Lakers have faced class action lawsuits for trying to 
communicate with people who have voluntarily communicated with 
them.
    Mr. Lance. Thank you. Chairman?
    Mr. Wheeler. Thank you, Mr. Lance. Several things. First of 
all, let me just go down Commissioner Pai's list. Exemptions, 
we wanted to make sure that there were opportunities if your 
doctor, or a hospital, needs to do something because of a 
medical emergency, or your bank needs to contact you because of 
fraud, or something like that, that there should be those kinds 
of exemptions, and they are not big loopholes.
    Secondly, you get to make one mistake, and discover that 
the Lance phone has been transferred. You don't have to do this 
three, four, or hundreds of times, as some people have. You can 
say, ``excuse me, this is not the number,'' and just provide 
notification.
    Thirdly, it was the Congress that created the private right 
of action, and that is something that is a decision that is out 
of our hands. But to your key point about the safe harbor and 
the carrier solution, specifically we address that, because the 
carriers were saying to us, ``we are afraid to offer blocking 
services, because you might charge us with blocking calls, 
doing just that,'' which would be a violation of our rules. And 
so we amended the rules to say, ``no, that is not a 
violation.''
    And we now have a workshop coming up where we are bringing 
the carriers, and other affected parties, in to sit down to 
say, ``OK, exactly how do you do it?'' Because how you handle a 
VOIP call is different from how you handle a TDM call. And how 
do you put those in place? We have said to the carriers, ``our 
rules now specifically allow you to block calls where you are 
requested by consumers. Please do.''
    Mr. Lance. Thank you. Any sur-rebuttal, Commissioner Pai?
    Mr. Pai. Congressman, I would simply point out that the 
safe harbor wasn't given enough granularity, to say the least. 
And if a carrier is willing to trust an agency that has proven 
itself to be more than willing to fine a company up to $100 
million for a violation of rules that don't exist, I would urge 
them not to rely on a safe harbor that doesn't provide much 
guidance at all.
    Mr. Wheeler. You are not encouraging folks not to not black 
calls? Are we together on the fact that, yes, we want them to 
be blocking calls?
    Mr. Pai. On that we agree, which is precisely why I 
proposed that the agency create a very detailed, specific 
guideline for how the safe harbor would operate.
    Mr. Wheeler. I don't want to send mixed messages--say, no, 
we can't do it because there is----
    Mr. Lance. Thank you. My time has expired, and thank you 
for the rebuttal, the sur-rebuttal, the sur-sur-rebuttal, and 
the sur-sur-sur-rebuttal.
    Mr. Pai. And feel free to call either one of us at home if 
you would like to follow up.
    Mr. Wheeler. That is right.
    Mr. Walden. I have got a pre-recorded message we will----
    Mr. Wheeler. That is right.
    Mr. Walden [continuing]. Send you. I do think there are 
issues the Committee will proceed to talk about on this issue, 
though, as it relates to democracy and----
    Mr. Lance. Thank you, Mr. Chair.
    Mr. Walden. We will go now to Mr. Loebsack of Iowa for 5 
minutes.
    Mr. Loebsack. Thank you, Mr. Chair. I really just want to 
come back to one issue that was already brought up, and have 
you elaborate a little bit on that, Mr. Wheeler. But before I 
actually ask that specific question, I always just like to talk 
about rural broadband, as you might imagine, both of you, and 
just how important it is for places like Iowa, but not just 
places like Iowa, just all over the country. And I know we have 
bipartisan support to make sure that we have rules in place, 
make sure that we have programs in place, incentives in place, 
to expand that broadband availability to so many folks around 
the country.
    We know it is an economic development issue. We know it is 
a health issue when we talk about the spectrum, for example, 
issue for hospitals, making sure that--I heard from someone 
this morning about that, making sure that they have the 
broadband available, and makingsure that they can do what they 
need to do for their patients.
    We know it is important for education. I often talk about 
the University of Iowa, how they have a program where they 
offer AP classes, but it doesn't do any good in those rural 
areas if those folks cannot access what the University of Iowa 
offers. And we know that farmers, it is very, very important 
for farmers to be able to have access to broadband so they can 
make decisions, obviously, for planting, and for their 
businesses in general, and on and on and on. I was in 
Centreville, Iowa for one of my 24 town hall meetings on 
broadband--small town, and there were 27 people at that meeting 
on a weekday afternoon at 2:00 in the afternoon because it is 
just so absolutely critical for them to be able to have this 
broadband coverage.
    So really my question goes back to what I think was already 
mentioned. You know, earlier this year 115 members, myself 
included, wrote to you, Chairman Wheeler, urging reform of the 
portion of the high cost program that supports small rural 
broadband providers so that they could receive USF support for 
lines, over which customers opted to purchase only broadband, 
rather than traditional voice service, as is the current 
practice. The rural broadband industry submitted a data-only 
broadband reform plan to the FCC in 2013, but the FCC has not 
yet acted on this plan. Are there issues with the reform plan 
specifically proposed by the Rural Broadband Industry that 
prevent the FCC from acting on it as proposed? And if you could 
just elaborate on that, I would appreciate it.
    Mr. Wheeler. Thank you, Congressman. There are something 
like 114 different carriers in Iowa. You represent the poster 
child of the rural challenge for rate of return carriers. And 
it is outrageous that if you live in rural America you are 30 
times more likely not to be able to get broadband as if you 
live in an urban area.
    So there are two components. One is dealing with things 
through the price cap carriers. And we recently released what 
will be $10 billion over 6 years to seven carriers to build 
their facilities. I love seeing the headlines that pop up 
across the country that we get in our report that so-and-so 
carrier announces they are going to spend $27 million to bring 
broadband to this area, as a result of our funds.
    Then we go to the rate of return carriers. The challenge 
with rate of return carrier, and how we deal with it, is that 
the program has been in place for so long, and the 
circumstances have changed over that period. Now, as I say, I 
agree strongly with Commissioner Pai that this bifurcation 
between narrow band and broadband doesn't make any sense, but 
we have got to do better than just slapping that Band-Aid on. 
We have to be saying, ``how do we make sure that we can bring 
this whole program forward?''
    So we sat down with the rural carriers to say, ``how can we 
do that?'' And to try and reach a consensus, because there are 
a couple of rural carrier associations who don't agree with 
themselves, as you know, how do you do that? It is encouraging. 
Everybody has agreed on this two prong process that I laid out 
a minute ago. And I am optimistic that Commissioner O'Reilly, 
and Commissioner Clyburn, and myself, who are all working 
together with the rural carriers to come up with a package 
proposal, will be able to get this done, and that we will be 
able to live up to the commitment that we made over in the 
other body to have it done by the end of the year.
    Mr. Loebsack. Thank you. Thank you, Mr. Wheeler. Thank you, 
Mr. Chair, and I yield back.
    Mr. Walden. The gentleman yields back. The Chair recognize 
the gentleman from Kentucky, Mr. Guthrie, for 5 minutes.
    Mr. Guthrie. Thank you, Mr. Chairman, and thank you for 
being here. And my first question is for Commissioner Pai, and 
it is three parts. I will ask, and if you need it repeated, I 
can do so as well, but this all flows together. But why do you 
oppose putting broadcasters in the duplex gap, and why is it 
important to minimize the number of broadcast stations placed 
in the wireless portion of the 600 megahertz band after the 
incentive auction? And I can stop there. I will go ahead and 
give you the three, and see--maybe you can answer one. Why do 
you believe it is preferable to put broadcast stations in the 
uplink portion--or the wireless band, rather than the downlink? 
And you have suggested that the Commission hold an en banc 
hearing to discuss issues related to the 600 megahertz plan. 
Why do you such a hearing would be helpful?
    Mr. Pai. Congressman, thanks for the question. I was 
transcribing as quickly as I could, so if I miss one, please 
let me know. In terms of putting broadcasters in the duplex 
gap, one of the things that a typically disparate industry, as 
the wireless industry, the broadcasters, and unlicensed 
advocates agree on, is that placing broadcasters in duplex gap 
would be a terrible idea. Wireless companies don't like it 
because it would impair downlink spectrum, which they have told 
us is more critical for them, in terms of meeting consumer 
demand. Broadcasters have told us it is not optimal because the 
duplex gap is the only exclusively reserved spectrum for 
wireless microphones, which a lot of broadcasters rely on, and 
unlicensed advocates have told us as well that if you have a 
full powered broadcaster out there, unlicensed devices will get 
drowned out. And so that is part of the reason why I have said 
consistently that we need to do what the record suggests, and 
that is moving them somewhere other than the duplex gap.
    That raises the question, well, where do you put them? And 
as between the downlink and the uplink, I don't think there is 
any question, certainly not in terms of the record itself, that 
there is tremendous opposition to putting them in downlink. If 
you think about it, everyone carrying a smartphone around now 
relies tremendously on downlink spectrum. We are always 
downloading things from the Internet. So putting a broadcaster 
in the downlink--first of all, it will impair a lot of the 
spectrum that is slated to be sold at auction and make it a lot 
less appealing. Secondly, it will end up causing tremendous 
problems, in terms of interference between broadcast and 
wireless.
    And here the 700 MHz auction is really a cautionary tale. 
Think about all the efforts that the Commission had to deal 
with because we had broadcasters in channel 51, and we had 
wireless carriers in the adjacent A block of the 700 MHz band. 
Those issues took a long time to resolve, and it was really 
challenging. Here we are talking about co-channel, in addition 
to adjacent channel interference. Plus, remember, this is the 
last spectrum auction, hopefully, we are going to have in some 
time with respect to this band, so broadcasters placed in 
downlink will be there essentially permanently. So this is not 
a problem we will be able to work around.
    So that is why I would prefer, based on what I have seen in 
the record, to place broadcasters, if they have to be put in 
the wireless band, to be placed in the uplink. Wireless 
carriers have told us it is technically preferable for a couple 
of reasons. First, they can minimize the amount of--or they can 
minimize the problems it would cause, in terms of interference, 
because you could just simply put a base station filter on. It 
would be a lot easier, since base stations are smaller in 
number, fixed in location, as opposed to putting a filter on a 
mobile device, which everyone is carrying around, and is always 
moving.
    So in terms of the en banc hearing, which I think was your 
third question, one of the reasons why I think it would be 
helpful is that the Commission has simply not made available 
enough data, in terms of the simulations for these clearing 
scenarios, the data, and the assumptions that underlie those 
simulations. And we have heard from everybody, from unlicensed 
advocates, to broadcasters, and wireless carriers, we need more 
data, and we need to give you more meaningful input before you 
make a decision.
    And so that is why I thought, let us just bring them all 
into a room, let us have everybody participate, and so then we, 
the Commissioners, can have a fully informed discussion before 
we vote on August 6, or whenever it is, to make sure that the 
band plan is right. I mean, Congress only gave us one chance to 
get it right, and if we don't, then I am afraid the cost could 
be substantial.
    Mr. Guthrie. OK. I am going to try to get another question 
in, and for Commissioner Pai as well. So you said hopefully 
this is the last spectrum auction for a long time, I think you 
said?
    Mr. Pai. With respect to 600 megahertz, yes.
    Mr. Guthrie. Well, do you believe enough is being done to 
ensure there is a long term national strategy to make 
additional spectrum available for commercial use, and if not, 
what else do you believe should be done?
    Mr. Pai. Thanks for the question. I think, consistent with 
what the Chairman has said, what Congresswoman Matsui and 
Congresswoman Blackburn have said, we need to make sure that 
there is more spectrum in the pipeline. I look at, the 
proliferation of broadband as a consumer, and I think that is a 
great thing. I look at it as a Commissioner, I wonder, how are 
we going to supply this spectrum that all these devices 
connected to the Internet are going to need? And that is part 
of the reason why I have been so bullish about getting more 
licensed and unlicensed spectrum out there.
    Mr. Guthrie. Do you think congressional action is needed?
    Mr. Pai. I think in some cases it might be. With respect to 
Federal users in particular, it would be very helpful. And I 
know that you and Congresswoman Matsui have been leaders on 
that, and I thank you for that legislation.
    Mr. Guthrie. Chairman Wheeler, I only have about 20 some 
seconds, but to comment on what he was about, the national--
more available spectrum?
    Mr. Wheeler. Yes, sir.
    Mr. Guthrie. May not be enough time.
    Mr. Wheeler. Yes, sir, and I would like to identify with 
what you and Congresswoman Matsui are doing. And, if we get a 
chance, I would like to also respond to your first question as 
well.
    Mr. Guthrie. OK. I only have 9 seconds, so I yield back, 
sorry.
    Mr. Walden. The gentleman yields back. The Chair now 
recognizes the gentlelady, Ms. Clarke, for 5 minutes.
    Ms. Clarke. Thank you, Mr. Chairman, and I thank our 
Ranking Member. I, of course, thank our panelists this 
afternoon for your updates regarding the agency's activities.
    I have a few concerns that I would like to have you 
address, and one of them worries me a bit, and it is what is 
not in your testimony, it is how the Commission will address 
continuing challenges in diversity and representation in the 
media and telecom industries. We are in the 21st century. We 
look at our nation, and its diversity, and I think there is a 
widespread acknowledgement that what we see, in terms of 
industry, is really just not reflective of who we are as a 
country.
    So I would like to ask, first of all, Chairman Wheeler, 
where is the Commission's focus on the completion of the 
diversity studies, and how can this data be used to create more 
nuanced and tailored policies and reforms that advance equity 
and inclusion? And second to that is what metrics and 
accountability structures are in place to ensure that 
vulnerable populations and their communities will be adequately 
served through these proposals?
    Mr. Wheeler. Thank you very much, Ms. Clarke. The media 
report that I had promised to the Committee by the middle of 
next year will include a topic on diversity. It has, frankly, 
been an issue that has caught up previous reports. I think that 
there are a couple of things we can take up. There is a 
substantial increase in the number of broadcast licensees since 
I became Chairman, minority broadcast licensees in large part, 
because of what we did on the JSA rules. Those rules were being 
used to keep opportunity away from minority entrepreneurs and I 
am proud of that effort.
    Secondly I think we all have to recognize, as a point that 
Mr. Latta was raising previously, the importance of how the 
television business is changing, and the opportunity that is 
reflected by over the top providers. There has been a 
difference up here on whether we ought to do what this 
Committee did for direct broadcast satellite for over the top. 
And that is to say that you can't hold content back. You can't 
have various leverage points, because I think over the top 
programming creates incredible new opportunities for 
minorities.
    And lastly, we have been talking a lot about the designated 
entity rules and the wireless auction. I feel strongly that 
what this Congress asked us to do was to create opportunities 
for minorities, women, and rural individuals to participate in 
wireless. That is what we did in the DE rules. The suggestions 
that have been made by my colleagues on the Republican side 
actually would have limited the ability for real live DEs, 
rather than hypothetical DEs, to participate.
    Ms. Clarke. So on the subject of DEs, and Commissioner Pai, 
excuse me, I will have you respond as well. It appears that we 
have probably cracked the code of only one part of supporting 
small businesses, gained access to capital to enable to compete 
in the wireless industry. How can the Commission facilitate 
more secondary market transactions for DEs and other small 
businesses, especially those owned by women and minorities, 
with the private sector?
    Mr. Wheeler. Were you addressing that to him? So I think 
that we need to make sure that--again, the JSA rule was very 
helpful in that regard, and has performed as expected. We have 
made it clear that when broadcast licensees come in for 
transfers, and they are complying with the rule which says that 
they can't now have control of multiple licensees in a market, 
that we will look favorably upon them selling those assets to 
minority entrepreneurs. And, in fact, that has been successful.
    Ms. Clarke. Thank you, Chairman. Commissioner, I have run 
out of time, but hopefully we can get a response from you as 
well. Thank you.
    Mr. Pai. Right now, or for the record, or--whichever.
    Mr. Walden. Probably for the record, because I want to keep 
moving forward, I think.
    Mr. Pai. OK.
    Mr. Walden. Mr. Olson from Texas, you are recognized for 5 
minutes.
    Mr. Olson. I thank the Chair, and welcome Chairman Wheeler 
and Commissioner Pai. Since I have been on the Energy and 
Commerce Committee, since 2011, consumer privacy has been a 
focus of my work for the people of Texas 22. In the 112th and 
111th Congress, that work was done on the Commerce, 
Manufacturing, and Trade Subcommittee because they had 
jurisdiction over the FTC. But the FCC has grabbed that 
authority to regulate the broadband ISPs, taken it from the 
FTC, and now it is with the FCC, and now it is under this 
Committee's jurisdiction.
    The good news is you haven't lost me. I am still with you. 
But folks back home want to know why. What was the problem with 
the FTC and broadband ISPs that forced this change? And a 
matter of time, would you--Chairman Wheeler 1 minute, and you, 
Mr. Pai, 1 minute to respond to his comments. Chairman Wheeler, 
why was it changed----
    Mr. Wheeler. Thank you, Congressman. As you know, the FTC 
Act, writ large, says that it does not have jurisdiction over 
common telecommunications carriers--common carriers. And so 
when we said that ISPs were telecommunications carriers, it 
triggered that. What your constituents should know, however, is 
that we work closely with the FTC, their jurisdiction, insofar 
as its providers. And whatever we do on our privacy proposals, 
which will be forthcoming in the next few months, we will do 
our best to harmonize so that there is a common set of concepts 
that govern privacy.
    Mr. Olson. OK, great. That gave me some time back. Mr. Pai, 
you response, Mr. Pai.
    Mr. Pai. Congressman, unfortunately, the FCC's 
reclassification of Internet Service Providers as common 
carriers had a two-fold hit on consumers. First, it deprived 
the FTC of jurisdiction, as the Chairman has pointed out, 
because of the common carrier exemption, jurisdiction that the 
FTC has explicitly been given congressional authorization for 
under things like COPPA.
    Secondly, because the FCC then arrogated that issue for 
itself, unfortunately, our authority under the statute is 
relatively circumscribed. As you pointed out, Section 222, CPNI 
is a pretty narrow, arcane piece of the privacy puzzle, if you 
will. So we don't actually have any rules in place.
    And, moreover, the guidance, so-called, that we have given 
out has been completely unhelpful. For example, in May of this 
year, our Enforcement Bureau put out a guidance with respect to 
privacy and it said, and I quote, ``The Enforcement Bureau 
intends that broadband providers should employ effective 
privacy protections in line with the core tenets of basic 
privacy protections.'' What does that mean? I have no idea, 
ISPs have no idea, consumers have no idea.
    Mr. Olson. I have no idea.
    Mr. Pai. And so I would rather have let the experts of the 
FTC, who have protected consumers lo these many years, handle 
this issue based on law that you have given them.
    Mr. Olson. And so you believe it is important that the FTC 
has expertise to handle these issues, as opposed to the FCC, 
correct?
    Mr. Pai. Expertise and legal authority, yes.
    Mr. Olson. OK. And the Chairman talked aboutanother issue, 
about privacy and edge providers. Chairman Wheeler, a consumer 
interest group filed a petition asking you to start a 
rulemaking to oppose consumer privacy protections on edge 
providers. When are we going to see your response? Do you 
believe that edge providers should have a different standard 
protection than ISPs?
    Mr. Wheeler. Thank you very much, Congressman. First of 
all, the Commission has, for decades, been enforcing privacy 
under the CPNI rules on telecommunications carriers. So it is 
not as though we fell into this patch. There is a long history 
of privacy protection regarding telecommunications carriers.
    Insofar as extending our jurisdiction to the edge 
providers, I have said repeatedly that that is not our 
intention. I don't know when the specific response to that 
specific petition will be coming out. I will be happy to get 
you a date. I don't know what the planning process on it is.
    Mr. Olson. OK, thank you. Commissioner Pai, your response?
    Mr. Pai. I think this is part of the problem. When the FCC 
crossed this Rubicon on February. If you believe, as the 
majority did at the time, that the Internet is a virtuous 
cycle, and you have Internet Service Providers and edge 
providers acting with one another to provide a better consumer 
experience, it would seem to follow logically, then, that if an 
edge provider is acting in an anti-competitive or anti-consumer 
way, then why shouldn't the FCC have the jurisdiction to extend 
those same rules to edge providers.
    And, moreover, if you look at the Internet conduct 
standard, it is not clear to me, a priori, why the FCC should 
limit its focus on Internet Service Providers. You could easily 
see a dominant edge provider engaging in anti-competitive 
conduct. And so that is part of the uncertainty that, 
unfortunately, the FCC opened up, and I hope we don't follow 
that to its logical conclusion.
    Mr. Olson. Well, thank you both. I yield back the balance 
of my time.
    Mr. Walden. The gentleman yields back the balance of his 
time. The Chair recognizes the gentleman from Illinois, Mr. 
Rush, for 5 minutes.
    Mr. Rush. I want to thank you, Mr. Chairman, and I want to 
thank you and the Ranking Member for today's hearing. Mr. 
Chairman, Commissioner Pai, I welcome both of you to today's 
hearing. So good to see you once again.
    Mr. Chairman, I want to lift up one of the most troubling 
and egregious matters that is under the consideration of the 
FCC. And I am referring to the prison phone call rates. I 
understand that FCC is poised to make a ruling on in-state 
phone rates for prison phone calls. That said, Mr. Chairman, we 
must stop this immoral practice of avaricious greed and 
unabashed exploitation of the poor, the very ones least able to 
afford this phone rate robbery.
    Additionally, Mr. Chairman, once and for all we must do 
away with the practice of site commission kickbacks, and we 
must cap in-state phone rates. As you know, Mr. Chairman, the 
prison call industry is a multi-billion dollar business. And if 
there is any doubt, I want to call your attention to a recent 
Huffington Post article entitled ``Prisoners Pay Millions to 
Call Loved Ones Every Year. Now This Company Wants Even More''. 
And this article referenced how Securus--a company called 
Securus, the 7th largest company in the prison phone call rate 
industry, Securus bragged to its investors about its $404.6 
million future profits on the backs of the very same poor.
    Mr. Chairman, as you know, I have been fighting this issue 
for over a decade, and it is now time for the FCC to take 
action, and rein in these predatory practices by capping the 
rate at five cents per minute, and eliminating all ancillary 
fees. But more importantly, Mr. Chairman, the FCC must also be 
a step ahead of these predatory companies that are right now 
trying to circumvent the laws by offering video phone calls at 
the same predatory rates that they offer for telephone calls.
    Mr. Chairman, my question is, when will the FCC rule on 
this legalized telephonic terrorism?
    Mr. Wheeler. Thank you very much, Mr. Rush. I agree, this 
is a very serious issue, and people across America owe a huge 
debt of gratitude to Commissioner Clyburn--this issue that had 
been sitting on the desk of the FCC for 10 years, since Martha 
Wright filed her first petition and brought it forward, so that 
there was a decision about inter-state.
    But you know what happens, is that whack-a-mole starts 
getting played here. OK, we can't do it here, so we will move 
it over here. Well, next month we have a decision on that, on 
intra-state, that we are doing next month. The point that you 
make about video phones is another legitimate point. The 
reality here is that what we are talking about is a monopoly 
that is granted to prisons to determine how people communicate. 
And like any monopoly, it ends up being exploitive. And the 
people who are hurt by that exploitation are the very people 
who rely on it. And I can assure you, sir, that Commissioner 
Clyburn keeps our feet to the fire on this, and that I am fully 
supportive of her efforts.
    Mr. Rush. That is good news, Mr. Chairman, and I am just 
apoplectic about this situation. And I don't know--well, let me 
move on. If I have--my time is up.
    Mr. Walden. Time has expired. Yes, I should tell you, we 
are going to do a second round of questions, so if you are here 
for that, there will be more time. We will now go to the 
gentleman from Florida, Mr. Bilirakis, for 5 minutes.
    Mr. Bilirakis. Thank you, Mr. Chairman, I appreciate it. 
Thanks to both of you for showing up today, and thank you for 
your testimony.
    Chairman Wheeler, in March we discussed public safety 
interference complaint responses, and a resulting quarterly 
report, which you thought was a good idea. I know you have 
provided some information. Have you posted what you provided 
the Committee on the Web site so the public can see what is 
going on, and what you are doing?
    Mr. Wheeler. Sure.
    Mr. Bilirakis. You have?
    Mr. Wheeler. No, I am saying--would we, or----
    Mr. Bilirakis. Have you posted online----
    Mr. Wheeler. I can't answer that question specifically, 
sir. I will get you the answer----
    Mr. Bilirakis. Can you get that information----
    Mr. Wheeler. Sure.
    Mr. Bilirakis [continuing]. To us as soon as possible?
    Mr. Wheeler. Yes, sir.
    Mr. Bilirakis. Yes. And if you haven't, I mean, can you 
post that online as soon as possible?
    Mr. Wheeler. I think that is a good point, sir.
    Mr. Bilirakis. OK, very good. Commissioner Pai, there has 
been a lot of attention and concern regarding the designated 
entity auction rules. Do you believe there are now correctly--
are they now correctly balanced, and if not, what should be 
done to fix them?
    Mr. Pai. Unfortunately, Congressman, I don't think they 
are. In fact, the agency has moved in the opposite direction. 
My principle for this small business program is that it should 
benefit small businesses. But, unfortunately, the agency, 
having loosened some of the restrictions that were imposed on a 
bipartisan basis several years ago, has now opened the door for 
large corporations to abuse the program and, ironically enough, 
squeeze out a lot of the small businesses, minorities, women, 
and others, who need access to capital in order to provide 
facilities-based service.
    And we saw that in the most recent AWS-3 auction, where 
small carriers tried to compete, but they weren't able to 
because the deep-pocketed Fortune 500 corporation used shell 
companies to prevent them from bidding. And that is part of the 
reason why I proposed what I thought were pretty common sense 
reforms. If you are making in the upper eight figures, you 
don't need a taxpayer-funded discount in order to participate 
in a spectrum auction. If you are a genuine small business, 
with less than $15 million of revenue, you don't need more than 
$50 million of taxpayer-funded bidding credits in order to get 
spectrum at an auction. If you are a genuine business, you 
should be able to provide facilities-based service, not simply 
flip your spectrum to a large incumbent corporation the minute 
the auction is over.
    Unfortunately, they fell one vote short, all of those 
proposals, which would, I submit, have restored public faith in 
the small business program.
    Mr. Bilirakis. Thank you. Chairman Wheeler, in the open 
Internet order you committed to take steps to prevent increases 
in poll attachment rates that might result from reclassifying 
broadband. What steps have you taken since the order to prevent 
such increases, and what additional steps are expected, sir?
    Mr. Wheeler. Thank you, Congressman. There is a proceeding 
underway to do that that we started in the last 6 weeks, 8 
weeks, somewhere like that. It is designed to make sure that 
there is parity between telecommunications service and cable 
service attachment fees.
    Mr. Bilirakis. OK. Again, can you continue to update us on 
this?
    Mr. Wheeler. Yes, sir.
    Mr. Bilirakis. Appreciate it very much. All right, Mr. 
Chairman, I yield back.
    Mr. Walden. OK. Yes. So now we will go to--Mr. Johnson is 
next----
    Mr. Johnson. Thank you.
    Mr. Walden [continuing]. For 5 minutes.
    Mr. Johnson. Thank you, Mr. Chairman. Chairman Wheeler, in 
a recent response to questions for the record as to whether you 
think stakeholders who cannot afford to have regulatory lawyers 
or lobbyists in Washington, D.C. should also have the same 
access that other stakeholders have, you made a point that the 
Commission does not have funding for routine field hearings, 
and similar activities, yet your emissary, Ms. Sone, has been 
routinely traveling to various events. In fact, it seems that 
both you and Ms. Sone have been wheels up quite frequently in 
your travels. So let me pose the question this way. Given that 
you apparently have a robust travel budget, isn't the real 
issue how you elect to spend the money?
    Mr. Wheeler. Thank you, Congressman. I think the people who 
I keep turning down, saying ``no, I am not going to come 
talk,'' would probably disagree. My travel is significantly 
less than other members of the Commission but your point is a 
well taken point, and that is that decisions get made. There is 
a travel budget that each Commissioner has, and that is for his 
or her discretion. There is not----
    Mr. Johnson. OK. Well, you have answered my question. It 
really is up to your discretion on how you spend the money. So 
could you let us know, for the record, how much the FCC has 
spent on travel in fiscal year 2013, 2014, and 2015 so far?
    Mr. Wheeler. By----
    Mr. Johnson. Could you----
    Mr. Wheeler. By Commissioner?
    Mr. Johnson [continuing]. Get that back?
    Mr. Wheeler. By Commissioner?
    Mr. Johnson. Yes.
    Mr. Wheeler. Yes, sure.
    Mr. Johnson. OK, great. I would like to see that. 
Commissioner Pai, I was listening closely to your discussion 
with my colleague, Mr. Bilirakis, regarding the designated 
entity program, and I am really struggling a bit with Chairman 
Wheeler's decision to eliminate the attributable material 
relationship rule, and the facilities requirement in the 
competitive bidding rules for a couple of reasons, and you 
pointed those out. You made a compelling case that this sets 
the state for arbitrage.
    So how are we going to prevent that from happening? What 
actions does the Commission need to take to make sure that 
these rural small carriers are able to get the credits that the 
Designated Entity Program was designed to give them so that 
they can serve those underserved, unserved areas?
    Mr. Pai. Thanks for the question, Congressman. I think, to 
be honest, we first need to return to the status quo, before 
the most recent decision, and we need to adopt some common 
sense reforms to make sure that large corporations don't game 
the system again.
    And to be sure the order did take some of these measures, 
prohibiting a single corporation from using multiple bidders in 
the same market and the same auction, but, that is low hanging 
fruit that is already prohibited by the criminal anti-trust 
laws. I am talking about genuine reforms of the DE Program to 
make sure that the people who need the help, the people who 
want to serve folks in Ohio, or Kansas, can be able to do that.
    And I have proposed some of those reforms, such as limiting 
the amount of bidding credits people can get, making sure that 
large companies can't own a majority of a DE, making sure that 
we preserve that AMR, as it is known, so that people don't end 
up flipping all of the spectrum to the entrenched incumbents, 
those are the kinds of common sense reforms that don't have a 
partisan affiliation to them. And I wish the majority had 
agreed with me.
    Mr. Johnson. Yes. Well, I can tell you that it is a real 
concern for me, and I am sure for other colleagues that 
represent rural areas of the country. I have got high school 
students that don't have access to broadband Internet service, 
and, as a result, they either have to go to a public library 
nearby, or some other location, maybe to where they can get a 
wireless signal or something like that, to do their homework, 
to do research, to do that kind of thing. And this is 2015, for 
crying out loud.
    Mr. Pai. If I could just add a coda, one of the reasons why 
the facilities-based requirement is so important is because in 
a lot of cases the larger providers don't see the business case 
in building out to that school, or to that area, whereas a 
smaller rural provider, who actually does want to connect those 
folks to the Internet wirelessly, they have a strong incentive 
to make sure that those folks are connected. So when those 
rural providers are squeezed out, because there is no more 
facilities-based requirement, and speculators can come in and 
take the spectrum and flip it to the big incumbents, that 
really does impact those consumers.
    Mr. Johnson. OK. All right. Well, thank you. Mr. Chairman, 
I yield back.
    Mr. Walden. Thank you. And now we go to the gentleman from 
Missouri, Mr. Long, for 5 minutes.
    Mr. Long. Thank you, Mr. Chairman, and thank you all for 
being here today. Chairman Wheeler, on July 24, 4 days ago, 
your agency announced that--granted with conditions approval of 
the transfer of control licenses and authorizations from 
DirecTV to AT&T. We hear much about your agency's 180 day shot 
clock for reviewing such transfers, yet your agency's 
conditional grant of approval took over twice that amount of 
time, as you are well aware, over 400 days. I have got some 
questions that I would like to have answers to. Number one, 
what is the point of the shot clock?
    Mr. Wheeler. Well, the shot clock is aspirational, to begin 
with, but it is something that we try to manage to. The 
difficulty in this particular situation was that we were hung 
up by a court proceeding and a court Decision that itself took 
as long as the shot clock. And that specifically dealt with the 
kind of information that we could have on the public record. We 
had to get through that before we could get through the 
decision.
    Mr. Long. Well, on the 170th day of the 180 shot clock your 
agency stopped it for 3 months. What----
    Mr. Wheeler. Because of the court Decision. We had----
    Mr. Long. That was the same thing you are talking about, 
the court----
    Mr. Wheeler. Yes.
    Mr. Long [continuing]. Decision?
    Mr. Wheeler. So the reality here is that there is right 
now, pending before Commissioner Pai and me--have you--yet? I 
mean, that is not a set up question. I don't know the answer to 
it.
    Mr. Pai. On what? I am sorry.
    Mr. Wheeler. On the protective order.
    Mr. Pai. I just saw it yesterday, so----
    Mr. Wheeler. OK. So we have put out an order to outline how 
you protect confidential information so that we can be in 
compliance with the court so that this will not happen again. 
And the absence of that was what held up this proceedings.
    Mr. Long. OK. Commissioner Pai, same question to you. Do 
you have the same opinion on why the shot clock was stopped at 
the 170th day, or what the benefit of the shot clock is?
    Mr. Pai. Congressman, I do have a different view. The 
agency inflicted a wound on itself, which is why the court had 
to intervene. The court didn't simply, out of whole cloth, 
decide to participate in this proceeding. What happened was, in 
the context of that transaction and another transaction, the 
agency decided to try to get all kinds of confidential 
information from programmers and--without any kind of due 
process. And so the programmers naturally sued.
    I urged the agency to try to reach a settlement, because 
this information wasn't really necessary to resolution of the 
issues in the transaction, and a unanimous D.C. Circuit Court 
of Appeals agreed with me, calling the FCC's decision an 
unexplained and substantial departure from previous policy. And 
miraculously, even though they remanded it and told the FCC, 
look, here is the road map you need to follow if you want this 
information, despite having said the information was critical, 
ultimately the agency didn't even seek it or rely on it in 
making the decision. So that is why I said, look, the shot 
clock needs to be more than aspirational, it needs to be a 
rule. Just as there are 24 seconds in the NBA, there should be 
180 days, period, for the FCC, with extensions for extenuating 
circumstances. But, nonetheless, we need to give both the 
public and the parties a lot of certainty as to how the FCC is 
going to do----
    Mr. Long. OK. Let me move on. I have got another question 
here for Chairman Wheeler. 3 days prior to your agency's 
conditional grant of approval of the transfer, control of 
license and authorization from DirecTV and AT&T, the Department 
of Justice announced that, after an extensive investigation, it 
concluded that the combination of AT&T's land-based Internet 
video business with DirecTV's satellite-based video business 
does not pose a significant risk to competition.
    Although the Justice Department closed its investigation 
without imposing any conditions on the transaction, your agency 
announced that it was imposing a number of conditions to 
address potential harms presented by the combination of AT&T 
and DirecTV, despite the Justice Department's view that the 
combination of the two video businesses did not pose a 
significant risk to competition. What significant risks to 
competition did your agency identify that the Justice 
Department apparently missed?
    Mr. Wheeler. Thank you, Congressman, and we worked closely 
with the Justice Department on this, and I don't think that 
there was a sliver of light between us. The reality----
    Mr. Long. And how can----
    Mr. Wheeler. The reality----
    Mr. Long. How can you say that----
    Mr. Wheeler. Because we have a different test. We have----
    Mr. Long. You have a what?
    Mr. Wheeler. We have a different test. They have an anti-
trust test that they face. We have a public interest test that 
we are supposed to measure by. So we have actually two 
different standards that we measure to. And what was happening 
here was that in about 25 percent of AT&T's service area, 
DirecTV was a competitor to AT&T for video service. And so 
eliminating that competition, the question became, ``does that 
create an incentive, then, to eliminate broadband competition 
as well?''
    So what we required was that AT&T expand its broadband 
coverage, which increased competition for broadband by a 
significant amount, and created an opportunity for those video 
providers not to have to go through an increasingly 
decreasing--increasingly--a decreasing choke point----
    Mr. Long. You just wanted to see if I was paying attention.
    Mr. Wheeler [continuing]. Insofar as----
    Mr. Long. We have got a red light on our backboard. My 5 
minute shot clock has expired, so I will be back for round two.
    Mr. Wheeler. Good.
    Mr. Long. The Chair now recognizes the gentleman from New 
York, Mr. Collins.
    Mr. Collins. Thank you, Mr. Chairman. Mr. Wheeler, the big 
issue that I have been involved in is pirate radio, which you 
may know. And back in early June pretty much every New York 
member of Congress, as well as----
    Mr. Wheeler. Yes, sir.
    Mr. Collins [continuing]. New Jersey sent you a letter. And 
while the issue may not be a terrible issue, in some parts of 
the country, it truly is in New York City, as evidenced by--not 
often can you get 27 members of New York to agree. Upstate and 
downstate, we are like two different worlds. So to sum it up, 
we are extraordinarily disappointed that the FCC has clearly 
said it is not a priority. We just got the letter from you 
yesterday.
    And I understand budget concerns, and the point I want to 
emphasize is this is an issue, even though it is not to you, 
and you are the Chairman. We really don't appreciate you saying 
that--as you put in here, the time and expense of pursuing 
these cases present particular difficulties in the current flat 
budget environment, where the Commission's staffing is at its 
lowest point in 30 years. Overtime is less available, so, 
accordingly, we must prioritize our work based on existing 
resources and harm to the public. Thus, matters posing an 
imminent threat to public safety, or directly harming large 
numbers of consumers, must take precedence over other matters, 
such as pirate radio.
    So, I understand what you are saying, but what is the size 
of your budget?
    Mr. Wheeler. So that letter, and those particular words 
which I wrote were not designed to say that this is a low 
priority, but designed to say that first issue is public 
safety. Pirate radio has to exist inside that, and I believe 
that we have been very aggressive. During my Chairmanship, we 
have had 200 private radio enforcements. In the last year we 
have had 100 alone. And----
    Mr. Collins. How many in New York, just----
    Mr. Wheeler. I don't know the exact number, but I would say 
maybe not--80 percent of those. And so what we have done is, 
and Commissioner O'Reilly, when he was meeting with the New 
York broadcasters, really focused on that, and he helped us 
focus on that. So we formed an inter-agency task force, to work 
with the NAB and the New York broadcasters on this issue to 
make sure----
    Mr. Collins. Well, so you had that meeting, and the fourth 
point on that that came out was basically that you need more 
folks in your local enforcement office. That point number four 
of that hearing was additional FCC enforcement options.
    Mr. Wheeler. That was one--right, that was one of the 
things that they----
    Mr. Collins. But in another hearing we talked about how you 
have been reducing the local field offices, and pulling those 
folks back to headquarters. And some of us would presume that 
is to be ready to enforce Title 2, which we can disagree on as 
well. But it seems a little disingenuous, and our big concern 
is words are words, actions are actions, and the actions have 
not convinced me, and I think other members, that it is at all 
a priority. Your letter, while it said maybe someday, if we 
have got nothing else to do, we will see what we might want to 
find in pirate radio, that is--it is a low priority for the 
FCC.
    Mr. Wheeler. If that is how you interpret it, I apologize, 
because that is not what was meant. So the New York office, the 
Boston office, and the Miami office, which is where pirate 
radio tends to exist--those three areas. This is a whack-a-
mole--I keep using the whack-a-mole today, but this is a whack-
a-mole kind of situation----
    Mr. Collins. Well, sure, that is what pirate radio is. 
They----
    Mr. Wheeler [continuing]. Where people keep----
    Mr. Collins. Absolutely.
    Mr. Wheeler [continuing]. Moving around. So one of the 
things I think that I encouraged in that letter is that 
Congress can also be helpful, because we can go and shut 
somebody down, and he or she moves to this spot, boom, they are 
up again.
    Mr. Collins. Right.
    Mr. Wheeler. And we are just constantly chasing. If 
Congress could also enact--make it illegal to aid and abet the 
carrying out of this--and I think that is also what the NAB 
group has recommended. If we can get at those who are aiding 
and abetting--because there is a cabal that pulls this off, 
right? Well, he moved to my apartment over here, you move to 
this space over here. We didn't know anything about this. And 
so there is a totality of the package here. I mean, 200 
enforcements. We have a task force working on it. We could use 
some additional authority so we could have some teeth.
    Mr. Collins. I am about out of time, so two things. One is, 
maybe this is a rhetorical question, but I will ask it. There 
have been suggestions that the FCC has actually directed field 
offices to step down and back away from enforcement. Any truth 
in that?
    Mr. Wheeler. I have heard that----
    Mr. Collins. Right.
    Mr. Wheeler [continuing]. Suggestion. I have not----
    Mr. Collins. So I am going to put it right out here.
    Mr. Wheeler. I have heard that suggestion. I have not seen 
that command.
    Mr. Collins. And it did not come from you?
    Mr. Wheeler. Did not come from me.
    Mr. Collins. Could you provide me the language that you 
might suggest? Because I can appreciate--don't bring me a 
problem without a solution. Can you bring me the language that 
we might put in----
    Mr. Wheeler. Great.
    Mr. Collins [continuing]. To some other legislation that 
would assist you on the pirate radio?
    Mr. Wheeler. Thank you, sir.
    Mr. Collins. It is an important issue for us in New York, 
and we just don't want to be the last thing on Friday afternoon 
at 4:59, somebody said I have 1 minute until I go home, let me 
see what I can do on pirate----
    Mr. Wheeler. Yes, sir.
    Mr. Collins [continuing]. Radio. Thank you.
    Mr. Wheeler. Thank you.
    Mr. Collins. I yield back.
    Mr. Walden. The gentleman yields back. The Chair now 
recognizes the gentleman from North Dakota, Mr. Cramer.
    Mr. Cramer. Thank the Chairman, and the Ranking Member, 
once again for suffering along with me as you wait for the last 
questioner. And thanks to both of you as well. And thank you, 
Commissioner Pai, for referencing the letter that 114 of my 
closest friends and I sent to the Chairman and to the FCC 
regarding standalone, and to both of you for addressing it so 
thoroughly today. And I might just hone in a little bit on some 
of the finer points regarding the timeline. Because in the 
letter I received, Mr. Chairman, from you yesterday you often 
referred to a lack of consensus. There seems to be some 
consensus. You pledged that by the end of the year we will 
solve this, but we need more consensus from stakeholders. As 
you both know, of course, the community presented a plan in 
2013, modified somewhat over the last couple of years to meet 
moving targets.
    I might ask you, Commissioner Pai, you have offered up I 
think your quote there from your plan was simple amendments to 
existing rules as an outcome. And one of the things I have 
noticed around here, and I have certainly noticed in regulatory 
bodies, having served on one, we can tend to complicate simple 
things. My goal is usually the opposite of that. Are there 
issues in the plan that prevent this from going forward, or 
prevent us from utilizing that as the model, or are there other 
issues that have caused this to take so long?
    Mr. Pai. Thanks for the question, Congressman, and thank 
you also for your kind words about my proposal, which in turn 
is modeled on your letter. Stepping back 60,000 feet, I think 
the problem is basically this. There are a number of problems 
with the high cost fund, A, B, C, D, E. Problem A, however, is 
standalone broadband service, and my position has been 
consistent with your letter, and a companion letter in the 
Senate: let us adopt targeted changes to our rules to make sure 
that rate of return carriers aren't penalized for offering 
broadband as a standalone service. Now, that is not to say that 
problems B, C, D, E aren't important, but, for the purposes of 
this issue, standalone broadband service, let us get that piece 
of it done, and then turn to the other issues.
    Now as to the issue with the rate of return carriers and 
the consensus, I appreciate the efforts of my colleagues to try 
to find that consensus, but nonetheless, number one, it is not 
necessary to resolve those issues, to adopt a standalone 
broadband solution, and number two, if we end up waiting until 
a consensus emerges on those other issues, I fear we are not 
going to meet the deadline we set for ourselves publicly of 
getting this done by the end of the year.
    Mr. Cramer. Chairman Wheeler, can we meet the end of the 
year deadline? Is there a reason we can't meet that, and are we 
attaching too many other things to the simple solution?
    Mr. Wheeler. Those are the two right questions.
    Mr. Cramer. Yes.
    Mr. Wheeler. I am trying to do that. It is my goal to do 
it. I expect to do it. A couple of points here. In order to do 
that, you cannot be wedded to consensus. As you know from your 
previous term, at some point in time you have got to pull up 
and shoot.
    Mr. Cramer. Indeed.
    Mr. Wheeler. Boy, am I trying to get consensus. But if you 
can't get everybody to agree at some point in time, we will put 
forward a proposal on that in a timely basis in order to do 
things by the end of the year. Because, at the root of this, is 
that we have got to do better for rural consumers, period. And 
it is not just one simple fix. It is a broader set of fixes. 
Because I am in violent agreement on the narrow band/broadband 
issue, but it is not enough.
    And then we also have a responsibility to those people who 
are paying for this every month in their phone bills, to make 
sure that the money is spent responsibly. And I hope we have 
consensus. I am working for consensus. But if we can't have 
consensus, we need to have progress.
    Mr. Cramer. Well, there are other issues the FCC has taken 
up this year that I wish there would have been more consensus 
on, so I don't want consensus to mean 100 percent, as you might 
imagine.
    Shifting, then, just a little bit with my remaining time, 
we spent some time talking about, of course, the auction. I was 
about to call it the voluntary auction. That is what it used to 
be called. I think it still is. The word voluntary is how it is 
often referred to, because, of course, it is, in fact, 
voluntary, both opting in and opting out. And, as you know, the 
$1.75 billion that Congress has put in for the repacking fund 
is probably not going to be enough, considering that we are 
looking at, what, 1,100, maybe, TV stations that are going to 
have to involuntarily move.
    Is there a plan to deal with that shortfall that I can 
assure my rural North Dakota broadcasters that they won't have 
to bear all the costs? Maybe Commissioner Pai first, and then 
the Chairman with the remaining time.
    Mr. Pai. Congressman, I have long suggested that we should 
treat the 1.75 billion relocation fund as a budget at the FCC, 
and structure the auction so as to minimize the possibility 
that we would exceed it, and ultimately end up putting the onus 
on the broadcasters to pay up.
    The other issue that I have heard, most recently in 
Nebraska from a group of broadcasters, is that the 36 months is 
not necessarily as long as it might seem, that there is a 
shortage of people who are able to do the work, there is a 
shortage of the equipment that is necessary for the repacking 
to be done, and that the Commission should be mindful of that 
as well as it progresses. So I share your concern, and I want 
to make sure that broadcasters, to the extent possible, are 
held harmless, in terms of necessary expenditures.
    Mr. Cramer. Chairman, do you want to speak----
    Mr. Wheeler. I think Commissioner Pai has identified the 
key issue, and that is we do need to make sure that we have to 
live within a budget, and we want to manage things within a 
budget. You gave us that number. We can't change that number, 
and we have got to come up with a program that will make it 
work.
    Mr. Cramer. Thank you both. Thank you, Mr. Chairman.
    Mr. Walden. And if you hang around, Mr. Cramer, we are 
going to do a second round. You could be, like, really quick on 
the shot clock here. We are now going to go to the gentleman 
from New Mexico, Mr. Luja AE1n, for 5 minutes.
    Mr. Luja AE1n. Mr. Chairman, thank you so much for having 
us here today. Ranking Member Eshoo, it is an honor to be 
with--here with both of you. Chairman Wheeler, Commissioner 
Pai, thank you for joining us as well.
    I appreciate the testimony centered around rural access. As 
Commissioner Pai said, he is a rural guy, I am a rural guy. I 
think Chairman Walden also represents a very rural district, as 
we talk about many parts of the country that need broadband 
access, and affordability. And you have heard me say this many 
times, Chairman Wheeler, we can have connectivity at 30,000 
feet when we are flying across the United States in an 
airplane, there is no reason that we cannot have connectivity 
when we are on the ground traveling all across America, not 
only in rural communities, tribal communities, and states like 
mine, in New Mexico.
    With that being said, in New Mexico, for example, 77 
percent of those living rural communities, and 89 percent 
living in tribal communities lack access to advanced broadband. 
Chairman Wheeler, as you said in your testimony, you have 
pursued an aggressive agenda at the FCC that includes reforming 
the E-rate Program, modernizing the Lifeline Program, and 
establishing the Connect America Fund. Can you discuss what 
this agenda means for people who lack sufficient access to 
broadband and communication services, not just with buildout, 
but also with making it more affordable so people are able to 
take advantage once there is a buildout program?
    Mr. Wheeler. Yes, sir. Thank you, Congressman, and I hope 
that we can do significantly better than the speeds that are 
delivered in the air, and that is what we are doing. I have 
been in New Mexico multiple times, in tribal areas, and other 
very remote areas in New Mexico to personally visit and talk to 
the individuals involved.
    I remember a situation that--there was a fiber going down 
this side of the road, a fiber on an Indian reservation, and 
over here, about 100 yards away, was a high school, and up here 
was the library. And they couldn't get a connection from the 
fiber to the high school because it was cost-prohibitive, and 
the E-rate Program wasn't paying for that. Now we pay for that, 
and that is in large part because of these kinds of specific 
examples that we have seen. We need to make sure this is the 
case.
    We also need to make sure that low income individuals who 
are, unfortunately, disproportionately represented on tribal 
areas have access to broadband support to connect them. And 
that is why we are not only overhauling, but changing the 
orientation of the lifeline program to go to broadband.
    Mr. Luja AE1n. And, Chairman Wheeler, in all these areas--I 
am going to submit some other questions into the record to 
flesh these areas out, but, as we do this, I really appreciate 
the conversation that we have had today, and the focus, and 
seeing how we can grow the rural family as well, and see how we 
get more attention there.
    The other place that I want to complement both of you, 
Commissioner Pai, Chairman Wheeler, and get your perspective is 
on modernizing the FCC. You have embarked on expanding 
electronic filing and distribution, decreasing backlogs, and 
improving responsiveness to consumers. Can you both tell me 
what you are doing to provide greater information to consumers, 
including transparency and accountability, standardizing forms, 
digitizing the process, including the submittal of documents?
    Mr. Wheeler. Boy, am I glad you asked that question.
    Mr. Luja AE1n. And you both support that effort?
    Mr. Wheeler. The----
    Mr. Luja AE1n. Yes, Commissioner Pai?
    Mr. Pai. Yes.
    Mr. Luja AE1n. Yes?
    Mr. Wheeler. On my first trip to our consumer operation in 
Gettysburg, I saw in the corner a humongous machine that the 
staff proudly announced to me could take 17 different forms and 
put them into one envelope. And I said, ``well, why are we 
sending out 17 different forms?'' And they said, ``well, 
because that is the way we do it.'' So you contact the FCC on a 
robocall issue, and we will send you the form for robocall, as 
well as the form for loudness on commercials, as well as the 
form for every other kind of complaint we had. And I said, 
``wait a minute, we can do better than this.''
    Mr. Luja AE1n. And those forms are required to be sent 
back.
    Mr. Wheeler. And the----
    Mr. Luja AE1n. Those forms----
    Mr. Wheeler. And I would talk to consumers who would say, 
``what am I supposed to do with this? Which form am I supposed 
to--? So we now have totally updated it and put it on the Web. 
We just won a prize for being one of the best consumer 
interface sites on the Web. And most of all, we are then taking 
that information and putting it back into what should we be 
doing to help us focus on our priorities.
    Mr. Luja AE1n. That is great. Mr. Chairman, if there are 
other areas that we can work on in this space, I look forward 
to having those conversations. And if I am able to, because of 
the length of the line, Mr. Chairman, I look forward to the 
second round----
    Mr. Walden. Indeed.
    Mr. Luja AE1n. Thank you, Chairman.
    Mr. Walden. I don't know if you can get there from here. 
Which we are going to start now, so thank you.
    I want to go back to this issue of LPTV and translators, 
and maybe Commissioner Pai--Chairman Wheeler. There is all this 
talk now at the Commission about setting aside an entire 
channel for unlicensed. And I support unlicensed, we have made 
a lot of unlicensed available, there is more to be done, but 
won't setting aside a whole channel for unlicensed contribute 
to the problem that we are hearing from translator and the LPTV 
community? Commissioner.
    Mr. Pai. Mr. Chairman, it will by definition, to the extent 
that a particular vacant channel is allocated solely for 
unlicensed. In the TV band, that means an LPTV's station can't 
occupy it post-auction.
    Mr. Wheeler. In----
    Mr. Walden. Chairman Wheeler?
    Mr. Wheeler [continuing]. Reality, probably not, because 
what we are talking about here are using TV white spaces, and 
creating these kinds of additional applications for unlicensed 
in those areas where the duplex gap is not sufficient. And that 
is going to be a handful of areas that I doubt will be any 
areas that are the typical LPTV rural kind of area.
    Mr. Walden. So will you commit to LPTV and translators 
having priority, then, over unlicensed?
    Mr. Wheeler. No. We are going to--so it was really clear--
--
    Mr. Walden. In the TV band?
    Mr. Wheeler. I think that the mandate from this Committee 
is clear. The mandate from this Committee is that there is no 
priority given to LPTV.
    Mr. Walden. True.
    Mr. Wheeler. And the Committee also said, however, that we 
need to be encouraging unlicensed. I don't think that it comes 
down to that kind of a solution, though, Mr. Chairman, with all 
due respect. I think that it is possible, and what we are just 
breaking our tails on, is to be able to accomplish both of 
these, and I think we will be successful.
    Mr. Walden. Yes. I would say--my recollection of the 
statute, which we together helped write here, was----
    Mr. Wheeler. You wrote it.
    Mr. Walden [continuing]. That unlicensed was never set 
aside as a priority to go create a nationwide band. In fact, we 
had a lot of discussion about that very fact, that you don't go 
clear all this and then give it away to, in effect, some pretty 
major operators. You know, Commissioner Pai?
    Mr. Pai. And this is part of the reason why I suggested 
that we adopt a technically sound solution to where to put 
broadcasters if we put them in the wireless----
    Mr. Walden. Right.
    Mr. Pai [continuing]. Band. If we put them in the uplink, 
then we avoid this entire issue altogether, whereas in the 
duplex gap, we not only impair unlicensed, which has to find a 
home, but also downlink.
    Mr. Wheeler. This is a really good point that Commissioner 
Pai has raised, that there is serious concern on. So, first of 
all, let us remember what we are talking about here--how do we 
minimize the aggregate impact across the country? And that 
means that in a handful of markets, it is a percentage that can 
be in single digits, OK, that there is an issue. He is 
proposing that you put it in the uplink, put the interference 
in the uplink. What that does is knock out an entire bay 
station.
    Mr. Walden. Right.
    Mr. Wheeler. The impact is much broader.
    Mr. Walden. I think you have got disagreement with 
Commissioner Pai, but I am going to have to move along here. My 
concern is there are a lot of--I hear from my colleagues all 
over the west, there are concern these translators are going to 
go dark because they are going to get squished out. And if they 
get squished out because you created a whole band of 
unlicensed, that only adds to the problem. And there is a 
public interest obligation underpinning all of this at the 
Commission to provide for.
    Now, I realize they are not classy. I realize they don't 
have all the rights, and all that. I was a licensee of 
translators myself. I knew I could be pushed out. But through 
this you have got some flexibility here to manage, and that is, 
I guess, what we are calling----
    Mr. Wheeler. Yes, we----
    Mr. Walden. I want to switch gears to go to the TCPA issue 
very quickly, because this issue of auto-dialer has come up. 
And, in your order, you adopted a pretty broad definition of an 
auto-dialer, although you acknowledged, and I quote, ``there 
are outer limits of the capacity of equipment to be an auto-
dialer, and there must be more than a theoretical potential 
that the equipment could be modified to satisfy the auto-dialer 
definition.'' Is my iPhone an auto-dialer?
    Mr. Wheeler. No, sir.
    Mr. Walden. Then let me ask you this. There are at least 
three apps that we found, Dial My Calls, Call Bot Automated 
Calling, and Voxling that would turn my iPhone into an auto-
dialer.
    Mr. Wheeler. So the issue that we were trying to deal with 
in this order was not the hardware, but the impact, because 
since Congress acted in 1991, the technology has changed. And 
what Congress's instructions to us were is no contact from 
auto-dialers without----
    Mr. Walden. But----
    Mr. Wheeler [continuing]. Permission.
    Mr. Walden. But my----
    Mr. Wheeler. I am taking that----
    Mr. Walden [continuing]. Question to you, though, is if I 
push somebody's name, Chairman Wheeler's--I don't ever dial 
your number. I just push----
    Mr. Wheeler. Correct.
    Mr. Walden [continuing]. Chairman Wheeler, and it dials. To 
me--is that an auto-dialer?
    Mr. Wheeler. No, sir.
    Mr. Walden. OK. If I have a database of names that I want 
to reach out to, let us say voters, and I want to turn them out 
to vote, and I have a device that calls until somebody answers, 
and then I can take the call, is that an auto-dialer?
    Mr. Wheeler. Yes, sir.
    Mr. Walden. OK. So I no longer can do that? If I have a 
tele-town hall in my office, which I do, and there is some 
company that does--calls all those thousands of people in my 
district, are they now prohibited from doing this?
    Mr. Wheeler. Unless the consumer has asked to get this. The 
statute is very explicit.
    Mr. Walden. So tele-town halls now by members of Congress, 
and most members do that, are now against----
    Mr. Wheeler. All I am doing is----
    Mr. Walden. No, I am asking you the question.
    Mr. Wheeler [continuing]. The statute. No, sir. That is 
right.
    Mr. Walden. So those are prohibited, and your contention is 
always have been?
    Mr. Wheeler. Yes, sir.
    Mr. Walden. Wow. That is interesting. That would be news to 
a lot of people. Commissioner Pai?
    Mr. Pai. Mr. Chairman, I think part of the reason why it is 
indisputable that a smartphone is an auto-dialer under the 
FCC's new interpretation--if you look at the statute, it says a 
capacity to randomly or sequentially dial a number. I 
explicitly said capacity means the actual capacity. The 
smartphone has, in itself, intrinsically, the ability to do 
that. The majority rejected my argument and said, no, you could 
download an app. There are all kinds of other things you could 
do to effectively make the smartphone an auto-dialer, even if 
it isn't intrinsically.
    And that is part of the reason why literally every 
communications device, other than a rotary phone, I give the 
majority credit for excepting those, nonetheless is now subject 
to TCPA liability as an auto-dialer. And that is not good for 
consumers, that is not good for providers. It is not good for 
anybody, other than trial lawyers.
    Mr. Walden. Well, and we are hearing from others out there 
who are--there is this issue with the health care exchanges, 
and whether or not insurance companies can follow up and notify 
you that it is time for you to come in and have some tests 
done. I have been told that may be prohibited now. Are you 
aware of that? Are you hearing those issues?
    Mr. Pai. That is the first I have heard of it, but it 
doesn't surprise me, because now we have seen it from a number 
of different industries. They are just uncertain about what the 
rules of the road are.
    Mr. Walden. Yes.
    Mr. Wheeler. So understand what we were doing, Mr. 
Chairman, was responding to a series of petitions. We did not 
issue a rule. People petitioned us and said, ``what is the 
rule?''--what does your----
    Mr. Walden. Right, but you interpreted.
    Mr. Wheeler. And if somebody wants to petition us on the 
kinds of things you talk about, we can deal with that.
    Mr. Walden. Right.
    Mr. Wheeler. On the health care issue one, we specifically 
had an exemption for bank fraud, health care, things like this. 
And for government agencies.
    Mr. Walden. And with changing technology, 40 percent of 
Americans no longer have a land line, right?
    Mr. Wheeler. Right.
    Mr. Walden. I know you spoke out and said, basically, 
pollsters could go the way of blacksmiths, I guess.
    Mr. Wheeler. Well, they have been right.
    Mr. Walden. Well, I guess my point is--so that industry, in 
effect, in terms of trying to do a random sample is now put out 
this----
    Mr. Wheeler. But----
    Mr. Walden [continuing]. In this effect, right? How do you 
do a random sample on a poll if you can't randomly sample and 
dial?
    Mr. Wheeler. So I once sat down with Peter Hart to write a 
piece----
    Mr. Walden. Right.
    Mr. Wheeler [continuing]. Exactly on that, insofar as 
wireless, because you can't get to the wireless numbers.
    Mr. Walden. Right.
    Mr. Wheeler. You don't know what they are. So that went by 
the board. The issue here is, if you come to us and you say, 
the statute says, which it does, that the only folks who are 
allowed to be called are those who want to be called----
    Mr. Walden. Got it.
    Mr. Wheeler [continuing]. And I am supposed to be a strict 
constructionalist of the statute----
    Mr. Walden. Well, we have seen some examples by the Court 
where they would disagree with your interpretation of statute 
on other issues----
    Mr. Wheeler. Let me----
    Mr. Walden [continuing]. Rather violently and directly.
    Mr. Wheeler. And you are constantly encouraging me to be a 
strict constructionalist.
    Mr. Walden. Well, I think we are just figuring out the 
impact----
    Mr. Wheeler. Yes. I understand.
    Mr. Walden [continuing]. Of your ruling as it relates to--I 
have gone way beyond my time, but I will now defer to my 
colleague from California, Ms. Eshoo.
    Ms. Eshoo. Thank you, Mr. Chairman. Well, it is an 
important discussion, and I think that we need to talk about 
this some more, because what went into the statute was like 
holding a mirror up to the country at that time.
    Mr. Wheeler. In '91, right?
    Mr. Walden. In '91. That is a long time ago. That is many, 
many moons ago, when you think of how many generations of 
technology changes have taken place. So whether someone wants 
to be a strict constructionist or whatever, I think that we 
have to have the elasticity to stay up with the times. I mean, 
each one of us represents 750,000 people. Now, maybe we have 
got to reach out to every single one of them if we possibly 
can, but, in my view, meeting with people relative to a 
telephone town hall meeting has been overwhelmingly embraced. 
Not just accepted, but embraced by my constituents. Plus it 
saves tons of money, and they get to just ask whatever they 
want. So these are, I don't think they would be satisfied--
well, this is what the statute says. I think they would say, 
change whatever you have to change, but keep up with the 
changes that are taking place. So it is important.
    Since we are going into a second round, and maybe it is 
just the Chairman and myself. No, that is--two others? Good, 
Billy and Ben. I want to talk about your budget. The House 
appropriators have really screwed the FCC, in plain English, in 
my view. And I don't think it is funny, I think it is serious. 
We had members asking questions today about travel budgets. I 
think that whatever you do, and however you do it, it would be 
interesting to see if it tracks along with what--how members of 
Congress are allowed to handle their MRA. I don't know, but it 
may be something for us to discuss. Now, the fiscal year 
appropriations bill has $315 million in it. That reflects a cut 
of $25 million below the fiscal year 2015 enacted level, and 
$73 million below the request. Now, they also have placed in 
riders relative to net neutrality and all of that.
    Now, what I would like to ask you, Mr. Chairman, is have 
you had conversations with the appropriators? Is there anyone 
from the majority here that has been asked to lean in with the 
appropriators? I mean, we are constantly putting on the FCC, 
and in oversight, all of these issues come up. I don't know who 
is going to do this work and follow up with every member's 
request about what they want? You wanted to close offices, 
members said don't close them, we need them open. But, I mean, 
there are so many things that are reliant on dollars. And I am 
not talking about having a load of extra dough. I am talking 
about the agency being able to carry out its responsibilities. 
So what I would like to know from you is, have you had 
conversations with the appropriators on the majority side? Have 
you had conversations with the majority side here to see what 
can be worked out with the budget?
    I don't know, these riders, the President is not going to 
sign something like that. And at the end of the day, I think 
that the appropriations process is so messed up around here 
because we don't have regular order, speaking of transparency, 
and process, and all of that, that we are going to end up with 
an omnibus bill. And I think that is what is going to happen. 
So compare and contrast what your present budget is, because an 
omnibus doesn't really allow for that much more, and address 
for us any conversations, or how you are following up with 
whatthe appropriators did to the budget of your agency.
    Mr. Wheeler. Thank you, Congresswoman. We have had 
conversations with everybody who will listen, and some who 
won't. And I mean that only in a flippant remark. I am----
    Ms. Eshoo. Yes.
    Mr. Wheeler [continuing]. Not saying people aren't 
listening. We have talked to this Committee, we have talked to 
their Committee. I was honored that the Chairman came to the 
Appropriations Committee, which I think--the first time that I 
have ever known that a Chairman has actually come----
    Mr. Walden. Second time. I was there last year.
    Mr. Wheeler. I missed you, then. I was--sorry.
    Mr. Walden. I was right behind you and waving.
    Mr. Wheeler. OK. So that he has got a record now for twice.
    Ms. Eshoo. But that is not the point.
    Mr. Wheeler. But the----
    Ms. Eshoo. I want to know about the money.
    Mr. Wheeler. But, yes, we have to live with the number that 
the Congress gives us. It is that simple.
    Ms. Eshoo. Have you, in response to what the appropriators 
have done--and I don't know, Mr. Chairman, were you there to 
support the appropriators in cutting the budget, or against it?
    Mr. Walden. I was there to listen to the appropriators----
    Ms. Eshoo. I see.
    Mr. Walden. Yes.
    Ms. Eshoo. You didn't testify?
    Mr. Walden. No. No, I was there to hear what they had to 
say.
    Ms. Eshoo. I see. Have you come up with--you know what I 
would like to ask you to do? Two things. What you will be able 
to do----
    Mr. Wheeler. Yes.
    Ms. Eshoo [continuing]. With a budget that is reduced by 25 
million----
    Mr. Wheeler. Yes, ma'am.
    Ms. Eshoo [continuing]. And the top line things that you 
have to do. We have got to move forward with the voluntary 
auction, and all the top line items. And also, if we have an 
omnibus bill, what that does. And I look forward to reviewing 
that. I think it should be sent to everyone on the----
    Mr. Wheeler. Thank you.
    Ms. Eshoo [continuing]. Committee.
    Mr. Wheeler. We would be----
    Ms. Eshoo. I would really like to see that, because----
    Mr. Wheeler. Do you mean----
    Ms. Eshoo [continuing]. We are walking into something that 
I think the members of this subcommittee, that have oversight 
responsibility, are going to have to understand, that we either 
have to curb our appetite for giving the FCC assignments that--
if they don't have the dollars to carry them out, then they 
don't have the dollars to carry them out. Something has going 
to go.
    Mr. Wheeler. I will tell you one interesting thing. We are 
currently at the lowest number of full time employees in modern 
history for the agency.
    Ms. Eshoo. Thank you.
    Mr. Walden. Thank the gentlelady. Now go to the gentleman 
from Missouri, Mr. Long.
    Mr. Long. I was very impressed that I got to follow the 
Chairman for the first time----
    Mr. Walden. You hang around long enough----
    Mr. Long. Felt kind of like Sally Field. I thought, they 
really do like me. Then I looked around and no one else was 
here, so--Commissioner Pai, I have got a question for you. It 
has been reported that the Chief of the Enforcement Bureau has 
acknowledged that many of his cases fall into the legal gray 
area where companies might not even realize they are doing 
anything wrong. I know you have raised concerns about this. Can 
you kind of explain your concerns, and what could be done to 
address them?
    Mr. Pai. Thanks for the question, Congressman. I think, 
unfortunately, many of the FCC's more high profile enforcement 
initiatives have betrayed that basic principle of due process, 
and that is not an FCC law. That is going back to King John 
signing the Magna Carta 800 years ago this summer at Runnymede. 
And I think part of the reason why I have been so outspoken 
about it is that if private actors, from companies all the way 
to individuals, don't know what the rules of conduct are, then 
they have no reason to know that their conduct is violating 
what the FCC thinks should be the rule.
    And with respect to certain notices of apparent liability 
the agency has issued, it is almost more a quest for headlines 
first, and we will figure out the law later, if at all. But 
that has it precisely backwards. To me, we should look at the 
facts, we should look at what the law is. If there is a gap in 
the law, let us change it to make sure that people are abiding 
by what we think is proper conduct. But we can't sanction 
somebody for violating a rule that they have no reason to know, 
or don't know, exists.
    Mr. Long. OK. Thank you. And, Chairman Wheeler and 
Commissioner Pai, to the two of you, I am curious about the 
Broadcasters Relocation Fund, and how those monies are going to 
be spent. The fund is currently at $1.75 billion, as you know, 
and obviously that fund was set up to pay for all of the 
relocation costs to the broadcasters you are required by the 
FCC to move to a new channel as part of the auction. After 
examining these issues for the last few years, has the FCC 
determined how many stations it is able to re-pack with that 
$1.75 billion fund?
    Mr. Wheeler. Thank you, Congressman. It is a moving target, 
depending upon the characteristics of who participates in the 
auction. Do you have to move an antenna? Do you have to build a 
taller antenna? How far do you have to move it?
    Mr. Long. Now, can you give me a ballpark on the number?
    Mr. Wheeler. I can get back to you with one, sir. I don't 
have one on the top of my head. But what we have tried to do is 
to develop a set of rules that can live inside of that, and so 
let me get you the number we use for denominator in that.
    Mr. Long. OK. I would----
    Mr. Wheeler. Because I don't know it off the top of my 
head.
    Mr. Long [continuing]. Appreciate it. And, Commissioner 
Pai, same question to you.
    Mr. Pai. I have heard estimates that it will cost somewhere 
north of $3 billion to relocate all the broadcasters. And, if 
that figure is correct, and we only have $1.75 billion in the 
relocation fund, then it necessarily follows that broadcasters 
would be out of pocket for that extra $1 \1/4\ billion. And 
that is something that I hope to avoid, and certainly I am 
willing to work with you and the Chairman, and my colleagues, 
to make sure that doesn't happen.
    Mr. Long. Well, do you have any estimate on the number that 
the $1.75 billion--that is the number I am trying to get to, 
how many that would cover?
    Mr. Pai. No, unfortunately, I don't, because, as the 
Chairman pointed out quite eloquently, there are a lot of 
moving parts to this, and every broadcaster is unique.
    Mr. Long. OK. Because I have heard some figures, and I have 
difficulty believing that $1.75 billion will cover the 
estimated number that they are talking about. So if both of you 
could get back to me on that, I would appreciate it. And I am 
going to yield back with a minute 37 to go.
    Mr. Walden. The gentleman yields back. The Chair recognizes 
the gentleman from New Mexico, Mr. Luja AE1n.
    Mr. Luja AE1n. Thank you, Chairman Walden, and I would like 
to associate myself with the questions that both Ranking Member 
Eshoo and Chairman Walden were asking pertaining to what 
appears now to be our inability to reach out to the American 
people to be able to get feedback from them.
    Chairman Wheeler, as we talked about these telephone town 
halls, when I travel the 13th Congressional District of New 
Mexico, especially in rural communities, one of the things that 
I hear from members of the community that I represent was 
sometimes I have to travel 3 or 4 hours just to get to town 
centers, not even city centers, is how much they appreciate 
being able to weigh in.
    So if the rule requires them to opt into this program, how 
would we reach out to seven, 800,000 constituents for them to 
opt in? We can't sent them an e-mail because, based on a 2015 
press release coming from the FCC, only 48 percent of those 
making less than $25,000 have broadband service at home. And so 
if we can't reach out to them to opt in, do I send them a 
letter, which is what the FCC is working against? You don't 
want to be sending letters and forms out to opt in, and then 
you would have to check a box yes or no, and then you get the 
letter back in. I certainly hope that we can look at this to 
see how we can address this. And I know it is something that I 
visited with Chairman Walden, and with Ranking Member Eshoo, 
with both the majority and minority staffs on this, so I look 
forward to working with you on that as well.
    With that being said, just some additional questions about 
broadband penetration. There has been a little bit of 
conversation today about broadband, and, Chairman Pai, do you 
see broadband penetration or accessibility in rural parts of 
the country to broadband as a necessity or a luxury?
    Mr. Pai. Well, Congressman, thanks for the question. As I 
said in response to Congresswoman Eshoo earlier, my goal has 
been always to make sure that any American anywhere, whether it 
is on tribal land in New Mexico, or somewhere in my home state 
of Kansas, anyone who wants digital opportunity, in terms of a 
broadband connection, should be able to get it. And that is why 
I have laid out proposals on rural broadband, on e-rate, on 
wireless infrastructure, on 5 GHz spectrum, to make sure that 
we have a bunch of competitors out there all competing to 
provide every American with that opportunity. And as far as the 
semantic classification of it, that is something that I will 
leave to wiser minds than myself, but my focus----
    Mr. Luja AE1n. But with the semantics associated with the 
difference between necessity and luxury, how would you 
characterize the importance of accessibility to broadband in 
rural parts of the country?
    Mr. Pai. I think it is absolutely critical, and one of the 
things I have enjoyed in this job is having a chance to travel 
to small towns, from Diller, Nebraska, to Fort Yukon, Alaska to 
be able to see how people have used broadband to get 
opportunities they otherwise wouldn't have. I am sure this is 
the case in your district, but I have seen it in a lot of rural 
districts that if people don't get that high speed connection, 
they will move somewhere else. They will move to another state, 
or a bigger city to get it. And that is unfortunate, because I 
think there are a lot of ideas in rural America that are 
probably withering on the vine for lack of that broadband 
connection.
    Mr. Luja AE1n. Yes.
    Mr. Pai. And that is something that I am passionate about, 
and I would be more than happy to work with you----
    Mr. Luja AE1n. I appreciate that, yes. Well, I would 
characterize it as a necessity, not a luxury. I really 
appreciate you considering it or characterizing it as 
absolutely critical. I would agree with that assessment as 
well.
    With that, Commissioner Pai, as we look to the Lifeline 
Program as well--and in the testimony that--or your dissent to 
the 2015 order, in it there were some concerns associated with 
the cost to the program to date. And in your dissent you did 
recognize that there had been some reforms, that we looked back 
to 2012, understanding that in 2005, 2008, we saw a 
transformation of Lifeline that went from land line phones to 
being able to go into mobile phones, and now into smartphone 
apparatus. Since then, in 2012, the Commission came forward 
with a unanimous opinion, which resulted in a reduction of $214 
million in savings in 2012, with a substantial projection going 
into 2014. I am trying to still get the numbers on what those 
realized savings were as well.
    But in your dissent you also listed a concern where there 
were providers that were signing people up fraudulently, which 
we need to crack down on, and we share that concern. But in the 
2015 order that you dissented, there was a reform in there that 
did state that we would--that the FCC would remove the ability 
for providers to sign people up for Lifeline--or for 
verification.
    Mr. Pai. Yes.
    Mr. Luja AE1n. Is that something that--with that principle, 
is that something that you agree with, and were there other 
areas that you disagreed with in the order? But is that 
something that you could agree with that we could work on 
together?
    Mr. Pai. Well, I would love to work with you on that, and I 
do think that verification is a critical issue. I think one of 
the problems that I cited in my dissent is the fact that fly by 
night operators, like Icon Telecom in Oklahoma, they just 
created so-called Lifeline customers out of whole cloth, got a 
lot of money for doing it, and the CEO ended up pocketing $20 
million, and spent it on his own private expenses. And that is 
something we need to weed out. We need more enforcement action, 
we need to reform the rules, and we need to have that 
conversation about how to have a fiscally responsible program.
    Mr. Luja AE1n. And so I appreciate the reforms the 
Commission has put in place. The last question I have is, is 
$1.6 billion the right cap? Because you and I share a concern 
with broadband availability in communities, but I would hope 
that we both would agree that it is not just accessibility from 
an infrastructure perspective to broadband, it is also an 
affordability question in many rural parts of the country. What 
is the right number for a cap, and should it be arbitrary, or 
should it be based on data?
    Mr. Pai. I do believe it should be fact-based, and that is 
part of the reason why I suggested a cap or a budget of $1.6 
billion, because the program was at $800 million in 2009. It is 
now at $1.6, and that is the only one of the universal service 
fund programs that isn't capped. And so what I suggested was, 
we need to have a balance here. We need to make sure that we 
target the people who are offline in the Lifeline Program.
    We also have to make sure that we are responsible stewards 
of the consumers' tax dollars. After all, this is paid for by 
consumers, and $1.6 seemed to me to be a good conversation--a 
good starting point to have.
    Mr. Luja AE1n. But $1.6 is based on last year's numbers. 
The only data associated there is that is what the number 
rounds up, and year to year that number changes, understanding 
that the inflation from 2008 to 2012 was because the reforms 
were necessarily in place that helped us back that number down 
with the reforms in 2012, and the recent actions by the FCC in 
2015.
    So, Mr. Chairman, this is an area maybe where we can work 
on it together as well, but I look forward to have more 
conversations in this space as well. Thank you for the time, 
Mr. Chairman.
    Mr. Walden. Thank you, and we appreciate your 
participation, and that of our witnesses. And, speaking of 
outdated data, just in closing, the quadrennial review I 
referenced in my opening statement is now--I think the last one 
we got is probably 8 years old, so I hope the Commission will 
deal with the quadrennial ownership report on a basis as 
required by statute. AM modernization is still something high 
on a number of our priorities, and on the de-stack issue, we 
ask in stellar that the Commission deal with the downloadable 
security issues, and it appears that Committee was given 
direction to work disaggregation of data on a video stream. So, 
again, we are after the downloadable security issue.
    I have one letter to put in the record from Care Payment, 
without objection.
    [The information appears at the conclusion of the hearing.]
    Mr. Walden. And I think you heard, Mr. Chairman, bipartisan 
concerns here on TCPA. We realize you are implementing the law, 
it appears a law that was created back in '91, when you got 
charged for incoming phone calls. Nobody is talking about 
robocalls here for cell phones. None of us want that. But I 
think there is an issue here where we need to take a look at 
that law.
    So, with that, thank you for your diligence, and your 
patience, and with that, subcommittee stands adjourned.
    [Whereupon, at 1:15 p.m. the subcommittee was adjourned.]
    [Material submitted for inclusion in the record follows:]

                 Prepared statement of Hon. Fred Upton

    With communications and technology issues touching nearly 
every part of our 21st century economy, these sectors need a 
fair, consistent, and transparent regulator. I think it's a 
good sign when we're having a healthy debate about the tough 
questions before the commission--it means the system is 
working. On the other hand, recent breakdowns in collegiality 
and last-minute data dumps into the record erode and needlessly 
distract from the commission's important work.
    A number of significant decisions were considered in the 
past year, and even more are on the horizon. For example, there 
is substantial work that must be completed before the incentive 
auction can take place. Proposals about the auction, such as 
the proposed duplex gap, have raised concerns among all 
participants that, without appropriate resolution, could 
threaten the auction's success.
    Real reforms, including a funding cap, must be made to the 
Universal Service Fund to ensure ratepayer dollars are spent 
wisely and the program is sustainable for years to come. 
Additionally, the chairman's plan to start a rulemaking on the 
commission's privacy authority under the new net neutrality 
rules represents fertile ground for the temptation of agency 
overreach--a temptation that must be resisted. How the 
commission addresses these issues will tell us whether real 
progress is obtainable.
    As we continue our oversight of the Federal Communications 
Commission, I remain concerned that little has improved since 
our last oversight hearing in March. Our work to institute real 
process reforms has traversed multiple chairmen and comes from 
our desire to guide the agency in a direction that works for 
the American people and enhances innovation, investment and 
jobs creation.
    It has been my hope that working together we can make the 
FCC a shining example of an effective, transparent, and 
apolitical government agency. As a Cubs fan, I still have hope. 
An FCC at its best is one that will benefit folks in Michigan 
and across the country as we continue to innovate and create 
jobs in the 21st century.
    I look forward to Chairman Wheeler and Commissioner Pai's 
take about how we can make that happen. The American people and 
our nation's economy deserve better than what we have seen. 
Let's make sure they get it.
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