[Senate Hearing 115-191]
[From the U.S. Government Publishing Office]



 
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2018

                              ----------                              


                         TUESDAY, JUNE 20, 2017

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.

    The subcommittee met at 2:30 p.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Shelley Moore Capito (chairwoman) 
presiding.
    Present: Senators Capito, Coons, Leahy, Lankford, Van 
Hollen, Moran, Manchin, Boozman, and Daines.

                   FEDERAL COMMUNICATIONS COMMISSION

STATEMENTS OF:
        HON. AJIT PAI, CHAIRMAN
        HON. MIGNON L. CLYBURN, COMMISSIONER
        HON. MICHAEL O'RIELLY, COMMISSIONER


           opening statement of senator shelley moore capito


    Senator Capito. We will go ahead and start. My Ranking 
Member, Senator Coons, will be here shortly, but I will go 
ahead and make my opening statement and maybe we can begin 
testimony. So thank you all for being here this afternoon. I 
appreciate it.
    Commissioner Pai, I would just personally like to thank you 
for your comments last week about the tone of civility that we 
need to strike. I think you will find that here in this 
subcommittee, so thank you for that.
    Today marks the first hearing of the Financial Services and 
General Government Subcommittee for the 115th Congress. This is 
also my first hearing in my new role as the chairwoman of this 
subcommittee and I am honored to be serving with Senator Coons.
    As we begin this important review of the budget request of 
the FCC, we welcome our witnesses, FCC Chairman Ajit Pai and 
FCC Commissioners Mignon Clyburn and Michael O'Rielly. We look 
forward to hearing from you all about the FCC's budget requests 
and the work that you are doing to carry out the agency's 
mission.
    For fiscal year 2018, the Commission has requested a total 
of $322 million. While the FCC's funding is offset by fees that 
does not minimize our duty to ensure that the agency is 
operating effectively and that the funds are being spent 
responsibly. This is especially important since these fees are 
passed on directly to the American consumer.
    The FCC's policies and actions have an enormous impact on 
our country's economic growth and potential. That impact is 
especially critical in rural America. Communities in my State 
of West Virginia have been hard hit by job loss and decline and 
creating a major drag on the State's economy and our quality of 
life. And two of our commissioners here have been in West 
Virginia firsthand to witness this.
    One of my top priorities has been to promote policies that 
spur new investment and boost economic growth. Broadband access 
can provide West Virginians with opportunities that lead to new 
jobs, higher wages, and providing that momentum that our 
State's economy needs. Potential investors need to see that 
West Virginia and its workforce is open for business and ready 
to work in the 21st Century economy.
    According to the FCC, more than 30 million Americans lack 
access to high speed broadband Internet, including a 
disproportionate number of rural communities. We just had a 
hearing over in the Commerce Committee that reflected some of 
that. Without this connectivity, these communities struggle to 
compete in today's Internet-based world.
    In 2015, I launched my Capito Connect plan, jumpstarting a 
statewide conversation about the need to connect our State. 
Broadband should be easily available and affordable. It is that 
simple and at the Federal level we have been all trying to make 
this a reality. The benefits of broadband access are numerous, 
but too many parts of rural America cannot attract the 
investment that they need to get online. Despite significant 
Federal and private funding, West Virginia is less connected 
than nearly every other State. We have been hamstrung by a lack 
of competition between our service providers, burdensome 
regulations, and we failed to maximize our existing resources 
as well.
    Communities like Thomas and Davis in Tucker County or the 
whitewater resorts in Fayette County need robust broadband to 
fully capture the potential of a tourism economy. These 
communities can capitalize on their natural beauty, attract a 
technology-based workforce that simply needs a computer, and 
strong stable connectivity to reach clients around the globe.
    In order to help these communities realize their potential, 
we must equip them with the right tools to succeed. That is why 
I introduced legislation to accelerate the development of high-
speed Internet in low-income communities. The Gigabit 
Opportunity, or GO Act, encourages new investment to connect 
these rural and urban communities. By empowering Governors and 
States to direct investments to areas with the greatest needs, 
this proposal ensures that communities with the highest 
potential for economic development are prioritized for funding. 
For providers, the proposal eliminates barriers to new 
investment in broadband infrastructure and incentivizes 
competition.
    Under the GO Act, the FCC is directed to release a 
framework to streamline broadband laws throughout the State, 
and we have talked about this with the commissioners. This will 
eliminate the myriad of duplicative and inconsistent laws that 
currently exist in all States. Once adopted, the Governors 
would be able to nominate a portion of their State's low-income 
areas as Gigabit Opportunity Zones. Businesses that invest in 
these zones or make upgrades to speed up their networks would 
benefit from targeted tax and other incentives.
    Internet access should be broadly available regardless of 
whether you live in a small town or big city, and this 
connectivity is essential to growing our Nation's economy, and 
in particular, West Virginia's economy. With all the focus on 
rural America, now is the time to level the playing field and 
close that digital divide.
    So I will let Mr. Coons, Senator Coons, have his opening 
statement, so I am going to turn to our witnesses, and Chairman 
Pai, I am going to ask you now to begin with your testimony.
STATEMENT OF HON. AJIT PAI, CHAIRMAN
    Mr. Pai. Chairwoman Capito, thank you for holding this 
hearing. I wanted to recognize Ranking Member Coons and all the 
Members of the subcommittee for inviting us here today to 
present the FCC's fiscal year 2018 budget request. I also want 
to note the participation of my two distinguished colleagues at 
today's hearing, Commissioners Mignon Clyburn and Mike 
O'Rielly. It is a privilege to serve alongside each of them as 
we strive to meet the public interest.
    For fiscal year 2018, we have developed a carefully crafted 
disciplined budget request of approximately $322 million. That 
is 5.2 percent below the prior fiscal year's undirected 
spending level of approximately $339 million. We also will not 
need any directed move or restacking funds, which amounted to 
$44 million and $16.9 million in fiscal years 2016 and 2017 
respectively. In addition, we propose to reduce our spectrum 
auction cap from $117 million to approximately $111 million. 
This would enable us to transfer approximately $6 million more 
to the Treasury.
    We can all agree that budget reductions do not come easily. 
We will face the same challenges as other agencies in doing 
more with less. Implementing budget cuts while maintaining 
essential services means rolling up our sleeves and rethinking 
how the Commission functions and does business.
    In the past, FCC chairmen have emphasized that we are an 
entirely fee funded agency, but it is important to remember, 
Madame Chairwoman, as you pointed out, that someone is paying 
our freight. And that someone includes small businesses, 
individual licensees, as well as larger companies which pass 
along those fees to American consumers. It is imperative for 
the FCC to be fiscally responsible and to avoid unnecessary 
spending. And I firmly believe that if we refrain from 
regulatory overreach we will realize additional cost savings as 
well as more economic growth, results that benefit everyone.
    And while we have experienced staffing reductions over the 
past several years, administrative efficiencies and better IT 
have ensured that the FCC remains productive. For example, this 
year with 100 fewer staff than last year, we have already 
managed to pursue an aggressive schedule for our open meetings 
where commissioners consider the highest profile matters. 
Indeed, in 2017 we are averaging more than double the number of 
items per meeting than we considered last year, 5.83 versus 
2.58. And I expect this increased productivity to continue into 
fiscal year 2018.
    And since I became Chairman in January we have been 
aggressive in looking for cost savings and our staff has 
already identified some substantial reductions like closing our 
offsite warehouse and improving our internal mail services for 
a projected annual saving of $851,000. We will also save 
another $280,000 by reducing the number of onsite printers and 
copy machines.
    Now as we move into fiscal year 2018, we will focus the 
FCC's resources on advancing the four strategic goals that were 
outlined in our budget request. First and foremost, consistent 
with your comments, Madame Chairwoman, we will concentrate on 
closing the digital divide. Among other things, we will 
implement the Connect America Fund Phase II and Mobility Fund 
Phase II reverse auctions to bring fixed broadband and 4G LTE 
to more of rural America. These are complicated tasks to be 
sure, but our Rural Broadband Auctions Task Force has a solid 
plan for getting the job done.
    If I may say, Madame Chairwoman, on a personal note, I 
appreciate your initiative in introducing the GO Act. This will 
be a substantial effort, I think, in connecting unserved 
Americans with digital opportunity. And I thank you for your 
leadership in that regard.
    Second, we will work to promote innovation from 
implementing policies to ensure American leadership in 5G 
wireless networks to authorizing television broadcasters to use 
the next generation television standard. We will also move full 
speed ahead on implementing the Spectrum Pipeline Act to get 
more airwaves into the commercial marketplace for consumer use. 
Third, we will concentrate on protecting consumers and public 
safety. From combatting illegal robocalls to improving video 
relay service for deaf and hard of hearing Americans, we will 
continue to pursue an aggressive pro-consumer agenda.
    When it comes to public safety, we will continue to support 
those on the front lines across the country who protect all of 
us each and every day. And fourth and finally, we will focus on 
reforming the FCC's processes. The American people deserve to 
have a transparent and responsive regulator. We have already 
made substantial progress on this front like making public 
commission meeting items at least 3 weeks before we vote on 
them, but there is much more to do, and do it, we will.
    Looking ahead to the next fiscal year, I am excited about 
how the FCC can bring digital opportunity to more Americans, 
promote technological innovation, protect the American people, 
and improve our agency's operations. And I believe that this 
budget request will help us to advance these goals in a 
fiscally responsive way.
    Thank you once again, Madame Chairwoman, for this 
opportunity to discuss the FCC's budget proposal. I will be 
pleased to answer any questions you or the Members might have 
and look forward to working with you in the future on these 
critical matters.
    [The statement follows:]
                  Prepared Statement of Hon. Ajit Pai
    Chairman Capito, Ranking Member Coons, and Members of the 
subcommittee, thank you for inviting me here to present the Federal 
Communications Commission's (FCC) fiscal year 2018 budget request. I 
also want to note the participation of my two colleagues at today's 
hearing, Commissioner Mignon Clyburn and Commissioner Michael O'Rielly. 
It is a privilege to serve with both of them as we work together to 
advance the public interest.
    My appearance today is my fifth time testifying before this 
subcommittee. But on this occasion, there are obvious differences in my 
level of responsibility. Now, as Chairman, my duty is to present a 
viable budget developed under my direction and to detail how the 
Commission's request will support our core mission and the execution of 
our programmatic initiatives. In developing the final budget request, 
we also adhered to the Office of Management and Budget's government-
wide effort to cut spending below the prior fiscal year by 5 percent or 
more.
    In the past, FCC Chairmen have routinely noted to this subcommittee 
that we are an entirely fee-funded agency. But it is important to 
remember that someone is still paying our freight. That someone 
includes small businesses, individual licensees, as well as larger 
companies, which pass along those fees to American consumers. As a 
result, I have always believed that it is important for the Commission 
to be fiscally responsible and avoid unnecessary spending. Moreover, I 
firmly believe that if the FCC refrains from regulatory overreach, we 
will realize additional cost savings as well as more economic growth--
results that benefit everyone.
    With this basic philosophy in mind, I instructed the FCC's Office 
of Managing Director to pare down our proposed fiscal year 2018 
spending plan and target all funds toward specific statutory mandates. 
We initiated an internal review of the Commission's procedures and 
administrative practices to identify ways to enhance our work and 
decrease spending. Already, this effort has produced dividends. Our 
staff has identified several potential cost-cutting initiatives. For 
example, we have decided to close our off-site warehouse and improve 
our internal mail services for a projected annual cost-savings of 
$851,000. We will also save another $280,000 by reducing the number of 
on-site printers and copy machines. And we will continue to investigate 
and implement cost-savings and cost-avoidance measures related to 
information technology (IT), like buying less extravagant (but 
effective) off-the-shelf software--because the most expensive choices 
do not necessarily equate with the best choices.
    As a result of these efforts, we have compiled a tightly-crafted, 
disciplined budget request of $322,035,000--or 5.2 percent below the 
prior fiscal year's undirected spending level of $339,844,000. This 
number includes the Office of Inspector General pass-through, which 
also includes a voluntary reduction. Importantly, during fiscal year 
2018, we will not need any directed move or restacking funds. In fiscal 
years 2016 and 2017, those directed funds totaled $44 million and $16 
million, respectively. Combined, these spending reductions will mean 
lower fees for those we regulate, and thus fewer costs passed on to 
American consumers.
    In addition, the spectrum auction cap, which has been steadily 
increasing over the past 5 years, will receive a 5 percent reduction, 
from $117,000,000 to $111,150,000. We arrived at this number after 
reviewing prior fiscal year spending with our staff and considering our 
anticipated workload for the next year. The lower cap is achievable in 
light of the scale-down of work associated with the broadcast 
television incentive auction. This reduction means that the FCC will 
turn over almost $6 million more to the Treasury than would be the case 
if the cap stayed steady.
    Budget reductions do not come easily. We will face the same 
challenges as other agencies in doing more with less. Implementing 
budget cuts in fiscal year 2018, while maintaining essential services, 
means rolling up our sleeves and re-thinking the way that the 
Commission functions and does business.
    Additionally, we believe that these operational reforms and 
financial savings can and must be supported by policy changes that 
reduce the scope and growth of our workload. That is why immediately 
upon becoming Chairman, I initiated a substantive review of ongoing 
Commission actions. I set top priorities of stopping regulatory 
overreach, modernizing our rules to match the modern marketplace, and 
promoting greater infrastructure investment, innovation, and economic 
growth.
    As we move into fiscal year 2018, we will focus the Commission's 
resources on advancing the four strategic goals outlined in our budget 
request: (1) closing the digital divide; (2) promoting innovation; (3) 
protecting consumers and public safety; and (4) reforming the FCC's 
processes. My commitment as Chairman is to do as I have promised 
without straying into activities that exceed our legal authority or go 
beyond the core competencies of our agency.
    First and foremost, we will focus on closing the digital divide.--
We will foster a regulatory environment that encourages the private 
sector to build, maintain, and upgrade next-generation networks so that 
the benefits of advanced communications services are available to all 
Americans, whether they live in Appalachia or the Ozarks, on Tribal 
Lands or in cities in transition. And where the business case for 
infrastructure investment does not exist, we will employ effective and 
efficient means to facilitate deployment and access to affordable 
broadband in all areas of the country.
    To accomplish this goal, we will continue to work on implementing 
the Connect America Fund Phase II reverse auction to disburse about $2 
billion. This program aims to bring fixed broadband to unserved areas. 
And we will continue to work on the Mobility Fund Phase II reverse 
auction to disburse $4.53 billion. This program aims to bring 4G LTE 
coverage to parts of our country where high-speed mobile broadband is 
not currently available. Each of these projects is complicated; each 
will take up a substantial amount of staff resources during fiscal year 
2018. But our Rural Broadband Auctions Task Force has developed a solid 
plan for getting the job done.
    In addition, we will continue to work in fiscal year 2018 to remove 
regulatory barriers to broadband deployment. For example, we must make 
it easier for companies to transition from the copper networks of 
yesterday to the fiber networks of tomorrow. Every dollar spent 
maintaining an old network is, by definition, a dollar that can't be 
spent building a next-generation network. We need to encourage private 
capital to be spent on high-speed, modern digital connectivity. We also 
must ensure that broadband providers can get timely access to poles and 
rights-of-way at a reasonable cost.
    Second, we will focus on promoting innovation.--Our goal is to 
foster a competitive, dynamic, and innovative market for communications 
services through policies that promote the introduction of new 
technologies and services. To do this, we will ensure that the FCC's 
actions and regulations reflect the realities of the current 
marketplace, promote entrepreneurship, expand economic opportunity, and 
remove barriers to entry and investment.
    In the mobile space, we will work to ensure that the United States 
leads the world in the development and implementation of 5G, or fifth-
generation wireless services. That means continuing our work to make 
more high-band, middle-band, and low-band spectrum available for mobile 
broadband. And that means removing regulatory barriers to the siting of 
physical infrastructure. As we transition to 5G, networks will 
``densify''--that is, coverage will depend more on dozens or hundreds 
tightly-packed small cells operating at low power, rather than cell 
towers operating at higher power. So we need to ensure that our rules 
keep up with the times. It doesn't make sense to apply a review process 
designed for a 200-foot tower to a small cell that you can fit in the 
size of your hand.
    In fiscal year 2018, we will also work on promoting innovation in 
the broadcast space by authorizing television broadcasters to use ATSC 
3.0, the next-generation television standard. This standard holds the 
promise of bringing 4K video, immersive audio, better accessibility 
features, and advanced emergency alerts to American consumers.
    The Commission also still has a great deal of work to do to carry 
out the spectrum pipeline language from the 2015 Bipartisan Budget Act, 
and the administration's budget proposes to extend the FCC's auction 
authority to 2027 in order to raise an additional $6 billion. This work 
includes substantial negotiations with sister agencies, identification 
of new spectrum for commercial use and sharing, and a broad range of 
engineering activities that requires staff-intensive work. But the 
agency's excellent staff is up to the task, and we intend to tackle 
these challenges head-on. The faster we get spectrum into the 
marketplace, the more innovation we'll see and the more consumers will 
benefit.
    Third, we will focus on protecting consumers and public safety.--
The number one topic of complaints we receive from American consumers 
involves unwanted robocalls. Accordingly, I've made combatting this 
scourge one of the Commission's top priorities. In March, for example, 
the Commission adopted a Notice of Proposed Rulemaking and a Notice of 
Inquiry to consider allowing service providers to block robocalls under 
certain circumstances, without fear of liability for failing to 
complete calls. This includes a proposed safe harbor that would allow 
providers to block presumptively invalid calls that spoof unassigned 
phone numbers before they reach consumers.
    In fiscal year 2018, we will continue to work on a variety of 
fronts to combat unlawful robocalls. Our Enforcement Bureau will 
investigate and take appropriate action to penalize those who are 
breaking the law. And our Consumer and Governmental Affairs Bureau, 
along with our Wireline Competition Bureau, will continue to work on 
rules that will make it easier for carriers to stop these unwanted 
calls.
    We will also emphasize expanding the communications opportunities 
available to Americans with disabilities. Another key Commission 
priority has been to improve the quality of Video Relay Service 
available to those who are deaf or hard of hearing. During fiscal year 
2018, we will continue this important work.
    We will also extend our efforts to protect public safety. June is 
Public Safety Month at the Commission, and at our next monthly meeting 
on Thursday, June 22, we will vote on three items to help law 
enforcement and protect the American people. First, we will advance a 
proposal to establish a Blue Alert code so that the Emergency Alert 
System is better able to warn of imminent dangers to law enforcement 
officials. Second, we will take another step to support FirstNet's 
development of a nationwide, interoperable broadband network for public 
safety officials. And third, we will move forward with a proposal to 
make it easier for law enforcement to discover the identity of those 
who make threatening phone calls to individuals or organizations. 
During fiscal year 2018, we will continue working on these areas and 
others to ensure that our Nation's law enforcement officers get the 
support they deserve and to keep Americans safe.
    Fourth, we will focus on reforming the FCC's processes.--The 
American people deserve to have a nimble and responsive regulator, and 
we aim to deliver just that. We hope to modernize and streamline the 
FCC's operations and programs to increase transparency, improve 
decisionmaking, build consensus, reduce regulatory burdens, and 
simplify the public's interactions with the Commission. Last year, this 
subcommittee included report language to encourage many of the steps 
that I have already taken to enhance agency transparency. On February 
2, 2017, we started releasing items to be voted upon at the 
Commission's monthly meetings at least three weeks in advance of those 
meetings. It used to be the case that the American people weren't 
allowed to see these items ahead of time. Only after the vote was taken 
were they able to see our work. This system benefited high-priced 
lobbyists who were often able to get access to information, but it left 
every other American in the dark. I am extremely pleased by the 
reaction to this reform and am working on additional ways to increase 
agency transparency. For example, we are in the process of developing 
an agency dashboard so that it is easy for the American people to see 
how we are doing on some key metrics.
    When it comes to agency reform and our internal operations, it's 
critical to emphasize the importance of IT to our mission. We are a 
licensing agency, and our licensing is IT-based. We conduct auctions, 
and auctions have a significant IT component. We are a consumer 
protection agency, and the vast majority of consumer complaints come to 
us online. There are other examples, too, but the point is that IT is 
invaluable.
    By modernizing our IT systems and moving away from legacy systems, 
we can reduce overall costs and improve the agency's operations. In 
recent years, we have made substantial progress on this front, but 
there is still more work to do. In particular, we have been focused on 
moving systems to the cloud. In fiscal year 2018, we will continue to 
upgrade our IT and prioritize those projects that produce the biggest 
bang for the buck.
    Finally, when it comes to agency reform, we must be willing to take 
a hard look at how the Commission is structured. Today, I don't believe 
that the Commission is organized in a way that focuses sufficiently on 
economic analysis. When it comes to legal analysis, we have the Office 
of General Counsel. When it comes to engineering analysis, we have the 
Office of Engineering and Technology. But we lack a similar center for 
economic analysis.
    That's why, later this year, I intend to send to the Appropriations 
Committee a plan that would create an Office of Economics and Data 
within the FCC. A working group of FCC staffers has been busy 
consulting with people inside and outside of the Commission to figure 
out, among other things, how this office should be structured and what 
authorities it should have. In keeping with a fiscally responsible 
approach to running the Commission, this office will be staffed with 
existing FTEs and will not require new FTEs. I look forward to 
receiving the group's recommendations this summer, and hopefully the 
Commission this fall will approve the establishment of this office.
    Looking ahead to the next fiscal year, I am excited about the steps 
the FCC can take to bring digital opportunity to more Americans, 
promote technological innovation, protect the American people, and 
improve our agency's operations. And I believe that this budget request 
will help us to advance these goals in a fiscally responsible way. By 
capturing new administrative efficiencies, improving our internal 
processes, and focusing on our core responsibilities, we can accomplish 
more for the American people for less money.
    Thank you for this opportunity to discuss the FCC's budget 
proposal, and I will be pleased to answer any questions that you may 
have.

    Senator Capito. Thank you, Chairman.
    Now I would like to turn to Commissioner Clyburn and ask 
for her to present her testimony. Thank you.
STATEMENT OF MIGNON L. CLYBURN, COMMISSIONER
    Ms. Clyburn. Let us try that again. Chairwoman Capito, 
Ranking Member Coons, and Members of the subcommittee, good 
afternoon. It is my distinct pleasure to appear before you to 
offer my perspective on the FCC's fiscal year 2018 budget 
request. Yesterday marked the FCC's 83rd anniversary. And while 
much has changed since 1934, our responsibility when it comes 
to protecting consumers, advancing competition, and ensuring 
the reliability and resiliency of public safety communications 
remains unchanged.
    To achieve these goals, the FCC needs a fully staffed 
workforce. However, the agency finds itself with the fewest 
number of FTEs in more than 30 years. In some cases, this has 
created much needed efficiencies. In others, it has required 
employees to double up on responsibilities with little or no 
pay increase. This not only puts at risk the quality of the 
final work product, it also has a direct impact on work-life 
balance.
    To put this assertion into perspective, each year the 
Federal Employee Viewpoint Survey asks FCC employees whether 
they agree or disagree that they have sufficient resources to 
get their job done. In 2011, just over 30 percent of FCC 
employees disagreed with this statement. By 2016, that figure 
had risen to nearly 38 percent. So additional budget and 
staffing cuts will likely lead to this number increasing even 
further in the coming years.
    Furthermore, while not unique to the FCC, an increasing 
number of Federal employees are eligible for retirement. Today, 
there are 362 FCC employees that are retirement eligible, 
equaling roughly 23 percent of our workforce. In practice, 124 
employees have already departed the agency this year, and this 
figure is only expected to increase. Some will retire while 
others will leave for new job opportunities. So while we have 
no choice but to think about a future which recruits and 
retains the Nation's next generation best and brightest, we 
must do so, and do so we will.
    You may have also heard me speak about the need for better 
broadband data. In part, because I have heard from far too many 
communities that take issue with the FCC's figures. They have 
said that where our data shows that there is either fixed or 
mobile broadband coverage that in actuality the service ranges 
from spotty to non-existent. It should not be this difficult 
for the expert agency to have accurate data down to the street 
level, for we know that improved data enables us to better 
target our infrastructure efforts and improve the accuracy of 
our national broadband map.
    And I am a strong believer in the power of broadband to 
tackle some of our Nation's greatest challenges, particularly 
when it comes to healthcare. Thanks to the work of the FCC's 
Connect2Health Task Force, we have a clearer picture of where 
the greatest needs exist. Chairman Pai has committed to 
carrying on the work of the Task Force and I am hopeful that 
through a sustained investment in this initiative it will 
continue to fuel and inform us when it comes to broadband 
health policy and investment for and in rural and underserved 
communities.
    As the subcommittee prepares its appropriations bill for 
fiscal year 2018, I am also hopeful that IT infrastructure will 
be top of mind. Modern IT infrastructure should be able to 
handle a few hundred thousand public comments without grinding 
to a halt. And to demonstrate the agency's commitment to IT 
modernization and cyber security, future budget requests should 
include a dedicated subaccount supporting these critical needs.
    Finally, I would like to talk about the agency spectrum 
auctions program. Despite several auctions currently in 
development and more in the pipeline, the Commission's budget 
request would cut $5.8 million from the program. Our auctions 
produce a tremendous return on investment and are a win-win for 
consumers, industry, and the Federal Government. With 5G on the 
horizon, we need to look long-term and focus on how we will 
provide the funding necessary to administer timely and 
efficiently run auctions. A sustained investment in our 
auctions program will help unlock the next generation of 
wireless broadband and ensure that America remains a leader in 
wireless innovation.
    Returning to the Commission's central mission, it is a 
point of great disappointment to me that this FCC is on the 
track to dismantle many of the key rules involving consumer 
protections and competition. Is this a prelude to the 
Commission that ultimately allows large companies to exist in a 
regulatory free zone? I ask this because the American people 
count on the FCC to be the referee on the field, ensuring that 
our Nation's communications providers play by the rules and 
consumers have a chance to be on the winning team, but only if 
this agency calls the right plays will it be able to say that 
it is truly putting consumers first.
    I would like to thank you once again for giving me the 
opportunity to testify today. I look forward to answering any 
questions you may have of me.
    [The statement follows:]
              Prepared Statement of Hon. Mignon L. Clyburn
    Good afternoon Chairman Capito, Ranking Member Coons and Members of 
the subcommittee. Nearly 4 years ago, I was honored to appear before 
this Subcommittee in my role as Acting Chair. Today it is my distinct 
pleasure to return as a Commissioner to offer my perspective on the 
Federal Communications Commission's fiscal year 2018 budget request.
    We are at an unprecedented time in the FCC's more than 80 year 
history. The issues we are tasked with addressing are not only 
increasingly complex, they directly impact the everyday lives of 
Americans. Yet the agency finds itself tackling these issues with the 
fewest number of FTEs in more than 30 years. In some cases, this has 
created much needed efficiencies, in others it has required employees 
to double up on responsibilities with little or no pay increase. This 
not only puts at risk the quality of the final work product but it also 
has a direct impact on work/life balance. To put this assertion in 
perspective, each year the Federal Employee Viewpoint Survey asks FCC 
employees whether they agree or disagree that they have sufficient 
resources to get their job done. In 2011, just over 30 percent of FCC 
employees disagreed with this statement. By 2016, that figure had risen 
to nearly 38 percent. So further budget and staffing cuts, will likely 
lead to this number increasing even further in the coming years.
    Equally alarming is that an understaffed FCC undermines our core 
mission of protecting consumers, advancing competition and ensuring the 
reliability and resiliency of public safety communications. 
Additionally, when employees are forced to work unpaid overtime to get 
the job done, not only can this accelerate staff turnover or burn-out 
but it may force employees to violate provisions of the Antideficiency 
Act.
    Furthermore, while not unique to the FCC, an increasing number of 
Federal employees are eligible for retirement. Today, there are 362 FCC 
employees that are retirement eligible, equaling roughly 23 percent of 
our workforce. In practice, 124 employees have already departed the 
agency this year--some for retirement while others will leave for new 
job opportunities. During the three previous fiscal years, we lost a 
combined total of 441 employees. So we have no choice but to think 
about a future which recruits and retains the next generations' best 
and brightest. Former Commissioner Jessica Rosenworcel once proposed an 
engineering honors program, modeled after the FCC's highly successful 
attorney honors program. I strongly support this concept and feel that 
it should include a pipeline for those with expertise in economics, 
public policy and communications.
    You may have also heard me speak a lot about the need for better 
broadband data. This is important to me because I have heard from far 
too many communities that take issue with the FCC's data. They say that 
where our data shows there is either fixed or mobile broadband 
coverage, that in actuality, the service ranges from spotty to non-
existent. It should not be this difficult for the expert agency to have 
accurate data down to the street level, for we know that improved data 
will enable us to better target our infrastructure efforts and improve 
the accuracy of our National Broadband Map.
    With this goal in mind, it should come as no surprise that I am a 
strong believer in the power of broadband to tackle some of our 
Nation's greatest challenges, particularly when it comes to healthcare. 
Thanks to the work of the FCC's Connect2Health Task Force, we have a 
clearer picture of where the greatest needs exist. Specifically, we 
have learned that over 36 million Americans live in counties with what 
can best be described as a ``double burden'' of need, meaning there are 
high burdens of chronic disease and a need for or lack of adequate 
broadband connectivity. Chairman Pai has committed to carrying on the 
work of the Task Force and I am hopeful that through a sustained 
investment in this initiative, it will continue to fuel and inform us 
when it comes to broadband health policy and investment for and in 
rural and underserved communities.
    And as the subcommittee prepares its appropriations bill for fiscal 
year 2018, I am also hopeful that IT infrastructure will be top of 
mind. We all remember the headlines of 2014, when a deluge of public 
comments in response to the Commission's open Internet proceeding 
caused the FCC's website to crash. Fast forward to last month and it 
would seem like deja vu all over again. With headlines like ``Net-
neutrality supporters cripple the FCC website again,'' one begins to 
realize we have a systemic problem on our hands. Modern IT 
infrastructure should be able to handle a few hundred thousand public 
comments without grinding to a halt. To demonstrate the agency's 
commitment to IT modernization and cybersecurity, future budget 
requests should include a dedicated sub-account supporting these 
critical needs.
    Finally, I would like to talk about the agency's spectrum auctions 
program. Despite several auctions currently in development and more in 
the pipeline, the Commission's budget request would cut $5.8 million 
from the program, representing a 5 percent reduction. Our auctions 
produce a tremendous return on investment and are a win-win for 
consumers, industry and the Federal Government. Take for example the 
AWS-3 auction which resulted in $20 billion for deficit reduction, as 
well as full funding for other key priorities such as FirstNet. With 5G 
on the horizon, we cannot just think in the short-term which means 
providing the funding necessary to administer timely and efficiently 
run auctions. A sustained investment in our auctions program will help 
unlock the next generation of wireless broadband, giving our 
communities the much needed fuel for growth and sustainability and 
ensuring that America remains a leader in wireless innovation.
    Returning to the Commission's core mission, it is a point of great 
disappointment to me that this FCC is on track to dismantle many of our 
key rules involving consumer protection and competition. Is this a 
prelude to a Commission that ultimately allows large companies to exist 
in a regulatory free-zone? The American people count on the FCC to be 
the referee on the field that ensures our Nation's communications 
providers play by the rules. The FCC as referee ensures consumers have 
the chance to be on the winning team. But only if this agency calls the 
right plays will it be able to say that it is truly putting 
#ConsumersFirst.
    Thank you once again for giving me the opportunity to testify 
today. I look forward to answering any questions you may have.

    Senator Capito. Thank you, Commissioner Clyburn.
    And now I would like to turn it over to Commissioner 
O'Rielly. Welcome.
STATEMENT OF MICHAEL O'RIELLY, COMMISSIONER
    Mr. O'Rielly. Chairman Capito, Ranking Member Coons, and 
Members of the subcommittee, thank you for the opportunity to 
appear before you. I commend FCC Chairman Pai for preparing the 
budget request presently before the subcommittee. In 
particular, I appreciate the Chairman's effort to trim the 
budget in terms of overall funding and personnel compared to 
the fiscal year 2017 budget submission and final appropriations 
level. While these are difficult decisions to make, I am sure, 
changes as those outlined in the submission can be made without 
undermining the ability of the Commission to execute its 
mission.
    If I could suggest one area where additional resources may 
be justified, it would be support for further work on the 
Commission's Universal Service Fund within the Wireline 
Competition Bureau. On another note, while it appears that the 
decision to relocate the Commission headquarters is final, I do 
think it is necessary to comment that the move will have a 
negative impact on the agency. For instance, I know of several 
seasoned agency professionals will choose to leave the 
Commission rather than transfer to the new location.
    In terms of the Commission's structure, I would argue that 
we maintain outdated bureaus and divisions based on bygone 
eras. Simply put, the Commission maintains regulatory silos 
based on transmission mechanisms that predate the invention of 
the Internet and that radical conversion that has occurred 
since then. Accordingly, I would humbly suggest this 
subcommittee consider requesting the Commission to prepare 
transformative plans for the agency structure.
    While this hearing is focused on the Commission's fiscal 
year 2018 budget, it seems appropriate to raise a couple of 
policy issues before the Commission for purposes of updating 
the subcommittee.
    First, as mentioned, it is a top Commission priority to 
make broadband available to as many Americans as possible. In 
addition to the two USF reform items discussed in the budget, 
the Commission also completed reform of a rate of return 
regulations last year. This bipartisan effort supported then 
and still now by the affected industry will allocate just over 
$2 billion over the next 10 years for rate of return carriers 
so they can expand their networks and economically bring 
service to consumers.
    Additionally, I would be remiss if I did not mention my 
perpetual project, to finally act on the Remote Areas Fund, or 
RAF. Second, part and parcel of reforming our subsidy 
mechanisms, the Commission is reviewing preparing to move the 
major barriers to broadband deployment imposed by State, local, 
and Tribal governments. Activities that delay and deny network 
builds, including excessive fees and official and de facto 
citing moratoria are being replicated throughout our Nation and 
cannot be allowed to continue if we are to ever make broadband 
availability as ubiquitous as possible.
    Third, despite best efforts over the last years trying to 
coax and cajole States not to divert necessary fees collected 
for 911 purposes, the Commission identified that in 2016 eight 
States and a U.S. territory continue that practice. While I 
have previously outlined a few possible ways for the Commission 
to push States to stop this behavior, this subcommittee 
maintains the ability to condition billions of dollars in 
grants and funding provided to States which can serve as a 
great course corrector on this subject.
    Lastly, for many reasons, the Commission has allowed 
individuals to illegally set up shop in the middle of radio 
bands, causing immediate and lasting harm to existing 
legitimate broadcasters and the American public. Thankfully, 
the Commission is preparing to take a different track towards 
these illegal operators, but the subcommittee's endorsement 
will be welcome as we set forth to end this practice.
    Thank you for the opportunity to be before you today and I 
look forward to answering any questions you may have. Thank 
you.
    [The statement follows:]
              Prepared Statement of Hon. Michael O'Rielly
    Chairman Capito, Ranking Member Coons, and Members of the 
subcommittee, thank you for the opportunity to appear before you to 
discuss the fiscal year 2018 budget request for the Federal 
Communications Commission and other matters.
                    i. budget request and priorities
    I applaud FCC Chairman Pai for preparing the budget request 
presently before the subcommittee. Due to a timing quirk, I didn't vote 
in favor of it. Because the original version of the request was 
prepared in early 2016 under the previous chairman and contained a 
substantial increase in spending, essentially reversing the prior 
year's reductions, I withheld my support. Since then, improvements were 
made by Chairman Pai over the last few months and the document now 
reflects a direction that I can generally support.
    In particular, I appreciate the Chairman's effort to trim the 
budget in terms of overall funding and personnel compared to the fiscal 
year 2017 budget submission and final appropriations levels. While 
these are difficult decisions to make I'm sure, changes as those 
outlined in the submission can be made without undermining the ability 
of the Commission to execute its mission. It is not unreasonable to 
reduce spending by 5.2 percent and personnel by 6.6 percent, as 
compared to last year (and I trust that the personnel reduction can be 
maintained notwithstanding the fact that the hiring freeze has been 
lifted).
    If I could suggest one area where additional resources may be 
justified, it would be support for further work on the Commission's 
Universal Service Fund (USF) within the Wireline Competition Bureau. 
Many vital projects to expand broadband to unserved communities come 
from the individuals that oversee these issues and yet the total number 
of staff working on them is surprisingly small. Affected industry are 
stunned to learn that only a dozen or so people are working on the 
High-Cost program, a critical part of our nearly $9 billion fund. 
Wireline certainly qualifies as one of the Commission's workhorse 
bureaus, and it has been noticed that necessary changes to our programs 
have been put on hold for lack of resources. However, I believe that 
this issue can be addressed through reallocating resources within the 
agency, thereby avoiding increases in overall personnel.
    USAC Difficulties.--While I previously suspected that there were 
questionable practices and poor management occurring within the 
Universal Service Administrative Company (USAC) (the quasi-private 
company the FCC uses to oversee its USF programs), it has recently been 
brought to the Commission's attention that USAC has been plagued by a 
number of significant problems preventing the efficient distribution of 
funding contributed by hard-working Americans. It should be clear that 
Chairman Pai inherited this situation and has been steadfast in trying 
to right the ship. However, the subcommittee should be aware that more 
problems are likely to be unearthed in the near future. This may force 
the Commission to revisit every aspect of USAC, including possibly 
putting the functions out for competitive bid, which would be my 
preference. This development does not diminish my belief that the 
Commission's High-Cost program is on reasonably strong footing, 
especially compared to other agencies' broadband programs or any new 
mechanism that could be created to distribute funding.
    Spectrum License Fees.--In terms of policy recommendations included 
in the budget, I do not support the imposition of spectrum license fees 
on private, commercial entities. The fundamental purpose of spectrum 
auctions is to efficiently allocate licenses, not raise revenue. Thus, 
trying to enact a fee to simulate auction value is not sound spectrum 
policy. To make those holding licenses obtained outside of the auction 
process pay additional fees now would result in increased costs on 
consumers and impact providers' ability to offer service. Similarly, 
market forces and other commercial spectrum users put constant pressure 
on commercial license holders to be spectrum efficient. Moreover, in 
most instances, licensees have paid for the spectrum in the secondary 
market when licenses were sold or swapped.
    I have, however, advocated that the Congress consider imposing 
Agency Spectrum Fees on those Federal Government agencies that hold 
spectrum. By establishing an opportunity cost, agencies would be forced 
to be more spectrum efficient and maintain only those frequencies 
needed to meet their respective missions. In today's structure, 
agencies face no penalty for letting spectrum remain fallow and there 
is only so much pressure that can be applied to agencies to become 
spectrum efficient.
    FCC Move.--While it appears that the decision to relocate the 
Commission headquarters is final, I do think it is necessary to note 
that the move will have a negative impact on the agency. For instance, 
I know that several seasoned agency professionals will choose to leave 
the Commission rather than transfer to the new location, which seems to 
be full of logistical nightmares, including the inability to easily 
access the site by major roads or metro. The loss of productivity from 
staff departures and lack of individual office space may not be 
noticeable immediately, but it will be felt over time.
                ii. commission structure and operations
    While the communications and technology industries serve as a 
vibrant job creator and economic productivity generator, their 
regulatory overseer needs a serious upgrade. The Commission's structure 
consists of outdated bureaus and divisions based on bygone eras. 
Routinely criticized, the Commission maintains regulatory silos based 
on transmission mechanisms that pre-date the invention of the Internet 
and the radical convergence that has occurred since then. Just consider 
that one of the Commission's top priorities, broadband availability, is 
overseen by at least three different bureaus depending on the 
underlying technology used (e.g., fiber, mobile or satellite). Also, 
note that the Media Bureau governs our intervention in over-the-top 
video offerings, VoIP is done by the Wireline Competition Bureau, and 
yet both are mere Internet applications, which the Commission arguably 
doesn't have authority to regulate. Then, there is the fact that the 
Enforcement Bureau is essentially duplicating functions that should be 
reserved for the policy bureaus. And the agency's 60 or so economists 
are scattered throughout the building, effectively preventing 
coordination or synergies.
    The last major Commission reorganization was the creation of new 
Public Safety Bureau in the mid-2000s, which is hard to consider a real 
modernization effort. Shouldn't the communications and technology 
industries, which are constantly facing dynamic changes, have a 
regulator that reflects such a marketplace?
    Accordingly, I would humbly suggest that this subcommittee consider 
requesting the Commission to prepare transformative plans for the 
agency's structure. The preparation of such plans would complement the 
work of Chairman Pai to improve the Commission's operating procedures 
and create a new Office of Economics and Data. Notwithstanding the good 
work of the Chairman to date, only Congress can sufficiently direct the 
Commission to conduct the requisite work to generate a blueprint for a 
modern FCC organizational structure.
                          iii. policy matters
    While this hearing is focused on the Commission's fiscal year 2018 
budget, it seems appropriate to raise a couple of key policy matters 
before the Commission for purposes of updating the subcommittee.
    Broadband Availability & USF.--As mentioned, it is a top Commission 
priority to make broadband available to as many Americans as possible. 
In addition to the two USF reform items discussed in the budget, the 
Commission also completed reform of our rate-of-return regulations last 
year in order to allow standalone broadband offerings, while also 
bringing other necessary improvements forward. This bi-partisan 
effort--supported then and still now by the affected industry--will 
allocate just over $2 billion over the next 10 years for rate-of-return 
carriers so they can expand their networks and economically bring 
service to consumers. Additionally, I would be remiss if I didn't 
mention my perpetual project to finally act on the Remote Areas Fund, 
or RAF. These are the hardest to serve portions of America and the 
Commission has generally ignored them for that reason. Hopefully, in 
the very near future, we will be able to finally make funding available 
and select providers willing to serve these areas.
    Infrastructure Deployment.--Part and parcel to reforming our 
subsidy mechanisms, the Commission is reviewing and preparing to remove 
the major barriers to broadband deployment imposed by State, local and 
Tribal governments. Quite simply, these entities, by their actions, and 
inactions in some cases, are standing in the way of Americans getting 
affordable broadband connections. For instance, just a few weeks ago, I 
was in New Orleans, Louisiana inspecting the installation of small cell 
systems to bring faster wireless broadband to its citizens. 
Unfortunately, the city and the local energy company, Entergy, were 
involved in a sad game of finger pointing and foot dragging that 
prevents Southern Light, a regional installation specialist and 
broadband expert, from getting electrical power to the site equipment. 
This means that a major wireless carrier is unable to double or triple 
wireless download speeds in some of the less affluent neighborhoods. 
Such activities that delay and deny network builds, including excessive 
fees and official and de facto siting moratoria, are being replicated 
throughout our Nation and cannot be allowed to continue if we are to 
ever make broadband availability as ubiquitous as possible.
    911 Fee Diversion.--Despite best efforts over the years trying to 
coax and cajole States not to divert necessary fees collected for 9-1-1 
purposes, the Commission identified that, in 2016, eight States and a 
U.S. territory continue the practice, and it did so via self-reporting, 
meaning the issue may be even more acute. Make no mistake about this: 
States are either misleading their citizens about where any ``extra 
funds'' are going or, worse yet, shortchanging their 9-1-1 system 
operations from having the resources to function optimally. At the same 
time, these budgetary shenanigans highlight why many States are ill-
prepared to migrate their systems to the next generation of 9-1-1 
systems (or NG-911). While I have previously outlined a few possible 
ways for the Commission to push States to stop this behavior, this 
Committee maintains the ability to condition billions of dollars in 
grants and funding provided to States, which could serve as a great 
course corrector on the subject.
    Pirate Radio.--One of the Commission's fundamental obligations is 
to issue licenses for the use of the radio spectrum and ensure that 
licensees' offerings are protected from harmful interference. 
Unfortunately, for many reasons, the Commission has allowed individuals 
to illegally set up shop in the middle of the radio bands, causing 
immediate and lasting harm to existing legitimate broadcasters and the 
American public. More specifically, in at least four markets (New York 
City, Miami, Boston and parts of New Jersey), these hooligans deprive 
broadcasters of ad revenue and listeners and keep emergency messages 
from being heard. Thankfully, the Commission is preparing to take a 
different tack toward these illegal operators, but the subcommittee's 
endorsement would be welcome as we set forth to end this practice.
    Thank you for the opportunity to be before the subcommittee today 
and I look forward to answering any questions that Members may have.

    Senator Capito. Thank you, Commissioner O'Rielly. And I 
want to turn to Senator Coons for an opening statement, so 
welcome. It is our first meeting together.

               STATEMENT OF SENATOR CHRISTOPHER A. COONS

    Senator Coons. Thank you, Chairwoman Capito. Thank you for 
being gracious about allowing me to make an opening later in 
the hearing. And I want to thank the entire Commission for 
being present today. This is our first hearing and your role as 
Chairwoman of FSGG Subcommittee and I look forward to working 
with you on a number of the challenging issues we have in front 
of us.
    And I welcome Chairman Pai. He is certainly well known to 
all of us and Commissioner Clyburn and Commissioner O'Rielly. I 
welcome the opportunity together to examine the FCC's budget 
request and discuss your crucial role in ensuring that national 
communications remains reliable, effective, efficient, and 
continuously innovating.
    The proposal in front of us is 5 percent below the current 
operating level of 340 million. Unlike most agencies, the FCC's 
funding has been frozen since 2009, forcing it to find savings 
in a variety of ways in order to meet necessary increases, 
inflation, and staff raises. These have been found in some 
cases through productive means, eliminating waste and 
duplication, but I am concerned there are no more easy 
efficiency improvements to be found and that it may end up 
affecting the very heart of the FCC's mission to lose another 
102 FTEs.
    To achieve the proposed reductions, these staff cuts, 
relying on an agency wide hiring freeze, will result in the 
lowest staffing levels on record for the agency. So I look 
forward to hearing from the witnesses about how this 
indiscriminate means of achieving this reduction will be 
accomplished without impacting the core mission of the agency.
    I think there is positive news in that we share an 
enthusiasm for improving broadband access and the $10 billion 
Universal Service Fund administered by the FCC expands access 
to vital communications necessary in our modern age. I was 
pleased to hear from Chairman Pai about progress on the 
Mobility II funding the Connect America Fund, which will 
provide significant funding for LTE and broadband service. I 
look forward to working with Chairwoman Capito about that as 
well.
    I will express in the course of my questioning about 
concerns about reversal and policy direction around net 
neutrality and consumer privacy protections for Internet data, 
things where I think it is important that we work together to 
reassure the public and find common ground. Although Chairman 
Pai has only led the FCC a few months, you have already made 
significant progress on a few fronts, NextGen TV and the 
Incentive Auction to Spur Innovation. It is my hope that we can 
also work together to find ways to protect consumers and to 
address the fundamental issues around net neutrality that are a 
concern to a lot of my constituents as well as to our country 
as a whole.
    Thank you for sharing your perspectives about the FCC's 
funding requirements and program goals and thank you, 
Chairwoman Capito, for your leadership.
    Senator Capito. Thank you. And I noticed that the ranking 
member of the full committee has entered the room and I wanted 
to extend an opportunity if he would like to say a few words.

                 STATEMENT OF SENATOR PATRICK J. LEAHY

    Senator Leahy. Thank you, Madame Chairwoman and my friend 
from West Virginia, and of course, my friend from Delaware, 
Senator Coons.
    I did want to come here especially to raise a question on 
net neutrality. But then I looked at the Trump budget proposal. 
It cuts funding for the FCC's core budget by 5 percent. This 
may pale in comparison with the drastic cuts proposed for other 
agencies, but it is a significant reduction for an agency whose 
budget basically flat funded for years. Perhaps it reflects an 
agency, and an administration, that is walking away from some 
of its core responsibilities. And in no area do we see that 
more than net neutrality and broadband privacy protections.
    This is something I hear every single time I go home. I 
hear it at the airport. I hear it going through the grocery 
store. I hear it coming out of church on Sunday. I hear it 
everywhere. In fact, nearly 4 million Americans, 4 million--it 
is an unprecedented number--called on the FCC to preserve the 
Internet as a free and open platform for all.
    In Vermont, small businesses and large businesses all say 
the same thing. They want strong meaningful rules to protect 
consumers and small businesses and startups. They want rules to 
protect the Internet as an open forum for commerce ideas and 
expressions.
    I held a Judiciary Committee field hearing in Burlington, 
Vermont. Small businesses told me directly about why these 
rules are so important. They do not want any special treatment. 
They simply want assurance that the Internet would remain an 
equal playing field, so they could use the Internet to expand 
their businesses beyond the Vermont border without fear of 
prohibitive fees or being squeezed out of special Internet 
``fast lane''.
    One very large company, which started as a very small 
company, said they do not want special preference. They do not 
want to be in a position where small companies can get squeezed 
out by big companies that can afford it, they being one. They 
said otherwise you are never going to see a small company start 
up again like them.
    Now, the FCC's landmark Open Internet rules reflected the 
concern of these small businesses and of millions of Americans. 
The rules ban pay-to-play deals that could derail startups and 
small businesses, stifling innovation. The FCC's landmark Open 
Internet rules ensure the Internet remains an open and dynamic 
platform for innovation and free speech, but Chairman Pai, 
immediately after President Trump appointed you, the FCC 
suddenly did an about face. I mean, you could just almost hear 
the tires squeal as it spun around.
    Chairman Pai, your actions to gut the Open Internet rule 
appear to further only one cause: to ensure that large 
corporations are able to maximize profits at the expense of 
hardworking Americans and small businesses--so many of the 
small businesses that many of us have in our States. And I'm 
troubled. I am deeply troubled, Chairman Pai, that under your 
leadership the FCC has turned from an agency whose primary 
objective was to ensure competition in the marketplace, to one 
that has been co-opted by moneyed interests and big businesses 
that could squeeze out competition. So I hope you will 
reconsider your ill-advised decision to undermine the Open 
Internet rules. Undermining net neutrality protections harms 
consumers.
    And I will close with this. In the past few months we have 
seen efforts to undermine important consumer protections not 
only from within the FCC, but also from Congress. And I remain 
disappointed, but sadly not surprised, that the Republican 
leadership and President Trump have teamed up to side with 
corporate interests over consumers when they rolled back common 
sense broadband privacy protections. But I would urge my 
colleagues on both sides of the aisle: You have a lot of small 
businesses, a lot of startups that are going to be just killed 
by this. If corporate interests are placed above the interests 
of consumers--hardworking Americans--that is unacceptable. 
Americans deserve better.
    Madame Chair, I will place my full statement in the record.
    [The statement follows:]
             Prepared Statement of Senator Patrick J. Leahy
    Thank you, Chairwoman Capito and Ranking Member Coons, for the 
opportunity to make brief remarks.
    The Trump budget proposal for fiscal year 2018 cuts funding for the 
FCC's core budget by 5 percent. If implemented it would require a 
reduction in over 100 full-time employees. While this proposed cut may 
pale in comparison to the drastic cuts President Trump proposed for 
other agencies, it is a significant for an agency whose budget has been 
flat-funded since fiscal year 2009. Perhaps this is a reflection of an 
agency, and an administration, that is walking away from some of its 
core responsibilities. In no area do we see that more than net 
neutrality and broadband privacy protections. While the main focus of 
today's hearing is the FCC's budget request for fiscal year 2018, it is 
also the duty of Members of the Appropriations Committee to provide 
oversight and hold agencies accountable for their actions. And today I 
exercise my oversight responsibilities.
    Two years ago, nearly 4 million Americans--a truly unprecedented 
number--called on the FCC to preserve the Internet as a free and open 
platform for all. Americans from all walks of life and from all sectors 
of our economy participated in the FCC's rulemaking process. They 
wanted strong, meaningful rules to protect consumers, small businesses, 
and startups. They wanted rules to protect the Internet as an open 
forum for commerce, ideas, and expression.
    At a Judiciary Committee field hearing that I held in Burlington, 
Vermont, I heard directly from small businesses about why these rules 
are so important. They do not want any special treatment. They simply 
want assurance that the Internet would remain an equal playing field, 
so that they too could use the Internet to expand their businesses 
beyond the Vermont border without fear of prohibitive fees or being 
squeezed out of special Internet ``fast lanes.''
    The FCC's landmark Open Internet rules reflected the concerns of 
these small businesses and of millions Americans. The FCC listened 
because net neutrality protections benefit and protect both consumers 
and broader marketplace competition. The rules ban pay-to-play deals 
that could derail startups and small businesses, stifling innovation. 
And the rules ensure that the Internet remains an open and dynamic 
platform for innovation and free speech.
    Yet, immediately after President Trump appointed you, Chairman Pai, 
the FCC abruptly reversed course. Chairman Pai, your actions to gut the 
Open Internet rules appear to further only one cause: to ensure that 
large corporations are able to maximize profits at the expense of 
hardworking Americans and small businesses.
    I am deeply troubled that under your leadership, the FCC has turned 
from an agency whose primary objective was ensure competition in the 
marketplace, to one that has been co-opted by moneyed interests and big 
business. I hope you will reconsider your ill-advised decision to 
undermine the Open Internet rules. Undermining net neutrality 
protections harms consumers. It hurts small business and startups 
looking to enter the market. And it undercuts economic opportunity and 
freedom of speech.
    Unfortunately, in the past few months we have seen efforts to 
undermine important consumer protections not only from within the FCC, 
but also from Congress. I remain disappointed, but sadly not surprised, 
that Republican leadership and President Trump have teamed up to side 
with corporate interests over consumers when they rolled back 
commonsense broadband privacy protections. Americans should not have to 
worry that their personal information will be used or shared by their 
Internet providers without their express consent. Repeatedly placing 
corporate interests above the interests of consumers and hardworking 
Americans is unacceptable. Americans deserve better.

    Senator Capito. Thank you, Senator Leahy.
    At this time, we will proceed with our questioning, which 
each Senator will do 5 minutes per round and I will begin the 
questioning.
    My first question, Chairman Pai, is about something that 
was alluded to in your statement, but also in Commissioner 
O'Rielly's statement about helping States figure out the best 
way to deploy broadband, eliminate some of the barriers, and I 
know that this is something you have been working on. Could you 
just give me a quick status on where you are on that? And I 
would like to say my State of West Virginia just did pass a 
semi-controversial broadband expansion bill which I am very 
proud the governor signed.
    Mr. Pai. Thank you for the question, Madame Chairwoman.
    We have taken aggressive steps to work cooperatively with 
States to make sure that we put broadband deployment front and 
center at all levels of government. For instance, soon after I 
was designated as chairman I set up the broadband deployment 
advisory committee, one critical working group of which is 
devoted specifically to States, helping to try to find a model 
code so that States that are interested in broadband deployment 
can take an approved, off the shelf, if you will, set of 
guidelines----
    Senator Capito. Right.
    Mr. Pai [continuing]. To help promote deployment. 
Similarly, with the stewardship of our Universal Service Fund 
programs, we have worked cooperatively with States to make sure 
that every dollar that is spent is spent wisely on unserved 
areas. And I met with a number of State officials that----
    Senator Capito. Is there one State that is doing it really 
well?
    Mr. Pai. There are a number of them. For example, with 
Tennessee, I have had a chance to learn about how they have 
migrated Next Generation 911, which is an IP based system. They 
have been very forward looking. I have worked well with 
Governor Cuomo in New York State to deliver Connect America 
Fund subsidies to upstate New York to serve unserved Americans. 
There are a lot of States--every State, I think, shares that 
interest.
    Senator Capito. Right.
    Mr. Pai. They might have just different challenges and 
different ways of getting there.
    Senator Capito. Okay. Turning to the budget quickly or some 
comments that both Commissioner Clyburn and Commissioner 
O'Rielly made sort of coming at it from different angles. I 
wanted to give you a chance to respond, or anybody really, but 
first your thoughts since you did not address it in your 
opening statements on possible agency structure, losing FTEs, 5 
percent shrinkage in the budget. How do you see that in terms 
of your ability to get your job done?
    Mr. Pai. A few different points. First, obviously the 
Office of Management and Budget offered governmentwide guidance 
with respect to the 5 percent figure and we crafted our budget 
consistent with that guidance. Secondly, we wanted to make sure 
that we had our eyes on the prize so to speak to make sure that 
the FCC discharges its core responsibilities, even if the 
staffing level might be lower. And that is why, for instance, 
despite the fact that we have fewer staffers, we have been able 
to focus on doubling the input--output, rather, with respect to 
our meeting items where we consider the highest profile issues.
    In the first month, we got across the finish line in a 
bipartisan way, with reforms to our Connect America Fund 
Program to make sure that fixed broadband and 4G LTE reaches 
unserved Americans. We have also considered some structural 
changes to make sure that we use the assets that we have in the 
most effective way.
    So, for instance, in the first speech I gave on this topic 
I proposed the creation of an Office of Economics and Data. One 
of the things I found is that the FCC, unlike at the FTC or the 
SEC, our economists are sprinkled throughout the various 
bureaus and offices. Some of them are very busy and some of 
them are not as busy.
    And so I thought, well, if the lawyers have an Office of 
General Counsel, if the engineers have an Office of Engineering 
and Technology, what if we centralized the economic function so 
that we consolidate all of the economists, that great talent 
that we have got, in one office? That would allow us to deploy 
resources more effectively. It would allow us to attract 
economists to the agency. And it would give them sort of an 
academic environment, if you will, to consider bigger picture 
things, to write white papers, for instance, that have 
generated some of the most innovative ideas that the FCC has 
such as price gap regulation and the incentive auction. So we 
are doing the best we can to meet those core responsibilities 
within the constraints that have been presented to us.
    Senator Capito. Thank you.
    Commissioner Clyburn, you and I have talked about this in 
terms of coordination between the FCC, the NTIA, and RUS, we 
have resources there for broadband deployment. We have some 
issues in our State with the initial stimulus package and the 
deployment of those funds as well. What are you seeing in terms 
of coordination with the FCC here? Is this an area of strength 
or things that need to be worked on?
    Ms. Clyburn. I think both, to be honest with you. We have a 
Federal State joint board initiative of framework where we are 
constantly in contact with our State counterparts about how we 
can do and how we could build, you know, better relationships.
    The Chairman was right to point out that his BDAC that was 
started gives a blueprint or a means for people to weigh in. I 
will also say, however, that there is only one local 
representative on BDAC as it stands now. And what I am hoping 
that we will continue to do is work with local authorities, 
work with us and come up with maybe an infrastructure 
consortium that will better and in a more streamlined and 
targeted way really get everybody's voices at the table, you 
know, come with a collaborative framework and really do what 
you and I want. That is to Connect America. I think there are 
better ways that we can do it, but only through a concerted 
effort and by concentrating on what our goals and objectives 
are and listening to State and local voices will that happen.
    Senator Capito. Thank you. Thank you.
    Senator Coons.
    Senator Coons. Thank you, Chairwoman Capito.
    Commissioner Pai, if I might, just an opening concern. 
There is widespread concern now that the administration has 
been choosing not to respond to requests for information from 
Democrats which counters a longstanding tradition upheld by 
both parties as to how Federal agencies ought to respond to 
questions. Will you commit to responding to all questions, 
whether from the majority or the minority, that come to you 
from Members of Congress?
    Mr. Pai. Thank you for the question, Senator. Absolutely. I 
have done so during my tenure as chairman and I will do so 
going forward.
    Senator Coons. Thank you. I appreciate that. As we 
discussed yesterday, consumer privacy is a topic of real 
concern to me. On April 3 President Trump signed into law a new 
enactment that nullified the FCC's previous rules that provided 
some movement on protection for consumer Internet privacy. As 
we discussed, you believe it is the Federal Trade Commission's 
core challenge, but it is currently outside their jurisdiction, 
so the FTC cannot currently provide that protection. What 
privacy protections are currently in place and who is enforcing 
them? Do you think there should be privacy protections for 
consumer privacy in the Internet? And how do we achieve a 
restoration of or a move towards a place where there really are 
robust privacy protections for consumers?
    Mr. Pai. Thank you for the question, Senator. I appreciate 
your concern as well as the courtesy extended to me yesterday 
in having this conversation.
    I think that the baseline expectation of every consumer and 
every regulator and elected official I dare say should be a 
uniform expectation that sensitive information will be 
protected whenever a consumer goes online. Prior to 2015, the 
Federal Trade Commission was the cop on the beat, so to speak. 
They applied a consistent privacy framework across the Internet 
economy. After 2015 when the FCC deemed telecommunications 
carriers to be common carriers, we stripped the FTC of 
jurisdiction. And so that left a hole in terms of privacy 
protections.
    Thus far, the only thing that applies is section 222 of the 
Communications Act, section (c)(1) which applies these 
requirements to telecommunications carriers. And that is 
because the FCC's rules on privacy have never gone into effect.
    And so essentially in 2015 we had to figure out how to go 
forward. We established some guidance based upon our 
Enforcement Bureau which provides some guidance to the 
industry. And I think going forward what we wanted to make sure 
is that we protect consumers as best we can and work 
collaboratively with the Federal Trade Commission to make sure 
that regardless of what agency is handling the issue we need to 
make sure the consumers are protected consistently.
    Senator Coons. So do you think it is clear now who is 
responsible and who has got jurisdiction or do you think there 
is additional action that needs to be taken in order to provide 
robust protection for consumer privacy?
    Mr. Pai. Well, currently the FCC does have jurisdiction 
over Internet service providers. The Federal Trade Commission 
has jurisdiction over everyone else essentially in the Internet 
economy. And so that is why I have committed to working very 
closely with Chairwoman Ohlhausen and other members of the 
Federal Trade Commission to make sure that we have a consistent 
framework that protects consumers whenever they go online.
    Senator Coons. The other area we discussed that I have real 
concern about is net neutrality. When the FCC first proposed a 
rule on net neutrality 3 years ago a record-breaking number of 
Americans filed comments. In fact, I think it crashed the FCC 
system. It certainly crashed my phone system in my office as 
well. And then when it was announced as a calendar item again, 
that happened again. So that just indicates that there is a lot 
of Americans who have strong views about trying to keep the 
Internet open.
    How will you consider the public comments you receive and 
how will the Commission weigh the voices of millions of 
Americans who have got serious concerns about Internet freedom?
    Mr. Pai. An important question, Senator. And that is part 
of the reason why we are having the public conversation. The 
FCC could have chosen to proceed through what is known as a 
declaratory ruling, simply saying that what the previous FCC 
did is null and void as a matter of law and move ahead. But it 
was important to us to make sure that we had the notice and 
comment process that is prescribed by the Administrative 
Procedure Act. And so that is why we had a full 90 days of 
public comments in addition to the 3 weeks before the FCC's 
vote to allow for robust public comments.
    Once the public comment period closes in the middle of 
August, August 16, I believe, we will take stock with the FCC's 
terrific staff and try to figure out whether the FCC should 
move ahead, and if so, how. And we will be guided, of course, 
by the principles of substantial evidence as enunciated by the 
D.C. Circuit, by the facts that are in the record and, of 
course, by the motivation to figure out what is in the public 
interest at the end of the day.
    Senator Coons. I would be interested, Commissioner Clyburn, 
in your comment on either of those two issues, net neutrality 
and consumer privacy, and then I have one last issue I wanted 
to briefly raise.
    Ms. Clyburn. Well, one of the--I find myself wondering who 
is the referee on the field and the cop on the beat when it 
comes to broadband Internet access service as it stands now. 
With the passage of the CRA and with the direction that we have 
taken, I--honestly, I am not an attorney, but I do not think 
anybody is directing, is now monitoring the balls and strikes.
    So from that perspective, I am worried. I am worried as a 
broadband--as a customer, and I am worried for the millions of 
others who are. I forgot the other question, Senator.
    Senator Coons. Consumer privacy and net neutrality and----
    Ms. Clyburn. I believe----
    Senator Coons [continuing], How we provide some reassurance 
to the public that their concerns are going to be taken serious 
by the Commission.
    Ms. Clyburn. I am hopeful that the 4 plus million comments 
that we have heard will be taken seriously by this body. 
Regardless of what form they came in, people took the time to 
weigh in. Their voices should be heard. We are a government 
agency. We are responsible for doing the will of the people.
    Senator Coons. I will close by just complimenting the 
proposed rule to reduce robocalls, as someone who is myself the 
victim of fairly frequent spoofing robocalls where I answer 
because it looks like it is a number I know, but it is not. I 
look forward to your work on that. It is a predatory practice 
and I am glad you are working to stop it. It is my hope that 
together we will address the unresolved concerns of consumer 
privacy protection.
    Thank you, Madame Chair.
    Mr. Pai. Thank you, sir.
    Senator Capito. Senator Lankford.
    Senator Lankford. Thank you. Chairman Pai, I appreciate all 
of you being here as well today. Tell me a little bit about 
Lifeline and the process that you are going through right now. 
I know there has been a continual review on Lifeline to 
determine how to be able to use that. There has been an 
expansion of that the past several years. There is still a 
concern about fraud and want to be able to make sure that 
obviously taxpayer dollars are used correctly and wisely. Where 
are you on that right now?
    Mr. Pai. Thank you for the question, Senator. I have been 
very consistent in saying that our top priority at the FCC is 
closing the digital divide. And I think that the Lifeline 
Program is an important part of the question in terms of 
closing that divide.
    One of the things that we have looked at is the way to make 
sure that every single dollar, which is after all a taxpayer 
dollar that is spent in the Lifeline Program goes to somebody 
that needs the help. And so we want to make sure that the 
Lifeline Program is directed toward needy consumers to make 
sure that, for instance, any of the fraud in the system is 
investigated and rooted out and so we are in the process of 
determining the next steps, but you can rest assured that 
certainly in terms of purpose it is focused.
    Senator Lankford. All right. So give me a timeline on that 
because obviously if I go back a year in this same hearing or 
the year before that, that seemed to be very similar rhetoric 
that I have heard for a while on it. While there have been some 
advances over the past several years, what is the next step and 
when is the next step on dealing with fraud in Lifeline?
    Mr. Pai. I think in the near term we have made it a 
priority. I have spoken with members of the staff as well as 
folks at the Universal Service Administrative Company which 
oversees this program among others on our behalf. And so I 
cannot give you a specific date, but what I can tell you is 
over the next several months we hope to be able to report to 
you improvements.
    Senator Lankford. So let's say by October, November, 
December? When are we talking about?
    Mr. Pai. Yes. I can commit to that. Yes.
    Senator Lankford. Okay. That would be terrific. So tell me 
a definition as you are walking through issues between 
underserved and unserved. That seems to be the great debate on 
just about every program and everything that we are engaging in 
with any kind of subsidy. Which has priority, underserved or 
unserved?
    Mr. Pai. They are both important, but to me at least it is 
critical to get folks who are unserved onto the other part of 
the ledger. It is increasingly important for folks to have 
Internet access, whether you want to start a job, educate your 
kids, get healthcare, and participate in civic society and 
other functions. So to me at least, it is important, I think, 
to bring some of those 30-some million Americans who are off 
the grid when it comes to the digital infrastructure on.
    Senator Lankford. Right.
    Mr. Pai. And so that is consistent if you look at our 
Universal Service Fund administration, what we have been 
focused on.
    Senator Lankford. Okay. So then the priority is shifting 
more towards that or is it already there where it is the 
unserved rather than underserved?
    Mr. Pai. I think it is largely there. If you look at, for 
example, the New York Broadband Initiative, we got across the 
finish line my first week as chairman. If you look at Mobility 
Fund Phase II, if you look at some of the other programs or 
initiatives that we have done, we are consistently trying to 
attack that digital divide. And the divide is keenest when 
folks simply do not have access at all. And I have seen that 
for myself just last week when I was traveling through the 
upper Midwest.
    Senator Lankford. So there has been some conversation about 
all of these areas on digital divide, but you have also got an 
issue of means testing. And I know that there has been some 
questions about that. To be able to put out just a generic 
question, what should we do on a means testing? Just because 
they do not have access does not mean that they do not 
necessarily have the finances to access. They have just chosen 
not to. Where is that right now?
    Mr. Pai. That is one of the things we are currently 
studying and I am actively working with Commissioner O'Rielly 
as well as the members of our staff to figure out the way 
forward on that initiative. And it is an important idea worth 
considering.
    Senator Lankford. Okay. So answer this question for me. I 
have already heard it come up so far in this conversation 
today, that FCC is leaning more towards the big corporate 
interests rather than the interests of the consumer. Why would 
that accusation sit out there and how would you answer that?
    Mr. Pai. I respectfully disagree with that assessment. I 
think that if you look at our track record we have been 
consistently making sure that we have a more competitive 
marketplace. And if you look at some of our initiatives with 
respect to, you know, reforming the broadband program to making 
sure that wireless Internet service providers have the ability 
to deploy. If you look at our Broadband Deployment Advisory 
Committee, if you look at my support of the Gigabit 
Opportunities Act--Each one of these initiatives is targeting 
and incentivizing some of the smaller providers to enter in the 
marketplace, to invest more risk capital.
    Now, that is something that is often difficult to convey. 
You know, last week when I was visiting Ethoplex, a fixed 
wireless provider in Germantown, Wisconsin, one of the things I 
learned from them is how difficult it is for those with limited 
budgets to be able to compete with some of the bigger folks. 
But they are the ones that are critical to providing a more 
competitive marketplace and those are the ones we are going to 
continue to focus on.
    With respect to consumer initiatives, as I said, 
robocalling is the number one consumer complaint that people 
have with the FCC. As of a couple of years ago, the FCC had 
only issued one citation in that calendar year with respect to 
it. We have made it a top priority, which is why we have taken 
steps to block some of those spoofed robocalls that are coming 
to Senator Coons and God knows how many other millions of 
Americans. And so we are refocusing the agency on getting the 
biggest bang for the buck when it comes to consumer protection.
    Senator Lankford. So when you get into enforcement, 
obviously robocalls, I would completely agree with Senator 
Coons on that. That is a big issue, especially the spoof calls, 
the numbers that are not the actual number, things that are 
clearly there. Getting authorities to it. I know decency 
standards have been one of those things that have been out 
there for a while, unenforced at times when there are clear 
violations. Ways that you can enforce existing law and regs 
that are there would be of great benefit to the consumer across 
the country.
    Mr. Pai. And if I might, Senator, part of the challenge is 
also that some of these robocalls come--they originate from 
outside of our country. And so one of the privileges of being 
the chairman is that I have the chance to meet with and work 
with some of my counterparts abroad. And I can tell the 
subcommittee that I have actively spoken with a number of them 
to make sure that this is on their radar too because it 
requires cooperation with some of our international 
counterparts to make sure that we crack down on all levels of 
some of these robocall schemes.
    Senator Lankford. Great. I appreciate that. Thank you.
    Senator Capito. Thank you. Senator Van Hollen.
    Senator Van Hollen. Thank you, Madame Chairman, Ranking 
Member Coons. Good to be on this subcommittee and looking 
forward to a discussion of the FCC issues. I will say, Madame 
Chairwoman, I know this is not the subcommittee of 
jurisdiction, but we just read reports that there may be a new 
healthcare bill being unveiled as soon as maybe Friday or next 
week. And I would urge all of our colleagues to urge their 
colleagues to have hearings on that issue just like we are 
having a hearing on this. That will affect one-sixth of our 
economy and hundreds of millions of our fellow Americans. I 
think it is important to have a hearing on that as we look at 
the budgets of the FCC and other Federal agencies.
    To all the commissioners, welcome. Chairman Pai, I do join 
my colleagues, Senator Coons and Senator Leahy, in expressing 
disappointment with the overturning of the privacy protections 
through the CRA. Obviously, you have a different view, but in 
my view that action puts millions of Americans, it makes them 
more vulnerable with respect to privacy information over the 
Internet. And I will also be following up in writing with 
questions on net neutrality where we have very real 
differences. And I think my colleagues expressed them well, but 
I have some follow up.
    I was pleased to hear your comments about expanding access 
to the Internet and positive comments about the Lifeline 
Program. Yes, of course, I think all of us want to make sure 
that nobody is abusing it, but it is also true that it has 
helped provide broadband access to millions more Americans, 
wouldn't you agree with that?
    Mr. Pai. Yes, sir.
    Senator Van Hollen. Thank you. And in Maryland I can tell 
you that we have a 39 percent participation rate, which means 
of those eligible, 39 are participating now, which is about 
231,000 subscribers, people who would not otherwise have access 
to the Internet.
    In addition to the Lifeline Program, what additional 
measures are you taking or would you suggest that you take to 
expand access to broadband throughout the country, to every 
neighborhood, both urban, suburban, and rural?
    Mr. Pai. That is a great question, Senator, and it is a 
challenge. Obviously, given the geographic dispersion of our 
population, some of the terrain, we have challenges, but I am 
committed as Senator Capito said in her opening statement, that 
now is the time to close the digital divide. And you know 
better than anyone given Maryland's diversity, that it is 
increasingly important for folks in your State, around the 
country, to get that access.
    I am committed to using every tool in the FCC's tool box to 
address it. And that means, number one, making sure that we 
wisely spend the Universal Service Funds that are under our 
administration to direct them to unserved parts of the country. 
Number two, making sure that we modernize our regulations to 
incentivize the deployment of next generation networks. That 
means everything from working cooperatively with State and 
local governments to adopt broadband friendly policies to 
making sure that smaller competitors can get access to the 
polls, the ducts, the conduits that allow them to deploy some 
of this infrastructure. It might not be exciting, but this is 
really one of the biggest cost elements to deploying networks.
    The other piece of it, which is admittedly discretionary, 
but it is the FCC shining a spotlight on the importance of this 
issue and working cooperatively with this body. Last September 
I proposed a concept of Gigabit opportunities because I have 
seen for myself in Alaska native villages above the Arctic 
Circle and in poor towns in Mississippi that there are far too 
many folks on the wrong side of the digital divide and that is 
because in a lot of cases there simply is not a business case 
for building in some of these areas. Companies see there is not 
a return on the investment.
    I am committed not so much as a regulator, but frankly as 
an American, to making sure that they get on the right side of 
that divide. And so that is why I proposed this idea, which I 
am very grateful to Senator Capito for advancing. I think there 
are a lot of ways that Congress could advance this, including 
through the infrastructure plan, if there is one, to direct 
some of those Federal funds to the FCC for broadband 
deployment.
    It is an important issue and I would love to work with you 
and any Members of the subcommittee who are interested in 
solving the problem.
    Senator Van Hollen. Thank you. And, Commissioner Clyburn, I 
know that you recently finished your tour I think connecting 
the communities, bridging the communications and the 
opportunities divide that we have been discussing. What are 
your thoughts on this? Is this an area where we can do more? Is 
this an area where congressional action would be helpful to 
you?
    Ms. Clyburn. Yes, yes, and yes.
    Senator Van Hollen. All right.
    Ms. Clyburn. One of the things that is the biggest driver 
that the biggest cost causer in terms of distress is in health. 
If you fall into a place where health is a challenge, that is 
usually the number one reasons for bankruptcies. But if you 
have a connected community, if you have people who are able to 
communicate with their healthcare professionals in a 
telemedicine or telehealth in that paradigm, if we can get that 
affordably through Lifeline, through satellite, through NGS or 
geo stational whatever it is called in terms of satellite. If 
we could do all of those in terms of the infrastructure as well 
as through programs that are means tested, that are Lifeline, 
that are targeted, then we can really solve many of our 
critical problems.
    So then the answer is yes no matter what the discipline, no 
matter what, if it is health, education, and life. Connectivity 
is key and we have to really use all of the tools in our 
arsenal, our regulatory arsenal to encourage innovation and 
investment and opportunities.
    Senator Van Hollen. Okay. Well, thank you. And, look, 
Madame Chairwoman, I look forward to working with you and 
Members of the subcommittee and commissioners on some of the 
suggestions that were made on this issue, vital issue.
    Thank you.
    Senator Capito. Thank you, Senator.
    Senator Moran.
    Senator Moran. Chairwoman, thank you very much. 
Congratulations on becoming the chairwoman of this 
subcommittee. I know of your continual efforts in regard to 
broadband deployment in West Virginia and obviously we care 
about Kansas and Arkansas and Connecticut. And I look forward 
to working with you and Senator Coons. I look forward to 
working with you and Senator Coons to make sure that broadband 
is deployed.
    Well, I recently saw, and I do not--Mr. Van Hollen talked 
about all across the country. I recently saw an article where 
rural America is now what used to be the problems of urban, 
suburban, I am sorry--urban, the core city centers has now 
spread to rural America based upon the statistics. And we are 
all looking for hope and this is--technology and 
telecommunications is one of the areas in which I think we can 
provide hope for parts of the country that all of us care so 
deeply about.
    I wanted to take a moment, Commissioner O'Rielly, 
Commissioner Clyburn, Chairman Pai, you are three commissioners 
that I have very much appreciated working with. Without 
exception, we have had, in my view, a good relationship of 
significant response and care and concern for the concerns that 
me and my staff raise. And I look forward to that relationship 
continuing.
    There was contention, Commissioner Clyburn, in past 
commissions. And I am not here to, you know, debate how well 
you all got along, but I know from time to time, Commissioner, 
you are opposed to some of the decisions that Commission is 
currently making, but I would hope that you would assure me 
that you feel that your voice is being heard and that you have 
opportunity to participate in the process that sometimes seemed 
missing in a past commission.
    Ms. Clyburn. Most of the time I feel that way, sir.
    Senator Moran. That is a good solid answer. I would 
encourage the Chairman and the Commission to work closely 
together. None of this stuff is easy, but voices need to be 
heard and results. Commissioner O'Rielly.
    Mr. O'Rielly. I was going to say I admittedly am biased on 
this topic, but in fairness, I think the Chairman has done a 
wonderful job in setting a new tone for the Commission. There 
is a fresh breath of air. And I think that even if my 
colleagues and I disagree on things, we move on to the next 
issue and try to work together. So I think it has really moved 
forward, a real kudos to the Chairman.
    Senator Moran. I appreciate hearing that. The nature of the 
conversations we heard in this subcommittee and the Commerce 
Committee over the past several years, in my view, there is an 
opportunity for that to be improved. And I just encourage you 
all to take advantage of that.
    Ms. Clyburn. Senator, I would like to also give credit to 
my fine Southern upbringing for that.
    Senator Moran. Well, since you put it that way, 
Commissioner, what I was trying to do was to make sure that 
Chairman Pai is behaving as a Kansas should.
    Mr. Pai. Can we--I do not know if we can speed up the clock 
here.
    Senator Moran. If not, we will talk to his mom and dad. Let 
me know.
    Ms. Clyburn. Thank you. Appreciate it.
    Senator Moran. Chairman, perhaps the place to start with 
you is with you on repack. We are looking for a smooth and 
orderly process. I want to be certain that no broadcaster is 
forced to go dark through no fault of their own. We have had 
this conversation numerous times with all of you. I assume that 
your commitment remains to work with us to ensure that adequate 
resources are provided to these impacted broadcasters. I assume 
that is the case, yes?
    Mr. Pai. Yes, sir.
    Senator Moran. If as expected the amount of money Congress 
set aside, the $1.75 billion currently authorized to pay these 
moves of broadcasters is insufficient, how will the FCC go 
about reimbursing broadcasters for covered costs on their 
moves? Is it going to be a pro rata circumstance in which you 
meter out payments for everyone? Will you pay in full those who 
moved first? Is there some other method by which you can fairly 
treat the circumstances that you find yourself in with that 
amount of money?
    Mr. Pai. All right. Thank you for the question, Senator. So 
we are in the early stages at this point. We are still waiting 
to receive cost estimates from the broadcasters. Those 
estimates should come to the Commission by July 12. At that 
point, the staff will take a look at all of the estimates that 
have come in, determining which of those costs are reasonable, 
and then aggregate them to try and figure out what is the 
number that we think will be required. If that number is 
greater than $1.75 billion, you have my personal commitment 
that I will come immediately to Congress to let you know so 
that Congress can make the appropriate decision.
    As to what the FCC would do at that point, we have not yet 
determined, but hopefully we will be able to work with you 
cooperatively on that topic.
    Senator Moran. Well, I worry about the slowness of 
Congress, so if you come to us and there is a shortfall in the 
amount of money, how long will it take for us to respond and 
what our response will be, I would encourage the Commission to 
be prepared to figure out how they treat broadcasters in that 
circumstance, which I think can help us, perhaps if that 
occurs, help us move our process along as well.
    Mr. Pai. Absolutely. One of the core planks of the 
Incentive Auction, as I have said for many years, is to ensure 
that broadcasters are treated fairly and consistently with the 
Spectrum Act. One part of that is not having to go out of 
pocket for expenses that are reasonably incurred as a result of 
the Incentive Auction repack. And so I would look forward to 
working with you and any members of the subcommittee on that.
    Senator Moran. Well, we have had a lot of concern 
particularly for rural and small broadcasters where the demand 
for movement will occur probably early in the larger broadcast 
areas. And I want to make sure that--I know, I see your 
finger--that--that did not sound good. We want to make sure 
that those are not left behind in the process.
    Mr. Pai. Absolutely, sir. So we have spaced out the repack 
over 10 different phases. We have also taken different steps to 
make sure that broadcasters are aided in cases where 
circumstances beyond their control have impacted their ability 
to repack smoothly. So, for example, a six-month extension of 
their construction permit in situations like that. So we are 
taking steps to make sure that broadcasters like that, again, 
are treated fairly and consistently with the law.
    Senator Moran. Chairman, thank you very much.
    Senator Capito. Thank you. I would like to, first of all, 
wish my fellow West Virginia a Happy West Virginia Day today. 
June 20, 1863 our State was formed.
    So now I would like to call on Senator Manchin.
    Senator Manchin. And I would like to wish my wife a happy 
birthday because it is on West Virginia Day also. It helps me 
to keep both of them.
    Senator Capito's State and mine had one of the lowest rates 
of broadband service in the Nation when the FCC voted to 
modernize its Universal Service Program in 2011. And in 2016, 
that is unfortunately where we remain, still the lowest. 
Significant gaps in mobile broadband coverage still exists in 
West Virginia. Unfortunately, inaccurate data has failed rural 
and remote communities across this country. And I say that 
inaccurate data has caused us to be left behind.
    To help address this problem, Senators Wicker, Schatz, 
Fischer, Klobuchar, Peters, Moran, and I introduced the Rural 
Wireless Service Act of 2017. The legislation would standardize 
the way FCC collects mobile data, coverage; in short, it 
represents an accurate picture of the real-world coverage 
experience currently available to consumers. The FCC's website 
notes that its current mobile coverage data has certain 
limitations that will likely result in an overstatement of 
coverage. You and I have talked about this, I think.
    Mr. Pai. Yes, Senator.
    Senator Manchin. We cannot afford to leave rural America 
behind and we are very concerned about this, so I guess what 
steps are you currently taking, Chairman, in order to address 
this?
    Mr. Pai. Thanks for the question, Senator. This is 
something I take seriously having been to West Virginia and 
seen on my own phone how you cannot get a signal in places like 
Clay and Clendenin and other areas that were hurting.
    Senator Manchin. You have been there, haven't you?
    Mr. Pai. I have. And it is--been in some desperate 
situations.
    Senator Manchin. It is tough, isn't it?
    Mr. Pai. It is. It is very hard, and especially when you 
have an area that, as that area was, that was hit by a flood 
and people are calling 911. You know, I have visited the 911 
call center and I have talked to the director about how hard it 
was to make sure that people were safe in circumstances where 
connectivity cannot be a given. And so we want to change that 
equation. And part of changing it is making sure that our data 
is accurate. And so I am aware the National Broadband Map has 
not been updated for several years. We want to make sure that 
we use data that is accurate based on Form 477.
    And while I cannot reveal non-public information, what I 
can say is we are actively working with our staff at the FCC to 
make sure that we have the right input, so to speak, so that 
the output in terms of policy is the right one for West 
Virginia, and I dare say for the country.
    Senator Manchin. Anybody else have any comments on that?
    Ms. Clyburn. I agree that that Form 477 process needs to be 
improved. We need more granular data. We need a staff to do so. 
We also need to make sure, especially going forward with the 
Mobility Fund Phase II and the other auctions that we have a 
challenge process that all companies no matter of size or 
scope, that they could weigh in on that.
    Senator Manchin. I hope that you would look at the 
topography of our State too. It is not Kansas. Okay. Kansas 
might be rural, but it is flat. We are not, so our challenges 
are much more compounded than any other State because of the 
terrain we have. We are beautiful, but we have challenges that 
come with that beauty.
    Ms. Clyburn. Part of my nerves are still up that mountain 
that I climbed, so I am aware of the beauty and the depth of--
--
    Senator Manchin. Another critical component of the 
Universal Service Program will be the Remote Areas Fund. I am 
encouraged by the Commission, what you all have reaffirmation 
to move forward with this Remote Areas Fund no later than a 
year after the Connect America Fund Reverse Auction. There are 
almost 13,000 locations in West Virginia alone and rural areas 
that are eligible for this Remote Areas Fund support.
    Many of these communities still lack access to a single 
viable broadband option where there is simply no business case 
for a provider to serve without our support. The market is just 
not large enough to attract them. And I believe the Remote 
Areas Fund must be targeted to reach these areas. So, 
Commissioner O'Rielly, would you like to discuss this Remote 
Areas Fund a little more in depth?
    Mr. O'Rielly. Well, I appreciate the question, Senator. 
This has been a difficult issue for me. It is something I 
worked on as soon as I got to the Commission.
    Senator Manchin. Right.
    Mr. O'Rielly. These are the hardest of hard places to 
serve.
    Senator Manchin. Absolutely.
    Mr. O'Rielly. And they have been put at the bottom of the 
list in terms of priority, that everything else has to be taken 
care of before we can get to that. And the Chairman has 
graciously increased the timeline and the effort to push on 
that, but for 3 years I have been pushing on this and I am not 
confident at this moment that by the time my term expires we 
will have finished it.
    Senator Manchin. Well, when you look at Appalachia, 
Appalachia is hit all across the board, every bit of it. And 
you want a war on poverty, you let us--you know, we get the 
people connected, they have got a chance to survive.
    And let me follow up with just last week Senator Heller and 
I introduced legislation that includes a Government 
Accountability Office report on the National Broadband Map. As 
you know, the Commission has not meaningfully updated the map 
since it inherited it from the National Telecommunications 
Information Administration. The GAO report will take a look at 
whether the National Broadband Map reflects the broadband 
coverage currently available across the country. I guess, 
Chairman Pai, how do we work together? How much effort and how 
much money are you putting towards revitalizing this?
    Mr. Pai. It is definitely a priority for us. We are looking 
at the options for updating.
    Senator Manchin. Do you have people? Do you have the 
resources?
    Mr. Pai. I believe we do, Senator. And----
    Senator Manchin. You have people dedicated towards?
    Mr. Pai. We do, yes.
    Senator Manchin. Do they know the urgency of how--I mean, 
we are going to be in a stalemate if we cannot get connected.
    Mr. Pai. Yes.
    Senator Manchin. You know, I think that Senator Capito and 
I both--and she has worked so hard on this--but both of us 
understand being around our State. You know, when I was 
Governor we had less than 50 percent of the people connected. I 
think we are up to about 85. We have every school and every 
rural--we have a school, a post office, or a public building 
that is connected today. We do not have the market to drive the 
market forces out. That is where we are just dead in the water.
    Mr. Pai. You have my personal commitment, Senator. I mean, 
just last week I drove over 1,600 miles from Milwaukee, 
Wisconsin to Casper, Wyoming, visited everything from a Sioux 
reservation in South Dakota to a farm town named Spencer, Iowa. 
And I saw for myself how difficult it is in some of these 
places to make sure that people have digital opportunity. And 
so it is a top priority for me.
    Senator Manchin. Well, Mr. O'Rielly said it has been on the 
bottom of the priority list for so, so long, so I hope all of 
you are committed to putting it on the top of your priority.
    Mr. Pai. Without question.
    Senator Manchin. Thank you. Thank you, ma'am.
    Senator Capito. Thank you. Senator Boozman.
    Senator Boozman. Thank you, Madame Chair. Thank all of you 
for being here and we do thank you for your willingness to 
serve. And I know you are working very, very hard for the best 
interest of the country.
    My questions really had to do with rural broadband and I 
think they have been covered very well. And it is interesting. 
The Committee is made up of a lot of rural areas and as you can 
see from the questions that probably the majority of the 
questions you have been asked today has to do with that, so it 
is so, so very important.
    One of the things that has been talked a lot about and 
really in the past has had good bipartisan support and I think 
it has the opportunity of good bipartisan support is an 
infrastructure package. And we talk in terms of railroads and 
runways and roads, the three Rs, but we do not talk a lot about 
infrastructure in terms of broadband. So you can have all those 
things in place and if you are not connected, as members have 
been talking about stories and then you all have relayed 
stories, it simply does not work.
    So what I would like to know, Commissioner Pai, and the 
rest of you guys can chime in also, but I hope that we have a 
firm commitment from you all in the sense of wanting to weigh 
in, be part of the infrastructure package in the sense of 
giving good advice so that we can include not just the three 
Rs, but have broadband in any package that comes forward.
    Mr. Pai. Senator, absolutely. Obviously we defer to the 
elected branches of government, but back in March I said that 
to the extent that Congress is considering an infrastructure 
package, I would hope that digital infrastructure, that 
broadband is a part of that. It is increasingly important for 
all walks of American life from agriculture to healthcare, and 
there are too many Americans who do not have it. And so I am 
certainly committed to working on that.
    Senator Boozman. And I would agree. We make the decision, 
okay, but where you can be helpful is just giving good 
information in the sense of that is really what it is all 
about. And I will tell you, unless you--most of us have the 
opportunity to be all over our States and we are in the 
hinterlands and it does get very, very difficult.
    Commissioner O'Rielly.
    Mr. O'Rielly. Thank you, Senator. I was going to just make 
two points. One is that if the decision is made in terms of 
infrastructure, I would hope you look at the Commission's high 
cost fund for purposes of where the dollars are spent rather 
than creating a new program.
    Senator Boozman. Okay.
    Mr. O'Rielly. Or using again NTIA's program which I think 
has had past difficulties. So I think that would be something 
that we have demand for that we cannot meet with our current 
dollars that could be filled in with added dollars from the 
Congress. And two would be that if you look at authority in 
terms of the Commission's authority overall to push back on 
some of the barriers to deployment that have been posed by 
State, local, and Tribal governments. And we want to be 
respectful of them, as the Chairman highlights, but I have been 
working on this for 25 years and some of these things are the 
same problems we had in 1995.
    Senator Boozman. Can you give a couple of examples 
regarding that?
    Mr. O'Rielly. Sure. There are two parts that dominate. One 
is the cost and the second is the approval process. I was just 
in New Orleans----
    Senator Boozman. Well, that is what I said, in pushing back 
against State and Tribal.
    Mr. O'Rielly. Sure. Yes. So----
    Senator Boozman. What specifically do we need to do?
    Mr. O'Rielly. Right. So we have some authority, and I think 
it is extensive authority, but I think it would be added if 
Congress were to amplify those points to make clear that we 
want broadband deployed. And, you know, there are some things 
that already banned by localities and States such as RF 
exposure and aesthetics that seem to be coming back. De facto 
moratoria are still happening in the United States, even though 
they are already prohibited in some regard. And so we have to 
constantly fight over what the language is and if Congress can 
clarify that for us, it would be very helpful.
    Senator Boozman. Good.
    Ms. Clyburn. I think from where I sit, Senator, is that we 
need to make sure that our house is in order. And what I mean 
by that is when we approve and consider and look and evaluate 
different technologies, we need to make sure that they are 
appropriate for the surroundings. So if I live on top of the 
mountain, which I do not and will not, you know, stringing 
fiber to me might not be the best way to connect me. So we have 
got, you know, satellite. We have got NGSOs. We have got, you 
know, TV white spaces. We have got other things that we need to 
make sure that are on par that have a chance to be approved and 
green lit by this agency. So, again, it is everything, what 
everybody said and the things that we have not thought about 
that you will help us with.
    Senator Boozman. Okay. Thank you, Madame Chairman.
    Senator Capito. Senator Daines.
    Senator Daines. Chairwoman Capito, Ranking Member Coons, 
thank you very much and congratulations, Senator Capito. I am 
honored to call you Chairwoman Capito.
    Senator Capito. Oh, thank you.
    Senator Daines. Well done. I want to thank the Chairman and 
thank the Commissioners for coming out today to testify. As the 
Commission is well aware of, out in Montana it is a rural 
State. I think there is a real rural tone to today's hearing. 
And when you are from a urban area you can take connectivity 
for granted. We do not take connectivity for granted in a rural 
State like Montana.
    In fact, I look at some of the maps the Commission has put 
out, you see gaping holes across the West. This is not only a 
barrier for businesses, for individuals. It has been talked as 
a public safety issue. And as Commissioner Clyburn stated, the 
maps do not even reflect the actual coverage in many areas. I 
spend a lot of time in my pickup, tens of thousands of miles 
driving around Montana. In fact, in Montana, we do not measure 
time in terms of oil changes. It is tire changes driving around 
the State. We see areas where it is--there is no cell coverage, 
let alone LTE coverage, so I very much look forward to working 
with each of you as we continue to close that gap.
    Chairman Pai, the Commission recently completed an 
incentive auction and is currently working on the repack and 
move of broadcasters to new channels and wireless companies in 
the spectrum that they purchased. In Montana, this auction is 
an important step forward to expanding broadband into our rural 
and particularly our tribal communities. However, we must take 
and make sure that we balance the rights of wireless companies 
to have access to the spectrum that they won outright with the 
real needs of broadcasters who have to vacate that same 
spectrum.
    Mr. Chairman, can you promise and commit to work with all 
of those effected by the incentive auction and with Congress if 
needed to make sure this transition will go as smoothly as 
possible?
    Mr. Pai. Yes, Senator, I will.
    Senator Daines. I feel like I am giving the marriage vows 
here or something. Wow. All right. I felt like a Sunday morning 
here, I will, by the grace of God.
    Commissioner O'Rielly, another issue we have seen in 
Montana is inhibiting the expansion of broadband, that is 
inhibiting it is spectrum squatting. Some companies are buying 
up spectrum and not deploying it in the areas that desperately 
need it, but instead they are sitting on it and later selling 
it at a much higher price. What enforcement authority and 
actions including tightening the rules can the FCC take in 
order to make sure that spectrum is practical and efficient and 
not placed on a shelf awaiting maturity?
    Mr. O'Rielly. Well, absolutely. In fairness, most wireless 
companies expedite the deployment of wireless frequencies as 
soon as possible because they need them for the advancement of 
their networks, but there are some instances--and I think your 
point is highlighted, is we can tighten our build out 
requirements, and that is the timing and the percentages needed 
to comply to make sure that they maintain their license. And 
that is something that I have looked at and I think that we 
could do that going forward. I do not think it is something you 
can go backwards on, but I think it is definitely something we 
can tighten going forward.
    Senator Daines. We would appreciate it. It has been an 
issue for us----
    Mr. O'Rielly. Absolutely.
    Senator Daines [continuing]. Out West. This is for Chairman 
Pai and Commissioner Clyburn. I have been impressed by the ways 
that TV white spaces can be better used to serve rural 
communities, including use in education, in public safety, 
rural health. How do you see the use of TV white spaces being 
utilized to get broadband access to hard to reach areas which 
is certainly lacking today? And I will start with Commissioner 
Clyburn.
    Ms. Clyburn. Well, I will be quick and say it is more 
affordable. It allows for a more entry by smaller providers and 
some of the existing providers to do things at a less expensive 
cost. So, you know, to me, you know, to be able to get rid of 
the burdens and the hurdles have mostly been economic. And if 
you can have another way that would be, you know, not legacy to 
get to connecting communities, then I think it is a positive. 
So, to me, the underlying has been entry, cost entry, lowered 
tremendously.
    Senator Daines. Right. And for these rural communities that 
have very, very small budgets and they are struggling on 
revenues, I think it is something that could help.
    Ms. Clyburn. It could make the business case.
    Senator Daines. Well, they do not need the coverage beyond 
what this white space can deliver.
    Mr. Chairman.
    Mr. Pai. Senator, I think Commissioner Clyburn captured 
well the gist of what is at stake. I will simply add that I 
have had the chance to talk to, for myself, with a number of 
the folks who were interested on this issue and so we are 
actively working on it at the moment.
    Senator Daines. Commissioner O'Rielly, and this is my last 
question. We are running out of time. One of the main goals in 
the Commission is to protect consumers. In Montana, we have 
seen an onslaught of these spoofed phone numbers and scammers 
using our area code for our entire State is 406. And they lure 
folks into a sense of false security because they see 406, kind 
of the hometown area code pop up. They think it is somebody 
perhaps that is okay. Scammers are getting better and better 
and I think it is our responsibility to move at a fast pace to 
keep up with them.
    Could you outline for me what are some of the recent 
actions the FCC has taken to combat spoofing, robocalls, and 
these telephone scams?
    Mr. O'Rielly. Senator, I do not want to be dismissive of 
your question. It is very important and you get to--but it is 
something that we are actually going to address in 2 days from 
now. We have an item before us that I think the Chairman has 
graciously put forward. I think it will address some of this.
    I want to be careful in terms of spoofing. There is the 
ability to get a number that is local even though you are 
outside the area, you know, for purposes of VOIP or something 
like that. That is not necessarily spoofing, but in terms of 
trying to commit fraud or harm the consumer, that can be that. 
So there is finite universes and definitions.
    I always--when we had the conversation about robocalls, I 
would like to be careful and say illegal robocalls because 
robocalls in and of themselves can have benefits, and I want to 
be careful. So there is fine lines here, but your question is 
important. I do not mean to be dismissive.
    Senator Daines. No, that is fine. And then in 2 days, what 
is going to happen in 2 days? Is it another hearing or a 
meeting you are having?
    Mr. O'Rielly. We have our monthly meeting.
    Senator Daines. Okay. You are addressing this issue in that 
meeting then.
    Mr. O'Rielly. That is our intent, I think, is it, Chairman?
    Mr. Pai. Yes. I am not sure if I am allowed to reveal any 
more information.
    Senator Daines. Okay. All right. Okay. All right.
    Mr. Pai. But I can say, if I might, that we have already 
taken some steps to address this issue. For instance, a couple 
of months ago we allowed some of the carriers to block spoofed 
calls that are clearly from unassigned numbers. These are 
numbers that are not assigned to any person within the United 
States. We also wanted to explore the idea of allowing 
consumers to affirmatively say to their phone company, do not 
carry any call that is not from me, sort of like a do not 
originate call to mirror the do not call list.
    Additionally, longer term, we are working with really 
talented engineers and technologists on call authentication. So 
to make sure that the person who is calling is in fact that 
person. So if you get a call from Senator Coons, for instance, 
it is not me trying to pitch you on the beauty of Wilmington. 
It is actually Senator Coons who is trying to call you. And 
that seems like a very simple thing, but in the technologically 
challenged world that we are in, it is very difficult sometimes 
to make sure.
    Senator Daines. Yes. Okay. Thank you. I am out of time. We 
need to move as fast or faster than the bad guys is what we 
need to do here in this space, don't we?
    Mr. Pai. Absolutely.
    Senator Daines. Yes. All right. Thank you.
    Senator Capito. Thank you. I have one additional question 
and then I think Senator Coons has a question or two he would 
like to post. So I would like to begin, first of all, with 
thanking all of you for being here and I want to thank the 
Chairman for the transparency initiatives that you have put 
forward. I think that is--you know, you are getting into some 
controversial areas and I think the more transparent that you 
can be, the better. And I am glad that you have made moves in 
that direction and I would encourage more.
    My last question really is, Commissioner O'Rielly, on the 
CAF 2 funding is relatively new to the unserved and 
underserved. I think, was it 2017 it started or 2016?
    Mr. O'Rielly. What, our decisions?
    Senator Capito. No. When the money going for the 6 years on 
the CAF 2.
    Mr. O'Rielly. Okay. Yes. CAF II, okay.
    Senator Capito. Yes. Yes.
    Mr. O'Rielly. Sorry. So the rate of return we did in 2016, 
the original CAFs for a number of years, and then we are doing 
CAF Phase II hopefully later this year and the decisions were 
made this year. Is that what you speak of? Yes.
    Senator Capito. Right. Right. I am wondering do you have 
any data as to whether--because what I am concerned about is, 
for instance, in our State $38 million a year additional for 
our State for underserved and unserved areas. I just--we have 
heard a lot of concern and deep concerns about the mapping and 
the accuracy of the data because we know anecdotally as we walk 
around or, you know, it sounds like all we do when we go home 
is go to the grocery store, but maybe that is what we do. You 
know, but you are always getting approached at the grocery 
store. You know, I cannot get Internet or my daughter cannot do 
her homework, blah, blah, blah. And then you go back to the 
carrier and it is like, oh, yes, we serve that area, when in 
actuality it is underserved or unserved.
    So I guess are you seeing? I mean, what kind of 
accountability are we going to have that when you spend all of 
this money and we spend all of this money that we are really 
going to get the results that we desire?
    Mr. O'Rielly. First, I think the question that was raised 
earlier in terms of underserved or unserved, I think unserved 
has been the Commission's focus and has to be. Those that do 
not have service, I think that is the main priority of the 
Commission and will continue to be.
    In terms of the dollars, we are trying to better pinpoint 
the dollars and how they are spent and make sure they go to 
those that actually need it. Better mapping will improve that. 
The 477 data that we are going to improve hopefully soon will 
improve that. Right now it is done in a broader sense and we 
are trying to actually pinpoint that as best we can going 
forward. So----
    Senator Capito. Yes. Just it is the Phase II money that I 
was talking about.
    Mr. O'Rielly. Yes. Yes.
    Senator Capito. All right. Senator Coons. Thank you.
    Senator Coons. Thank you, Chairwoman.
    On media ownership rules, your current rules limit any 
broadcaster from reaching more than 39 percent of the country 
to ensure independence, variety, inclusion of local voices, 
minority voices. And if I understand correctly, the FCC is 
moving to reinstate the UHF discount which some would argue 
unwinds these requirements and you are now considering a merger 
between Sinclair and Tribune, which could create a massive 
broadcast group with access to three-quarters of all U.S. 
households dwarfing competitive media owners.
    Do you believe the 39 percent limit should still be in 
place as a barrier to overconcentration in the market and what 
factors will you be reviewing as you look at media ownership 
going forward? Then I have one more question.
    Mr. Pai. Senator, thanks for the question. At this point, 
it is very preliminary, so the UHF discount decision we made 
earlier was simply returning to the status quo. And the 
argument I made back then was that we could not repeal the 
discount without also considering whether any adjustments to 
the national cap were necessary. So we have not made any 
determinations about what that number should be. Our point was 
simply the administrative slash legal one of as one goes, so 
does the other. As the UHF discount goes, we also have to 
consider the national cap and we do not have a timeframe for 
considering that. And, of course, we have not made any--we have 
not received any papers with respect to the transaction you 
mentioned, so I cannot opine about how our rules might affect 
our consideration of that.
    Senator Coons. Okay. And then last, I referenced in my 
opening questions that your current budget plan is to by 
attrition reduce I think it was 102 FTEs, but I did not hear 
clarity about sort of what the plan is and what officers or 
functions might be reduced. And I am concerned about whether 
the regular day to day functioning of the agency that is 
supposed to continue moving forward on things that maybe are 
not big national policy issues, but that need to be moved 
forward in order for carriers to have some predictability about 
processes they are involved in, whether they will continue or 
whether you expect significant disruptions as a result of this 
reduction in overall expenditures.
    Mr. Pai. A critical question, Senator. I am confident that 
we will not experience any negative impact like that on our 
core programmatic responsibilities.
    Just to give you one quick example, I recently met with the 
FCC team that handles E-rate appeals. So these are schools and 
libraries across the country that are looking for E-rate 
funding. For whatever reason, they have been sucked into this 
appeals process and some of those appeals have been around for 
almost 20 years. And so we recently found that we needed more 
resources on that team to handle some of those appeals and to 
prioritize longest lasting ones and the most difficult ones.
    So I met with them obviously to thank them for their hard 
work, but also to hear from them about some of the challenges. 
These are a lot of tricky cases. And at the end of the day, the 
message I left with them is that you will get the resources 
that you need. These are a lot of institutions that are 
critical to the American society and we need to make sure we 
give you an answer, give them an answer, the applicants an 
answer in a more timely way. And so in areas like that, we are 
going to make sure that we meet those core responsibilities in 
a way that will make Congress proud and certainly deliver value 
for American taxpayers.
    Senator Coons. Could I just invite the other two 
commissioners, if you have concerns about staffing levels? I 
think, Commissioner O'Rielly, you made a sort of passing 
reference around the Universal Service Fund. I would also 
welcome hearing that as well in terms of staffing.
    Ms. Clyburn. Well, I will add to that. I support what the 
Chairman just put forth. I will say using a balloon example. 
When you squeeze a balloon one place, the air goes to another. 
And that is not necessarily always positive, meaning that 
resources or individuals are taken from somewhere else and that 
could possibly slow down efficiencies in other places. I agree 
and this is the Chairman's job to be efficient and direct 
appropriately, but continue. You know what our situation is. 
You know what we are faced with. We are asked to do more 
increasingly with less, and it is--I am positive that there is 
going to come a time when we are going to have diminishing 
margin returns and I think that time is quickly approaching.
    Mr. O'Rielly. I would only add to that that when we all 
talked about--the conversation about rural broadband, most of 
those decisions and most of the hard work are done by the 
Wireline Competition Bureau and the good folks working on the 
High Cost Program. And I have been working with them for many 
years now and, quite frankly, a number of items have to be 
stacked up because they do not have the resources.
    That does not mean we cannot allocate resources from 
elsewhere. It does not mean that we cannot do the budget that 
the Chairman has put forward or the team has put forward. I 
think we can do both. I think we can improve our efficiency. I 
was just suggesting that they could use some additional 
resources in one particular very important part of our agency.
    Senator Coons. Well, Commissioners, Chairman, thank you. 
Chairwoman, thank you for your graciousness. And I appreciate 
your dedication to continuing to move forward and to execute on 
the mission of the agency. Thank you.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Capito. So, thank you, Senator Coons. And thank all 
of you, again, particularly our witnesses for the testimony 
today. If there are no further questions, the hearing record 
will remain open until Tuesday, June 27, at 2:30 for 
subcommittee members to submit any statements or questions to 
the witnesses for the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Commission for response subsequent to the 
hearing:]
                  Questions Submitted to Hon. Ajit Pai
           Question Submitted by Senator Shelley Moore Capito
    Question. Please provide an update on the FCC's move/restack.
    Answer. The lease at the FCC's current headquarters location 
expires on October 16, 2017. In September 2015, the General Services 
Administration (GSA) issued a solicitation for offers to interested 
lease parties. In October 2015, Parcel 49C filed a pre-award agency 
level protest with GSA. In December 2015, the GSA Agency Protest 
Official issued a decision denying the protest in entirety. Thereafter, 
Parcel 49C filed a pre-award protest with GAO.
    In March 2016, GAO issued a decision dismissing the Parcel 49C 
protest in part, and denying the balance of the protest. Parcel 49C 
proceeded to file a pre-award protest with the U.S. Court of Federal 
Claims in April 2016, and the court denied the protest in November 
2016. In December 2016, the GSA executed a lease with Trammell Crow to 
move the FCC to a new building.
    In February 2017, Parcel 49C, the owner of the current FCC's 
Headquarters building, filed a brief with the U.S. Court of Appeals for 
the Federal Circuit in an effort to retain the FCC as its tenant. In 
March 2017, the parties (Parcel 49C, GSA, and Trammell Crow) submitted 
a joint motion to the court to suspend the proceedings to allow the 
parties to attempt to resolve the protest outside of court.
    The effort to resolve the protest outside of court is still 
ongoing. GSA is continuing to negotiate with Parcel 49C to obtain a 
lease extension for the FCC. And the FCC is continuing to work on the 
planning for the new building--GSA provided the FCC with a due date of 
August 9, 2017, for the FCC to submit its completed requirements to GSA 
and Trammell Crow so the design phase of the FCC's new space may begin.
                                 ______
                                 
          Questions Submitted by Senator Christopher A. Coons
    Question 1. The budget request for the FCC is a 5 percent reduction 
below current levels, when eliminating the one-time moving costs we 
provided in fiscal year 2017. I am concerned that this is an arbitrary 
amount, not the product of thoughtful analysis. The budget would rely 
on an agency-wide hiring freeze, which will not result in a strategic 
reallocation of staff, but a random loss of the agency's institutional 
knowledge. Please explain the strategic vision you have for the agency 
that would result in these final staffing levels. How will you reduce 
staff in the areas that are being deprioritized? How will you ensure 
that the vital daily functions of the agency are still being performed?
    Answer. The FCC has had essentially flat funding since fiscal year 
2008. Before I became Chairman, the Commission dropped its FTE level 
from 1,776 to 1,572. The proposed fiscal year 2018 budget will follow 
this trajectory by providing for 1,448 FTEs. This staffing decision 
adheres to the Office of Management and Budget's guidance for the 
fiscal year 2018 budget submission to reduce spending by 5 percent from 
the prior fiscal year. In fact, the FCC's fiscal year 2018 request 
represents a 5.2 percent reduction from fiscal year 2017.
    In light of current budgetary constraints, my strategic vision is 
simple--focus on our core mission and realize administrative 
efficiencies across-the-board, freeing up and redirecting staff to 
specific statutory-based tasks and provide them with the IT tools to 
accomplish their work. This vision includes refraining from regulatory 
overreach to conserve resources and foster economic growth. It also 
recognizes the reality that we are completely fee-funded, and reducing 
this burden will ultimately reduce the cost of services for American 
consumers. We will continue to find cost savings administratively to 
preserve our workforce options and use the most cost-efficient options 
for IT projects.
    I should note that the spectrum auction cap, which has been 
steadily increasing over the past 5 years, was reduced by 5 percent as 
well. We arrived at this number after reviewing prior fiscal year 
spending and considering our anticipated workload for the next year. 
The lower cap is achievable in light of the scale-down of work 
associated with the broadcast television incentive auction. These 
budget reductions do not come easily.
    Question 2. On April 3rd, President Trump signed a law which 
nullified the FCC's rules that provided protections for consumer 
Internet privacy. I understand that you believe this should be the 
responsibility of the Federal Trade Commission, however, this is 
currently outside of their jurisdiction, so the FTC cannot provide this 
protection. So, with FTC lacking jurisdiction and FCC's rules 
nullified, what privacy protections are currently in place and who is 
enforcing them? Do you believe there should be protections in place 
when it comes to consumers' privacy on the Internet and what should 
they be?
    Answer. Section 222 of the Communications Act requires 
telecommunications carriers to protect the privacy of their customers, 
and the FCC's Enforcement Bureau has existing guidance regarding how 
that section applies to ISPs' protection of consumers' privacy. 
American consumers' privacy deserves to be protected regardless of who 
handles their personal information. The Federal Trade Commission (FTC) 
is well-situated to deliver that consistent and comprehensive 
protection. The FTC is America's most experienced and expert privacy 
regulator, and the FCC's Restoring Internet Freedom Notice of Proposed 
Rulemaking proposes to return jurisdiction to the FTC and end the 
uncertainty and confusion that was created in 2015 when the FCC 
intruded in this space.
    Question 3. As you know, when the FCC issued a proposed rule on net 
neutrality in 2014, a record-breaking number of Americans filed 
comments to say that they wanted the Internet to remain open and fair, 
crashing the FCC's system. Already this year, when the FCC announced 
that net neutrality was on the calendar for discussion, the comments 
poured in again, crashing the FCC's system for a second time. How will 
you ensure that the comment system remains functional so that Americans 
can be confident their comments are being received? How will you weigh 
the voices of millions of Americans who demand Internet freedom?
    Answer. The Commission has received over 12 million comments in 
this proceeding already and the Electronic Comment Filing System (ECFS) 
continues to provide filers with the opportunity to make their views 
known. Although there was a disruption from the evening of May 7, 2017 
until the following day caused by a nontraditional DDoS attack, 
commenters had ample time to submit comments to the FCC before the vote 
on the Restoring Internet Freedom NPRM, and the ECFS system to date has 
functioned very well since the adoption of the NPRM.
    Although we cannot guarantee that the system will not be subject to 
any further disruptions, working with our commercial cloud providers, 
we have taken a number of steps to mitigate the impact of any future 
attacks on the system. Also, it is important to note that the FCC 
maintains four separate methods for commenting: sending a written 
document, filing through the normal web interface, filing through the 
API, or submitting through the electronic inbox using the Bulk Upload 
Template.
    Any decision that the FCC makes in this proceeding will be based on 
the facts and the law, and we will look to the comments filed in the 
record to guide our determinations on the relevant issues. As with all 
proceedings before the FCC, we comply with Section 706 of the 
Administrative Procedure Act, as interpreted by the Supreme Court in 
(among other cases) Consolo v. Federal Maritime Commission, 383 U.S. 
607, 619-620 (1966), as well as our own rules concerning public input. 
Essentially, the question is whether the agency collected evidence that 
a reasonable person would agree would be adequate to support the 
conclusions ultimately made. That is the standard that we will apply, 
and we will make the appropriate judgment based facts in the record and 
applicable law.
    Question 4. The first ever incentive auction has concluded, but the 
work isn't done--now the FCC starts the process of moving the remaining 
broadcasters to new spectrum locations. Those broadcasters are 
concerned that the $1.75 billion set aside for their moving costs will 
be insufficient, and the 39-month timeframe is too short. What will the 
FCC do if there is not enough money or time to move all of the 957 
broadcasters across the country? Will you commit, that no broadcaster 
will be forced off the air?
    Answer. I share your view that the post-auction transition must be 
done in a careful and orderly manner that minimizes viewer 
inconvenience; takes into account the interference and other 
dependencies of all the stations who will be changing channels; enables 
efficient allocation of the resources necessary for broadcasters to 
undertake the change; and ensures that winning bidders for wireless 
licenses in the forward auction can deploy in the 600 MHz band in a 
timely manner.
    July 12 was the deadline for broadcast television stations that are 
going to be repacked during this process to submit construction permit 
applications and cost estimates to the Commission. And 2 days later, 
the FCC announced that the aggregate amount of the estimated costs 
reported by broadcast television stations and multichannel video 
programming distributors (MVPDs) eligible for reimbursement from the 
Commission was $2.115 billion. In this announcement, we cautioned that 
we expected to receive additional estimates from MVPDs and a small 
number of stations.
    In recent days, the Commission has received several additional 
estimates, and the aggregate total of estimated costs has increased by 
approximately $24 million to $2.139 billion. At this point, we only 
expect to receive additional cost estimates from some smaller MVPDs and 
eight broadcast television stations. These eight stations were granted 
waivers of the July 12 deadline because they are unable to construct at 
their current channel assignment and must apply to receive a new one. 
But extrapolating from the estimates that we have received to date, we 
are confident that once all initial estimates are received, the 
aggregate total will be below $2.2 billion.
    Looking beyond the initial round of estimates, the aggregate total 
of estimated repacking costs will continue to change as the post-
incentive auction transition process proceeds. Many stations will end 
up amending their initial estimates. Additionally, both the Commission 
and its fund administrator will conduct reviews of those estimates, 
which will likely alter the aggregate number. For these reasons, the 
FCC cannot definitively report how much the repack actually will cost. 
The final number could be lower than the current $2.139 billion. It 
could also be higher. But I can say that the agency expects the final 
number to be above the $1.75 billion that Congress has provided the 
Commission to reimburse impacted broadcast stations and MVPDs. As a 
result, unless Congress acts to raise the $1.75 billion cap, the 
substantial likelihood is that local broadcasters will be required to 
pay some portion of their repacking costs out of their own pockets. I 
would be happy to work with your office to address this issue.
    If Congress does not provide additional funding, then I will work 
with my colleagues to determine how best to allocate the $1.75 billion 
that we have been provided. With respect to the timeline for the 
repack, we will continue to monitor the situation closely and go where 
the facts lead us. I have repeatedly stated that I believe no 
broadcaster should be forced off the air during this process as a 
result of circumstances outside of their control.
    Question 5. The Lifeline and E-Rate programs provide Internet for 
low-income Americans, and schools and libraries across the country. 
Both programs are critical to help close the digital divide and the 
homework gap, and both programs were also greatly expanded in the 
previous administration. This year, under this administration, the FCC 
has taken a few concerning steps for these programs, by removing 9 
providers from the lifeline program and revoking a staff report on the 
success of the e-rate program. What is your vision for the future of 
these two important programs? What future changes are you considering?
    Answer. I am deeply committed to doing everything within the FCC's 
power to close the digital divide. I have said that as long as I am 
Chairman, broadband will be a part of Lifeline. I also believe that it 
is necessary to strengthen the Lifeline program's efficacy and 
integrity by respecting the States' role in the program and ensuring 
the program is free of waste, fraud, and abuse.
    The Government Accountability Office (GAO) recently released a 
report confirming that waste, fraud, and abuse are still all too 
prevalent in the Lifeline program. I have accordingly directed the 
Universal Service Administrative Company (USAC) to take immediate 
action to combat this abuse of the program and establish procedures for 
ongoing vigilance to protect the Fund. I stand ready to work with my 
colleagues to crack down on the unscrupulous providers that abuse the 
program so that the dollars we spend support affordable, high-speed 
broadband Internet access for our Nation's poorest families.
    I believe an effective E-rate program--one that promotes better 
connectivity for students and library patrons alike--can be a powerful 
tool to help bridge the digital divide. This is why, 4 years ago, I 
said that ``E-rate is a program worth fighting for.''
    Unfortunately, there have been serious flaws in the administration 
of the E-rate program, specifically related to the process for schools 
and libraries to apply for E-rate funding, that are preventing many 
schools and libraries from getting that funding. I have asked USAC to 
provide a detailed report on plans to fix the existing problems so it 
can administer the E-rate program in a manner that is fully compliant 
with our rules and that works for applicants and participants.
                                 ______
                                 
            Questions Submitted by Senator Patrick J. Leahy
    Question 1. The President has expressed his interest in passing an 
infrastructure package that would invest in critical areas of our 
economy. Do you believe that the deployment of broadband is an 
essential component of any infrastructure package? What role will you 
and the FCC assume in ensuring that broadband deployment--including 
deployment in rural areas--is part of the administration's 
infrastructure plans?
    Answer. Yes. I have stated publicly that if Congress moves forward 
with a major infrastructure package, broadband should be included. I 
also have said that any direct funding for broadband infrastructure 
appropriated by Congress should be administered through the FCC's 
Universal Service Fund.
    Question 2. The FCC is undertaking an examination of the barriers 
to deploying investments in wireless broadband. Looking beyond the 
barriers, what role do you envision the Federal Government, through 
programs at the FCC or other agencies, playing in making capital 
available for investment in broadband?
    Answer. We know that, in some areas, the business case for 
broadband deployment will just not be there absent government help. 
That is why in February of this year, the FCC adopted on a bipartisan 
basis a plan to make 4G LTE mobile broadband available in parts of 
rural America without wireless service. Phase II of the Mobility Fund 
will make available $4.53 billion in new funding over 10 years for 
building mobile networks where the market would not otherwise do so. I 
have circulated for my colleagues' consideration for our August open 
meeting a proposed Mobility Fund Order that would establish a 
``challenge process'' for resolving disputes over whether areas should 
be eligible for Mobility Fund subsidies. This is the next step in 
making sure funding is targeted at areas still lacking adequate 
coverage.
    In February, the Commission also adopted rules for the Connect 
America Fund (CAF) Phase II competitive bidding process, and we are 
planning on moving forward with the next step--the CAF II Commitment 
Public Notice--at our August meeting. The CAF Phase II auction will 
offer almost $2 billion over the next 10 years to broadband providers 
that commit to offer voice and broadband services to fixed locations in 
unserved high-cost areas in our country. The auction rules are 
structured to induce new entrants to participate--competitive entrants 
like wireless Internet service providers, small-town cable operators, 
satellite companies, and electric utilities.
                                 ______
                                 
               Questions Submitted by Senator Jerry Moran
    Question 1. I understand the next generation of wireless network 
infrastructure will be built using small-cell networks employing 5G 
wireless technology. The faster data speeds and improved connectivity 
of 5G is essential for the Internet of Things (IoT) which will unleash 
billions of dollars in economic growth. The U.S. is the world leader in 
4G, but I am worried we are not taking the necessary steps to maintain 
our global leadership to deploy 5G. Carriers tell me the regulatory 
barriers to deploy small-cell networks are outdated, hampering 
investment and economic growth. Do you agree 5G deployment is critical 
for the American economy, and if so, what steps is the FCC taking to 
eliminate barriers and costs to deploying 5G technology in a timely 
manner?
    Answer. Yes. 5G services will stimulate the American economy by 
providing end users with higher quality connections, more bandwidth, 
and lower latency. A key feature in the transition from 4G to 5G is a 
change in network architecture from heavy reliance on large, macro-cell 
towers to wireless networks that will include hundreds of thousands of 
densely-deployed small cells operating at lower power. As these 
networks evolve, the FCC is taking steps to accelerate the deployment 
of 5G facilities by removing any unnecessary barriers to such 
deployment, whether caused by Federal law, FCC regulation, State, 
local, and/or Tribal reviews, or other rules and procedures.
    In April, the Commission adopted a Notice of Proposed Rulemaking 
and Notice of Inquiry on wireless infrastructure, which seeks comment 
on multiple measures to reduce regulatory barriers to investment and 
deployment in wireless network infrastructure. Moreover, earlier this 
year, I announced the formation of the Broadband Deployment Advisory 
Committee (BDAC), which is tasked with identifying regulatory barriers 
to infrastructure investment and making recommendations to the 
Commission on how to reduce or remove these barriers. The BDAC held its 
first meeting in April and its second meeting in July, and I hope will 
provide initial recommendations to the Commission by the end of the 
year.
    Question 2a. I continue to hear from Kansans who remain concerned 
about the status and effectiveness of the Universal Service Fund's 
(USF's) High-Cost program. In April, I joined a number of my colleagues 
in a letter to the FCC strongly encouraging you to take immediate steps 
to ensure sufficient resources are available to enable this program to 
work as statutorily mandated.
    I hear that the budget shortfall is resulting in canceled network 
builds and undermining the intended effect of the reforms to make 
standalone broadband affordable for consumers. Are you hearing this 
too, and what steps are you taking to address this?
    Answer. Four years ago, I called on the Commission to tackle the 
issue of affordable broadband in rural America head-on. Despite the 
previous Commission's efforts in the 2016 Rate-of-Return Reform Order, 
I still hear from small carriers that offering stand-alone broadband 
would put them underwater--that the rates they have to charge exceed 
the rates for bundled services because of the different regulatory 
treatment. This is unfortunate, but unsurprising. As I noted in my 
dissent to the Order in 2016, the previous Commission needlessly 
complicated our rate-of-return system and in many ways made it harder, 
not easier, for small providers to serve rural America.
    To provide some relief, my colleagues in recent months have urged 
me to work through a punch list of lingering issues from the Order. 
Although I hope these changes will help, something more fundamental may 
be needed. After all, if the Order is not carrying out its stated 
purpose of advancing broadband deployment in rural America, we cannot 
ignore that problem--time is not on the side of rural Americans.
    Question 2b. Some have talked about an infrastructure package from 
Congress as a potential solution for this USF budget shortfall. If 
Congress does come forward with such funding, would you commit to 
adequately funding the program for these small, rural carriers?
    Answer. If Congress does enact an infrastructure package that 
directs adequate funding to the program for these small, rural 
carriers, then yes, the Commission would faithfully discharge its duty 
to ensure these carriers have sufficient and predictable funding.
    Question 3. As mentioned in some of your written testimonies, I 
believe that modernizing the Federal Government's information 
technology (IT) systems needs to remain a top-priority for all 
agencies. According to the Government Accountability Office's (GAO) 
2015 High Risk Series report, the Federal Government annually spends 
over $80 billion on IT, but more than 75 percent of this spending is 
for ``legacy IT''. I have worked with my colleague Senator Udall on 
legislation called the Modernizing Government Technology (MGT) Act of 
2017 in an effort to replace ``legacy IT'' systems that continue to 
plague numerous Federal agencies. With examples like the reported 
cyberattack on the FCC's Electronic Comment Filing System, I think that 
this effort needs to remain a priority.
    Could you please speak to the cybersecurity benefits resulting from 
the FCC's current and ongoing efforts to replace ``legacy IT'' systems?
    Answer. Replacing legacy IT systems with more modern systems and 
moving from local hosting of these systems to the cloud allows the FCC 
to more accurately monitor traffic to the FCC's site and applications. 
As a result, the FCC has been able to accommodate higher volumes of 
data without a corresponding increase in costs. The cloud-based 
solutions are far more secure than the legacy code that previously 
supported the Commission's applications. Our legacy systems contained 
code that was both unsupportable in the marketplace and subject to 
malware attacks. For example, the cloud-based systems have reduced our 
FISMA findings nearly 80 percent. The FCC can now afford to have the 
best tools on the market for its cyber mission because of the savings 
that resulted from moving to cloud products.
    Question 4. Your testimony discussed the FCC's ongoing efforts to 
close the ``Digital Divide'' by expanding fixed and mobile broadband 
deployment in the Connect America Fund Phase II and the Mobility Fund 
Phase II. What role do you see the Rural Broadband Auctions Task Force 
playing in implementing these important USF-related auctions?
    Could you please further elaborate on the Task Force's plan that 
you referred to in your written testimony?
    Answer. Absolutely. I have directed the Task Force to use resources 
from throughout the Commission to make sure both the CAF Phase II and 
MF Phase II auctions are implemented in a timely manner so that 
taxpayer funds are allocated efficiently for rural broadband deployment 
and that as many Americans as possible are able to get Internet access. 
The Task Force has been working with the staff of the Wireline 
Competition Bureau, the Wireless Telecommunications Bureau, the Office 
of General Counsel, the Office of Strategic Policy and Planning, the 
Office of the Managing Director, as well as others within the 
Commission to map out the steps necessary to proceed with these reverse 
auctions.
    For example, the Task Force has been diligently working with 
auction experts inside and outside the agency to design the CAF Phase 
II auction, which has culminated in the Public Notice that the 
Commission is considering on its August open meeting to seek comment on 
the design of that auction as well as the surrounding processes (such 
as the forms of applications). In parallel, the Task Force has been 
overseeing the development of the IT systems that will ensure the 
smooth operation of the CAF Phase II auction once it commences next 
year.
    Question 5. Title II and ``Open Internet'' rules are not the same 
and should not be conflated. If people are worried about Open Internet 
issues, shouldn't Congress act to put ``Open Internet'' rules into 
statute and thus end the regulatory ping pong and market uncertainty 
that results every time the Administration changes parties and a new 
FCC Chairman steps into this issue?
    Answer. I believe that legislation would provide greater certainty 
to consumers and companies alike.
    Question 6. For each year beginning in 2011, and cumulatively, 
please provide Universal Service Fund (USF) annual collections and 
annual obligations. Please provide this information collectively and 
broken down by USF program.
    Answer.

                                       UNIVERSAL SERVICE FUND--COLLECTIONS
                                                  [In Millions]
----------------------------------------------------------------------------------------------------------------
                             2011       2012       2013       2014       2015       2016      2017 *     Total
----------------------------------------------------------------------------------------------------------------
High Cost...............   4,516.16   4,571.82   4,589.47   4,531.14   4,522.04   4,543.24   4,546.06  31,819.93
Lifeline................   1,468.99   2,277.82   1,952.24   1,690.27   1,548.81   1,499.31   1,400.77  11,838.21
E-Rate..................   2,220.90   2,358.61   2,374.40   2,395.63   2,435.13   2,493.88   1,814.75  16,093.30
RHC.....................      85.78     118.12     145.14     241.69     255.97     294.41     439.30   1,580.41
                         ---------------------------------------------------------------------------------------
    Total...............   8,291.83   9,326.37   9,061.25   8,858.73   8,761.95   8,830.84   8,200.88  61,331.85
----------------------------------------------------------------------------------------------------------------


                                  UNIVERSAL SERVICE FUND--OBLIGATIONS INCURRED
                                                  [In Millions]
----------------------------------------------------------------------------------------------------------------
                             2011       2012       2013       2014       2015       2016      2017 *     Total
----------------------------------------------------------------------------------------------------------------
High Cost...............   4,061.26   4,101.25   4,578.75   3,843.15  12,294.51   3,313.80   8,734.17  40,926.89
Lifeline................   1,588.43   2,081.88   2,008.59   1,683.20   1,567.00   1,572.97   1,405.70  11,907.77
E-Rate..................   3,118.21   3,469.76   3,046.09   3,689.25   2,802.31   2,230.18   3,363.66  21,719.47
RHC.....................     211.63     243.81     204.77     201.86     338.19     206.18     641.31   2,047.74
                         ---------------------------------------------------------------------------------------
    Total...............   8,979.53   9,896.70   9,838.21   9,417.46  17,002.01   7,323.13  14,144.84  76,601.89
----------------------------------------------------------------------------------------------------------------
* In both tables above, the fiscal year 2017 figures include projections for the fourth quarter.

    Question 7. For each year beginning in 2011, and cumulatively, 
please provide Universal Service Fund (USF) annual collections and 
annual amounts dispersed. Please provide this information collectively 
and broken down by USF program. If these figures are different from the 
figures provided in response to Question 1, please explain the reason 
for the difference.
    Answer.

                                       UNIVERSAL SERVICE FUND--COLLECTIONS
                                                  [In Millions]
----------------------------------------------------------------------------------------------------------------
                             2011       2012       2013       2014       2015       2016      2017 *     Total
----------------------------------------------------------------------------------------------------------------
High Cost...............   4,516.16   4,571.82   4,589.47   4,531.14   4,522.04   4,543.24   4,546.06  31,819.93
Lifeline................   1,468.99   2,277.82   1,952.24   1,690.27   1,548.81   1,499.31   1,400.77  11,838.21
E-Rate..................   2,220.90   2,358.61   2,374.40   2,395.63   2,435.13   2,493.88   1,814.75  16,093.30
RHC.....................      85.78     118.12     145.14     241.69     255.97     294.41     439.30   1,580.41
                         ---------------------------------------------------------------------------------------
    Total...............   8,291.83   9,326.37   9,061.25   8,858.73   8,761.95   8,830.84   8,200.88  61,331.85
----------------------------------------------------------------------------------------------------------------


                               UNIVERSAL SERVICE FUND--OUTLAYS (AMOUNTS DISBURSED)
                                                  [In Millions]
----------------------------------------------------------------------------------------------------------------
                             2011       2012       2013       2014       2015       2016      2017 *     Total
----------------------------------------------------------------------------------------------------------------
High Cost...............   4,084.31   4,113.66   4,046.15   4,116.08   4,269.20   4,590.48   4,600.55  29,820.43
Lifeline................   1,601.83   2,088.14   1,992.53   1,683.32   1,582.80   1,554.81   1,452.38  11,955.81
E-Rate..................   2,400.21   2,293.70   2,208.71   2,380.79   2,163.59   2,584.67   2,875.91  16,907.58
RHC.....................     133.23     173.56     163.20     195.00     260.90     303.55     351.64   1,581.08
                         ---------------------------------------------------------------------------------------
    Total...............   8,219.58   8,669.06   8,410.59   8,375.19   8,276.49   9,033.51   9,280.48  60,264.90
----------------------------------------------------------------------------------------------------------------
* In both tables above, the fiscal year 2017 figures include projections for the fourth quarter.
The differences between obligations incurred and amounts dispersed each year largely relate to timing--funds
  must first be obligated before they are disbursed (and there may be a lag between the two), and adjustments
  may occur after obligations are incurred, which would affect the amounts dispersed.

    Question 8. Since 2011, funds have been collected in excess of 
obligations, please provide the following information:
    a. For amounts for which specific allocations are identified--
 i. Amount
 ii. Description of Intended allocation
 iii. FCC order or other action effectuating such allocation
    b. For amounts for which specific allocations are not identified--
 i. Amount
 ii.  Limitations on allocation of such funds (e.g., limited to a 
specific USF program), including citation to limiting rule, order, etc.
    Answer.

                          UNIVERSAL SERVICE FUND--COLLECTIONS LESS OBLIGATIONS INCURRED
                                                  [In Millions]
----------------------------------------------------------------------------------------------------------------
                     2011        2012        2013        2014        2015        2016        2017        Total
----------------------------------------------------------------------------------------------------------------
High Cost.......     454.90      470.57       10.72      687.99   (7,772.47)   1,229.44   (4,188.11)  (9,106.96)
Lifeline........    (119.44)     195.94      (56.35)       7.07      (18.19)     (73.66)      (4.93)     (69.56)
E-Rate..........    (897.31)  (1,111.15)    (671.69)  (1,293.62)    (367.18)     263.70   (1,548.91)  (5,626.17)
RHC.............    (125.85)    (125.69)     (59.63)      39.83      (82.22)      88.23     (202.01)    (467.33)
                 -----------------------------------------------------------------------------------------------
    Total.......    (687.70)    (570.33)    (776.96)    (558.73)  (8,240.06)   1,507.71   (5,943.96)  (15,270.04
                                                                                                               )
----------------------------------------------------------------------------------------------------------------

    The general instruction regarding excess funds is found in the 
FCC's rules at 47 C.F.R. Sec. 54.709(b). If the contributions received 
by the Administrator in a quarter exceed the amount of universal 
service support program contributions and administrative costs for that 
quarter, the excess payments will be carried forward to the following 
quarter. The contribution factors for the following quarter will take 
into consideration the projected costs of the support mechanisms for 
that quarter and the excess contributions carried over from the 
previous quarter.
    The Commission may instruct the Administrator to treat excess 
contributions in a manner other than as prescribed in paragraph (b). 
Such instructions may be made in the form of a Commission Order or a 
public notice released by the Wireline Competition Bureau. Any such 
public notice will become effective 14 days after release of the public 
notice absent further Commission action. Also, the Schools and 
Libraries and Rural Health Care program's collections occur within a 
given fund year; the outlays take place over a longer period, typically 
2 to 3 years.
    In addition, the FCC has provided additional instructions over 
time; see summarized details below:
  --High Cost--USF/ICC Transformation Order, 26 FCC Rcd 17663, 17847 
        (2011), paras. 559-563: The FCC instructed USAC that if 
        contributions to support the high-cost support mechanisms 
        exceed high-cost demand, excess contributions were to be 
        credited to a Connect America Fund reserve account (which has 
        the effect of increasing or maintaining, instead of reducing, 
        the contribution factor). Thus, USAC was directed to forecast 
        total high-cost universal service demand as no less than $1.125 
        billion per quarter for years 2012-2017 in order to avoid 
        dramatic shifts in the contribution factor while the Connect 
        America Fund was implemented.
  --High Cost--USF/ICC Transformation Order, 26 FCC Rcd at 17663: 
        Alternative Connect America Model (A-CAM) is announced.
  --High Cost--Connect America Fund Order, 31 FCC Rcd 3087 (2016): The 
        FCC established the rules for A-CAM.
  --High Cost--January 2017 Public Notice, DA 17-99, pg. 3, n.12: The 
        FCC directed USAC to retain $1.768B in the high-cost account to 
        cover the net increase in support associated with A-CAM for 
        2018-2026.
  --Schools and Libraries--Schools and Libraries Third Report and 
        Order, 18 FCC Rcd 26912, 26933-35 (2003), paras. 52-58: The FCC 
        amended its rules to make unused funds available annually in 
        the second quarter of each calendar year for use in the next 
        full funding year of the Schools and Libraries mechanism. Based 
        on the estimates provided by the Administrator, the Commission 
        announces a specific amount of unused funds from prior funding 
        years to be carried forward in accordance with the public 
        interest to increase funds for the next full funding year in 
        excess of the annual funding cap.
  --Schools and Libraries--E-rate Modernization Order, 29 FCC Rcd 8870, 
        8900 (2014), para. 81: The FCC added a provision that the Chief 
        of the Wireline Competition Bureau is delegated authority to 
        determine the proportion of unused funds to meet category one 
        demand and to direct USAC to use any remaining funds to provide 
        category two support. See also 47 C.F.R. Sec. 54.507(a)(5).
    Question 9. Please describe the extent to which, if at all, prior 
period adjustment affects the information provided above.
    Answer.

               UNIVERSAL SERVICE FUND--ANNUAL PRIOR PERIOD ADJUSTMENTS PER QUARTERLY DEMAND FILING
                                                  [In Millions]
----------------------------------------------------------------------------------------------------------------
                            Fiscal     Fiscal     Fiscal     Fiscal     Fiscal     Fiscal    Year to
                          Year 2011  Year 2012  Year 2013  Year 2014  Year 2015  Year 2016  Date 2017    Total
----------------------------------------------------------------------------------------------------------------
High Cost...............    103.21     114.69     (10.09)      1.68     (19.70)     13.38     (13.71)    189.46
Lifeline................    (16.80)    (46.77)   (332.81)    (49.15)    (60.57)    (30.44)    (53.16)   (589.70)
Schools and Libraries...     (2.01)      0.01      (2.23)      0.79      (2.54)      0.14      (1.76)     (7.60)
Rural Health Care.......     58.28      48.33     (10.18)     (5.19)     (7.77)      7.29     (12.51)     78.25
                         ---------------------------------------------------------------------------------------
    Total...............    142.68     116.26    (239.05)   (290.92)   (381.50)     (9.63)    (81.14)   (743.30)
----------------------------------------------------------------------------------------------------------------

    The prior period adjustments (PPAs) are added to or subtracted from 
program demand to determine the collection requirement. Since 2011, a 
total reduction to demand of $743 million has occurred through PPAs. 
These adjustments have no effect on obligations or disbursements.
                                 ______
                                 
               Question Submitted by Senator John Boozman
    Question. Chairman Pai, I have been hearing concerns with the 
Commission's AM Revitalization proceeding. The elimination of certain 
interference protections on AM radio could generate new interference on 
AM radio and may harm Arkansans' ability to receive news and 
information. As Chairman of the Homeland Security subcommittee, I'm 
particularly interested in FEMA's concerns with the FCC's proposal to 
eliminate skywave interference protections for Class A stations, due to 
the threatened disruption to the emergency alert system. My State could 
be particularly vulnerable to a loss of emergency information due to 
increased interference. At nighttime, Arkansans receive 15 Class A 
radio stations, but under the current FCC proposal, a station upgrading 
its signal in a distant State could create added interference locally 
in Arkansas. I applaud the work the Commission has done thus far to 
improve AM radio, but I hope the Commission will heed FEMA's concerns 
with changing the interference protections for Class A AM radio 
stations.
    Answer. I can assure you that the continued integrity of the 
Emergency Alert System is a priority for the Commission. We are aware 
of FEMA's concerns, and we will certainly take them into account as we 
continue with our proceeding to revitalize the AM radio service.
                                 ______
                                 
            Questions Submitted by Senator Joe Manchin, III
    Question 1. The universal service mandate means that Americans 
living in even the most rural and remote areas of the Nation must have 
access to comparable services available to those in urban communities. 
That necessarily includes reliable, affordable broadband access. At the 
beginning of this year, I introduced the Rural Telecommunications and 
Broadband Service Act of 2017. Importantly, that legislation would 
require a report defining what constitutes a rural area that has access 
to comparable services in accordance with the principles of universal 
service. I applaud your formation of the Broadband Deployment Advisory 
Committee, which I understand will focus on accelerating broadband 
deployment in rural America.
    Would you commit to having this advisory committee focus on the 
question of what access to comparable services means in rural areas?
    Answer. The Broadband Deployment Advisory Committee (BDAC) is a 
crucial component in the FCC's efforts to close the digital divide. The 
mission of the BDAC includes making recommendations that would 
accelerate the deployment of high-speed Internet access in communities 
across the country, including rural America. The BDAC will provide an 
effective means for stakeholders to identify regulatory barriers to 
infrastructure investment and make recommendations on reducing and/or 
removing them, which will in turn enhance the Commission's ability to 
carry out its statutory responsibility to encourage broadband 
deployment to all Americans. The BDAC's comprehensive examination of 
ways to expedite broadband deployment in rural areas will include an 
examination of issues related to the one you raise in your question.
    Question 2. The Commission's budget proposes to require the auction 
of additional spectrum by 2027. I strongly support the continued focus 
on making more spectrum available for commercial use. Federal 
communications policy both embraces and requires that rural Americans 
must have access to the economic opportunities provided by broadband 
access. Innovative ideas are not limited by geography. We must do more 
to ensure they are not limited by a lack of connectivity.
    How can future auctions be structured to ensure additional wireless 
spectrum deployment in rural areas actually occurs?
    Answer. Eliminating the digital divide is one of my top priorities 
as Chairman. In my Digital Empowerment Agenda, I laid out three keys 
ways to encourage more mobile broadband in rural America, where high 
costs and low population density make the private-sector case for 
deployment much more difficult.
    First, I said the FCC should move forward with a Mobility Fund 
Phase II, which with your support we have been doing. This program 
includes buildout requirements to ensure that the funds we provide are 
actually used to connect rural America.
    Second, I said the FCC should increase the build-out obligations of 
wireless carriers and incentivize rural broadband investment by 
extending license terms up to 15 years. I have asked my colleagues to 
consider such a proposal at our August agenda meeting.
    Third, I called on Congress to create a ``rural dividend'' to 
supplement existing funding sources by setting aside 10 percent of the 
money raised from future spectrum auctions for the deployment of mobile 
broadband in rural America. Although legislation would be required to 
enact a rural dividend, it would provide an ongoing source of funding 
to ensure that rural Americans get the mobile broadband opportunities 
they need.
    Question 3. Broadband has an important role to play in providing 
access to healthcare services, particularly in rural America. I commend 
the Commission's work through the Connect2Health Task Force to provide 
valuable insight into broadband health policies. Most fundamentally, 
telehealth services are only an option for those who have a broadband 
connection. I strongly support the Commission's focus on closing the 
digital divide through programs such as Mobility Fund II, which has the 
potential to be a critical part of the broadband expansion necessary 
for telehealth in rural areas.
    Beyond connectivity, would you please discuss what barriers to 
telehealth services currently exist at the State level?
    Answer. Through its broad stakeholder outreach and data gathering 
efforts, the FCC's Connect2Health Task Force has learned that the main 
barriers to the availability of telehealth services at the State level 
include: the need for more effective policies to streamline the 
deployment of broadband infrastructure and services for health; the 
need for a more coordinated and sustained effort to promote sustainable 
business models for broadband-enabled health in rural and underserved 
areas; a lack of understanding about the value proposition of broadband 
in helping to meet State and local health goals; and interstate 
physician licensure and other payment/reimbursement issues that are not 
within the FCC's ability to address.
    In addition, small healthcare providers, especially those operating 
in rural areas, have cited cost, inadequate or lack of funding support, 
liability concerns, and lack of training/expertise as other barriers to 
telehealth services. Finally, another barrier is simple lack of access 
to telehealth services. Many consumers, especially in rural and 
underserved areas, reportedly obtain the bulk of their healthcare 
services at city and county health departments and other community 
health centers that do not offer telehealth services.
    Question 4. I understand the Commission opened a proceeding in 
April to explore barriers to wireline broadband infrastructure 
deployment. I applaud the Commission's continued focus on rural 
broadband deployment. Under current law, most providers generally have 
a duty to allow other providers access to its broadband infrastructure 
like conduit. However, because broadband conduit cannot be visibly 
inspected, it has been brought to my attention that providers have had 
difficulty finding out where it is already in the ground. In turn, this 
can hinder broadband deployment.
    Can ensuring greater access to conduit make financial sense for 
providers as well as help close the digital divide?
    Answer. Streamlining rules, accelerating approvals, and removing 
other barriers, where possible, will better enable broadband providers 
to build, maintain, and upgrade their networks, which in turn will lead 
to more affordable and accessible Internet access and other broadband 
services for consumers and businesses alike.
    As you note, in April the Commission proposed and sought comment on 
a number of actions designed to accelerate the deployment of next-
generation networks and services by removing barriers to infrastructure 
investment. In particular, that document seeks comment on how to reform 
the FCC's pole attachment rules to make it easier, faster, and less 
costly to access the poles, ducts, conduits, and rights-of-way 
necessary for building out next-generation networks. Additionally, I 
have also established the Broadband Deployment Advisory Committee 
(BDAC) to provide advice and recommendations to the Commission on how 
to accelerate deployment of broadband. I look forward to seeing the 
record develop on the promise of greater access to conduit as well as 
any recommendations from the BDAC on that issue, and of course working 
with your office to close the digital divide.
    Question 5a. A mix of low, mid, and high-band spectrum deployed in 
rural areas is necessary both for wireless coverage today and to build 
network capacity in the future. The broadcast incentive auction that 
concluded earlier this year was an important step to deliver additional 
low-band spectrum to carriers, which is particularly beneficial for 
expanding service in rural areas. Applications for construction permits 
and reimbursement cost estimates for reassigned broadcast stations are 
due next month.
    Could you discuss the steps the Commission is taking right now to 
ensure the transition occurs as quickly as possible?
    Answer. The Commission released a Transition Scheduling Plan in 
January that sets forth the order and schedule of stations' channel 
moves throughout the transition period. The plan is designed to 
minimize viewer inconvenience, enable efficient allocation of the 
resources necessary for broadcasters to operate on their new 
frequencies, and ensure that winning bidders for wireless licenses in 
the forward auction can deploy in the 600 MHz band in a timely manner.
    Commission staff has already granted hundreds of television 
stations' construction permits, enabling stations to move from planning 
to actual construction. We will continue to process construction permit 
applications and to implement the 10-phase construction schedule that 
we adopted in January to facilitate efficient use of the resources 
necessary to complete the transition.
    Question 5b. What steps are you taking to ensure cost allocations 
for reassigned stations are not insufficient?
    Answer. July 12 was the deadline for broadcast television stations 
that are going to be repacked during this process to submit 
construction permit applications and cost estimates to the Commission. 
And two days later, the FCC announced that the aggregate amount of the 
estimated costs reported by broadcast television stations and 
multichannel video programming distributors (MVPDs) eligible for 
reimbursement from the Commission was $2.115 billion. In this 
announcement, we cautioned that we expected to receive additional 
estimates from MVPDs and a small number of stations.
    In recent days, the Commission has received several additional 
estimates, and the aggregate total of estimated costs has increased by 
approximately $24 million to $2.139 billion. At this point, we only 
expect to receive additional cost estimates from some smaller MVPDs and 
eight broadcast television stations. These eight stations were granted 
waivers of the July 12 deadline because they are unable to construct at 
their current channel assignment and must apply to receive a new one. 
But extrapolating from the estimates that we have received to date, we 
are confident that once all initial estimates are received, the 
aggregate total will be below $2.2 billion.
    Looking beyond the initial round of estimates, the aggregate total 
of estimated repacking costs will continue to change as the post-
incentive auction transition process proceeds. Many stations will end 
up amending their initial estimates. Additionally, both the Commission 
and its fund administrator will conduct reviews of those estimates, 
which will likely alter the aggregate number. For these reasons, the 
FCC cannot definitively report how much the repack actually will cost. 
The final number could be lower than the current $2.139 billion. It 
could also be higher.
    But I can say that the agency expects the final number to be above 
the $1.75 billion that Congress has provided the Commission to 
reimburse impacted broadcast stations and MVPDs. As a result, unless 
Congress acts to raise the $1.75 billion cap, the substantial 
likelihood is that local broadcasters will be required to pay some 
portion of their repacking costs out of their own pockets. I would be 
happy to work with your office to address this issue.
    Question 6. In 2013, West Virginia University became the first 
university in the United States to use TV white spaces to offer 
broadband access. TV white space spectrum can be particularly 
beneficial for last-mile broadband deployment in rural areas and I 
applaud the Commission's focus on wireless solutions that can narrow 
the digital divide.
    How do you believe technologies such as these help expand broadband 
deployment in high-cost, hard to reach areas?
    Answer. Eliminating the digital divide is one of my top priorities 
as Chairman. I am also focused on promoting innovative means to help 
narrow that divide. Expanding broadband deployment in high-cost, hard-
to-reach areas should not be a one-size-fits-all approach, so I am 
interested in how this spectrum can be used to help bridge the digital 
divide. That's why I went to South Boston, Virginia recently, where I 
saw for myself how students were using white-space devices to stay 
connected from home. We are currently studying this issue and engaging 
with all interested stakeholders to determine whether and how to 
proceed.
                                 ______
                                 
            Questions Submitted by Senator Chris Van Hollen
    Question 1a. Chairman Pai--Congress gave the FCC robust rulemaking 
authority and statutory directives to protect consumers and 
competition, yet on many of the highest profile issues, such as net 
neutrality and privacy, you have sought to disclaim that authority to 
other agencies such as the FTC.
    You have publicly said that there is evidence that Title II has 
slowed down investment in broadband. Have ISPs specifically stated that 
Title II classification is reducing investment? How has that investment 
been reduced? How is it related specifically to Title II and not other 
factors?
    Answer. Yes, ISPs have specifically stated that the Title II Order 
has reduced their investment. For example, just 2 months after the 
Commission issued the Title II Order, many small ISPs declared under 
penalty of perjury that they were cutting back on investments because 
of that decision. Those declarations can be found in GN Docket No. 14-
28.
    Question 1b.1. If the Courts have said that Title II is a 
permissible grant of authority for the FCC why do you believe consumers 
have been or will be harmed by this classification?
    Answer. For nearly two decades, the Internet flourished under a 
bipartisan, light-touch regulatory framework upheld by the Supreme 
Court. As I stated when the Commission commenced the current 
proceeding, the evidence so far suggests that was the right way to go--
we had a free and open Internet as well as tremendous investment in our 
networks prior to the Title II Order. In the Restoring Internet Freedom 
NPRM, the Commission discussed these issues and sought comment on 
whether there is harm from the Title II classification. In particular, 
I am concerned that the Title II Order has impeded infrastructure 
investment, which means fewer Americans benefiting from digital 
opportunity. I look forward to reviewing the record of the current 
proceeding to determine the best path forward for consumers.
    Question 1b.2. Why do you believe that the FTC is best charged with 
this role despite Congressional directive and the court's ruling?
    Answer. The FTC has a long track record of protecting consumers' 
interests across the Internet ecosystem. As the staff of that agency 
recently commented in Docket No. 17-108:
        ``[t]he FTC has developed specific expertise over privacy and 
        data security issues affecting BIAS [broadband Internet access 
        service] providers. . . . The FTC has consistently used its 
        privacy and data security enforcement authority against unfair 
        and deceptive practices by BIAS providers. . . . One privacy 
        law--not affected by the Title II Order--that the FTC continues 
        to enforce against BIAS providers is the FCRA [Fair Credit 
        Reporting Act]. . . . For example, the FTC brought separate 
        cases against Time Warner Cable and Sprint for allegedly 
        imposing less favorable terms on consumers who had negative 
        information on their credit reports, without providing notices 
        required by the FCRA. . . . In addition to enforcement, the FTC 
        has long engaged in policy initiatives and business guidance 
        efforts particularly germane to BIAS providers' privacy and 
        data security practices.''
    Question 1c. You have publicly stated that there is no evidence of 
collusion or fast lane contracts between ISPs and edge service 
providers despite examples of this collusion. For example, from 2011-
2013, AT&T, Sprint and Verizon blocked Google Wallet, a mobile-payment 
system that competed with a similar service called Isis, which all 
three companies had a stake in developing. In 2012, the FCC fined 
Verizon because Verizon as the Nation's largest wireless network, had 
asked Google to remove 11 applications in the Android marketplace that 
were being used to circumvent Verizon's $20 tethering charge. Google 
agreed to remove the apps from its marketplace, thereby directly 
hurting consumers. However, you describe these future potential 
contracts as ``efficient'' methods of delivering content to end users.
    Given your public statements, how will the FCC, under your 
leadership, address agreements between companies that throttle content 
from competitors?
    Answer. As with any adjudication, the FCC would address such 
agreements based on the relevant facts and the law with the goal of 
furthering the public interest. I cannot say in the absence of 
particular facts how the agency might approach a specific agreement.
    Question 1d. Can you provide an example of when would a contract 
between an ISP and edge providers would be too ``efficient'' and harm 
consumer access to the Internet? What would be the FCC's role in 
protecting consumers and competition if that situation arose?
    Answer. We are currently seeking comment in the context of the 
Restoring Internet Freedom NPRM on whether there are such contracts, 
what impact they may have, and what the appropriate regulatory response 
to them might be, and I look forward to reviewing the record to 
determine the best role for the FCC in protecting consumers going 
forward.
    Question 2a. The press has reported that ultimately you believe 
that a system where ISPs self-regulate is the best way going forward to 
protect consumer privacy.
    Is protecting consumer data a priority for the FCC?
    Answer. Yes.
    Question 2b. Do you believe a paragraph--written by lawyers--buried 
within long and complicated terms of use agreements, asking consumers 
to opt-in, instead of clearly asking them to opt-out, can sufficiently 
protect the privacy of most Americans?
    Answer. I believe clearly written and easy-to-understand policies 
best protect consumers.
    Question 2c. Do you think it is the responsibility of Americans to 
hunt for information regarding how their sensitive information is being 
used by ISPs or you believe that companies should be more transparent?
    Answer. I believe all online companies should be transparent with 
respect to their use of sensitive consumer information.
    Question 2d. Do you believe that consumers should have the right to 
determine who collects their data online and how it can be used?
    Answer. Yes.
    Question 2e. Many consumers, particularly those in rural areas, 
cannot switch providers if they do not like their provider's privacy 
policy. What options does the FCC have for these users? What is their 
recourse?
    Answer. I have previously stated that fostering further broadband 
deployment, coupled with restoring the FTC's role as cop on the beat 
with respect to online privacy, would best serve all consumers, 
particularly those in rural areas.
    Question 2f. Over 20 States have introduced legislation to 
reinstate the opt-in rule that was rolled back by Congress. Do you 
believe your public statements before the CRA was passed, Congressional 
actions, and the FCC have created a patchwork and disjointed system?
    Answer. In 2015, the FCC under the prior Administration created a 
disjointed system for protecting consumers' online privacy when it 
stripped privacy jurisdiction from the FTC by reclassifying broadband 
Internet access service as a common carrier service. As I have said 
before, the government should respect consumers' uniform expectation of 
privacy online and work towards restoring a uniform system of privacy 
protections administered by the FCC.
    Question 3. Chairman Pai, you often say that the Internet 
flourished because of competition. If fast lanes are created how will 
small start-ups compete against big business that can afford fast 
lanes?
    Answer. The Commission's Restoring Internet Freedom NPRM asks about 
the trade-offs of banning outright certain business models. In an age 
of rapid technological advancement, a variety of business models may be 
needed to support increasingly complex networks for delivering 
increasingly sophisticated services. Examples might be real-time or 
interactive services, such as the remote monitoring of consumers' 
healthcare vital signs. Other examples might suggest less pro-
competitive outcomes. We will review the record on this point as we 
determine the best way forward.
    Question 4a. Chairman Pai, in May you met with local and State MD 
officials on the issue of microcells. At that meeting, Montgomery 
County Executive Leggett underscored the importance of working with 
local authorities. Maryland is a unique State because we have very 
dense urban communities and rural and mountainous areas--we are a 
microcosm of the challenges of nationwide broadband deployment. I am 
very excited about the expansion 5G next generation networks. However, 
local governments feel that they are being left out of the 
conversation.
    Commissioner Pai and Commissioner O'Rielly--you have both spoken 
numerous times about Federal overreach and over regulation. What steps 
will you take to ensure that local jurisdictions are heard and that 
your actions do not preempt their regulations?
    Answer. In April 2017, the Commission adopted the Wireless 
Infrastructure NPRM and NOI, seeking comment on multiple potential 
measures to remove or reduce regulatory barriers to wireless network 
infrastructure investment and deployment. We solicited input on how 
Section 332(c)(7)(B) of the Communications Act applies to local 
government review of wireless facility siting applications and on other 
local requirements that have an impact on the deployment of wireless 
facilities. In addition to the opportunity to comment in this 
proceeding, we have met with local leaders such as yours and discussed 
their concerns, and on May 24, 2017 we held a Webinar on the NPRM and 
NOI for State and local governments. I look forward to completing this 
rulemaking expeditiously and working with stakeholders to ensure that 
5G is a reality for all Americans.
    Question 4b. Do you think federally regulated expansion will 
encourage the private sector to invest profits into areas that are less 
profitable to serve--such as rural areas?
    Answer. Reducing regulatory costs for broadband deployment will, by 
definition, improve the business case to deploy broadband everywhere in 
the United States. That's why removing regulatory barriers is so key to 
less-profitable-to-serve areas. But we know that, in some areas, the 
business case for broadband deployment will not be there absent 
government help. That is why in February of this year, the FCC adopted 
bipartisan plans to spur broadband deployment in rural America through 
the Connect American Fund Phase II and Mobility Fund Phase II reverse 
auctions. I should note that reducing the cost of deployment in the 
areas targeted by these auctions will mean that Federal taxpayer 
dollars can be stretched farther to serve even more of rural America.
    Question 4c. Do you agree that the private industry and local 
governments are working to create innovative solutions regarding 
microcells?
    Answer. Yes, I believe that in many cases wireless providers and 
State and local governments are working very well together to expedite 
wireless infrastructure deployments.
    Question 4d. You have said Chairman Pai ``the more heavily you 
regulate something, the less of it you're going to get.'' The FCC, 
under your directive, is aggressively rewriting its rules regarding 
pole attachment and is seeking Congress's approval to expand the 
Commission's authority over pole attachments.
    Do you believe that this innovation would continue under the new 
rules and expanded authority?
    Answer. I have heard from countless consumers about the importance 
of increasing broadband deployment and heard from numerous ISPs that 
access to existing poles, conduit, and rights-of-way is critical 
delivering better, faster, cheaper broadband. This is one of the major 
cost elements to building a high-speed broadband network. If we are to 
put consumers first and increase competition and innovation in the 
broadband marketplace, every indication is that we will need new rules 
for pole attachments.
    Question 5. The Laboratory Division of the FCC is located in 
Columbia, MD. This facility conducts testing on radio frequencies and 
ensures that equipment sold in the U.S. meets safety standards. What 
resources are you devoting to support this division and its engineers?
    Answer. The Columbia, Maryland facility is one of the FCC's most 
important assets in terms of equipment and staff. In addition to 
housing our Office of Engineering (OET) and Technology's Laboratory 
(Lab), it also contains our Enforcement Bureau (EB) field office and 
monitoring equipment and the Sensitive Compartmented Information 
Facilities for the Public Safety and Homeland Security Bureau (PSHSB). 
The Lab houses engineers, administrative staff, and has test facilities 
including the Anechoic Chamber that permits testing of devices for 
compliance, interference, and safety requirements required by our 
rules. The test facilities and supporting equipment are also used to 
support the Commission's policy making activities by evaluating new 
technologies.
    These operations are all essential to the Commission's core, 
spectrum-based mission. Accordingly, we will prioritize the allocation 
of financial and human resources to ensure that the work continues 
properly and that facilities are upgraded as soon as funds can be 
obligated for this purpose. I can report that the PSHSB staff have 
relatively new and modern facilities and that we are upgrading the OET 
building's HVAC system and infrastructure. We are also moving EB staff 
into the OET building to ensure they have more up-to-date facilities. 
And we hope to fund a modernized Equipment Authorization system, which 
will upgrade the database of equipment grants of certification used by 
the public and allow for more efficient interaction with the Lab staff 
during review.
                                 ______
                                 
               Questions Submitted to Hon. Mignon Clyburn
               Questions Submitted by Senator Jerry Moran
    Question 1. As mentioned in your testimony, I believe that 
modernizing the Federal Government's information technology (IT) 
systems needs to remain a top-priority for all agencies. According to 
the GAO's 2015 High Risk Series report, the Federal Government annually 
spends over $80 billion on IT, but more than 75 percent of this 
spending is for ``legacy IT''. I have worked with my colleague Senator 
Udall on legislation called the Modernizing Government Technology (MGT) 
Act of 2017 in an effort to replace ``legacy IT'' systems that continue 
to plague numerous Federal agencies. With examples like the reported 
cyberattack on the FCC's Electronic Comment Filing System, I think that 
this effort needs to remain a priority.
    Could you please speak to the cybersecurity benefits resulting from 
the FCC's current and ongoing efforts to replace ``legacy IT'' systems?
    Answer. Thank you for the question, Senator. The FCC has made 
significant strides in modernizing its IT systems by transforming 
costly legacy infrastructure into more efficient and secure cloud-based 
networks. Since 2013, the FCC has reduced its legacy IT spending from 
85 percent to less than 50 percent of the agency's IT budget. However, 
there is still progress to be made at the FCC and across all Federal 
agencies when it comes to IT modernization. This is evidenced by the 
30,899 cyber incidents reported by Federal agencies just last year, as 
well as the FCC's own difficulties maintaining an operational public 
comment website during times of heavy use. A fully operational comment 
system is crucial for our rulemaking process, and further system 
upgrades are necessary to avoid disruptions to our agency mission. 
Increased funding through programs like the one proposed in the 
Modernizing Government Technology Act of 2017 would provide the FCC 
with the funding required to build and maintain a robust IT 
infrastructure, while moving to a cloud-based system needed to ensure a 
fully functional and secure network.
    Question 2a. I continue to hear from Kansans who remain concerned 
about the status and effectiveness of the Universal Service Fund's 
(USF's) High-Cost program. In April, I joined a number of my colleagues 
in a letter to the FCC strongly encouraging you to take immediate steps 
to ensure sufficient resources are available to enable this program to 
work as statutorily mandated.
    I hear that the budget shortfall is resulting in canceled network 
builds and undermining the intended effect of the reforms to make 
standalone broadband affordable for consumers. Are you hearing this 
too, and what steps are you taking to address this?
    Answer. I have heard from many rural carriers over the course of 
the past year since the Commission adopted its rate-of-return reforms. 
Some have excitedly told me about how they are using universal service 
dollars to build out more broadband. Others have expressed dismay at 
having to cancel network builds. We need to have a rural broadband 
program that addresses the needs of all Americans, and we are working 
to do so.
    One step I am hopeful the Commission will take is to address waste, 
fraud, and abuse in the high-cost fund. By prohibiting ratepayer 
dollars from being spent on things like artwork and golf memberships, 
we can simultaneously increase the amount of money available for rural 
broadband, and help rein in wasteful spending of government dollars.
    I stand ready to work with my colleagues to ensure that rural 
America is not relegated to second-class broadband.
    Question 2b. Some have talked about an infrastructure package from 
Congress as a potential solution for this USF budget shortfall. If 
Congress does come forward with such funding, would you commit to 
adequately funding the program for these small, rural carriers?
    Answer. All of our universal service programs--high-cost, rural 
healthcare, E-Rate, and Lifeline--work together to bring the benefits 
of broadband to all Americans. I would carefully evaluate the level and 
nature of funding that is available and would commit to working with 
your office to ensure that any concerns you have are adequately 
addressed.
    Question 3a. Your written testimony touched upon the increasing 
number of FCC employees that are eligible for retirement (about 23 
percent of the agency's current workforce). You identified recruitment 
as a key action item to bring in the ``next generations' best and 
brightest'' for the future of the agency. Could you please elaborate on 
the engineering honors program that you briefly described in your 
written testimony?
    Answer. Engineers support critical aspects of the Commission's 
work, including our testing laboratory in Columbia, Maryland. An 
engineering honors program, modeled after a similar program we have for 
attorneys, could provide 2 years of employment and training needed to 
support the next generation of engineers. A competitive selection 
process, requiring applicants to submit a cover letter, resume, 
transcript and sample of their work, would ensure we attract the best 
and brightest and provide a pipeline for new engineers as agency 
retirements continue.
    Question 3b. What other efforts do you think are necessary to 
recruit and retain the staff talent pool that the FCC needs to 
effectively carry out its mission?
    Answer. Every year, many recent graduates go through the process of 
deciding between a career in public service or a job in the private 
sector. When government cannot compete on salary, I believe we must 
think creatively on other ways to give agencies like the FCC a 
competitive advantage. The following are a few recommendations:
  --Ensuring staff have adequate resources to do their job.
  --Empowering staff with the ability to make decisions within their 
        area of expertise
  --Starting a generous student loan reimbursement program
  --Promoting a flexible telework policy.
  --Enabling greater staff collaboration across Bureaus, including the 
        ability to easily transition between Bureaus or Offices.
                                 ______
                                 
            Questions Submitted by Senator Joe Manchin, III
    Question 1. The Commission's budget proposes to require the auction 
of additional spectrum by 2027. I strongly support the continued focus 
on making more spectrum available for commercial use. Federal 
communications policy both embraces and requires that rural Americans 
must have access to the economic opportunities provided by broadband 
access. Innovative ideas are not limited by geography. We must do more 
to ensure they are not limited by a lack of connectivity.
    How can future auctions be structured to ensure additional wireless 
spectrum deployment in rural areas actually occurs?
    Answer. Thank you for the question, Senator. Ensuring that 
Americans in rural areas have access to robust and affordable broadband 
has been a top priority of mine since I joined the Commission 8 years 
ago. I would like to highlight two ways the Commission is working to 
ensure that spectrum auctions promote actual deployment in rural areas: 
bidding credits and the Universal Service Fund.
    Two years ago, the Commission updated its competitive bidding 
rules, and for the first time, established a bidding credit for 
eligible rural service providers. This bidding credit allows providers 
serving predominately rural areas and who have 250,000 or fewer 
subscribers to apply for a 15 percent bidding credit in spectrum 
auctions. I supported this expansion of our bidding credits, and am 
pleased to report that it was successfully employed during the 
Incentive Auction. There, 23 service providers collectively obtained 
123 licenses to serve 13.4 million subscribers in rural America, via 
$18.3 million in bidding credits. These providers invested over $100 
million in rural broadband, and I am confident that the bidding credit 
will continue to provide incentives for rural broadband deployment in 
future auctions.
    Moreover, as you know, the Commission has two USF auctions in the 
pipeline: Connect America Fund Phase II and Mobility Fund Phase II. 
Both of these will support wireless connectivity in rural areas, and 
could provide a boost to ensure that spectrum that is currently unused 
will be utilized in those areas.
    Question 2. Broadband has an important role to play in providing 
access to healthcare services, particularly in rural America. I commend 
the Commission's work through the Connect2Health Task Force to provide 
valuable insight intro broadband health policies. Most fundamentally, 
telehealth services are only an option for those who have a broadband 
connection. I strongly support the Commission's focus on closing the 
digital divide through programs such as Mobility Fund II, which has the 
potential to be a critical part of the broadband expansion necessary 
for telehealth in rural areas.
    Beyond connectivity, would you please discuss what barriers to 
telehealth services currently exist at the State level?
    Answer. What I have heard from stakeholders on the ground, as well 
as those who have filed comments in response to the FCC's Broadband 
Health proceeding (GN Docket No. 16-46) is that telehealth and 
telemedicine services have become an essential component of States' 
healthcare systems, especially in providing healthcare services to 
people living in rural and remote areas. A good example of where these 
services have made a meaningful impact is in the State of Mississippi. 
From a broadband perspective, we continue to hear concerns about the 
lack of broadband or inadequate broadband services and speeds 
especially in rural areas, which is impacting the availability of 
telehealth and telemedicine services. And some of this is not only 
based on the lack of infrastructure or service providers, but it is 
also based on the unavailability or insufficiency of Federal and State 
funds. In this regard, with respect to Federal Universal Service 
funding, we are hearing from numerous healthcare providers, especially 
those that run community health centers, such as Federal Qualified 
Health Centers (FQHCs), that the FCC needs to increase the $400 million 
per year cap under the Rural Health Care (RHC) program, given that the 
cap has been reached (in Funding Year 2016 and likely also in 2017), 
and that the inadequate funding will threaten the provision of medical 
services.
    In terms of specific State issues that are impeding the provision 
of telehealth services, one major issue is physician licensure--i.e., 
the inability of a physician to provide telehealth and telemedicine 
services to a patient residing in a different State where he/she is not 
medically licensed, although some State medical boards have begun to 
issue special licenses or certificates to address this issue, and I 
understand that other States are continuing to look into this 
impediment issue. Another major State issue is reimbursement for the 
provision of these services. While many States are beginning to expand 
telehealth reimbursement, others continue to restrict and place 
limitations on telehealth delivered services. I am encouraged, however, 
that States appreciate the value of these services. Indeed, I was 
recently informed by FCC staff that looked into these issues that, in 
the 2016 legislative session, 44 States introduced over 150 telehealth-
related pieces of legislation to address these and other State issues 
related to the provision of telehealth services.
    Question 3. I understand the Commission opened a proceeding in 
April to explore barriers to wireline broadband infrastructure 
deployment. I applaud the Commission's continued focus on rural 
broadband deployment. Under current law, most providers generally have 
a duty to allow other providers access to its broadband infrastructure 
like conduit. However, because broadband conduit cannot be visibly 
inspected, it has been brought to my attention that providers have had 
difficulty finding out where it is already in the ground. In turn, this 
can hinder broadband deployment.
    Can ensuring greater access to conduit may make financial sense for 
providers as well as help close the digital divide?
    Answer. You are correct, utilities generally have an obligation to 
make conduit available at nondiscriminatory rates, terms, and 
conditions under section 224 of the Communications Act. I would welcome 
further FCC action to ensure competitive access to conduit.
                                 ______
                                 
              Questions Submitted to Hon. Michael O'Rielly
           Question Submitted by Senator Shelley Moore Capito
    Question. Commissioner O'Rielly, you previously stated that there 
are bad actors who may take advantage of broadband deployment, 
particularly those that seek to deploy 5G wireless service. What steps 
is the Commission taking to prevent this from occurring?
    Answer. The Commission has initiated a multi-pronged approach to 
eliminate and minimize roadblocks to broadband deployment. For 
instance, earlier this year Chairman Pai established a new advisory 
committee, aptly named the Broadband Deployment Advisory Committee, 
consisting of experts tasked with examining ways to remove barriers to 
deployment. Further, the Commission has issued a (1) Public Notice on 
streamlining small cell wireless deployment (2016), (2) a broader 
Notice of Proposed Rulemaking and Notice of Inquiry pertaining to 
wireless issues (2017), and (3) a Notice of Proposed Rulemaking, Notice 
of Inquiry and Request for Comment pertaining to wireline services 
(2017). These efforts are intended, in part, to solicit steps and 
requisite authority the Commission can exercise to eradicate barriers. 
I am hopeful that these items will conclude in the very near future and 
providers can focus on bringing service to all Americans, instead of 
being smothered by unnecessary red tape and/or excessive payments to 
some State, local or Tribal governments.
                                 ______
                                 
               Questions Submitted by Senator Jerry Moran
    Question 1. I understand the next generation of wireless network 
infrastructure will be built using small-cell networks employing 5G 
wireless technology. The faster data speeds and improved connectivity 
of 5G is essential for the Internet of Things (IoT) which will unleash 
billions of dollars in economic growth. The U.S. is the world leader in 
4G, but I am worried we are not taking the necessary steps to maintain 
our global leadership to deploy 5G. Carriers tell me the regulatory 
barriers to deploy small-cell networks are outdated, hampering 
investment and economic growth. Do you agree 5G deployment is critical 
for the American economy, and if so, what steps is the FCC taking to 
eliminate barriers and costs to deploying 5G technology in a timely 
manner?
    Answer. Yes. Too many State, local and Tribal governments are 
acting in bad faith, by imposing unreasonable approval procedures or 
seeking to extract excessive compensation, preventing or delaying the 
deployment of small cell networks. I strongly believe that the 
Commission must be willing to step in to aggressively use authority 
provided by Congress to preempt these regulatory barriers. In addition, 
the Chairman has established a new Commission advisory committee to 
examine these and other issues and make recommendations for further 
Commission action. I am hopeful that the advisory committee's work will 
be fruitful for its intended purposes.
    Question 2a. I continue to hear from Kansans who remain concerned 
about the status and effectiveness of the Universal Service Fund's 
(USF's) High-Cost program. In April, I joined a number of my colleagues 
in a letter to the FCC strongly encouraging you to take immediate steps 
to ensure sufficient resources are available to enable this program to 
work as statutorily mandated.
    I hear that the budget shortfall is resulting in canceled network 
builds and undermining the intended effect of the reforms to make 
standalone broadband affordable for consumers. Are you hearing this 
too, and what steps are you taking to address this?
    Answer. Yes, I have heard this is occurring. I support providing 
some additional funding resources to both the model and legacy sides 
for rate of return carriers. The Commission should promptly examine 
whether this can be done without increasing the burden on consumers, by 
using funding from our reserves without jeopardizing funding for other 
purposes.
    Question 2b. Some have talked about an infrastructure package from 
Congress as a potential solution for this USF budget shortfall. If 
Congress does come forward with such funding, would you commit to 
adequately funding the program for these small, rural carriers?
    Answer. If Congress decides to allocate Federal taxpayer dollars 
for broadband deployment and if such funding is allocated to the FCC 
for distribution via our high-cost program, which I have advocated 
would be the best mechanism, I would certainly commit to ensuring that 
the funds are properly distributed to extend broadband deployment 
nationwide. Depending on how the funding is designated by Congress, I 
would agree that additional targeted funding should go to carriers 
willing to serve parts of America that lack broadband service, which 
tend to be the more rural areas.
    Question 3. I believe that modernizing the Federal Government's 
information technology (IT) systems needs to remain a top-priority for 
all agencies. According to the GAO's 2015 High Risk Series report, the 
Federal Government annually spends over $80 billion on IT, but more 
than 75 percent of this spending is for ``legacy IT''. I have worked 
with my colleague Senator Udall on legislation called the Modernizing 
Government Technology (MGT) Act of 2017 in an effort to replace 
``legacy IT'' systems that continue to plague numerous Federal 
agencies. With examples like the reported cyberattack on the FCC's 
Electronic Comment Filing System, I think that this effort needs to 
remain a priority.
    Could you please speak to the cybersecurity benefits resulting from 
the FCC's current and ongoing efforts to replace ``legacy IT'' systems?
    Answer. I may not be in the best position to comment on this, as it 
is an area generally overseen by the Chairman. In terms of replacing 
legacy IT systems, I wholeheartedly agree that modernizing our physical 
equipment, networks and databases is a sound investment, assuming 
funding is available to do so, and would tend to improve the security 
of our internal network from any threats.
    Question 4. Your testimony discussed the FCC's ongoing efforts to 
close the ``Digital Divide'' by expanding fixed and mobile broadband 
deployment in the Connect America Fund Phase II and the Mobility Fund 
Phase II. What role do you see the Rural Broadband Auctions Task Force 
playing in implementing these important USF-related auctions?
    Answer. As I understand from conversations with the Chairman's 
staff, the task force is charged with designing and executing the 
respective reverse auctions for high-cost program funds, in compliance 
with decisions made by the Commission. While these functions previously 
existed, the Chairman felt it was important to ensure that the 
necessary focus and attention was paid to this important topic via a 
dedicated task force of Commission staff.
    Question 5. Title II and ``Open Internet'' rules are not the same 
and should not be conflated. If people are worried about Open Internet 
issues, shouldn't Congress act to put ``Open Internet'' rules into 
statute and thus end the regulatory ping pong and market uncertainty 
that results every time the administration changes parties and a new 
FCC Chairman steps into this issue?
    Answer. The Commission currently has an open proceeding on the 
matter and I am committed to reviewing the record as it develops, so I 
will withhold lengthy commentary at this point. However, I can state 
that I firmly believe that the only way to ensure lasting peace on the 
issue of net neutrality is for Congress to enact requisite legislation 
on the topic, as it deems appropriate. Absent this action, changes to 
rules are likely to occur as Commissioners change over time.
                                 ______
                                 
            Questions Submitted by Senator Joe Manchin, III
    Question 1. The Commission's budget proposes to require the auction 
of additional spectrum by 2027. I strongly support the continued focus 
on making more spectrum available for commercial use. Federal 
communications policy both embraces and requires that rural Americans 
must have access to the economic opportunities provided by broadband 
access. Innovative ideas are not limited by geography. We must do more 
to ensure they are not limited by a lack of connectivity.
    How can future auctions be structured to ensure additional wireless 
spectrum deployment in rural areas actually occurs?
    Answer. I believe the best way to facilitate wireless coverage to 
all areas is to have firm build-out requirements that are enforced 
vigorously. That being said, I do not support making retroactive 
changes to existing licenses for this purpose, as it would unfairly 
impose burdens on those licensees who purchased licenses under rules 
previously designed. Instead, any such reform should be done on a going 
forward basis.
    Question 2. Broadband has an important role to play in providing 
access to healthcare services, particularly in rural America. I commend 
the Commission's work through the Connect2Health Task Force to provide 
valuable insight intro broadband health policies. Most fundamentally, 
telehealth services are only an option for those who have a broadband 
connection. I strongly support the Commission's focus on closing the 
digital divide through programs such as Mobility Fund II, which has the 
potential to be a critical part of the broadband expansion necessary 
for telehealth in rural areas.
    Beyond connectivity, would you please discuss what barriers to 
telehealth services currently exist at the State level?
    Answer. While Congress has assigned a limited role for the 
Commission in regard to telehealth, I am familiar with these issues 
from my previous employment. Certainly, the issues of licensing and 
liability have been roadblocks to further use of telehealth, requiring 
greater attention and possible action by Congress or individual States. 
However, the Commission recently released a Public Notice seeking 
additional information and answers to questions regarding a host of 
aspects involving telehealth and whether the Commission can play a role 
in facilitating its usage, within the bounds of our authority.
    Question 3. I understand the Commission opened a proceeding in 
April to explore barriers to wireline broadband infrastructure 
deployment. I applaud the Commission's continued focus on rural 
broadband deployment. Under current law, most providers generally have 
a duty to allow other providers access to its broadband infrastructure 
like conduit. However, because broadband conduit cannot be visibly 
inspected, it has been brought to my attention that providers have had 
difficulty finding out where it is already in the ground. In turn, this 
can hinder broadband deployment.
    Can ensuring greater access to conduit may make financial sense for 
providers as well as help close the digital divide?
    Answer. In terms of duty to offer access to conduit, different 
legal requirements may apply depending on the type of provider and the 
service being offered. For instance, section 251(b)(4) of the 
Communications Act of 1934 imposes the obligation on each local 
exchange carrier ``to afford access to the poles, ducts, conduits, and 
rights-of-way of such carrier to competing providers of 
telecommunications services on rates, terms and conditions that are 
consistent with section 224'' (pertaining to pole attachments). As you 
note, the Commission has initiated a proceeding, and one of the points 
it is considering is the scope of any such requirements.
    The Commission is also broadly considering whether barriers to 
wireline investment can be eliminated or modified to facilitate 
broadband deployment. The record on the that item has since closed and 
it is now before the Commission to determine the best course of action, 
if any. I plan to review the record closely to see the answers 
commenters provided to the many questions and proposals posed.
    Generally, greater access to existing conduit, consistent with 
obligations under the law, may be helpful to broadband deployment, 
depending on the remedial structure and costs. Certainly, any efforts 
on this front shouldn't serve directly or indirectly as an incentive 
not to deploy broadband facilities.
                                 ______
                                 
            Questions Submitted by Senator Chris Van Hollen
    Question 1a. Chairman Pai: In May you met with local and State MD 
officials on the issue of microcells. At that meeting, Montgomery 
County Executive Leggett underscored the importance of working with 
local authorities. Maryland is a unique State because we have very 
dense urban communities and rural and mountainous areas--we are a 
microcosm of the challenges of nationwide broadband deployment. I am 
very excited about the expansion 5G next generation networks. However, 
local governments feel that they are being left out of the 
conversation.
    Commissioner Pai and Commissioner O'Rielly: You have both spoken 
numerous times about Federal overreach and over regulation. What steps 
will you take to ensure that local jurisdictions are heard and that 
your actions do not preempt their regulations?
    Answer. I believe that a good portion of State, local and Tribal 
governments want their citizens to have the opportunity to obtain 
broadband services and the benefits that can come from such technology. 
However, a number of bad actors remain that delay the approval process 
for necessary deployment through various means or seek to extract 
exorbitant payments from broadband providers. Moreover, there are some 
governmental entities that prevent deployment based on reasons that are 
not under their purview. Accordingly, I believe that the Commission 
must exercise authority provided by Congress to preempt these 
instances.
    Question 1b. Do you think federally regulated expansion will 
encourage the private sector to invest profits into areas that are less 
profitable to serve--such as rural areas?
    Answer. The development and deployment of new technologies, such as 
fixed wireless broadband and satellite offerings, is likely to decrease 
the cost to serve many of the hardest to reach areas, although there 
may still be areas where it is cost prohibitive to offer services. 
Accordingly, the Commission operates its high-cost program to provide a 
subsidy mechanism to entice providers to serve areas where there is no 
business case at the current time. In terms of removing barriers to 
entry, I do believe that this can reduce the cost of service or lead to 
greater network expansion.
    Question 1c. Do you agree that the private industry and local 
governments are working to create innovative solutions regarding 
microcells?
    Answer. In many instances, the current regulatory landscape hampers 
the deployment of broadband. Therefore, I applaud efforts by State, 
local and Tribal governments to find creative ways to expedite 
deployment and minimize the cost for siting new wireless technologies, 
including small cells. I do worry, however, that the patchwork of 
differing regulations and costs can act as an additional deployment 
barrier.

                          SUBCOMMITTEE RECESS

    The subcommittee hearing is hereby adjourned. Thank you 
all. Thank you.
    [Whereupon, at 3:55 p.m., Tuesday, June 20, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]