[Senate Hearing 116-]
[From the U.S. Government Publishing Office]


 
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2020

                              ----------                              


                          TUESDAY, MAY 7, 2019

                                       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. John Kennedy (Chairman) presiding.
    Present: Senators Kennedy, Moran, Boozman, Daines, 
Lankford, Coons, Manchin, and Van Hollen.

     FEDERAL COMMUNICATIONS COMMISSION AND FEDERAL TRADE COMMISSION


               opening statement of senator john kennedy


    Senator Kennedy. All right, folks. The subcommittee will 
come to order.
    We are going to hear today about the fiscal year 2020 
budget requests for the FCC and the FTC. We have with us today 
our two chairmen; from the FCC, Chairman Ajit Pai, who has 
served as chairman since January of 2017. He was previously a 
commissioner on the Federal Communications Commission. He is a 
proud graduate of Harvard and Chicago Law. We also have from 
the Federal Trade Commission, Chairman Joseph Simons. He has 
been chairman since May of 2018. He was previously a partner at 
the law firm of Paul, Weiss, where undoubtedly he made more 
money. He was co-chair of the firm's Antitrust Group, and he is 
a graduate of Cornell and Georgetown Law.
    Let me say a few words, and then I will call on my 
colleague Senator Coons.
    As indicated today, we are convening the first hearing for 
the Financial Services and General Government Subcommittee for 
fiscal year 2020.
    I would like to welcome my colleague Senator Coons and all 
the Members of the subcommittee, and I am very pleased to be 
working with them.
    I look forward to us taking a collaborative approach to 
these hearings and to our fiscal year 2020 appropriations bill. 
Our subcommittee may be small dollar-wise, but we are mighty. 
And we are committed to saving taxpayer money and spending what 
we spend wisely.
    The programs and agencies funded by this subcommittee, I do 
not need to tell our two chairmen, play an important role in 
supporting the American economy, ensuring a fair and efficient 
system of justice, and promoting private-sector growth.
    The FTC is a critically important agency, and is the 
Nation's top cop on the consumer beat. We want to make sure it 
is using its resources as efficiently as possible. I do not 
mean to suggest that you are not, but that is what our 
questions will be directed toward.
    The FTC requests $312.3 million in fiscal year 2020, which 
is an increase of $2.6 million, to fulfill its mission of 
protecting consumers and promoting competition.
    We are eager to hear about the new initiatives in the FTC's 
Bureau of Competition and Bureau of Consumer Protection. We are 
also anxious to hear about your new task force to monitor 
competition and technology markets and your efforts to ensure 
consumer privacy. Welcome, Mr. Chairman.
    Today we will also talk with our chairman at the FCC about 
his agency's efforts to expand the deployment of rural 
broadband, to improve public safety, and to protect consumers. 
The President's budget proposes $335.7 million for operating 
expenses at the FCC for fiscal year 2020.
    The FCC has also identified four strategic goals for fiscal 
year 2020. Those include closing the digital divide, promoting 
innovation in the market for communication services, protecting 
consumer and public safety, and of course, improving FCC 
regulatory processes. I am looking forward to hearing how our 
friends at the FCC plan to execute these goals under their 
requested budget authority.
    I am also looking forward to hearing about the FCC's plan 
to win America's race to 5G through its ongoing and planned 
spectrum auctions, while simultaneously protecting rural 
communities and incumbent officeholders.
    I want to thank both of you again for appearing this 
morning.
    Before I ask the Ranking Member, Senator Coons, to give his 
remarks, I just want to say an additional word that occurred to 
me as I was walking over here today. It is really directed to 
all of us, particularly to our friends at the FCC.
    So-called ``net neutrality'' is critically important to the 
American people, and many reasonable people have different 
points of view on what we ought to do.
    The problem is that regardless of what one thinks about the 
correct course with respect to net neutrality, we need to pick 
a course and stick to it because it is very, very hard for 
people and consumers to comply with changing rules. It is very 
hard when we have the policy bouncing around like a ping-pong 
ball.
    This is just one person's opinion, but it is really time 
for Congress to act. We need to roll up our sleeves. I think we 
have more in common than we do not. We need to stop passing the 
buck, and we need to pass a net neutrality bill.
    With that, I will call on my colleague and esteemed Ranking 
Member, Senator Coons.


               statement of senator christopher a. coons


    Senator Coons. Thank you, Chairman Kennedy, for convening 
this hearing today, for that opening statement, and for the 
first hearing in this Congress in which you will be the 
Chairman of the FSGG subcommittee. I look forward to working 
with you. I enjoyed a great working relationship with your 
predecessor, Senator Lankford, and my staff and I are very 
excited to begin this year's appropriation process.
    I also want to welcome our witnesses, Chairman Pai and 
Chairman Simons. Both of you testified before this subcommittee 
last year. We have stayed in touch, and it is very good to see 
both of you back here today to review your fiscal year 2020 
budget request.
    Chairman Pai, I am, as you know, concerned you are 
requesting a cut in funding.
    As your agency also takes the lead in making sure the 
United States is the global leader in 5G technology, I look 
forward to discussing whether that makes sense.
    Chairman Simons, you are requesting an increase of less 
than 1 percent, at the same time we are counting on the FTC to 
protect every American's privacy in the Internet age. I am 
going to ask whether that is realistic, given the increasing 
cost of litigation and expert witnesses.
    Chairman Pai, Chairman Simons, each of your agencies plays 
a central role in protecting Americans' privacy, as the 
Chairman referenced. These personal devices we all carry around 
with us everywhere allow us to connect and talk with loved ones 
and find the fastest route from A to B. You can even apparently 
buy a car, a home, anything on your smartphone these days.
    But they also tell companies an awful lot about us. So I am 
interested to learn, Chairman Pai, what steps the FCC has taken 
to address the sale of consumers' location on their phones.
    And, Chairman Simons, there are reports the FTC will soon 
level its largest ever fine in a case dealing with consumer 
privacy, and I want to hear how your current enforcement 
authorities are working or not and what additional authorities 
you may seek.
    I could not agree more with the Chairman's comments about 
net neutrality. I think we have had a several-year-long fight 
back and forth. It is time for us to sort it out and to 
legislate responsibly.
    On broadband, for our connected devices to work well, every 
home, no matter how rural, must be connected to the 
communications and IT systems that now drive our economy and 
our way of life. I hear about connectivity issues in the more 
rural areas of my home State. Yes, a State as small as Delaware 
does still have rural areas in Kent and Sussex Counties that 
struggle with reliable access.
    The FCC oversees the multibillion-dollar universal service 
fund, which expands access to vital communications, including 
remote health care access for systems across the country. I 
want to know what you think we should be doing to make sure 
that all American communities have access to broadband.
    Chairman, I know you are addressing this issue, but it has 
not been fixed yet, and I want to talk with you about it 
further.
    Last, let me just mention robocalls. Americans receive--I 
did not believe this number when it was first given to me--5 
billion robocalls a month. That is more than double the number 
of calls received just 2 years ago. That means someone in this 
room is going to get a robocall during this hearing, and I want 
to understand, frankly, what you are doing about this and 
whether you have sufficient resources and authorities to 
address that problem adequately.
    We have got lots to talk about, so let me stop talking, Mr. 
Chairman, and let us get on with this first hearing of this 
Congress for fiscal year 2020.
    Thank you.
    Senator Kennedy. All right. Thank you, Senator.
    Chairman Pai, I will now invite you to make your opening 
remarks.
STATEMENT OF HON. AJIT PAI, CHAIRMAN, FEDERAL 
            COMMUNICATIONS COMMISSION
    Chairman Pai. Thank you, Mr. Chairman.
    Chairman Kennedy, Ranking Member Coons, Members of the 
subcommittee, thank you for inviting me to present the FCC's 
fiscal year 2020 budget request, and I wanted to extend a 
personal thanks to each of you for taking time out of your busy 
schedules to meet with me personally about these important 
issues.
    Mr. Chairman, as you recognized, our requested spending 
level is $335,660,000, derived from regulatory fees for regular 
FCC operations, with an auction spend cap of $132,538,680.
    But, first, I would like to thank you for providing us with 
generous funding in the omnibus as well as permission to 
complete internal reorganizations to advance agency reform 
efforts.
    Additional auction funds are supporting Congress' expansion 
of the TV Broadcaster Relocation Fund to reimburse low-power 
television, TV translator, and FM radio stations for costs that 
are related to the post-Incentive Auction repack.
    We also appreciate your authorization to create the Office 
of Economics and Analytics at the FCC. We are making great 
strides, expanding and deepening the use of economic analysis 
in our decisionmaking.
    Our budget proposal for near year for regular operations is 
slightly below what we received for fiscal year 2019, and our 
auction cap is only adjusted upward for inflation. So our FTE 
level will stay the same.
    What will those 1,448 FTEs be doing? Well, in my written 
testimony, I discussed important agency priorities, such as 5G 
and public safety, but I would like to focus my oral remarks 
this afternoon on rural broadband deployment.
    The FCC's top priority is to close the digital divide. I 
have personally seen how the lack of broadband can affect rural 
communities in particular, from a bayou outside of Hammond, 
Louisiana, to the mountains of Capon Springs, West Virginia.
    I have seen how the business case for deployment too often 
does not exist without Federal help, and that is why the FCC 
has been pursuing an aggressive agenda to expand high-speed 
Internet access across rural America.
    For example, through our groundbreaking Connect America 
Fund Phase II reverse auction, we are awarding about $1.5 
billion to connect over 713,000 homes and small businesses 
nationwide with fixed broadband. This will make a big 
difference in these communities.
    Earlier this year, when I was in Seaford, Delaware, I 
visited officials from Bloosurf, a broadband provider that will 
use FCC-directed funds to connect over 5,000 unserved locations 
in Sussex County, Delaware, and the Eastern Shore of Maryland.
    And just last week, I met with representatives of electric 
cooperatives from States including Oklahoma, Alabama, Arkansas, 
and Oregon.
    Our funding will allow these electric co-ops to deliver 
gigabit fiber to previously unserved rural areas, enabling 
things like telemedicine and precision agriculture, while 
strengthening rural communities.
    Last December, we also reformed our Alternative Connect 
America Cost model, or A-CAM program. Specifically, we offered 
many small rural carriers more funding in return for deploying 
faster broadband to more rural locations.
    As a result of these offers, we announced last month that 
an additional 106,000 rural homes and small businesses will get 
faster broadband. That is a 31 percent increase in the number 
of locations receiving broadband of at least 25/3 megabit-per-
second speeds through the A-CAM program, and the increase is 
much larger in many States, like 105 percent in Montana and 92 
percent in my home State of Kansas.
    We have also begun requiring that small rural carriers that 
still rely on the FCC's legacy mechanism provide faster 
broadband to more rural locations.
    Under the previous administration's rules, these carriers 
were only required to provide 10/1 service to about 115,000 
locations. Under our new rules, these same carriers will have 
to provide at least 25/3 broadband to more than 600,000 
locations.
    At the same time, we initiated a second round of A-CAM 
offers to these carriers. If all accept, they will have to 
provide 25/3 service to at least 1.1 million new locations, 
including over 38,000 in Oklahoma, 34,000 in Kansas, 29,000 in 
Montana, and 27,000 in Arkansas.
    Of course, we need to do more just to close the digital 
divide, and that is why, among other things, I intend in the 
coming year to establish a Rural Digital Opportunity fund.
    Currently, the FCC directs substantial amounts of money 
each year to larger carriers to deploy 10/1 broadband service 
to many rural homes and businesses under a program adopted 
during the prior administration. This program is in many 
States, including Louisiana, but in my view, 10/1 service is 
not good enough for rural America. So I intend to replace this 
program with a Rural Digital Opportunity Fund. This fund will 
distribute over $20 billion through a reverse auction to deploy 
gigabit-speed broadband to up to 4 million homes and 
businesses.
    We are taking many other steps to promote rural broadband 
deployment, from reducing regulatory barriers to fiber 
deployment to increasing funding for our rural health care 
program to enable telemedicine.
    I do not have enough time to discuss all of them now. So 
let me conclude simply by thanking our staff for the hard work 
they do each and every day and thank you for the resources you 
give us to help meet the public interest.
    I look forward to answering your questions and working with 
you and your staff in the time to come to promote the public 
interest.
    Thank you, Mr. Chairman.
    [The statement follows:]
                  Prepared Statement of Hon. Ajit Pai
    Chairman Kennedy, Ranking Member Coons, and Members of the 
Financial Services and General Government Subcommittee, thank you for 
inviting me here to present the Federal Communications Commission's 
Fiscal Year 2020 Budget Request. The Commission's Office of Management 
and Budget-designated spending level for fiscal year 2020 is 
$335,660,000, derived exclusively from regulatory fees for regular FCC 
operations, and an auction spending cap of $132,538,680.
    But before I discuss the Commission's plans for the next fiscal 
year, I want to take this opportunity to thank this subcommittee for 
its support during the prior year. We greatly appreciate your decision 
to provide us with funds above the fiscal year 2019 request, as well as 
your permission to complete internal reorganizations to advance agency 
reform efforts.
    Let me highlight a few positive impacts of this subcommittee's 
decisions.
    First, you increased auction funding by more than $17 million. The 
funds provided by this subcommittee have enabled us to meet our 
statutory deadline to complete our rulemaking to implement changes to 
the TV Broadcaster Relocation Fund and provide money to reimburse low-
power television, TV translator, and FM radio stations impacted by the 
post-Incentive Auction spectrum repack. They have also helped us 
establish a dedicated call center and launch a public education 
campaign to assist consumers impacted by the relocation of broadcast 
stations. And they have funded monthly reports to subcommittee staff on 
our progress with respect to the repack.
    Second, you authorized two agency reorganization initiatives to 
help the Commission better carry out its mission. You approved the 
creation of the Office of Economics and Analytics, which brought 
together economists who were previously scattered throughout the 
Commission. The Office is already having a positive impact on the 
Commission's work, and going forward, I am confident that it will allow 
us to continue expanding and deepening the use of economic analysis in 
the Commission's decision-making. This subcommittee also permitted us 
to transfer the audit and enforcement responsibilities associated with 
our Equal Employment Opportunity rules from the Media Bureau to the 
Enforcement Bureau. This reorganization, which took place earlier this 
year, was supported by many civil rights organizations and will help us 
to more effectively enforce these rules.
    Third, you gave us nearly $6 million above our general request for 
fiscal year 2019, which is supporting a broad range of Commission 
efforts essential to our core mission. The FCC greatly appreciates your 
decision to return our funding to $339,000,000 in fiscal year 2019. 
This amount means a great deal to a small agency and aids our efforts 
to expand the deployment of rural broadband, improve public safety, 
foster technological innovation, protect consumers, and modernize our 
information technology.
    Turning to the future, I'd like to discuss some of the Commission's 
most important priorities for next year--priorities that the funds 
requested in this budget submission are critical to advancing.
    First, we will continue our work to secure our Nation's leadership 
in 5G, the next generation of wireless connectivity. 5G networks will 
be 100 times faster than today's networks, maybe even more. They will 
have lag times that are a tenth of what they are today. And they'll 
have much more capacity, being able to connect as many as one million 
devices per square kilometer.
    Our work on 5G will open the door to new services and applications 
that will grow our economy and improve our standard of living. Smart 
transportation networks will link connected cars--reducing traffic, 
preventing accidents, and limiting pollution. Ubiquitous wireless 
sensors will enable healthcare professionals to remotely monitor your 
health and transmit data to your doctor before problems become 
emergencies. Connected devices will empower farms to apply precision 
agriculture. And there will be more innovations that we can't even 
conceive of today.
    These breakthroughs will boost our economy. One study pegs 5G's 
potential at 3 million new jobs, $275 billion in private investment, 
and $500 billion in new economic growth.
    To realize this potential, we've developed a comprehensive strategy 
that will ``Facilitate America's Superiority in 5G Technology''; it's 
called the ``5G FAST'' plan. It has three key components: (1) pushing 
more spectrum into the marketplace; (2) promoting the deployment of 
wireless infrastructure; and (3) modernizing outdated regulations. In 
my testimony today, I'd like to concentrate on the first prong, 
spectrum.
    The applications and services of tomorrow will require much more 
bandwidth. They cannot be developed and deployed without spectrum. This 
critical resource represents the lifeblood of the communications 
industry--and with it, the future of our economy. That's why the FCC 
must continue its work to aggressively make more spectrum available for 
commercial use.
    In my testimony to this subcommittee last year, I said that the FCC 
would hold two high-band spectrum auctions during fiscal year 2019: one 
for the 28 GHz band and another for the 24 GHz band. And I noted that 
conducting these auctions successfully and promptly would be important 
to U.S. leadership in 5G.
    I am pleased to report that we have done what I said we would do. 
Our 28 GHz auction began last November and concluded this January. All 
in all, bidders won 2,965 licenses, and the auction raised $702,572,410 
in gross bids for the U.S. Treasury. Our 24 GHz auction began in March. 
The clock phase of this auction ended in April, and the assignment 
phase is currently taking place. Gross bids so far have more than 
doubled from the amount raised in the 28 GHz auction, to just short of 
$2 billion.
    While these auctions are significant accomplishments, the FCC 
cannot and will not rest on our laurels. Instead, we will continue to 
free up spectrum for commercial use. Starting on December 10, we will 
hold the largest auction in Commission history--we expect the upper 37 
GHz, 39 GHz, and 47 GHz bands will release 3.4 gigahertz of spectrum 
into the commercial marketplace. During the next fiscal year, we also 
intend to auction mid-band spectrum in the 3.5 GHz band. We will 
continue our work to make additional mid-band spectrum bands available 
for flexible use, including in the 2.5 GHz and 3.7-4.2 GHz bands.
    All in all, these auctions will free up for the commercial 
marketplace over 5 gigahertz of spectrum for flexible use. For context, 
that's more spectrum than is currently used for mobile broadband by all 
mobile broadband providers in the United States combined.
    As part of our balanced spectrum strategy, we have also been 
working to make more spectrum available for unlicensed use. Earlier 
this year, for example, we allocated over 21 gigahertz of spectrum 
above 95 GHz for unlicensed operations. And we are continuing our 
effort to open up a large amount of unlicensed spectrum in the 6 GHz 
band, proposing to safeguard incumbents with innovative technologies 
and sharing techniques that will make sure we get the most use of this 
limited, essential resource.
    The second priority I'd like to address involves our continuing 
efforts to close the digital divide. Closing the digital divide has 
been my top priority since becoming chairman. That's why last year, the 
Commission took a variety of steps to better enable the private sector 
to deploy broadband infrastructure. For example, we made it easier and 
cheaper for competitive providers to attach fiber to utility poles 
through a groundbreaking reform called ``one-touch make ready.''
    Of course, there are some areas where the business case for 
broadband deployment just won't exist--no matter how much red tape we 
cut. These are typically rural areas with sparser populations and lower 
incomes. The FCC manages programs to connect these rural communities 
through what is called the Universal Service Fund (USF). And we've been 
aggressively taking action to maximize the USF's impact--to stretch 
scarce dollars as far as we can.
    Last year, we finished a landmark reverse auction called Connect 
America Fund Phase II. Through this novel approach, we're awarding 
about $1.5 billion to connect over 713,000 homes and businesses 
nationwide. Before the auction, we identified parts of our country that 
were unserved by broadband. This was so that we could target funding to 
leverage--not displace--private capital expenditures. We didn't want to 
fund overbuilding. We also made sure the auction was open to providers 
of all types, including rural telecom companies, cable, fixed wireless, 
and satellite companies, ands well as electric utilities. This ensured 
that there would be plenty of competition.
    The outcome of the auction was a tremendous success. We distributed 
funding much more efficiently thanks in part to intermodal, competitive 
bidding, saving $3.5 billion from the $5 billion price we initially 
thought would be required to connect these unserved areas. We also 
ensured that 99.7 percent of the winning bids would provide consumers 
with service of at least 25/3 Mbps. And we set a level playing field 
that enabled a variety of entities, from fixed wireless to electric 
utilities, to win.
    Moreover, last December, we implemented reforms to the FCC's 
Alternative Connect America Cost Model (A-CAM). As a result, a total of 
186 small, rural carriers participating in the A-CAM program have now 
accepted $65.7 million in additional annual support over the next 
decade to provide 106,000 more rural homes and small businesses with 
25/3 Mbps broadband service. This represents a 31.8 percent increase in 
the number of locations that will have high-quality service available 
through the FCC's A-CAM program. And the increase is much larger in 
many States, such as 105.4 percent in Montana and 92.4 percent in my 
home State of Kansas.
    In December, for the first time we also began requiring that small, 
rural carriers that continue to rely on the Commission's legacy, cost-
based support mechanism provide 25/3 Mbps broadband service to specific 
numbers of rural homes and small businesses in their service areas. 
Under the prior administration's rules, these carriers were only 
required to provide 10/1 Mbps service to 115,441 locations; under our 
new rules, these same carriers will have to provide 25/3 Mbps broadband 
to at least 600,535 locations. At the same time, we also initiated a 
second round of A-CAM offers of fixed, model-based support for a term 
of 10 years to these carriers, in exchange for building out 25/3 Mbps 
broadband to all fully-funded locations in their service areas. If all 
legacy-reliant carriers accept the new A-CAM offers, they will be 
required to provide 25/3 Mbps service to at least 1,126,082 locations.
    Last year, we took other steps through the Fund to help close the 
digital divide as well. For example, we increased the annual cap on 
rural healthcare program spending by nearly 43 percent, to $571 million 
per year for that funding year--the first increase in the program's 
funding level since it was established in the 1990s. These additional 
funds will help to provide critical connectivity to rural healthcare 
institutions.
    And we plan to continue our emphasis on closing the digital divide. 
Later this year, for example, we will begin a rulemaking to establish a 
$20.4 billion Rural Digital Opportunity Fund. Applying lessons learned 
from the Connect America Fund Phase II reverse auction, this program 
will spur the deployment of high-speed broadband networks across more 
of rural America over the next decade, bringing greater economic 
opportunities to America's heartland. Service providers that win 
funding in the reverse auction will deploy needed infrastructure to 
provide up to gigabit-speed broadband in the parts of the country most 
in need of connectivity. I'm excited about this program--it will be the 
FCC's single biggest step yet to close the digital divide and will 
connect up to four million rural homes and small businesses to high-
speed broadband networks.
    Of course, it is important that we spend USF funds wisely and 
eliminate waste, fraud, and abuse in these programs. That's why last 
month, we sent you a reorganization plan to create a Fraud Division 
within the Enforcement Bureau. I am pleased that this proposal was 
unanimously endorsed by the Commission and cleared by the Office of 
Management and Budget. This reform will embed a permanent effort to 
combat USF fraud within the structure of the Enforcement Bureau.
    Our third priority is to continue fulfilling our important mission 
to protect public safety. Last year, for example, we took important 
steps to improve Wireless Emergency Alerts, which play a critical role 
in notifying Americans when emergencies strike.
    In February, I visited the Orleans Parish Communications District, 
which is the 911 call-handling and dispatch center for the Crescent 
City. And in March, I traveled to New Jersey and Delaware and visited 
911 call centers. These interactions underscored to me the importance 
of supporting those who work every day to help their fellow Americans 
in their time of need. During the last fiscal year, we began work to 
implement laws passed by Congress to improve 911 calling. For example, 
we proposed rules to implement Kari's Law. Kari's Law requires multi-
line telephone systems--which commonly serve hotels, office buildings, 
and campuses--to enable users to dial 911 directly. And it also 
contains a notification requirement so that when a 911 call is made in 
these settings, a front desk or security office will be alerted to 
facilitate building entry by first responders. We have proposed rules 
to help first responders locate wireless 911 callers in multi-story 
buildings. In the coming year, the Commission intends to take further 
steps to improve 911 calling. Among other things, I believe that we 
will be able to take final action to add a vertical, or ``z-axis'' 
metric to our location accuracy rules and finalize rules implementing 
Kari's Law.
    Our work in this area also extends to national security and 
involves our review of foreign companies that seek to do business in 
the United States. Later this week, at our May open meeting, the 
Commission will act to promote secure communications--a long-standing 
FCC priority. In 2011, China Mobile USA, which is ultimately owned by 
the Chinese Government, applied to the Commission seeking to provide 
international telecommunications services in the United States. 
Consistent with agency policy, we solicited the views of the relevant 
Federal agencies on whether the application raised national security, 
law enforcement, or related concerns.
    After a lengthy review of the application and in consultation with 
the U.S. intelligence community, in 2018, the executive branch agencies 
recommended that the FCC deny China Mobile USA's application due to 
substantial national security and law enforcement concerns that cannot 
be resolved through an agreement with the company (called ``voluntary 
mitigation''). Notably, this is the first time the executive branch has 
ever recommended that the FCC deny an application due to national 
security concerns. Based on this recommendation and the full public 
record in this proceeding, I have determined that approving this 
application would not serve the public interest. At our May meeting, 
the Commission therefore will vote on an order that would deny China 
Mobile USA's application.
    Going forward, we will continue to use our statutory authority to 
protect the people and overall security of United States. That includes 
following through with our proposal to ban the use of money from the 
FCC's Universal Service Fund from being used by recipients to procure 
equipment or services from companies that pose a national security 
threat to our communications networks or the communications supply 
chain.

                                *  *  *

    I would like to conclude by highlighting the FCC's most important 
resource: our staff. Day in and day out, they come to work ready and 
eager to advance the public interest. Whether they are working to 
expand broadband deployment, combat robocalls, promote wireless 
innovation, protect public safety, or address consumer complaints, they 
serve the American people with skill and dedication, and I am honored 
to have them as colleagues. The funds that you provide to our 
Commission enable them to do their jobs, and for that I am very 
grateful.
    Thank you for this opportunity to discuss this budget proposal. I 
will be pleased to answer any questions that you may have.

    Senator Kennedy. Thank you, Mr. Chairman.
    Chairman Simons.
STATEMENT OF HON. JOSEPH J. SIMONS, CHAIRMAN, FEDERAL 
            TRADE COMMISSION
    Mr. Simons. Chairman Kennedy, Ranking Member Coons, and 
distinguished Members of the subcommittee, I am pleased and 
honored to appear before you today to testify about the 
Commission's fiscal year 2020 appropriations request and to do 
so along with my friend, Chairman Pai.
    The FTC is an independent agency with a broad mission to 
protect consumers and maintain competition in most sectors of 
the economy, ranging from oil and industrial chemicals to high 
technology and consumer goods and lots in between.
    The FTC has a long history of bipartisanship and 
cooperation, and we work very hard to maintain that tradition.
    We fulfill our mission using three critical tools. First 
and foremost, the FTC pursues a vigorous and effective law 
enforcement program, and the impact of its work is significant. 
Our competition enforcement program is critically important to 
maintain in competitive markets across the country. Vigorous 
competition results in lower prices, high quality goods and 
services, and innovative new products and services.
    Our consumer protection enforcement program stops unfair 
and deceptive practices in the marketplace, everything from 
fraud to deceptive advertising to robocalls to problematic 
privacy and data security practices.
    Second, we pursue a policy and research agenda to improve 
agency decisionmaking. Last fall, for example, the Commission 
began its Hearing on Competition and Consumer Protection in the 
21st Century. These public hearings are exploring whether 
broad-based changes in the economy, evolving business 
practices, new technology, or international developments might 
require adjustments to competition and consumer protection law, 
enforcement priorities, and policies.
    The formal hearings will conclude shortly, and we expect to 
produce several reports by the end of the year. We also engage 
in advocacy by promoting competition principles and comments to 
State lawmakers and regulators, and we host initiatives like 
PrivacyCon, which explores cutting-edge research on privacy and 
security topics.
    Third, the FTC provides important consumer education and 
business guidance to encourage, inform consumer choices and 
compliance with the law. For example, the Commission has 
created a series of educational materials for older Americans. 
These include a series of materials that give details on scams 
that affect seniors, blogs to help identify these scams, and 
materials to empower older adults to educate others, like our 
Pass It On campaign.
    We also work to provide companies with resources on a 
variety of issues that affect businesses. For example, our 
Cybersecurity for Small Business campaign, a joint effort with 
NIST, the SBA, and DHS, includes a dozen need-to-know topics 
like ransomware, phishing, and tech support scams.
    In fiscal year 2019, the FTC's enacted budget is $309.7 
million, and for fiscal year 2020, the FTC is requesting $312.3 
million. The additional $2.6 million is requested for expert 
witnesses and IT modernization. Expert witnesses are an 
increasing need in light of the growing number of complex 
investigations and litigation in both competition and consumer 
protection matters.
    We also require additional resources to modernize our IT 
infrastructure, which includes moving critical applications 
from our aging on-premises data center to the cloud, including 
critical litigation software support.
    We are committed to using our resources efficiently to 
protect consumers and promote competition, to anticipate and 
respond to changes in the marketplace, and to meet current and 
future challenges.
    We look forward to continuing to work with the subcommittee 
and Congress, and I look forward to answering your questions.
    Thank you.
    [The statement follows:]
              Prepared Statement of Hon. Joseph J. Simons

                            I. INTRODUCTION

    Chairman Kennedy, Ranking Member Coons, and Members of the 
subcommittee, I am Joe Simons, Chairman of the Federal Trade Commission 
(``FTC'' or ``Commission''), and I am pleased to appear before you 
today to testify about the Commission's fiscal year 2020 appropriations 
request and its work to protect consumers and promote competition.\1\
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    \1\ This written statement presents the views of the Federal Trade 
Commission. My oral statement and responses to questions are my own and 
do not necessarily reflect the views of the Commission or any other 
Commissioner.
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    The FTC is an independent agency with three main bureaus: the 
Bureau of Consumer Protection (``BCP''); the Bureau of Competition 
(``BC''); and the Bureau of Economics (``BE''), which supports both BCP 
and BC. The FTC is the only Federal agency with a broad mission to both 
protect consumers and maintain competition in most sectors of the 
economy. Its jurisdiction includes privacy and data security, consumer 
fraud, mergers and acquisitions, and anticompetitive tactics by 
pharmaceutical and other companies. We enforce the law across a range 
of sectors, including healthcare, high technology, and emerging 
industries. The FTC has a long history of bipartisanship and 
cooperation, and we work hard to maintain it.
    The FTC has broad law enforcement responsibilities under the 
Federal Trade Commission Act,\2\ and enforces a wide variety of other 
laws, ranging from the Clayton Act to the Fair Credit Reporting Act. In 
total, the Commission has enforcement or other responsibilities under 
more than 75 laws.\3\ The Commission pursues a vigorous and effective 
law enforcement program, and the impact of its work is significant. Its 
competition enforcement program is critically important to maintaining 
competitive markets across the country: vigorous competition results in 
lower prices, higher quality goods and services, and innovative and 
beneficial new products and services.
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    \2\ 15 U.S.C. Sec. 41 et seq.
    \3\ See https://www.ftc.gov/enforcement/statutes.
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    The FTC also investigates and prosecutes those engaging in unfair 
or deceptive acts or practices, and seeks to do so without impeding 
lawful business activity. The agency has a varied toolkit to advance 
its mission. For example, the Commission collects consumer complaints 
from the public and maintains one of the most extensive consumer 
protection complaint databases, Consumer Sentinel. The FTC and other 
Federal, State, and local law enforcement agencies use these complaints 
in their law enforcement and policy efforts. The FTC also has 
rulemaking authority. In addition to the FTC's Magnuson-Moss rulemaking 
authority, Congress has given the agency discrete rulemaking authority 
under the Administrative Procedure Act (``APA'') over specific topics. 
The agency regularly analyzes its rules, including seeking public 
feedback, to ensure their continued efficacy. The FTC also educates 
consumers and businesses to encourage informed consumer choices, 
compliance with the law, and public understanding of the competitive 
process.
    To complement these enforcement and public education efforts, the 
FTC pursues a consumer protection and competition policy and research 
agenda to improve agency decision-making, and engages in advocacy and 
education initiatives. Last fall, the Commission began its Hearings on 
Competition and Consumer Protection in the 21st Century.\4\ This 
extensive series of public hearings is exploring whether broad-based 
changes in the economy, evolving business practices, new technologies, 
or international developments might require adjustments to competition 
and consumer protection law, enforcement priorities, and policy. To 
date, we have heard from more than 350 panelists and received more than 
850 public comments. The formal hearings will conclude shortly, and we 
will be accepting public comments through at least the end of June. 
These hearings underscore the unique role that the FTC plays in the 
development of sound competition and consumer protection policy.
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    \4\ FTC, Hearings on Competition and Consumer Protection in the 
21st Century, https://www.ftc.gov/policy/hearings-competition-consumer-
protection; see also FTC Press Release,
FTC Announces Hearings On Competition and Consumer Protection in the 
21st Century
(June 20, 2018), https://www.ftc.gov/news-events/press-releases/2018/
06/ftc-announces-hearings-
competition-consumer-protection-21st.
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    This testimony provides a brief overview of the FTC's budget and 
resources. It also discusses the FTC's work to protect U.S. consumers 
and competition, including highlights of some of the agency's major 
recent activities and initiatives. It also discusses the Commission's 
international efforts to protect consumers and promote competition.

                        II. BUDGET AND RESOURCES

    In fiscal year 2019, the FTC's enacted budget is $309.7 million and 
1,140 FTEs. For fiscal year 2020, the FTC is requesting $312.3 million 
and 1,140 FTEs. The additional $2.6 million requested is for expert 
witnesses and IT modernization. Expert witness contracts are an 
increasing need in light of the growing number of complex 
investigations and litigation in both competition and consumer 
protection matters. As a result, we face significantly higher costs to 
obtain the kinds of outside experts that we need to support our cases. 
For example, in competition cases, we require experts to opine on 
complex issues including: proper product and geographic market 
definitions; anticompetitive effects resulting from a merger or 
anticompetitive conduct; efficacy of economic models used to evaluate 
various antitrust issues; and potential efficiencies associated with 
any merger or challenged business practice. Consumer protection cases 
often require experts to opine on scientific, data security and 
privacy, and advertising issues. Experts also are sometimes called upon 
to assist with calculating appropriate monetary relief. It is critical 
that the FTC have sufficient resources to support expert work in 
litigation, particularly in cases against large, well-financed 
defendants.
    In addition to the growing need for experts, the agency also 
requires additional resources to modernize our IT infrastructure. In 
support of the IT modernization program, the FTC requests funding to 
update the Commission's portfolio of direct mission applications, as 
outlined in the agency's Information Resources Management (``IRM'') 
Strategic Plan.\5\ These applications support operations that are 
necessary for the successful execution of the FTC's mission, such as 
the Hart-Scott-Rodino (``HSR'') Premerger Filing Program and the 
collection and management of consumer redress funds. The requested 
funding would support the development of a roadmap for modernization of 
all direct mission applications and the initial migration of those 
currently managed in FTC's on-premise data center to cloud platforms. 
The funding would also be used to improve productivity through process 
reengineering and increased integration with other technology and 
systems used by FTC staff and the public.
    In addition to the technology benefits, these additional resources 
would dramatically improve our business operations. Notably, many of 
the agency's processes still involve manual paperwork and employee 
intervention to complete an activity. For example, the current HSR 
premerger filing process requires a significant amount of time-
consuming manual input from the public, FTC employees, and other 
Federal agencies. The HSR premerger filing process starts when a 
merging party submits a hard copy of the HSR form, called an HSR 
filing, to the FTC and Department of Justice (``DOJ''). The entire 
filing, including attachments, often runs to hundreds of pages. After 
receiving the HSR filing, FTC staff must manually enter the information 
provided in the filing into the premerger software. After all this 
information is inputted manually, the software tracks the status of the 
filing through the review process. A modernized version of the 
premerger software would allow filers to submit premerger filings 
online and track the filing through the entire premerger review 
process. This would significantly decrease the burden on filers by 
allowing them to submit filings online and would eliminate the manual 
steps taken by the FTC and other Federal agencies. Projects such as the 
digitalization of the HSR Premerger Filing would also directly support 
FTC's compliance with the recently enacted 21st Century IDEA Act.
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    \5\ FTC Information Resource Management (IRM) Strategic Plan, for 
fiscal year 2019-2022. The IRM provides strategic direction for the use 
of IT resources that support the agency's evolving mission and business 
needs.
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    The FTC's budget request assumes that total offsetting collections 
from HSR filing fees and Do Not Call fees will provide the FTC with 
$151 million in fiscal year 2020. As a result, in order to meet the 
requested $312.3 million amount in fiscal year 2020, an estimated 
$161.3 million in direct appropriations would be required.
    The agency continues to use its resources effectively and 
efficiently on behalf of American consumers. When possible, the agency 
collects money to return to harmed consumers.
    During fiscal year 2018 alone, the agency disbursed $601 million to 
claimants, third party administrators, and the Treasury. The agency 
returned over $83 million in redress to consumers and deposited over 
$10 million into the U.S. Treasury, reflecting collections in both 
consumer protection and competition matters. Additionally, Commission 
actions required defendants to self-administer refund programs worth 
more than $1.6 billion during fiscal year 2018.
    The agency estimates how much money it has saved consumers through 
law enforcement in comparison to the FTC's costs. In recent years, the 
agency saved consumers on average $38.90 for every $1 of resources 
devoted to the consumer protection program; $50.16 for every $1 of 
resources devoted to the merger program; and $40.12 for every $1 of 
resources devoted to the nonmerger antitrust enforcement program.

                    III. CONSUMER PROTECTION MISSION

    As the Nation's primary consumer protection agency, the FTC has a 
broad mandate to protect consumers from unfair and deceptive practices 
in the marketplace, including fraud. We do this by, among other things, 
pursuing law enforcement actions to stop and deter unlawful practices, 
and educating consumers and businesses about their rights and 
responsibilities. The FTC's enforcement and education efforts include 
working closely with Federal, State, international, and private sector 
partners on joint initiatives. Among other issues, the FTC works to 
protect privacy and data security, helps ensure that advertising claims 
to consumers are truthful and not misleading, addresses fraud across 
most sectors of the economy, and combats illegal robocalls.
    The FTC's law enforcement orders prohibit defendants from engaging 
in further illegal activity, impose other compliance obligations, and 
in some cases, ban defendants from engaging in certain conduct 
altogether. Where appropriate, the FTC collects money to return to 
harmed consumers. During fiscal year 2018, Commission actions resulted 
in over $1.6 billion being returned to consumers. Specifically, the 
Commission returned more than $83.3 million in redress to consumers, 
and the FTC resolved matters--including in the Volkswagen,\6\ 
Amazon,\7\ and NetSpend \8\ matters--that required defendants to self-
administer consumer refund programs worth more than $1.6 billion. The 
FTC also collected civil penalties worth more than $2.4 million and 
forwarded an additional $8.5 million to the U.S. Treasury in fiscal 
year 2018.
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    \6\ FTC v. Volkswagen Group of America, Inc., No. 3:15-md-02672-CRB 
(N.D. Cal. May 17, 2017), https://www.ftc.gov/enforcement/cases-
proceedings/162-3006/volkswagen-group-america-inc.
    \7\ FTC v. Amazon.com, Inc., No. 2:14-cv-01038 (W.D. Wash. Apr. 4, 
2017), https://www.ftc.gov/enforcement/cases-proceedings/122-3238/
amazoncom-inc.
    \8\ FTC v. NetSpend Corp., No. 1:16-cv-04203-AT (N.D. Ga. Apr. 10, 
2017), https://www.ftc.gov/enforcement/cases-proceedings/netspend-
corporation.

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A. Protecting Consumer Privacy and Data Security

    Since the enactment of the Fair Credit Reporting Act (``FCRA'') \9\ 
in 1970, the FTC has served as the chief Federal agency charged with 
protecting consumer privacy. With the development of the Internet as a 
commercial medium in the 1990s, the FTC expanded its focus on privacy 
to reflect the growing collection, use, and sharing of consumer data in 
the commercial marketplace.
---------------------------------------------------------------------------
    \9\ 15 U.S.C. Sec. 1681. Among other things, the FCRA prohibits the 
unauthorized disclosure of sensitive data used for credit, employment, 
and other decisions.
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    The Commission's primary source of legal authority in the privacy 
and data security space is Section 5 of the FTC Act, which prohibits 
deceptive or unfair commercial practices.\10\ Under Section 5 and other 
authorities granted by Congress, the FTC has aggressively pursued 
privacy and data security cases in myriad areas, including children's 
privacy, financial privacy, health privacy, and the Internet of 
Things.\11\ To date, the Commission has brought more than 65 cases 
alleging that companies failed to implement reasonable data security 
safeguards, and more than 60 general privacy cases.\12\
---------------------------------------------------------------------------
    \10\ 15 U.S.C. Sec. 45. The Commission also enforces sector-
specific statutes containing privacy and data security provisions, such 
as the Gramm-Leach-Bliley Act (``GLB Act''), Public Law No. 106-102, 
113 Stat. 1338 (1999) (codified as amended in scattered sections of 12 
and 15 U.S.C.), and the Children's Online Privacy Protection Act 
(``COPPA''), 15 U.S.C. Sec. Sec. 6501-6506.
    \11\ See, e.g., FTC, Privacy & Data Security Update: 2018 (March 
2019), https://www.ftc.gov/system/files/documents/reports/privacy-data-
security-update-2018/2018-privacy-data-security-
report-508.pdf.
    \12\ Id.
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    Section 5, however, is not without its limitations. For example, 
Section 5 does not allow the Commission to seek civil penalties for the 
first offense. It also excludes non-profits and common carriers from 
the Commission's authority, even when the acts or practices of these 
market participants have serious implications for consumer privacy and 
data security. To better equip the Commission to meet its statutory 
mission to protect consumers, we urge Congress to enact privacy and 
data security legislation, enforceable by the FTC, which grants the 
agency civil penalty authority, targeted APA rulemaking authority, and 
jurisdiction over non-profits and common carriers.\13\
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    \13\ Commissioner Phillips supports congressional efforts to 
consider consumer data privacy legislation. He believes legislation 
should be based on harms that Congress agrees warrant a remedy, and 
that tools like penalties and rulemaking should be calibrated carefully 
to address those harms. Commissioner Phillips believes Congress should 
also give appropriate consideration to the trade-offs involved in new 
regulation, and, with regard to rulemaking, reserve to itself 
fundamental value judgments appropriately made by the legislature. 
Finally, Commissioner Phillips believes data security legislation is a 
critical step Congress should also take to protect consumer privacy.
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    While the Commission believes new authority could be very 
beneficial for American consumers, we will continue to use every tool 
currently at our disposal to address consumer harm. For example, the 
Commission protects children's privacy online by enforcing the 
Children's Online Privacy Protection Act (COPPA). We recently alleged 
that Unixiz, doing business as i-Dressup.com, violated the COPPA Rule 
by failing to obtain parental consent prior to collecting personal 
information from children, as well as failing to protect children's 
personal information.\14\ The FTC's complaint also alleged that the 
company stored and transmitted users' personal information in plain 
text, failed to implement an intrusion detection and prevention system, 
and failed to monitor for potential security incidents. As a result, a 
hacker accessed the personal information of approximately 2.1 million 
users, including 245,000 users under the age of 13. And in March, the 
FTC announced a settlement with the operators of the popular video 
social networking app Musical.ly, now known as Tik Tok, for COPPA 
violations.\15\ The FTC alleged that the company collected children's 
personal information online without first obtaining parental consent. 
Because COPPA allows the Commission to seek civil penalties for its 
violations, the defendants agreed to pay a $5.7 million dollar civil 
penalty, the largest ever obtained by the Commission in a COPPA case.
---------------------------------------------------------------------------
    \14\ U.S. v. Unixiz, Inc. d/b/a i-Dressup.com et al., No. 5:19-cv-
02222 (N.D. Cal. Apr. 24, 2019), https://www.ftc.gov/enforcement/cases-
proceedings/172-3002/unixiz-inc-doing-business-i-dressupcom.
    \15\ U.S. v. Musical.ly, et al., No. 2:19-cv-1439 (C.D. Ca. Mar. 
27, 2019), https://www.ftc.gov/
enforcement/cases-proceedings/172-3004/musically-inc.
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    Further examples of data security enforcement include the 
Commission's settlement with Uber Technologies over the company's 
alleged failure to reasonably secure sensitive consumer data stored in 
the cloud.\16\ As a result, an intruder allegedly accessed personal 
information about Uber customers and drivers, including more than 25 
million names and email addresses, 22 million names and mobile phone 
numbers, and 600,000 names and driver's license numbers. During the 
pendency of that investigation, Uber suffered a second, larger breach 
of drivers' and riders' data in October-November 2016, and failed to 
disclose that breach to consumers or the FTC for more than a year, 
despite being the subject of an ongoing FTC investigation of its data 
security practices during that time. Among other things, the final 
order prohibits Uber from misrepresenting how it monitors internal 
access to consumers' personal information and the extent to which it 
protects personal information, with the threat of strong civil 
penalties if it fails to comply.\17\ And in May 2018, the Commission 
resolved allegations that PayPal's Venmo peer-to-peer payment service 
misled consumers about their ability to control the privacy of their 
Venmo transactions and the extent to which their financial accounts 
were protected by ``bank grade security systems.'' \18\
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    \16\ See FTC Press Release, Federal Trade Commission Gives Final 
Approval to Settlement with Uber (Oct. 26, 2018), https://www.ftc.gov/
news-events/press-releases/2018/10/Federal-trade-
commission-gives-final-approval-settlement-uber.
    \17\ As discussed above, because the FTC does not have civil 
penalty authority under Section 5, it could not require Uber to pay a 
civil penalty in the first instance.
    \18\ PayPal, Inc., No. C-4651 (May 24, 2018), https://www.ftc.gov/
enforcement/cases-proceedings/162-3102/paypal-inc-matter.
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    Just this past month, the Commission settled with an online rewards 
website, Clixsense.com, for its alleged failure to take appropriate 
steps to secure consumers' data.\19\ The FTC alleged that the company's 
inadequate security--including its storage of personal information in 
plain text and its failure to perform vulnerability and penetration 
testing--allowed hackers to gain access to the company's network 
through a browser extension downloaded by the company. These failures 
resulted in hackers gaining access to personal information regarding 
6.6 million consumers, over 500,000 of whom were U.S. consumers.
---------------------------------------------------------------------------
    \19\ James. V. Grago, Jr. also d/b/a ClixSense.com, Matter No. 
1723003 (Apr. 24, 2019) (proposed consent order), https://www.ftc.gov/
enforcement/cases-proceedings/172-3003/james-v-grago-jr-doing-business-
clixsensecom.
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    In addition to its enforcement efforts in the privacy and data 
security areas, the Commission seeks to improve agency decisionmaking 
through its policy initiatives. Last fall, for example, the Commission 
held four days of panels that specifically addressed consumer privacy 
and data security.\20\ The Commission also announced its fourth 
PrivacyCon, which will take place on June 27, an annual event that 
explores evolving privacy and data security research.\21\
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    \20\ See FTC Press Release, FTC Announces Sessions on Consumer 
Privacy and Data Security as Part of Its Hearings on Competition and 
Consumer Protection in the 21st Century (Oct. 26, 2018), https://
www.ftc.gov/news-events/press-releases/2018/10/ftc-announces-sessions-
consumer-privacy-data-security-part-its.
    \21\ See FTC Press Release, FTC Announces PrivacyCon 2019 and Calls 
for Presentations (Oct. 24, 2018), https://www.ftc.gov/news-events/
press-releases/2018/10/ftc-announces-privacycon-2019-calls-
presentations.
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    The Commission also is empowered to conduct industry studies 
related to privacy and data security under Section 6(b) of the FTC 
Act.\22\ In March, we issued 6(b) orders to several Internet service 
providers to evaluate their privacy practices.\23\ As we have done in 
the past, we will use the information we learn from this study to 
better inform our policy and enforcement work.
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    \22\ 15 U.S.C. Sec. 46(b).
    \23\ See FTC Press Release, FTC Seeks to Examine the Privacy 
Practices of Broadband Providers (Mar. 26, 2019), https://www.ftc.gov/
news-events/press-releases/2019/03/ftc-seeks-examine-
privacy-practices-broadband-providers.
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    The Commission continues to work closely with our law enforcement 
partners in the European Union (``EU'') and its member States to ensure 
the success of the EU-U.S. Privacy Shield framework. Under the EU's 
General Data Protection Regulation (``GDPR''), companies are required 
to meet certain data protection requirements in order to transfer 
consumer data from the EU to other jurisdictions. Privacy Shield--a 
voluntary mechanism that companies can use to comply with the GDPR when 
transferring data from Europe to the United States and which 
facilitates billions of dollars in transatlantic data flows--is 
enforced by the FTC with respect to those participants under its 
jurisdiction.\24\
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    \24\ See www.privacyshield.gov and www.ftc.gov/tips-advice/
business-center/privacy-and-security/privacy-shield. Companies can also 
join a Swiss-U.S. Privacy Shield for transfers from Switzerland.
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    Last fall, for example, the Commission announced settlements with 
four companies that we alleged had falsely claimed Privacy Shield 
certification.\25\ And in September 2018, Chairman Simons, along with 
the Secretary of Commerce and our European counterparts, participated 
in the second annual review of the Privacy Shield framework, 
culminating in a European Commission recommendation for continued FTC 
enforcement in the Privacy Shield area.\26\ Our Privacy Shield approach 
is built on four pillars: referrals from the Department of Commerce; 
priority consideration of referrals from the European Union; checking 
for Privacy Shield violations as part of every privacy investigation; 
and proactive monitoring of Privacy Shield participants.
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    \25\ See FTC Press Release, FTC Reaches Settlements with Four 
Companies That Falsely Claimed Participation in the EU-U.S. Privacy 
Shield (Sept. 27, 2018), https://www.ftc.gov/news-events/press-
releases/2018/09/ftc-reaches-settlements-four-companies-falsely-
claimed.
    \26\ See Report from the Commission to the European Parliament and 
the Council on the Second Annual Review of the Functioning of the EU-
U.S. Privacy Shield, COM (2018) 860 final, https://ec.europa.eu/info/
sites/info/files/report_on_the_second_annual_review_of_the_eu-
us_privacy_shield_2018.pdf.
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    Finally, many of the FTC's privacy and data security investigations 
and cases involve complex facts and technologies and well-financed 
defendants, often requiring outside experts, which can be costly. It is 
critical that the FTC have sufficient resources to support its 
investigative and litigation needs, including expert work, particularly 
as demands for enforcement in this area continue to grow.

B. Protecting Consumers from Fraud

    Fighting fraud is a major focus of the FTC's law enforcement 
efforts. The Commission's anti-fraud program tracks down and stops some 
of the most egregious scams that prey on U.S. consumers--often, the 
most vulnerable consumers who can least afford to lose money. In 2018, 
imposter scams became the top consumer fraud complaint, in part due to 
the rise in reports about government imposter scams.\27\ Fraudsters 
falsely claiming to be government agents (including the Social Security 
Administration, IRS and even the FTC), family members, or well-known 
tech companies contact consumers. These fraudsters pressure them to 
send money, often via cash-like payment methods, such as gift cards or 
money transfers, or trick them into providing personal information. 
Many of these scams target older Americans.
---------------------------------------------------------------------------
    \27\ FTC Press Release, Imposter Scams Top Complaints Made to FTC 
in 2018 (Feb. 28, 2019), https://www.ftc.gov/news-events/press-
releases/2019/02/imposter-scams-top-complaints-made-ftc-2018.
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    In response to the rise in imposter complaints, the FTC has filed 
multiple cases against defendants who deceptively pose as the 
government or well-known tech companies. For example, the FTC recently 
brought two actions against defendants for falsely claiming 
affiliations with the Federal Government. The Commission charged Sunkey 
Publishing with using copycat military recruitment websites to trick 
consumers seeking military careers into providing their personal 
information; according to the complaint, Sunkey then sold the 
information to post-secondary schools as part of its lead generation 
business.\28\ The Commission's action against American Immigration 
Center stopped an alleged scheme using deceptive websites and 
advertising that falsely implied an affiliation with the U.S. 
Citizenship and Immigration Services to dupe legal residents trying to 
renew their green cards or apply for naturalization.\29\
---------------------------------------------------------------------------
    \28\ FTC Press Release, FTC, FTC Takes Action against the Operators 
of Copycat Military Websites (Sept. 6, 2018), https://www.ftc.gov/news-
events/press-releases/2018/09/ftc-takes-action-against-operators-
copycat-military-websites.
    \29\  FTC Press Release, American Immigration Center Settles with 
FTC on Government Imposter Allegations (Oct. 16, 2018), https://
www.ftc.gov/news-events/press-releases/2018/10/
american-immigration-center-settles-ftc-government-imposter. The court 
entered the Stipulated Order for Permanent Injunction and Monetary 
Judgment against the defendants on December 7, 2018.
---------------------------------------------------------------------------
    The Commission also helps older Americans protect themselves from 
fraud. Last month, the FTC joined Federal, State, and international law 
enforcement partners in announcing a nationwide and international 
crackdown on elder fraud schemes with a particular focus on technical 
support scams. Technical support scams dupe consumers into believing 
their computers are infected with viruses and malware, and then charge 
them hundreds of dollars for unnecessary repairs. As part of that 
initiative, the FTC filed suit against technical support operator Elite 
IT Partners,\30\ developed new consumer education materials to help 
consumers avoid falling victim to these scams,\31\ and released new 
complaint data that illustrates the disproportionate effect these scams 
have on older adults.\32\
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    \30\ FTC Press Release, FTC Halts Tech Support Scam as Part of 
Major Initiative Focused on Older Adults Hit Hardest by These Scams 
(Mar. 7, 2019), https://www.ftc.gov/news-events/press-releases/2019/03/
ftc-halts-tech-support-scam-part-major-initiative-focused-older.
    \31\ See How to Spot, Avoid and Report Tech Support Scams, https://
www.consumer.ftc.gov/
articles/how-spot-avoid-and-report-tech-support-scams.
    \32\ See FTC Consumer Protection Data Spotlight, Older Adults 
Hardest Hit by Tech Support Scams (Mar. 7, 2019), https://www.ftc.gov/
news-events/blogs/data-spotlight/2019/03/older-adults-hardest-hit-tech-
support-scams.
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    Over the last year, the FTC has targeted business opportunity 
scams, filing numerous actions against defendants who promise consumers 
a legitimate opportunity to earn money if consumers will pay for 
defendants' ``coaching'' services. In reality, the ``coaching'' 
services provide no value to consumers and are typically nothing more 
than a handful of training videos and documents with generic 
information. In Digital Altitude, the Commission brought an action 
against defendants who allegedly defrauded consumers out of millions of 
dollars--some paying more than $50,000--by promising of individualized 
coaching on how to run an online business.\33\ The Commission also 
brought separate actions against defendants in FBA Stores \34\ and, 
with the Attorney General of Minnesota, against defendants in Sellers 
Playbook \35\ based on allegations that the defendants falsely claimed 
they could teach consumers ``the secrets for making money on Amazon.'' 
The Commission's actions shut down three large operations that resulted 
in over $100 million in losses to consumers.
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    \33\ FTC Press Release, FTC Obtains Court Order Halting Business 
Coaching Scheme
(Feb. 8, 2018), https://www.ftc.gov/news-events/press-releases/2018/02/
ftc-obtains-court-order-halting-business-coaching-scheme.
    \34\ FTC Press Release, FTC Action Halts a Large Deceptive Business 
Opportunity Scheme (Mar. 23, 2018), https://www.ftc.gov/news-events/
press-releases/2018/03/ftc-action-halts-large-deceptive-business-
opportunity-scheme.
    \35\ FTC Press Release, FTC and State of Minnesota Halt Sellers 
Playbook's Get Rich Scheme (Aug. 6, 2018), https://www.ftc.gov/news-
events/press-releases/2018/08/ftc-state-minnesota-halt-sellers-
playbooks-get-rich-scheme.
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    The Commission's fraud cases also extend to sprawling international 
scams. The Commission charged the defendants in MOBE--competitors of 
Digital Altitude--for running an international coaching scam that the 
FTC alleged took more than $300 million from thousands of American 
consumers.\36\ The Commission also recently filed an action against 
defendants in Sanctuary Belize, a massive land sale scam that allegedly 
bilked over $100 million from consumers, largely retirees. According to 
the complaint, recidivist Andris Pukke perpetrated an international 
scheme selling lots in a development in remote southern Belize with 
promises that he never intended to keep. The FTC shut down the 
enterprise by obtaining a temporary restraining order and preliminary 
injunction, and continues to litigate the matter.\37\
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    \36\ FTC Press Release, FTC Action Halts MOBE, a Massive Internet 
Business Coaching Scheme (June 11, 2018), https://www.ftc.gov/news-
events/press-releases/2018/06/ftc-action-halts-mobe-massive-Internet-
business-coaching-scheme.
    \37\ FTC Press Release, At FTC's Request, Court Halts Massive 
``Sanctuary Belize'' Real Estate Investment Scam (Nov. 8, 2018), 
https://www.ftc.gov/news-events/press-releases/2018/11/ftcs-
request-court-halts-massive-sanctuary-belize-real-estate.
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    The FTC frequently works with other law enforcement agencies to 
tackle widespread fraud. In July 2018, the FTC launched ``Operation 
Donate with Honor,'' a coordinated effort to target fraudulent and 
deceptive fundraising for military and veterans' causes that has 
resulted in over 100 law enforcement actions.\38\ As part of that 
initiative, the FTC has announced four cases with several State 
Attorneys General to shut down sham charity operations that were using 
consumers' generous donations for private benefits and spent very 
little of the donated funds on the charitable programs.\39\
---------------------------------------------------------------------------
    \38\ FTC Press Release, Operation Donate with Honor: Law Enforcers 
Unite to Challenge Deceptive Fundraising (Jul. 19, 2018), https://
www.ftc.gov/news-events/blogs/business-blog/2018/07/
operation-donate-honor-law-enforcers-unite-challenge. This initiative 
included 54 Attorneys General from all 50 States, the District of 
Columbia, American Samoa, Guam, and Puerto Rico, and 16 State agencies 
that oversee charities.
    \39\ FTC & State of Missouri v. Disabled Police and Sheriffs 
Foundation, Inc., et al., No. 4:19-cv-00667 (E.D. Mo. Mar. 28, 2019), 
https://www.ftc.gov/enforcement/cases-proceedings/172-3128/disabled-
police-sheriffs-foundation-inc; FTC & State of Florida Office of the 
Attorney General v. American Veterans Foundation, Inc., et al., No. 
8:18-cv-00744 (M.D. Fla. Mar. 28, 2019), https://www.ftc.gov/
enforcement/cases-proceedings/172-3163/american-veterans-foundation-
inc; FTC et al. v. Help the Vets, Inc., et al., No. 6:18-cv-1153-Orl-
41KRS (M.D. Fla. July 19, 2018), https://www.ftc.gov/enforcement/cases-
proceedings/172-3159/help-vets-inc; FTC v. Travis Deloy Peterson, No. 
4:18-00049-DN (D. Utah July 16, 2018), https://www.ftc.gov/enforcement/
cases-proceedings/182-3049/veterans-america.
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    The FTC strives to stay ahead of scammers by analyzing Sentinel 
complaints to help raise public awareness about fraud. In October 2018, 
the FTC launched its Consumer Protection Data Spotlight series to alert 
law enforcers, industry, and the public about growing threats and 
important patterns identified in Sentinel data. The Spotlight explores 
data over time, showing how scammers change tactics and catch consumers 
off guard.\40\ In addition, the FTC is making Sentinel data more 
accessible to State and local governments, the media, academics, and 
the public-at-large by publishing interactive dashboards that enable 
people to see what kind of fraud is affecting their State or large 
metropolitan area.\41\
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    \40\ The first Spotlight identified a sharp rise in gift cards-
particularly iTunes and Google Play cards-as a payment method for 
scams. See FTC Consumer Protection Data Spotlight, Scammers 
Increasingly Demand Payment by Gift Card (Oct. 2018), https://
www.ftc.gov/news-events/blogs/data-spotlight/2018/10/scammers-
increasingly-demand-payment-gift-card. Most recently, the Spotlight 
pointed to the dramatic increase in reports about imposters passing 
themselves off as Social Security Administration officials, which is 
happening just as reports about IRS imposter scams are waning. See FTC 
Consumer Protection Data Spotlight, Growing Wave of Social Security 
Imposters Overtakes IRS Scam (Apr. 2019), https://www.ftc.gov/news-
events/blogs/data-
spotlight/2019/04/growing-wave-social-security-imposters-overtakes-irs-
scam.
    \41\ See generally FTC, FTC Consumer Sentinel Network (Apr. 8, 
2019), https://
public.tableau.com/profile/Federal.trade.commission.

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C. Truthfulness in National Advertising

    Ensuring that advertising is truthful and not misleading has long 
been one of the FTC's core missions. It allows consumers to make well-
informed decisions about how to best use their resources and promotes 
the efficient functioning of market forces by encouraging the 
dissemination of accurate information.
    For example, the agency has continued to bring cases challenging 
false and unsubstantiated health claims, including those targeting 
older consumers, consumers affected by the opioid crisis, and consumers 
with serious medical conditions. The Commission has brought cases 
challenging products that claim to improve memory and ward off 
cognitive decline, relieve joint pain and arthritis symptoms, and even 
reverse aging.\42\ We have challenged bogus claims that treatments 
could cure, treat, or mitigate various serious diseases and ailments, 
including those affecting children and older consumers.\43\ We have 
brought law enforcement actions against advertisers and ad agencies who 
allegedly used native advertising--commercial advertising masquerading 
as editorial content--to deceptively sell health products such as 
mosquito repellants during the Zika virus outbreak and cognitive 
improvement supplements.\44\ The Commission also has sued companies 
that claimed, allegedly without scientific evidence, that using their 
products could alleviate the symptoms of opioid withdrawal and increase 
the likelihood of overcoming opioid dependency.\45\ The Commission 
obtained an order barring a marketer from making deceptive claims about 
its products' ability to mitigate the side effects of cancer 
treatments.\46\ And we have issued joint warning letters with the Food 
and Drug Administration to marketers who claim their dietary 
supplements and cannabidiol (``CBD'') products treat or prevent serious 
diseases, including Alzheimer's disease and cancer.\47\
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    \42\ See, e.g., Telomerase Activation Sci., Inc. et al., No. C-4644 
(Apr. 19, 2018), https://www.ftc.gov/enforcement/cases-proceedings/142-
3103/telomerase-activation-sciences-inc-noel-thomas-patton-matter; FTC 
v. Health Research Labs., Inc., No. 2:17-cv-00467 (D. Maine Nov. 30, 
2017), https://www.ftc.gov/enforcement/cases-proceedings/152-3021/
health-research-laboratories-llc.
    \43\ See, e.g., FTC v. Regenerative Med. Grp., Inc., No. 8:18-cv-
01838 (C.D. Cal. filed Oct. 12, 2018), https://www.ftc.gov/enforcement/
cases-proceedings/172-3062/regenerative-medical-group-inc; A&O Enters., 
Inc., No. C-4670 (Feb. 21, 2019), https://www.ftc.gov/enforcement/
cases-
proceedings/172-3016/ao-enterprises-doing-business-iv-bars-aaron-k-
roberts-matter.
    \44\ See, e.g., FTC v. Glob. Cmty. Innovations LLC, No. 5:19-CV-
00788 (N.D. Ohio
Apr. 10, 2019), https://www.ftc.gov/enforcement/cases-proceedings/162-
3135/global-community-
innovations-llc-et-al-geniux; Creaxion Corp., No. C-4668 (Feb. 8, 
2019), https://www.ftc.gov/
enforcement/cases-proceedings/172-3066/creaxion-corp; Inside Publ'ns, 
LLC, No. C-4669 (Feb. 8, 2019), https://www.ftc.gov/enforcement/cases-
proceedings/172-3067/inside-publications-llc.
    \45\ FTC v. Catlin Enters., Inc., No. 1:17-cv-403 (W.D. Tex. May 
17, 2017), https://www.ftc.gov/enforcement/cases-proceedings/1623204/
catlin-enterprises-inc. In addition, in conjunction with the FDA, the 
FTC issued letters to companies that appeared to be making questionable 
claims in order to sell addiction or withdrawal remedies. See FTC Press 
Release, FTC, FDA Warn Companies about Marketing and Selling Opioid 
Cessation Products (Jan. 24, 2018), https://www.ftc.gov/news-events/
press-releases/2018/01/ftc-fda-warn-companies-about-marketing-selling-
opioid-cessation.
    \46\ FTC v. CellMark Biopharm, No. 2:18-cv-00014-JES-CM (M.D. Fla. 
Jan. 12, 2018), https://www.ftc.gov/enforcement/cases-proceedings/162-
3134/cellmark-biopharma-derek-e-vest.
    \47\ See FTC Press Release, FTC Joins FDA in Sending Warning 
Letters to Companies Advertising and Selling Products Containing 
Cannabidiol (CBD) Claiming to Treat Alzheimer's, Cancer, and Other 
Diseases (Apr. 2, 2019), https://www.ftc.gov/news-events/press-
releases/2019/04/ftc-joins-fda-sending-warning-letters-companies-
advertising; FTC Press Release, FTC and FDA Send Warning Letters to 
Companies Selling Dietary Supplements Claiming to Treat Alzheimer's 
Disease and Remediate or Cure Other Serious Illnesses Such as 
Parkinson's, Heart Disease, and Cancer (Feb. 11, 2019), https://
www.ftc.gov/news-events/press-releases/2019/02/ftc-fda-send-
warning-letters-companies-selling-dietary.
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    When consumers with serious health concerns fall victim to 
unsupported health claims, they may put their health at risk by 
avoiding proven therapies and treatments. Through consumer education, 
including the FTC's advisories, the agency urges consumers to check 
with a medical professional before starting any treatment or product to 
treat serious medical conditions.\48\
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    \48\ FTC Consumer Blog, Treatments and Cures, https://
www.consumer.ftc.gov/topics/
treatments-cures.

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D. Illegal Robocalls

    Illegal robocalls also remain a significant consumer protection 
problem and one of consumers' top complaints to the FTC. These calls 
disturb consumers' privacy, and frequently use fraud and deception to 
pitch goods and services, leading to significant economic harm. In 
fiscal year 2018, the FTC received more than 5.7 million complaints 
about unwanted calls, including 3.7 million complaints about 
robocalls.\49\ The FTC has used all the tools at its disposal to fight 
these illegal calls, including 141 enforcement actions to date.\50\
---------------------------------------------------------------------------
    \49\ See Do Not Call Registry Data Book 2018: Complaint Figures for 
FY 2018, https://www.ftc.gov/reports/national-do-not-call-registry-
data-book-fiscal-year-2018.
    \50\ See FTC Robocall Initiatives, https://www.consumer.ftc.gov/
features/feature-0025-robocalls. Since establishing the Do Not Call 
Registry in 2003, the Commission has fought vigorously to protect 
consumers' privacy from unwanted calls. Indeed, since the Commission 
began enforcing the Do Not Call provisions of the Telemarketing Sales 
Rule (``TSR'') in 2004, the Commission has brought enforcement actions 
seeking civil penalties, restitution for victims of telemarketing 
scams, and disgorgement of ill-gotten gains against 444 corporations 
and 358 individuals. As a result of the 125 cases resolved thus far, 
the Commission has collected over $121 million in equitable monetary 
relief and civil penalties. See Enforcement of the Do Not Call 
Registry, https://www.ftc.gov/news-events/media-resources/do-not-call-
registry/enforcement. In August 2017, the FTC and its law enforcement 
partners achieved an historic win in a long-running fight against 
unwanted calls when a Federal district court in Illinois issued an 
order imposing a $280 million penalty against Dish Network-the largest 
penalty ever issued in a Do Not Call case. U.S. et al. v. Dish Network, 
L.L.C., No. 309-cv-03073-JES-CHE (C.D. Ill. Aug. 10, 2017), https://
www.ftc.gov/enforcement/cases-proceedings/052-3167/dish-network-llc-
united-states-america-
Federal-trade.
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    The FTC's most recent law enforcement crackdown stopped four 
separate robocall operations.\51\ For example, in FTC v. Christiano, 
the FTC obtained a $1.35 million civil penalty and a ban on providing 
an autodialer to anyone engaged in telemarketing against two technology 
companies and their owner for knowingly providing the tools that 
unlawful telemarketers used to blast out billions of illegal 
robocalls.\52\ In another case from the recent crackdown,\53\ the FTC 
sued a recidivist robocaller and his partners for allegedly running a 
Google rankings scam that used robocalls to reach their victims and 
bombarded individuals who did not own businesses with the same 
robocalls.\54\ In April, a court granted the FTC's motion for summary 
judgment, banning him and one of his co-defendants from all 
telemarketing and imposing a $3.3 million judgment.
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    \51\ See FTC Press Release, FTC Crackdown Stops Operations 
Responsible for Billions of Illegal Robocalls (Mar. 26, 2019), https://
www.ftc.gov/news-events/press-releases/2019/03/ftc-crackdown-stops-
operations-responsible-billions-illegal.
    \52\ FTC v. James Christiano et al., No. 8:18-cv-00936 (C.D. Cal. 
June 5, 2018), https://www.ftc.gov/enforcement/cases-proceedings/162-
3124/james-christiano-et-al-netdotsolutions-inc.
    \53\ FTC v. Pointbreak Media LLC et al., No. 18-cv-61017 (S.D. Fla. 
May 23, 2018), https://www.ftc.gov/enforcement/cases-proceedings/172-
3182/pointbreak-media-llc-0.
    \54\ Previously, in 2017, the FTC settled claims with Ramsey for 
illegal robocalls and calls to numbers listed on the National Do Not 
Call Registry. See FTC v. Ramsey et al., No. 9:17-cv-80032 (S.D. Fla. 
Jan. 13, 2017), https://www.ftc.gov/enforcement/cases-proceedings/132-
3254/
justin-ramsey.
---------------------------------------------------------------------------
    Despite the FTC's vigorous law enforcement program, technological 
advances continue to permit bad actors to place millions or even 
billions of calls, often from abroad, at very low cost, and in ways 
that are difficult to trace. This phenomenon continues to infuriate 
consumers and challenge enforcers. Recognizing that law enforcement, 
while critical, is not enough to solve the problem of illegal calls, 
the FTC has taken steps to spur the marketplace to develop 
technological solutions. For instance, from 2013 to 2015, the FTC led 
four public challenges to incentivize innovators to help tackle the 
unlawful robocalls that plague consumers.\55\ The FTC's challenges 
contributed to a shift in the development and availability of 
technological solutions in this area, particularly call-blocking and 
call-filtering products. Consumers can access information about 
potential solutions available to them on the FTC's website.\56\ The 
telecommunications industry has also developed a new framework, SHAKEN/
STIR, which is designed to limit illegitimate number spoofing and 
reduce illegal robocalls.
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    \55\ The first challenge, in 2013, called upon the public to 
develop a consumer-facing solution to block illegal robocalls. One of 
the winners, ``NomoRobo,'' was on the market within 6 months after 
being selected by the FTC. NomoRobo, which reports blocking over 600 
million calls to date, is being offered directly to consumers by a 
number of telecommunications providers and is available as an app on 
iPhones. See FTC Press Release, FTC Announces Robocall Challenge 
Winners (Apr. 2, 2013), https://www.ftc.gov/news-events/press-releases/
2013/04/ftc-announces-robocall-challenge-winners; see also FTC Press 
Release, FTC Awards $25,000 Top Cash Prize for Contest-Winning Mobile 
App That Blocks Illegal Robocalls (Aug. 17, 2015), https://www.ftc.gov/
news-events/press-releases/2015/08/ftc-awards-25000-top-cash-prize-
contest-winning-mobile-app-blocks; FTC Press Release, FTC Announces 
Winners of ``Zapping Rachel'' Robocall Contest
(Aug. 28, 2014), https://www.ftc.gov/news-events/press-releases/2014/
08/ftc-announces-winners-zapping-rachel-robocall-contest.
    \56\ See https://www.consumer.ftc.gov/features/how-stop-unwanted-
calls.
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    The FTC continues to engage with industry stakeholders and supports 
the industry initiative to authenticate caller ID numbers. The FTC also 
regularly works with its State, Federal, and international partners to 
combat illegal robocalls.\57\
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    \57\ See, e.g., FTC Press Release, FTC and FCC to Host Joint Policy 
Forum on Illegal Robocalls (Mar. 22, 2018), www.ftc.gov/news-events/
press-releases/2018/03/ftc-fcc-host-joint-policy-forum-
illegal-robocalls; FTC Press Release, FTC and FCC Seek Exhibitors for 
an Expo Featuring Technologies to Block Illegal Robocalls (Mar. 7, 
2018), www.ftc.gov/news-events/press-releases/2018/03/ftc-fcc-seek-
exhibitors-expo-featuring-technologies-block-illegal; Memorandum of 
Understanding Among Public Authorities of the Unsolicited 
Communications Enforcement Network Pertaining to Unlawful 
Telecommunications and SPAM (May 2016), https://www.ftc.gov/
policy/cooperation-agreements/international-unlawful-
telecommunications-spam-enforcement-
cooperation; FTC Press Release, FTC Signs Memorandum of Understanding 
With Canadian Agency To Strengthen Cooperation on Do Not Call, Spam 
Enforcement (Mar. 24, 2016), https://www.ftc.gov/news-events/press-
releases/2016/03/ftc-signs-memorandum-understanding-canadian-agency-
strengthen.
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    For many years, the Commission has recommended eliminating the 
common carrier exemption. The exemption is outdated and no longer makes 
sense in today's marketplace where the lines between telecommunications 
and other services are increasingly blurred. It impedes the FTC's work 
tackling illegal robocalls and more broadly circumscribes other 
enforcement initiatives. For example, a carrier that places, or assists 
and facilitates, illegal telemarketing might argue that it is beyond 
the Commission's reach because of the common carrier exemption. 
Likewise, the exemption may frustrate the Commission's ability to 
obtain complete relief for consumers when there are multiple parties, 
some of whom are common carriers. It also may pose difficulties when a 
company engages in deceptive or unfair practices involving a mix of 
common carrier and non-common carrier activities. Finally, litigation 
has been complicated by entities that attempt to use their purported 
status as common carriers to shield themselves from FTC 
enforcement.\58\
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    \58\ See, e.g., Answer and Affirmative Defenses of Defendant 
Pacific Telecom Communications Group at 9, 17-20, Dkt. 19, FTC et al. 
v. Caribbean Cruise Line et al., No. 0:15-cv-60423
(S.D. Fla. June 2, 2015), https://www.ftc.gov/enforcement/cases-
proceedings/122-3196-x150028/caribbean-cruise-line-inc.

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E. Consumer and Business Education and Outreach

    Public outreach and education is another critical element of the 
FTC's efforts to fulfill its consumer protection mission. The 
Commission's education and outreach programs reach tens of millions of 
people each year through the FTC's website, the media, and partner 
organizations that disseminate consumer information on the agency's 
behalf. The FTC delivers actionable, practical, plain-language guidance 
on dozens of issues, and updates its consumer education materials 
whenever it has new information to share.
    The FTC disseminates these tips through articles, blog posts, 
infographics, videos, social media, and education campaigns. For 
example, in response to the enactment of the Economic Growth, 
Regulatory Relief, and Consumer Protection Act,\59\ which allows 
consumers nationwide to freeze their credit and place year-long fraud 
alerts for free, the Commission helped consumers take advantage of the 
new protections by: updating IdentityTheft.gov; revising its identity 
theft publications; and providing blogs, webinars, and podcasts in 
collaboration with a wide range of partners.\60\
---------------------------------------------------------------------------
    \59\ Public Law No: 115-174.
    \60\ See, e.g., FTC Press Release, Starting Today, New Federal Law 
Allows Consumers to Place Free Credit Freezes and Yearlong Fraud Alerts 
(Sept. 21, 2018), https://www.ftc.gov/news-events/press-releases/2018/
09/starting-today-new-law-allows-consumers-place-free-credit-freezes.
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    The FTC also tailors its guidance to serve specific audiences, 
including older adults.\61\ A recent FTC report to Congress details how 
older adults experience scams,\62\ and a series of FTC Data Spotlights 
gives further details on scams that affect older adults \63\ and helps 
educate consumers.\64\
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    \61\ See www.ftc.gov/PassItOn and www.ftc.gov/Pasalo. The campaign 
has distributed more than 10.6 million print publications since its 
creation, including 1.1 million so far in fiscal year 2019.
    \62\ FTC Report, Protecting Older Consumers: 2017-2018 (Oct. 2018), 
https://www.ftc.gov/
reports/protecting-older-consumers-2017-2018-report-congress-Federal-
trade-commission.
    \63\ See, e.g., FTC Consumer Protection Data Spotlight, Older 
Adults Hardest Hit by Tech Support Scams (Mar. 7, 2019), https://
www.ftc.gov/news-events/blogs/data-spotlight/2019/03/older-adults-
hardest-hit-tech-support-scams.
    \64\ See, e.g., FTC Consumer Blog, How to Spot, Avoid, and Report 
Tech Support Scams (Feb. 2019), https://www.consumer.ftc.gov/articles/
how-spot-avoid-and-report-tech-support-scams and https://
www.consumidor.ftc.gov/articulos/como-detectar-evitar-y-reportar-las-
estafas-de-soporte-tecnico.
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    The Commission also works to provide companies with resources on a 
variety of issues that affect businesses. For example, our 
``Cybersecurity for Small Business'' campaign, a joint effort with the 
National Institute of Standards and Technology, the Small Business 
Administration, and the Department of Homeland Security, includes a 
dozen need-to-know topics as well as fact sheets, videos, and other 
materials.\65\
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    \65\ See Cybersecurity Resources for Your Small Business (Oct. 18, 
2018), https://www.ftc.gov/news-events/blogs/business-blog/2018/10/
cybersecurity-resources-your-small-business. These materials will soon 
be available in Spanish.
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                        IV. COMPETITION MISSION

    The FTC enforces U.S. antitrust law in many sectors that directly 
affect consumers and their wallets, such as healthcare, consumer 
products and services, technology, manufacturing, and energy. The 
Commission shares Federal antitrust enforcement responsibilities with 
the DOJ Antitrust Division.
    One of the agencies' principal responsibilities is to prevent 
mergers that may substantially lessen competition. Under U.S. law, 
parties to certain mergers and acquisitions must file premerger 
notification with the FTC and DOJ and observe the statutorily 
prescribed waiting period before consummating their transactions. 
Premerger filings under the HSR Act have generally increased steadily 
since fiscal year 2013. Last year, for the second year in a row, we 
received just over 2,000 HSR filings.\66\
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    \66\ The agencies received 2,111 HSR filings in fiscal year 2018, a 
slight increase from fiscal year 2017, where we received 2,052. Apart 
from the last 2 years, the last time annual HSR notification filings 
exceeded 2,000 was back in fiscal year 2007. For historical information 
about HSR filings and U.S. merger enforcement, see the joint FTC/DOJ 
Hart-Scott-Rodino annual reports, https://www.ftc.gov/policy/reports/
policy-reports/annual-competition-reports.
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    Most reported transactions do not raise significant competitive 
concerns, and the agencies clear those non-problematic transactions 
expeditiously. But when the evidence suggests that a proposed merger 
likely would be anticompetitive, the Commission does not hesitate to 
intervene. In fiscal year 2018, the Commission took enforcement actions 
against 22 different mergers, most of which were resolved through a 
consent decree. We also challenged five mergers in court: Federal 
courts granted preliminary injunctions in two cases; \67\ the parties 
abandoned their plans in the face of our court challenge in two cases; 
\68\ and a ruling is currently pending in the fifth matter.\69\
---------------------------------------------------------------------------
    \67\ See, FTC v. Tronox Ltd., 332 F. Supp. 3d 187 (D.D.C 2018), 
(granting preliminary injunction); FTC v. Wilh.Wilhelmsen Holding ASA, 
341 F. Supp. 3d 27 (D.D.C. 2018) (granting preliminary injunction). The 
agency also won a full administrative trial on the merits in the Tronox 
matter before an administrative law judge, before the parties 
ultimately settled with the agency. FTC Press Release, FTC Requires 
Divestitures by Tronox and Cristal, Suppliers of Widely Used White 
Pigment, Settling Litigation over Proposed Merger (Apr. 10, 2019), 
https://www.ftc.gov/news-events/press-releases/2019/04/ftc-requires-
divestitures-tronox-cristal-suppliers-widely-used.
    \68\ J.M. Smuckers and Conagra abandoned their planned combination 
after the FTC filed suit in March 2018. CDK abandoned its plan to 
purchase Auto-Mate after the Commission initiated litigation in March 
2018.
    \69\ The agency formally challenged the consummated merger of Otto 
Bock and Freedom Innovations in fiscal year 2018. Litigation before an 
administrative law judge concluded last fall, and the agency is 
currently awaiting a ruling.
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    Over the past year, the Commission has continued its decades-long 
efforts to fight anti-competitive conduct in the pharmaceuticals and 
healthcare industries, where rising costs continue to burden American 
consumers. For over twenty years, the Commission has prioritized ending 
anticompetitive reverse payment patent agreements in which a brand-name 
drug firm pays its potential generic rival to delay entering the market 
with a lower cost generic product. Following the U.S. Supreme Court's 
2013 decision in FTC v. Actavis, Inc.,\70\ the Commission is in a much 
stronger position to protect consumers. Since that ruling, the FTC 
obtained a landmark $1.2 billion settlement in its litigation involving 
the sleep disorder drug, Provigil,\71\ and other manufacturers, 
including the remaining Actavis defendants,\72\ have agreed to abandon 
the practice.\73\ In administrative litigation, the Commission ruled in 
March of this year that Impax had engaged in an illegal reverse payment 
agreement designed to block consumers' access to a lower-cost generic 
version of the branded drug, Opana ER.\74\ In addition, the Commission 
has challenged other anticompetitive conduct by drug manufacturers. 
Last month, the Commission filed a complaint against the health 
information company Surescripts, alleging that it employed illegal 
vertical and horizontal restraints to maintain its monopolies over two 
electronic prescribing, or ``e-prescribing,'' markets (routing and 
eligibility).\75\ Additionally, a Federal court recently ruled that 
AbbVie Inc. used sham litigation illegally to maintain its monopoly 
over the testosterone replacement drug Androgel, and ordered $493.7 
million in monetary relief to consumers who were overcharged for 
Androgel as a result of AbbVie's conduct.\76\
---------------------------------------------------------------------------
    \70\ 570 U.S. 756 (2013).
    \71\ FTC Press Release, FTC Settlement of Cephalon Pay for Delay 
Case Ensures $1.2 Billion in Ill-Gotten Gains Relinquished; Refunds 
Will Go To Purchasers Affected by Anticompetitive Tactics (May 28, 
2015), https://www.ftc.gov/news-events/press-releases/2015/05/ftc-
settlement-cephalon-pay-delay-case-ensures-12-billion-ill.
    \72\ On February 28, 2019, after over 10 years of litigation, the 
Commission reached a settlement with the final remaining defendant in 
the Actavis case. FTC Press Release, Last Remaining Defendant Settles 
FTC Suit that Led to Landmark Supreme Court Ruling on Drug Company 
``Reverse Payments'' (Feb. 28, 2019), https://www.ftc.gov/news-events/
press-releases/2019/02/last-remaining-defendant-settles-ftc-suit-led-
landmark-supreme.
    \73\ FTC Press Release, FTC Enters Global Settlement to Resolve 
Reverse-Payment Charges against Teva (Feb. 19, 2019), https://
www.ftc.gov/news-events/press-releases/2019/02/ftc-enters-global-
settlement-resolve-reverse-payment-charges; Joint Motion for Entry of 
Stipulated Order for Permanent Injunction, FTC v. Allergan plc, No. 17-
cv-00312 (N.D. Cal. Jan. 23, 2017), https://www.ftc.gov/enforcement/
cases-proceedings/141-0004/allergan-plc-watson-laboratories-inc-et-al; 
Stipulated Order for Permanent Injunction, FTC v. Teikoku Pharma USA, 
Inc., No. 16-cv-01440 (E.D. Pa. Mar. 30, 2016), https://www.ftc.gov/
enforcement/cases-proceedings/141-0004/endo-pharmaceuticals-impax-labs.
    \74\ FTC Press Release, FTC Concludes that Impax Entered into 
Illegal Pay-for-Delay Agreement (Mar. 29, 2019), https://www.ftc.gov/
news-events/press-releases/2019/03/ftc-concludes-impax-
entered-illegal-pay-delay-agreement.
    \75\ FTC Press Release, FTC Charges Surescripts with Illegal 
Monopolization of E-Prescription Markets (Apr. 24, 2019), https://
www.ftc.gov/news-events/press-releases/2019/04/ftc-charges-surescripts-
illegal-monopolization-e-prescription.
    \76\ FTC v. AbbVie Inc., 329 F. Supp. 3d 98 (E.D. Pa. 2018); 
Statement of FTC Chairman Joe Simons Regarding Federal Court Ruling in 
FTC v. AbbVie (June 29, 2018), https://www.ftc.gov/news-events/press-
releases/2018/06/statement-ftc-chairman-joe-simons-regarding-Federal-
court-ruling.
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    The Commission also maintains a robust program to identify and stop 
anticompetitive conduct. This year, in administrative litigation of the 
1-800 Contacts matter, the Commission ruled that agreements among 
competitors to limit the scope of their Internet advertising were 
unlawful.\77\ The agency also successfully argued and won an important 
procedural victory in the U.S. Court of Appeals for the Fifth Circuit, 
defeating an effort by the Louisiana Real Estate Appraisers Board to 
obtain interlocutory review of the agency's determination that the 
State-action doctrine did not apply to its conduct.\78\ The agency also 
has several other conduct matters in active litigation.\79\
---------------------------------------------------------------------------
    \77\ In re 1-800 Contacts, Inc., Dkt. No. 9372 (Nov. 14, 2018), 
https://www.ftc.gov/system/files/documents/cases/
docket_no_9372_opinion_of_the_commission_redacted_public_
version.pdf. This matter is currently on appeal to the U.S. Court of 
Appeals for the Second Circuit.
    \78\ La. Real Estate Appraisers Bd. v. FTC, 917 F.3d 389 (5th Cir. 
2019).
    \79\ In addition to the cases involving pharmaceutical firms 
discussed infra, pending litigation alleging anticompetitive conduct 
includes FTC v. Qualcomm, Inc., No. 17-cv-00220 (N.D. Cal. Jan. 17, 
2017), https://www.ftc.gov/enforcement/cases-proceedings/141-0199/
qualcomm-inc; In re Benco Dental Supply et al., Dkt. 9379 (Feb. 12, 
2018), https://www.ftc.gov/enforcement/cases-
proceedings/151-0190/bencoscheinpatterson-matter.
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    The Commission also continues to focus its attention on high 
technology markets. In an effort to more closely monitor developments 
in the technology sector, the FTC's Bureau of Competition recently 
announced the creation of a Technology Task Force dedicated to 
monitoring competition in U.S. technology markets.\80\ The Task Force 
will include attorneys from the Bureau of Competition with expertise in 
complex product and service markets and ecosystems, including markets 
for online advertising, social networking, mobile operating systems and 
apps, and platforms, and will be supported by a Technology Fellow who 
will provide important technical assistance for investigations. The 
Task Force will examine industry practices, conduct law enforcement 
investigations, and coordinate and consult with staff throughout the 
FTC on technology-related matters, including prospective merger reviews 
and reviews of consummated technology mergers.
---------------------------------------------------------------------------
    \80\ FTC Press Release, FTC's Bureau of Competition Launches Task 
Force to Monitor Technology Markets (Feb. 26, 2019), https://
www.ftc.gov/news-events/press-releases/2019/02/ftcs-
bureau-competition-launches-task-force-monitor-technology.
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    In addition to competition enforcement, the FTC promotes 
competition principles in advocacy comments to State lawmakers and 
regulators, as well as to its sister Federal agencies,\81\ and in 
amicus briefs filed in Federal courts considering important areas of 
antitrust law.\82\ The Commission benefits from critical self-
examination, examining prior merger enforcement decisions to assess 
their impact on competition and consumers, and we intend to expand this 
effort going forward. Similarly, through the series of hearings 
described above, the Commission is devoting significant resources to 
refresh and, if warranted, renew its thinking on a wide range of 
cutting-edge competition issues.\83\
---------------------------------------------------------------------------
    \81\ See generally https://www.ftc.gov/policy/advocacy.
    \82\ Amicus briefs are posted at https://www.ftc.gov/policy/
advocacy/amicus-briefs.
    \83\ See Prepared Remarks of Chairman Simons Announcing the 
Competition and Consumer Protection Hearings (June 20, 2018), https://
www.ftc.gov/system/files/documents/public_
statements/1385308/
prepared_remarks_of_joe_simons_announcing_the_hearings_
6-20-18_0.pdf.
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                      V. INTERNATIONAL COOPERATION

    The FTC also engages in significant international work to support 
its domestic enforcement programs. During the last fiscal year, the FTC 
cooperated in 43 investigations, cases, and enforcement projects with 
foreign consumer, privacy, and criminal enforcement agencies. To 
sustain this level of cooperation, the agency often works through 
global enforcement networks, such as the International Consumer 
Protection and Enforcement Network, the Global Privacy Enforcement 
Network, the Unsolicited Communications Enforcement Network, and the 
International Mass Marketing Fraud Working Group. The FTC also works 
directly with foreign counterparts on enforcement issues.\84\
---------------------------------------------------------------------------
    \84\ For example, the FTC has conducted several trainings and 
roundtables in the United States and India to help develop the capacity 
of Indian law enforcement to address tech support and other impostor 
scams such as the impersonation of IRS and Social Security officials. 
To address these continued threats, the FTC will convene a fourth 
annual roundtable in June, in partnership with the U.S.-India Business 
Council, on combatting Indian call center fraud. U.S.-India Business 
Council, 4th Annual Round Table on Stepping Up to Stop Indian Call 
Center Fraud, https://www.usibc.com/event/4th-annual-round-table-on-
stepping-up-to-stop-indian-call-center-fraud.
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    International enforcement cooperation also is critical for the 
FTC's competition program. With the expansion of global trade and the 
operation of many companies across national borders, the FTC and DOJ 
increasingly engage with foreign antitrust agencies to ensure close 
collaboration on cross-border cases and convergence toward sound 
competition policies and procedures.\85\ The FTC effectively 
coordinates reviews of multijurisdictional mergers and continues to 
work with its international counterparts to achieve consistent outcomes 
in cases of possible anticompetitive conduct. The U.S. antitrust 
agencies facilitate dialogue and promote convergence through multiple 
channels, including through strong bilateral relations with foreign 
competition agencies and multilateral competition organization projects 
and initiatives. The FTC also works with other agencies within the U.S. 
Government to advance consistent competition enforcement policies, 
practices, and procedures in other parts of the world.\86\
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    \85\ In competition matters, the FTC also seeks to collaborate with 
the State Attorneys General to maximize results and use of limited 
resources in the enforcement of the U.S. antitrust laws.
    \86\ For example, the Commission works through the U.S. 
government's interagency processes to ensure that competition-related 
issues that also implicate broader U.S. policy interests, such as the 
protection of intellectual property and non-discrimination, are 
addressed in a coordinated and effective manner.
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    The U.S. SAFE WEB Act is key to much of the agency's international 
work, especially on consumer protection and privacy matters.\87\ Passed 
in 2006 and renewed in 2012, the Act strengthens the FTC's ability to 
work on cases with an international dimension. It allows the FTC to 
share evidence and provide investigative assistance to foreign 
authorities in cases involving spam, spyware, misleading health and 
safety claims, privacy violations and data security breaches, and 
telemarketing fraud. In many cases, the foreign agencies investigated 
conduct that directly harmed U.S. consumers; in others, the FTC's 
action led to reciprocal assistance. The Act also has bolstered the 
agency's authority to engage in enhanced enforcement cooperation with 
foreign counterparts, including through memoranda of understanding, 
international agreements, staff exchanges, and other mechanisms.
---------------------------------------------------------------------------
    \87\ Undertaking Spam, Spyware, and Fraud Enforcement With 
Enforcers Beyond Borders Act (U.S. SAFE WEB Act), Public Law No. 109-
455, 120 Stat. 3372, extended by Public Law No. 112-203, 126 Stat. 1484 
(amending 15 U.S.C. Sec. Sec. 41 et seq.). Certain provisions, such as 
the secondment program for foreign officials described below, also 
apply to the FTC's competition work.
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    The U.S. SAFE WEB Act has been a remarkable success. The Act 
enabled the FTC to respond to more than 130 SAFE WEB information 
sharing requests from more than 30 foreign enforcement agencies. It 
allowed the FTC to issue more than 115 civil investigative demands in 
more than 50 investigations on behalf of foreign agencies, both civil 
and criminal. The Commission has also used this authority to file suit 
in Federal court to obtain judicial assistance for one of its closest 
law enforcement partners, the Canadian Competition Bureau.\88\
---------------------------------------------------------------------------
    \88\ See Remarks by John Pecman, Commissioner of Competition 
[Canada] at International Privacy Enforcement Meeting (June 4, 2015), 
https://www.competitionbureau.gc.ca/eic/site/cb-bc.nsf/eng/03957.html.
---------------------------------------------------------------------------
    The FTC's foreign law enforcement partners similarly have assisted 
FTC enforcement actions. For example, the FTC worked directly with U.K. 
and Canadian authorities to halt Next-Gen Inc., a sweepstakes scam.\89\ 
The FTC relied on key information sharing provisions of the U.S. SAFE 
WEB Act to facilitate cooperation with its U.K. partner and, last 
month, the defendants forfeited $30 million in cash and assets to 
settle the FTC's charges. In the privacy arena, the FTC used key 
provisions of the U.S. SAFE WEB Act to collaborate successfully with 
the Office of the Privacy Commissioner of Canada in its COPPA case 
against V-Tech, the FTC's first case involving Internet-connected 
toys.\90\ The FTC also brought several significant enforcement actions 
in the past year relying on the SAFE WEB Act's provisions that allow 
the FTC to reach foreign conduct that has a ``reasonably foreseeable'' 
effect on U.S. consumers, or that involves ``material conduct'' in the 
United States, as the basis for challenging practices involving foreign 
defendants.\91\
---------------------------------------------------------------------------
    \89\ FTC Press Release, Operators of Sweepstakes Scam Will Forfeit 
$30 Million to Settle
FTC Charges (Mar. 7, 2019), https://www.ftc.gov/news-events/press-
releases/2019/03/operators-sweepstakes-scam-will-forfeit-30-million-
settle-ftc.
    \90\ U.S. v. VTech Electronics Ltd., et al., No. 1:18-cv-00114 
(N.D. Ill. Jan. 8, 2018), https://www.ftc.gov/enforcement/cases-
proceedings/162-3032/vtech-electronics-limited.
    \91\ See, e.g., FTC Press Release, Court Temporarily Halts 
International Operation that Allegedly Deceived Consumers through False 
Claims of ``Free Trial'' Offers and Imposed Unauthorized Continuity 
Plans (Nov. 28, 2018), https://www.ftc.gov/news-events/press-releases/
2018/11/court-temporarily-halts-international-operation-allegedly; FTC 
Press Release, At FTC's Request, Court Halts Massive ``Sanctuary 
Belize'' Real Estate Investment Scam (Nov. 8, 2018), https://
www.ftc.gov/news-events/press-releases/2018/11/ftcs-request-court-
halts-massive-sanctuary-belize-real-estate; FTC Press Release, FTC 
Halts Online Marketers Responsible for Deceptive ``Free Trial'' Offers 
(July 3, 2018), https://www.ftc.gov/news-events/press-releases/2018/07/
ftc-halts-online-marketers-responsible-deceptive-free-trial; FTC Press 
Release, FTC Action Halts MOBE, a Massive Internet Business Coaching 
Scheme (June 11, 2018), https://www.ftc.gov/news-events/press-releases/
2018/06/ftc-action-halts-mobe-massive-Internet-business-coaching-
scheme.
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    The Act also underpins the FTC's ability to participate in cross-
border cooperation arrangements. This includes data transfer mechanisms 
such as the EU-U.S. Privacy Shield framework and the Swiss-U.S. Privacy 
Shield framework, as well as the APEC Cross-Border Privacy Rules 
System, designed to protect privacy and data flows in the Asia-Pacific 
region. Many U.S. companies use these mechanisms to carry out cross-
border data flows consistent with strong privacy protections. The SAFE 
WEB Act also provides the FTC with key powers helping to carry out 
enhanced cooperation with important partners.\92\
---------------------------------------------------------------------------
    \92\ FTC Press Release, FTC Signs Memorandum of Understanding with 
United Kingdom's Competition and Markets Authority to Strengthen 
Consumer Protection Enforcement Cooperation (Mar. 25, 2019), https://
www.ftc.gov/news-events/press-releases/2019/03/ftc-signs-memorandum-
understanding-united-kingdoms-competition. The MOU streamlines sharing 
investigative information and complaint data, simplifies requests for 
investigative assistance, aids joint law enforcement investigations, 
and provides strong confidentiality and data safeguards.
---------------------------------------------------------------------------
    The SAFE WEB Act's provision authorizing staff exchanges also 
yields tremendous benefits. Using the Act, the FTC established an 
International Fellows program that has enabled the agency to host over 
120 officials of foreign competition, consumer protection, and data 
privacy agencies to work alongside FTC staff on enforcement matters, 
subject to confidentiality protections, over the past dozen years. 
Foreign counterparts continue to seek exchanges with us, as the Fellows 
incorporate their learning from the FTC into the work of their home 
agencies, strengthening their capacity as well as our cooperative 
relationships with those counterparts.
    The Act sunsets in 2020. The Commission strongly urges Congress to 
reauthorize this critical authority and eliminate the sunset provision. 
Just as Congress permanently granted the Securities and Exchange 
Commission and the U.S. Commodity Futures Trading Commission similar 
enforcement powers decades ago, and provided the Consumer Product 
Safety Commission with permanent authority to share information with 
its foreign counterparts, we ask Congress to repeal the Act's sunset 
provision and make the SAFE WEB Act's cooperation tools a permanent 
part of the FTC Act.

                             VI. CONCLUSION

    The FTC remains committed to marshalling its resources efficiently 
in order to effectively protect consumers and promote competition, to 
anticipate and respond to changes in the marketplace, and to meet 
current and future challenges. We look forward to continuing to work 
with the Subcommittee and Congress, and we would be happy to answer 
your questions.

    Senator Kennedy. Thank you, Mr. Chairman.
    We will now move to 5-minute periods of questions.
    Chairman Simons, I want to start with you. Let us start 
with the topic of antitrust.

                             FTC ANTITRUST

    Some of our social media companies are no longer 
companies--they are countries. They are huge, and they got that 
way by buying their competition. Under at least one point of 
view traditional antitrust analysis, that is okay because they 
have not put pressure on pricing because their services are 
free.
    Another point of view is that, well, there are other ways 
to hurt a consumer than raising prices. I want to know what the 
position of the FTC is. I know you have appointed a committee, 
a task force. What is your task force doing? When is it going 
to finish, and what is the position of the FTC going to be on 
these antitrust issues?
    Mr. Simons. Thank you, Senator.
    I am going to start with the Technology Task Force. This is 
created in the Bureau of Competition, and it is not temporary. 
So it is basically creating like another division that we 
already have, a litigating division in the Bureau of 
Competition. Its mission is to focus on companies in the high-
tech sector, particularly digital platforms.
    Senator Kennedy. Right.
    Mr. Simons. All right. And so it is looking at exactly the 
things that you just described. It is going to be looking at 
the transactions that they are engaging in. It is going to be 
looking at the conduct that they are engaging in, aside from 
the transactions, and we are looking for----
    Senator Kennedy. Excuse me for interrupting, Mr. Chairman, 
but I have got other questions.
    Do you know when the task force is going to complete its 
work and the FTC will have a policy with respect to antitrust?
    Mr. Simons. So the Task Force is ongoing. It is like a law 
enforcement effort. So, hopefully, it is going to bring--we 
expect them to bring cases, and those cases can just continue.
    Senator Kennedy. When?
    Mr. Simons. When what?
    Senator Kennedy. When do you think you will bring cases? 
When will we know what your policy is?
    Mr. Simons. Oh. So the policy is irrespective of the 
Technology Task Force. Our policy is to stop anticompetitive 
conduct and anticompetitive mergers that either result in price 
increases, reductions in product quality, which would include 
privacy, and reductions in innovation. That is the basic 
concept.
    Senator Kennedy. Have you brought any cases reflecting that 
point of view?
    Mr. Simons. Sure. We brought one last week involving the 
health care sector in a high-tech platform called Surescripts. 
This is e-prescribing. It connects the pharmacy benefit 
managers (PBMs) to the doctors and the doctors to the 
pharmacies.

                    CONSUMER CREDIT RATING AGENCIES

    Senator Kennedy. Let me shift gears to consumer credit 
rating agencies.
    Our rating agencies form a very useful function. They 
gather information about each of us. Can we agree, however, 
that when the rating agencies have information that is 
inaccurate, they could do a better job of making it easier for 
a consumer to change that information? Could they not?
    Mr. Simons. Well, certainly, it is very important that the 
information they have be accurate.
    Senator Kennedy. But have you ever had a situation where it 
was not accurate and you----
    Mr. Simons. Yes. In fact, we brought a case against a 
company called RealPage, which is a background screening 
company, and they were using an algorithm to match up data to 
people's criminal records. And they were not doing a very good 
job of it.
    So we brought a case and got them to change their algorithm 
and also to pay monetary relief of $3 million.
    Senator Kennedy. But what I am talking about is a situation 
where the rating agencies have information on you, for example, 
and they just got it wrong.
    Mr. Simons. You know, this is an example. That is what 
happened. They had it wrong.
    Senator Kennedy. But I am talking about a procedure where, 
short of having the FTC go bring a case, a consumer can call 
the rating agency and correct the information. What can we do 
to encourage the rating agency to fix it, as opposed to saying 
``we do not care, because we do not have to''?
    Mr. Simons. Well, the statute requires them to fix it and 
have dispute procedures in place.
    Senator Kennedy. I know.
    Mr. Simons. So if they are not doing that, then that would 
be a violation of the statute, and that is something that we 
would correct. We would try to correct.
    Senator Kennedy. In the meantime, the consumers have to 
wait and put up with the bad information about him or her?
    What I am asking is, Can you visit with our credit rating 
agencies----
    Mr. Simons. Yes.
    Senator Kennedy [continuing]. And try to have them set up a 
system that looks like somebody designed it on purpose, so that 
consumers can say, ``Hey, you got my information wrong. Please 
fix it''----
    Mr. Simons. Yes. One of the----
    Senator Kennedy [continuing]. And then they will do it as 
opposed to saying, ``You do not pay our fees. Business guys pay 
our fees. So call somebody who cares''?
    Mr. Simons. Right. I mean, one of the things we are doing 
is we are talking to the Consumer Financial Protection Bureau 
(CFPB), and considering a workshop that will address exactly 
these issues.
    Senator Kennedy. Okay.
    Senator Coons.

                               ROBOCALLS

    Senator Coons. Thank you, Mr. Chairman.
    To both of you, about robocalls, Americans receive more 
than 5 million robocalls a month, and as best I know, virtually 
every American would like it to stop.
    You, Chairman Pai, have encouraged phone companies to 
implement a new technology. I think it is called SHAKEN/STIR, 
which alerts a consumer to spoofing, to changing the caller ID 
to a number other than the actual calling number. Have the 
phone companies listened to your advice so far and deployed 
this technology?
    Chairman Pai. Thank you for the question, Senator.
    Generally speaking, they have, and we have posted the 
responses to my demand from last fall and earlier this spring 
that they adopt Call Authentication this year, with the penalty 
being if they do not, the FCC will intervene regulatorily to 
make sure that they do.
    So there have been a number of announcements from various 
companies, the top 14 in particular, talking about some of 
their efforts in this regard. In addition to that, we have also 
been encouraging them to empower themselves to block calls that 
are obviously spoofed.
    We have been creating a reassigned numbers database to 
allow legitimate callers to determine whether a number has been 
reassigned.
    We have been working with foreign governments to make sure 
that we share information when we see the calls are coming from 
a particular country, and just last week, actually, we put out 
a consumer advisory about the one-ring scam in which a call 
comes from, say, Mauritania or Sierra Leone, and it only rings 
once. And it is tempting some consumers to call back, and it 
essentially operates like a 900 number. You get all these fees 
per minute if you call back.
    There is a very good example of the collaboration between 
Chairman Simon's agency and mine. We direct them to the FTC if 
they want to file a complaint. We urge them not to answer the 
calls. We want to empower consumers with information, and we 
want companies here to get rid of ``the scourge of 
civilization,'' as former Senator Fritz Hollings once called 
it.
    Senator Coons. Well, we can continue that work in his 
memory.
    Does the FCC have a dedicated unit focused on this, and do 
you feel like you have the scope and reach of authorities that 
you need to continue the work you describe?
    Chairman Pai. The answer to the first question, Senator, is 
yes. We have the Telecommunications Consumer Division within 
our Enforcement Bureau, the primary focus of which is tackling 
this problem.
    In addition, I know that Members of Congress and Members of 
this body of both the parties are looking at legislation like 
the TRACED Act, which I support.
    We want additional tools to help tackle this problem, and I 
think the TRACED Act in particular is a step in the right 
direction.
    Senator Coons. Chairman Simons, what is the FTC doing as 
part of this, and what comments might you have on the scope and 
reach of your current authorities and whether they are 
sufficient?
    Mr. Simons. Thank you, Senator.
    So we continue to sue people who engage in robocalls. We 
had four at least, I think, in the past year, but as you know, 
a lot of those calls come from overseas and places where--they 
are kind of like boiler room operations which when you shut one 
of them down, they just reopen someplace up right next door, 
down the block, or even in another country.
    So one of the things we would really very much like is to 
get authority to go after common carriers, which we do not have 
right now.
    Our sense is we could have a material impact, particularly 
for the foreign robocallers. They have to have an entry point 
into the U.S. telephone network system, and their call 
characteristics are quite distinct. You should be able to find 
them, and my understanding is that there are carriers who 
actually cater to this type of traffic. So we could go after 
them and stop them from carrying the robocalls if we could get 
authority to cover the common carriers.
    Senator Coons. I would welcome the chance to work with you 
on that. Are you aware of legislation that specifically 
addresses that? I am not.
    Mr. Simons. I think there is some legislation that has been 
introduced very early on.
    Senator Coons. Okay.
    Mr. Simons. Very early days for that.
    But, yes, I would very much appreciate any help we could 
get on that.
    Senator Coons. Thank you, Mr. Chairman.
    Chairman Pai, I am glad you are taking active measures to 
make sure that we are a leader in 5G technology deployment in 
the United States.
    As your plan notes, to successfully deploy 5G, we are going 
to need more spectrum. In particular, there is a band, the C-
Band, that may well be vital to this, and my understanding is 
some of the current users have suggested they be allowed to 
sell the rights to wireless companies.
    This would result in a significant windfall profit to those 
users who did not have to pay to get that spectrum in the first 
place.
    Do you have a rough estimate about how much money such an 
auction might generate or sale, and why not have the FCC 
auction off parts of the C-Band itself? What delay might it 
cause? What sort of revenue might it generate to the Treasury, 
and would you need any authorities to be able to do that?
    Chairman Pai. I appreciate the question, Senator.
    In our Notice of Proposed Rulemaking on this issue, we teed 
up all of the different options, and our goal here was pretty 
simple: to solicit public input across the board on what the 
appropriate course for the FCC would be.
    In addition to that, we have been soliciting targeted input 
on some of the authority questions. For example, last week, we 
issued a series of questions about the legal ramifications of a 
particular course of action because the last thing we want to 
do, of course, is to make a decision that we believe is in the 
best interest of the American people but then be stuck in the 
courts for a long time.
    So there are many different factors here that we are trying 
to balance. One of them, of course, is time. As you mentioned, 
5G leadership is a top priority for America, not just in terms 
of national competitiveness, but in terms of the innovation and 
investment that will happen on our shores if we get it right on 
5G. That is one factor. The quicker we can get the spectrum to 
market for 5G, the more effective it will be.
    Another consideration is some of the incumbent users or 
customers of this band, and so we want to see, to the extent 
that they have concerns, to what extent we can accommodate 
those concerns.
    Another one which you highlighted as well is just making 
sure that for Members of Congress especially that the amount of 
revenue that will be raised, could be raised from this 
spectrum. In that regard, I do not have a verified internal 
estimate of how much could be raised, but with mid-band 
spectrum, we have a number of initiatives under way. And there 
has been a lot of chatter in the private sector about how much 
it could raise.
    Mid-band is in that sweet spot, it has good propagation 
characteristics in terms of coverage and as well as throughputs 
in terms of capacity, and so that is one of the reasons why 
this band in particular is very highly prized.
    Senator Coons. But it could be tens of billions of dollars; 
is that correct?
    Chairman Pai. I have seen estimates along those lines. I do 
not have any independent way to verify those estimates.
    Senator Coons. Thank you. I look forward to continuing to 
work on 5G and other issues.
    Thank you, Mr. Chairman.
    Senator Kennedy. Thank you, Senator Coons.
    Before I call on Senator Moran, give us the names, Chairman 
Simons, of those carriers that work closely with the 
robocallers that make it easier for the robocallers to do 
business.
    Mr. Simons. I do not have those, but I can get them.
    Senator Kennedy. Would you?
    Mr. Simons. Sure.
    Senator Kennedy. Can you get them to me?
    Mr. Simons. Yes.
    Senator Kennedy. I will put it on my Facebook page.
    Mr. Simons. Okay.
    [Laughter.]
    Mr. Simons. Well----
    Senator Kennedy. These are carriers that make it--these are 
American companies that make it easier for the robocalls.
    Mr. Simons. Yes. So this is a--these are probably small 
carriers, and so I do not have a list. We would have to develop 
the list.
    Senator Kennedy. Can you get me a list?
    Mr. Simons. I would have to check with my staff, but 
assuming these----
    Senator Kennedy. Well, we ought to tell people who they 
are.
    Mr. Simons. No, I agree. But because we do not have 
authority over them now, we have not looked in detail at who 
they are.
    Senator Kennedy. Okay.
    Senator Moran.

                            FTC'S AUTHORITY

    Senator Moran. Chairman Kennedy, thank you. I join Ranking 
Member in welcoming you to your chairmanship and look forward 
to working with you.
    Let me start with you, Chairman Simons. FTC's current 
Section 5 authority and other specific enforcement authorities 
that you have, does the FTC currently have the financial and 
staffing resources to effectively enforce against harmful data 
collection and processing practices? So what resources, if any, 
additional do you need for your current responsibilities?
    Mr. Simons. Right. So the first thing I would point out 
would be we lack civil penalty authority. So we can go into 
court under 13(b) and try to get monetary relief, but usually, 
with data security cases, it is very hard to prove a specific 
harm, that a specific breach resulted in a specific harm to any 
consumer.
    So the ability to get significant monetary relief is quite 
limited under our current authority, and our sense is that it 
would be much better if we had civil penalties because that way 
we could create an effective deterrent and cause people to 
think more carefully about their data security practices and 
protect consumers' data.
    Senator Moran. So, in answer to my question, you are asking 
for a legislative endeavor----
    Mr. Simons. Yes.
    Senator Moran [continuing]. Not necessarily something from 
this appropriations subcommittee?
    Mr. Simons. Right, yes. We would like to get civil penalty 
authority. We would like to get targeted rulemaking, and we 
would like to get jurisdiction over nonprofits and common 
carriers.
    Senator Moran. As you know, I chair the Commerce 
Subcommittee that deals with these topics, so I appreciate you 
reminding me of that.
    Let me ask you. If that subcommittee or the full Commerce 
Committee, those that are working on data privacy legislation 
are successful--and I am teamed up with a handful of Senators, 
and I think that I remain optimistic that we will be able to 
deal legislatively with data privacy. So if Congress were to 
enact a Federal privacy law to provide the FTC with those 
improved authorities, how would you expect your resource needs 
at the FTC to change?
    Mr. Simons. I think they would go up significantly. One 
point of comparison would be if you look at the UK Data 
Protection Authority, which has jurisdiction to enforce the 
General Data Protection Regulation (GDPR), which is a much more 
extensive privacy law than what we enforce now, they have--this 
is just the UK--they have over 500 people doing that job.
    Even the Irish Authority has, I think 140. We have about 
40.
    Senator Moran. A dramatic difference.
    We had the Irish Authority in front of our full committee 
last week.
    Mr. Simons. Yes.
    Senator Moran. As perhaps an aside, but something I want to 
say to you, Mr. Chairman, when we had you and all the remaining 
commissioners in front of our subcommittee, I want to tell you 
how impressed I was with every member of the Commission, and it 
was good to see the capabilities but also the evidence of 
working together to find solutions to problems. I am very 
grateful and appreciative for what I saw.
    Mr. Simons. Thank you so much. We deeply appreciate that.

                                FCC MAPS

    Senator Moran. Chairman Pai, let me turn to you in a 
conversation that you and I have had ever since you showed me 
mobility maps. I remain concerned with the effectiveness of the 
Form 477 data collection process, and that is important. We 
talk about the resources in this committee. We would talk about 
the FCC and the Universal Service Fund. It also matters over at 
USDA and Rural Development and those dollars.
    I want to make certain that if we are going to spend the 
amount of money that you have to spend and that the Department 
of Agriculture has to spend that it goes where it needs to go 
to provide broadband service for all Americans.
    I joined--in fact, I led a letter that you will receive 
from the Kansas Congressional Delegation regarding our concerns 
about the 477 data collection process.
    Do you have any suggestions how the FCC plans to improve 
the maps? I know there is an effort afoot to determine whether 
carriers violated rules. Is there something that is taking 
place between now and that determination to improve the quality 
and accuracy?
    Chairman Pai. Yes, Senator, is the short answer.
    With respect to fixed broadband, right after I got into 
office, we started a comprehensive rethink of the Form 477 
process, maps where fixed broadband is and importantly where it 
is not.
    We are now engaging with staff--and I expect the staff will 
come to me with some recommendations--on how to make sure that 
this information is both accurate and more granular, so we 
understand, for example, where broadband within a census block 
is as opposed to simply understanding whether a census block 
has a single household covered in that block.
    On the mobility side with respect to wireless broadband, we 
do have the Mobility Fund Phase II, as you and I have discussed 
before, and here, thanks in part to Senator Manchin's advocacy, 
we determined that we believe that one or more carriers may 
have submitted inaccurate data.
    I referred immediately that matter to the Enforcement 
Bureau for investigation. I anticipate that the staff will come 
back to me with some reports on that investigation at some 
point in the near future, and at that point, we will determine 
how to proceed with respect to the Mobility Fund II program.
    But overall, I share, 100 percent, your concern, and the 
concern of other Members of the committee, that we need to have 
accurate mapping data in order to make sure that this scarce 
Federal funding is being distributed to close the digital 
divide, not to overbuild or----
    Senator Moran. Part of the FCC's conclusion as to how to 
improve the data has been to encourage an appeal process, and 
hundreds of folks across Kansas went out and attempted to do 
that--the Kansas Farm Bureau, others--in trying to determine 
whether or not the maps were accurate.
    What have you learned from that process of that information 
being provided to the FCC? Does it validate the maps, or does 
it indicate there remains problems?
    Chairman Pai. I think the challenge process has been 
illuminating. It has illustrated that in many cases, consumers 
and small businesses--farmers out there, for example--have been 
able to pinpoint that some of these mapping statistics are 
inaccurate, and that has been enormously helpful.
    In the context of our Form 477 proceeding, that is one of 
the reasons why, among other solutions, we are looking at 
crowdsourcing as a way of getting information aside from the 
carriers themselves so that we get the consumer experience 
reflected in our records as well as the Form 477 data itself.
    Senator Moran. Mr. Chairman, earlier in the day, you were 
kind enough to suggest you would come join me in Kansas. Maybe 
you and I can go out and take the device together. We can 
travel Kansas. I can show you some of the places where my cell 
coverage gets dropped every time I am there. It would be a 
great opportunity for us, you and I, to go experience the 
confirmation process to make improvements.
    Chairman Pai. Well, Senator, it is a great State. Some 
would say the greatest State. I would always be pleased to go 
back home.
    Senator Moran. I was very offended by the Chairman's 
suggestion that you were proud of your alma mater. I thought 
you would be proud of your State.
    [Laughter.]
    Senator Kennedy. Senator Van Hollen.
    Senator Van Hollen. Thank you, Mr. Chairman.
    I want to associate myself with the Chairman's comments 
earlier on about credit rating agencies. Big problem.
    Thank you both for being here.

                                   5G

    Chairman Pai, on 5G, you stated U.S. leadership in 5G is a 
national imperative for economic growth and competitiveness. I 
agree. Would you also agree it is a strategic imperative 
globally at this point in time?
    Chairman Pai. Yes, sir.
    Senator Van Hollen. And would you agree that we are falling 
behind? I would just call your attention to a Washington 
Examiner article, just April 10: State Department admits U.S. 
cannot compete with China's 5G. You were at a National Security 
conference, I think, in Prague, in the Czech Republic recently 
talking about the risks of Huawei and the Chinese system.
    Do you believe that deployment of a Huawei system would 
pose a privacy risk and even a security risk here in the United 
States and to our allies?
    Chairman Pai. I appreciate the question, Senator. I have 
been spending a lot of time thinking about this issue, working 
with colleagues across the executive branch and with Members of 
Congress.
    I think the short answer is that the FCC believes--we have 
not announced any proposal along these lines--that the 
deployment of equipment or services by companies that receive 
Federal funds from us that present a national security threat 
to the United States is unacceptable. We cannot assume that 
risk.
    We want to think about security with respect to next-
generation networks at the front end as opposed to worrying 
about it as an afterthought once it is too late, and that is 
one of the messages I was privileged to help share with some of 
our allies in Prague. And as a result of those conversations, 
over 31 nations agreed with the United States and the Prague 
proposals to think about the security of these ICT networks.
    Now, with respect to the other part of your question, I do 
not believe in terms of development and deployment of these 
technologies, the United States is falling behind. For example, 
Cisco's VNI report earlier this year pointed out that North 
America would have twice as many 5G connections by 2022 as 
Asia. The ABI Research Group said specifically the United 
States will win the race to 5G in the short term and----
    Senator Van Hollen. Let me--Chairman Pai, I mean, you have 
been following what has happened in Europe, right?
    Chairman Pai. Yes.
    Senator Van Hollen. I mean, both in the UK, France, 
Germany, our National Security officials have been there 
warning people about the risks to their users about deploying 
Huawei.
    Right now, it does not appear that we are winning that 
battle in the sense that I do not think any of them to date 
have said, ``We are going to rip out what we already have from 
Huawei. It is too expensive.''
    So I do have a question here because your predecessor, 
Chairman Wheeler, talked about this. This was a national 
priority. How is it that we got ourselves as a country in a 
position where we do not have one of the major suppliers with 
respect to at least the radio phase of this? I mean, you have 
got Ericsson. You have got the Finnish company. But then you 
have got Huawei. How did this happen, and what do we need to do 
now to make sure we do not fall behind going forward?
    Chairman Pai. It is a great question, Senator. I think 
there are some long-term economic trends that made it very 
difficult for some of the suppliers to remain in business.
    I think one of the other challenges, to be frank, is the 
fact that the Chinese government picks national champions in 
this space, subsidizes them in many cases, and those subsidies 
allow some of their domestic champions to compete when it comes 
to developing----
    Senator Van Hollen. No, I think that is a big issue.
    You know, we were a little bit ahead of the curve when we 
talked about semiconductors. As an industry, the U.S. 
Government was part of that. I know there is a lot of emphasis 
on always relying on the private sector. It is obviously a 
creative force, but some of these essential technologies 
require a national strategic focus. So I just want to continue 
that conversation.

                          NON-COMPETE CLAUSES

    Chairman Simons, a question about non-compete clauses. I am 
very concerned with the growth of non-complete clauses. It goes 
beyond non-compete causes for engineers and physicians. We are 
talking about fast food workers. We are talking about hair 
stylists. In fact, the Treasury Department estimates that 30 
million American workers are now bound by non-compete clauses, 
including minimum wage sandwich makers, camp counselors.
    So you got a letter recently from Senator Blumenthal and 
many of us on this. I saw your response. I appreciate your 
expressed concern. My question is, what are you going to do 
about it? Does the FTC, in your view, have the authority to do 
a rulemaking in here to put an end to this nonsense where 
someone making sandwiches is theoretically bound by a non-
compete clause? And then if they want to contest it, they have 
got mandatory arbitration on the other side. So what are you 
going to do about this?
    Mr. Simons. So I share your concern, absolutely, 
particularly with respect to the----
    Senator Van Hollen. I mean beyond the concern. I just want 
to know exactly what you are going to do.
    Mr. Simons. Yes. Well, here is what we are doing right now. 
I am having the Bureau of Economics do a review of the economic 
evidence that these types of clauses over the full range, 
whether it is on the low end of the pay scale or the high end 
of the pay scale, to see what impacts there are that we can 
find already proven in the economic literature. So that is the 
first step.
    So that comes back and shows that we already have the basis 
for a rulemaking. Then that is something we will be pushing 
for.
    On the other hand, if the economic evidence is not 
sufficient to justify a rulemaking, then I think what we are 
going to try to do is develop the evidence.
    Senator Van Hollen. What is your estimate timeline here in 
terms of the end of that analysis and decision on rulemaking?
    Mr. Simons. So the literature review should be done pretty 
quickly. I would think a matter of months. If it turns out that 
there is a good basis for a rulemaking, then I think that could 
happen within months of that.
    On the other hand, if there is not the economic evidence 
that would support such a rule, then we would have to develop 
it ourselves, and that would take considerably longer.
    Senator Van Hollen. Thank you.
    Senator Kennedy. Senator Lankford.
    Senator Lankford. Mr. Chairman, thank you.
    Gentlemen, thanks for being here as well. We have got a lot 
to be able to cover, as you can tell, a lot of issues here.
    I jump into one that is especially important I think for 
the FCC, and that is this issue about contraband cell phones 
that we have got to be able to resolve that are in our prisons.
    In Oklahoma, we had 7,500 contraband cell phones that were 
picked up just last year. We have individuals in prison running 
their gangs, calling out hits, executions that are occurring, 
selling drugs, reaching out to children, that are pedophiles 
within our prisons. It is a serious issue, and it is an issue 
currently the Federal law prohibits the FCC from engaging on 
the issue of trying to be able to allow a waiver for prisons to 
be able to jam those cell phone devices.
    This is something that this subcommittee and Congress 
requested a report from FCC on that was due April the 15th. 
That I understand there was a delay waiting on another report 
coming in and trying to get a study on this. We need to get 
this issue resolved in law and what direction that we are going 
to head on it.
    Where is that report from the FCC? When do you expect it to 
come to us?
    Chairman Pai. Thank you for the question, Senator, and for 
your longstanding advocacy on this issue, an issue where I 
share your great concern. It is a real public safety menace and 
one that I have been focused on for a while.
    We are analyzing the recent report on which our own report 
is dependent. We will get it to you as soon as we can. My 
understanding is our staff is looking at that right now, and I 
hope to be able to deliver it to you----
    Senator Lankford. So is that a month away? Is it 6 months 
away? Is it 6 hours away?
    Chairman Pai. Much closer to 1 month than 6 months.
    Senator Lankford. Okay. Thank you.

                            AUTOMATED CALLS

    Let us talk about some of the automated calls coming from 
overseas that Chairman Simons has already brought up as well. 
We have automated calls coming in extremely large numbers, 
coming from overseas, that they have a digital signature that 
can be identified coming in. That is why American carriers are 
able to identify those and to be able to filter those out.
    What would prohibit us at this point from blocking 
automated calls from coming from overseas? And so if there is 
an automated call coming at all, it would have to originate in 
the United States, and then Americans could filter that if they 
chose to, but blocking it just at our borders. Would there be a 
reason we would not do that?
    Chairman Pai. From a legal perspective, do you mean, or as 
a policy matter?
    Senator Lankford. As a policy matter.
    Chairman Pai. I think part of the problem is the technology 
has evolved to the point where it is very difficult to 
distinguish where this traffic is coming from. That is part of 
the reason why the private sector has led a Traceback Group 
that we rely upon often to try to figure out when we see some 
of these calls that are masked, spoofed especially, they seem 
to be coming from the United States.
    We try to track the origin of those, and then one of the 
things I have done is worked with some of my counterparts, the 
chairman of the Indian FCC equivalent, for example, so we can 
share information when we see that some of these calls are 
coming from dedicated call centers that exist for no reason 
other than to robocall American consumers.
    That is an effort where we think the Call Authentication 
Framework and some of these other tools that we have been 
trying to develop in consultation with the private sector will 
prove worthwhile, but it is getting to the point where we need 
to be able to track down these phone calls and stop them at 
their source as opposed to trying to track them down after the 
call is placed.
    Senator Lankford. If there is a legislative need that you 
have that says, ``I can only go this far,'' then I have a block 
on legislation, we need to know it obviously. Jerry Moran and 
his leadership in the authorizing committee, we need to be able 
to identify that so we can keep moving on this to be able to 
get this resolved.
    We have spoken briefly about the Mobility Fund Phase II and 
the testing as well. I know that you are actively pursuing the 
issue of trying to get the maps correct. I appreciate that you 
are doing that. That is exceptionally important to any of us 
that have rural areas in our State, which I do obviously, and 
large areas where there is no coverage. I am trying to resolve 
that.
    I do want to identify, though, on the broadband portion of 
this. There have been some questions on the performance 
standards testing and the requirements for the speed testing 
and the equipment and how intrusive that is to the consumer. Is 
this something that can be resolved, as in the process of being 
resolved now, so the consumer is not affected in this process 
of getting a testing?
    Chairman Pai. We are examining that issue, Senator.
    There is a pending petition for reconsideration that had 
been filed by the representative of the rural telephone 
carriers, and one of the things that we are examining, is there 
a way to tweak this requirement to minimize the burden on some 
of these smaller carriers who should be spending this money, 
the scarce funding, to build out broadband as opposed to some 
of the testing.
    Senator Lankford. Do you have a timeframe on that?
    Chairman Pai. We do not have a particular timeframe. We are 
scheduled to sit down with our staff at some point in the near 
future and figure it out, but we are much closer to the end of 
that process. The petition has been pending for a while, and we 
hope to act very soon.
    Senator Lankford. We look forward to that and that getting 
resolved, and that would be very helpful for a lot of folks as 
they are doing investment.

                              CHINA MOBILE

    Last question I want to be able to bounce off of you is 
this issue of China Mobile.
    Chairman Pai. Yes.
    Senator Lankford. You denied an application for China 
Mobile. It has been pending out there for a long time. I 
believe that is the first time that there has been a denial 
like that. Is there anything that we need to know that we are 
trying to address not only from what Senator Van Hollen was 
bringing up about Huawei that we are all extremely familiar 
with, that China Mobile and its American subsidiary is now 
blocked out of the United States?
    Chairman Pai. Senator, hopefully the FCC will vote on 
Thursday to agree with my proposal to ban China Mobile from 
entering the U.S. market.
    In addition to that, the supply chain proceeding that I 
mentioned to Senator Van Hollen is outstanding. We hope to be 
able to resolve that.
    There are a number of other issues that I would be happy to 
discuss with you in a different setting involving some of the 
threats that we are seeing to security.
    But what I will say is that I do believe that certain 
Chinese suppliers, such as Huawei, do indeed present a threat 
to the United States, either on their own or because of Chinese 
domestic law.
    For example, China's national intelligence law explicitly 
requires any individual or entity that is subject to that law 
to comply with the request from the intelligence services. That 
is a problem because especially when you are talking about 5G 
networks that are deployed in one country and could be managed 
by software that is resident in another country, that presents 
some security risks, I think, and those risks to me are 
unacceptable when it comes to the deployment of 5G networks on 
our shores.
    Senator Lankford. Right. Thank you.
    Thank you, Mr. Chairman.
    Senator Kennedy. You bet.
    Senator Manchin.
    Senator Manchin. Thank you, Mr. Chairman, and thank you, 
Mr. Pai and Mr. Simons, for being here.
    Chairman Pai, I think last year, I was the only one Member 
of Congress to formally and successfully challenge the Federal 
broadband, as you know.
    You recognize I just--we are fighting it all over, and we 
knew the maps had been wrong from day one.

                          FCC'S MOBILITY FUND

    The problem I am concerned with is the amount of time it is 
taking. You have put everything on hold, Mobility II Fund. That 
is $4.5 billion.
    Little States and rural areas of any State is dependent on 
connectivity.
    Also, we brought to you, basically, the cost in certain 
areas. It is much costlier in the mountainous areas of West 
Virginia to build out the infrastructure that would be in the 
flatlands of our neighboring friends, and we wanted to make 
sure that was in the consideration of that.
    The time elements as far as deploying these funds, what 
time table are you all on? And I am not being critical, except 
that you just do not know how desperate it is. We cannot keep 
people. Businesses cannot function. Nothing happens.
    Chairman Pai. I could not appreciate that more, Senator.
    As I mentioned in my opening statement, when I visited 
Capon Springs--and I visited with a small business owner who is 
consistently losing business because after folks are enjoying 
the beautiful outdoors of West Virginia in the evenings, they 
want to plug in and watch Netflix or some other service, and 
they cannot do it. So that is starting to cost him. That is 
just one example from one business in one town.
    We want to make sure that these funds are getting 
distributed to close that digital divide, and that is why with 
respect to the Mobility Fund, we want to try to resolve those 
enforcement investigations of the carrier or carriers that 
submitted inaccurate data, so then we can figure out how to 
right-size the Mobility Fund Phase II.
    Senator Manchin. Here is what I am concerned about. If the 
feedback, the public feedback, is not built into the whole 
review process and then if you are going to wait until you 
think you have corrected the whole problem, it is going to be--
I do not know how long it is going to be until we do this.
    Cannot you when you correct the maps, the maps are 
corrected--the lights are crazy here, I know.
    Chairman Pai. Yes, sir.
    Senator Manchin. You think they are bad on your side. You 
ought to try them on our side.
    [Laughter.]
    Senator Manchin. Anyway, as you correct--and the maps have 
been corrected and we commend--to a State, and basically, the 
app--you know, we have apps, and we can go around, which we 
have done. And we contest and we showed it. Your people 
accepted that as factual. We appreciate that.
    But as we correct them, cannot we start when the need is 
there, start releasing some of the funds?
    Chairman Pai. I think part of the concern we have, Senator, 
is to make sure that to the extent that a carrier or carriers 
submitted inaccurate data, if we proceed before we figure out 
the inaccuracies in the map and how to correct them, then we 
run the risk that you have highlighted before, which is that we 
might be directing funding to a part of the country that 
already has service. And so we want to make sure we get that 
part of it right and then make the determination with respect 
to how to proceed on Phase II.
    Senator Manchin. But the public feedback mechanism has to 
be in a 477.
    Chairman Pai. On the fixed side, yes. And that is where in 
the----
    Senator Manchin. It is not there now.
    Chairman Pai. Right.
    So, in the context of the 477 proceeding, we are thinking 
about incorporating crowdsourcing or other types of consumer-
led information.
    Senator Manchin. Because these apps, basically they can 
submit to you off their phone and show you the app that 
basically shows they are not covered----
    Chairman Pai. Right.
    Senator Manchin [continuing]. Or the coverage is less than 
what the providers are showing.
    Chairman Pai. And with respect to the 477 process, that is 
one of the things we are hoping to wrap up in the near term as 
well. We have been working very much with the private sector on 
different solutions to try to figure out where broadband is and 
unfortunately where it is not.
    Senator Manchin. Sir, again, I want to comment on basically 
the amount of time we have had in getting response back from 
your office. So any of your staff that is here, I am being 
constructively critical that we do not get response as quick as 
we should, and I will give you a few examples.
    It was last August. We invited you to West Virginia to see 
some of the unique challenges, okay? We still have not had a 
response on that. That was last August about you coming and 
trying to--we are only 3 hours. We are an hour and a half away. 
We are not that far.
    Chairman Pai. Yes.
    Senator Manchin. We will drive you, okay?
    In December, I had to put a hold on Commissioner Carr's 
nomination, as you recall, until we could get basically a 
thorough, expeditious review on the Mobility Fund to include 
terrain factor. We got that moving. It took us holding him up.
    So, without the hearing today, I do not know when we could 
have gotten a response on the February letter, and we got a 
response a couple days ago.
    If you are having trouble with the staff or you need 
resources for your staff to be able to do the job and get back 
with Congress, we have to answer every weekend we go home, and 
they are on--it does not change. They do not have connectivity. 
They are honest, and they want to know when it is going to 
happen. We have been telling them about the Mobility broadband 
fund, rural broadband, and they are tickled to death with it. 
Now they do not believe it. They do not believe it is going to 
happen.
    So I am just saying whatever it takes on that to Congress 
and the congressional inquiries, it is a matter of us 
communicating, and if we do not hear from you all, we have no 
way to communicate.
    Chairman Pai. I appreciate it, Senator. Your concern, we 
will look to rectify that, and part of the reason why when you 
requested a waiver to be able to participate in the challenge 
process, I personally told our staff, ``Let us make sure we do 
what we can to allow the Senator to participate.''
    Senator Manchin. Well, just communicate with us. Just call 
us back, you know, whatever. Just to hear from you would be 
great.
    Mr. Simons, very quickly, because my time is up, on the 
Committee on Foreign Investment in the United States (CFIUS), 
you know about, of course, CFIUS.
    Mr. Simons. Yes, I know what CFIUS is, but we do not really 
participate----
    Senator Manchin. You have nothing in that whatsoever?
    Mr. Simons. No.
    Senator Manchin. Have you identified basically things as 
far as the different building blocks that we have, a 
manufacturer that affects our economy that could be detrimental 
if CFIUS review is not pertaining to those? And I am using 
butane, propane, everything that we have in the white gasses 
that are coming out of the New Marcellus and Utica Shale.
    Mr. Simons. I am sorry, Senator. That is in not our 
jurisdiction.
    Senator Manchin. That is not in our bailiwick?
    Mr. Simons. Right. Sorry.
    Senator Manchin. Well, I wish it was. We need help there. 
They are trying to drain every ounce of energy we have out of 
our country and take it and monopolize it. China is awful about 
what they are trying to do.
    Thank you, Mr. Chairman.
    Senator Kennedy. Senator Boozman.
    Senator Boozman. Thank you, Mr. Chairman, and 
congratulations on being Chair of the subcommittee. I know that 
you and Senator Coons will work together very closely. This 
subcommittee has a great track record of working together, not 
only as the chair and Ranking Member, but also the staffs, so 
lots of good things that we can get done in this particular 
subcommittee.

                             RURAL NETWORKS

    Chairman Pai, as one of the co-chairs of the Senate 
Broadband Caucus, I want to echo Senator Manchin's concerns 
with the mapping.
    We have lots of areas in Arkansas, and you do not live too 
far from Arkansas, back in the old days, but simply, we have 
situations where it is marked to serve and it is simply not 
anywhere close to being served. So we would appreciate all of 
your help in moving forward and trying to get that corrected. 
It is so, so very important.
    We have got lots of different entities now that are moving 
into the space to try and provide service. Last year, Congress 
made what some have called a ``down payment'' on investing in 
rural infrastructure by creating the $600 billion Reconnect 
Program to be administered by USDA Rural Services, and an 
additional $550 million was added in the fiscal year 2019 
omnibus.
    I guess the question is, with all of the work being done on 
the networks, how are we coordinating that? How are we making 
sure that it is spent in an efficient way, that there is not 
duplication of effort?
    Chairman Pai. Thank you for the question, Senator.
    We have been working closely with the U.S. Department of 
Agriculture and with other stakeholders to make sure that the 
Federal funding that you have allocated is not going to 
duplicate efforts that another agency might be supporting, but 
we do work very closely with them, and ultimately, whether 
through legislation or through those agency-to-agency efforts, 
we will make sure that this taxpayer funding is devoted just 
once to close that digital divide.
    Senator Boozman. Right. In regard to the shape files that 
are being provided, USDA, FCC, you are collecting the broadband 
information. If it were in the same format, could that help 
facilitate coordination between the agency and USDA to target 
funding to avoid overbuilding?
    Chairman Pai. That is one of the issues that we are 
examining in the context of our Form 477 proceeding, what is 
the best way to proceed with respect to mapping. One sector of 
the industry has advanced the idea of shape files as a way of 
skinning that cat, so to speak. Another sector has proposed a 
different methodology. We are engaging with all of those 
stakeholders. From our perspective at least, we want to make 
sure that we do what we can as soon as we can to get a more 
accurate sense of broadband availability. So we look forward to 
keeping you informed.
    Senator Boozman. I would appreciate that.
    It does seem like it would make sense if we could have a 
standard.
    Chairman Pai. Exactly. We want to operate on the basis of 
common facts, both at FCC and at USDA, I think.
    Senator Boozman. The other thing is I would like to second 
Senator Lankford's concern with the prisons. We are in a 
situation now where the cell phones run anywhere from $500 to 
$1,000. It is a very corrupting influence in that regard.
    There was an article I think over the weekend or last week 
about soldiers, prisoners playing like they were females or 
whatever and trapping soldiers, blackmailing them, things like 
that.
    I think in Arkansas, there were 1,600 that were 
apprehended, and it is difficult because then you have got to 
try all those people. And that relies on the county prosecutor 
right there, so again, just all kinds of problems. So anything 
that you could do to push that forward would be greatly 
appreciate, or if you need additional authorities or whatever, 
be sure and let us know so that we can be helpful in that 
regard.
    Chairman Pai. Thank you, Senator. You have got my 
commitment. I have personally visited maximum security 
facilities in Georgia, minimum security facilities in 
Massachusetts, and everything in between, voluntarily I would 
add, and one of the things they have made clear is that in many 
cases, these cell phones are the most valuable currency to a 
prisoner, more valuable than drugs or anything else.

                           CONTACT LENS RULE

    Senator Boozman. Chairman Simons, recently, your contact 
lens release, you are working hard on that. There is some 
concern that the paper trail regarding prescription providers, 
prescription release, there is concern that there is--you know, 
if you can do it on that end, why not do it to the online 
sellers and have them have a paper trail also?
    Right now, we could get our cell phones out and punch up 
prescription contact lenses, and you would find a bunch of 
people that were selling without prescriptions. Do you have any 
comment about that?
    Mr. Simons. Yes, Senator. Thank you for the question.
    So we are looking at changes to the rule that would tighten 
up what some people would refer to as loopholes in terms of 
passive verification. So this is where the seller needs to call 
or otherwise contact the prescriber and get the prescription 
validated, and so there is reported instances or incidents in 
the record which are described as doing it in a very kind of--
almost a hidden way, and so we are trying to bolster that and 
close those loopholes, make sure that the sellers actually have 
the prescription and that the prescription is valid and 
accurate and they do not change the brand without the 
consumer's consent.
    Senator Boozman. Thank you, Mr. Chairman.
    And we will submit some more questions regarding that, so 
appreciate it. Thank you.
    Mr. Simons. Thank you.
    Senator Kennedy. Senator Daines.
    Senator Daines. Thank you, Chairman Kennedy, Ranking Member 
Coons.
    Senator Kennedy. Welcome to the discotheque.
    [Laughter.]
    Senator Kennedy. I expect John Travolta to walk in.
    [Laughter.]
    Senator Daines. I will walk out, sir, if he comes in 1970s 
clothes.
    I want to thank Chairman Pai and Chairman Simons for coming 
today.

                                   5G

    Chairman Pai, always good to see you, and I wanted to chat 
a bit about 5G mid-band spectrum.
    I am very concerned and fear the U.S. is falling behind on 
the race to 5G, and we simply cannot let that happen in this 
race with China.
    The 5G economy is going to lead to a breakthrough in jobs, 
information, connectivity; however, other countries are making 
four times more mid-band spectrum available in the next few 
years compared to the United States.
    Mid-band spectrum will be a key component to make 5G a 
reality, especially in places like Montana. We need to stop 
just talking about 5G and actually take some action and see 
some real solutions. An important part of this is the 3.5 
gigahertz band, which I want to thank you for working with me 
on that last year.
    Could you update me on the timeframe for that auction so we 
can get that spectrum deployed?
    Chairman Pai. I appreciate that question, Senator, and for 
your leadership on this band in particular, which as I was 
mentioning earlier in response to a question is sort of in the 
sweet spot, so to speak, when it comes to 5G innovation.
    We believe the auction will proceed in 2020. So, in less 
than a year, we will be able to hold that auction, and in the 
meantime, we have been working with some of our other Federal 
partners on things like the environmental sensing capabilities 
to make sure that deployments can occur as quickly as possible.
    Senator Daines. Another piece of mid-band spectrum 
certainly is C-Band.
    Chairman Pai. Yes.
    Senator Daines. Currently, our broadcasters, our cable 
companies use portions of this band to provide content to rural 
Montana, but it is also prime 5G spectrum. How do we balance 
the current and future uses in this band as we move forward?
    Chairman Pai. That is the $64,000 question, and there are a 
number of different complicated interests from a policy 
perspective. Additionally, there are some legal complications 
as well.
    With respect to the latter, we just issued a request for 
public comment on some of the legal questions that we need to 
be able to sort through in order to proceed on the band.
    With respect to the policy question, there are a number of 
different tradeoffs. One of them is time. As often mentioned by 
the panel, there is considered to be a race to 5G in some 
quarters, and in order to lead in 5G, we need to make more 
spectrum and mid-band spectrum in particular available.
    That is one of the reasons why we have been thinking about 
in the C-Band proceeding, how important a priority is it to be 
able to move quicker, even if that means that we proceed with 
something other than an auction.
    On the other hand, we also have some incumbent customers 
who are relying on that band, as you mentioned, especially for 
the delivery of video programming in places like rural Montana. 
How do we accommodate the concerns of folks like that? And that 
is one of the issues we have been sorting through.
    A number of other different complicated questions in terms 
of timing and the like, but ultimately, we want to be able to 
find a solution that allows us to promote 5G leadership, 
especially in mid-band spectrum, while also accommodating some 
of the concerns that have been expressed.
    Senator Daines. How optimistic are you that you can find 
that solution?
    Chairman Pai. I am fairly optimistic. This is, without 
question, one of the more complicated issues I have confronted 
at the FCC. There is no question about it. There's a number of 
different industries, a number of different legal questions. It 
is very, very complicated, but nonetheless, I am optimistic 
that we will be able to find a solution that threads the 
needle, advances the ball in terms of the public interest.

                               ROBOCALLS

    Senator Daines. I want to shift gears and talk about 
robocalls. Chairman Simons, Chairman Pai, Montanans are being 
inundated by illegal robocalls every day, and they are 
frustrated. In fact, I have got my phone here with me.
    Mr. Chairman, if I happen to get a robocall, would you 
allow me to put it on speakerphone so we could all hear it, if 
it happens?
    Senator Kennedy. Please.
    Senator Daines. So I have got RoboKiller app on my phone. 
If I happen to get a robocaller, I am going to put it on 
speakerphone here. I get so many of them. It would not surprise 
me if one happened during my line of questioning.
    What is worse is these bad actors are spoofing numbers. 
They look just like they are from our neighbors, from our 
friends, from our family. Montanans are fed up with the lack of 
action being taken right here, and thankfully, with my support, 
Congress is finally taking action with this bipartisan TRACED 
Act.
    My question is this. I will start with Chairman Simons. Can 
you commit to work with me to do whatever is necessary to put a 
stop to these illegal robocalls?
    Mr. Simons. Absolutely.
    Senator Daines. Chairman Pai, same question to you.
    Chairman Pai. Yes, sir.
    Senator Daines. And when do you think we can do that?
    Chairman Pai. Soon, hopefully. I would defer to you on the 
timing of the TRACED Act, but----
    Senator Daines. Assuming we pass the legislation that 
enables that, as you have seen the text, how long will it take 
us? How long will it take you all to implement that and get 
that done?
    Chairman Pai. Certain tools, we could implement 
immediately. For example, it would make it easier for us to go 
after some of these robocallers in terms of extending the 
statute of limitations. That is not something that requires, as 
I understand it, anyway, a full notice and comment rulemaking. 
But I think we could move very quickly.
    Senator Daines. Okay. Thank you.
    Thank you, Mr. Chairman.
    Senator Kennedy. Thank you, Senator.
    I have got a few more questions, and I welcome my 
colleagues joining now as well.
    Let me go back to the robocalls. Did I understand you to 
say, Chairman Simons, that in order for these foreign 
robocallers to do what they do, they have to have the 
cooperation of our carriers?
    Mr. Simons. That is my understanding.
    Senator Kennedy. And there are certain carriers that 
facilitate their conduct?
    Mr. Simons. Yes. Our understanding is that there are 
certain carriers that cater to this type of traffic.
    Senator Kennedy. And do we know who those carriers are?
    Mr. Simons. I would have to talk to my staff about whether 
they know any specific carrier, but----
    Senator Kennedy. Is that under your jurisdiction----
    Mr. Simons. Yes.
    Senator Kennedy [continuing]. Or is that under FCC?
    Mr. Simons. We know. I am told we know who those carriers 
are.
    Senator Kennedy. We know.
    Mr. Simons. My staff says we do.
    Senator Kennedy. Okay.
    Mr. Simons. Okay.
    Senator Kennedy. So why are we not punishing them the rest 
of their natural lives?
    Mr. Simons. Well, we would love to, but we do not have 
jurisdiction over them because they are common carriers, and 
our authority does not allow us to go after common carriers.
    Senator Kennedy. Who has jurisdiction over them?
    Chairman Pai. That would be the FCC.
    Senator Kennedy. Why is the FCC not punishing them the rest 
of their natural lives?
    Chairman Pai. Well, we would be happy to look at the 
particular investigation that Chairman Simons----
    Mr. Simons. Promoted.
    Chairman Pai [continuing]. Is referring to.
    Senator Kennedy. Well, it seems to me it is real simple. 
The American people are being inundated with these calls. Many 
of them are coming from foreign countries. Even if they are 
coming from the United States, they are not any more pleasant. 
In order for them to do it, they have to use carriers in the 
United States. These carriers are helping them do it for money, 
and you can stop them.
    Chairman Pai. Absolutely. And that is one of the reasons 
why we have demanded that the phone companies implement call 
authentication, that digital fingerprint for every single phone 
call. So you have a validation before you even look at the 
phone to know that that phone call is coming from a legitimate 
source.
    Senator Kennedy. But I guess what I am saying is while we 
dither around in the Senate trying to decide whether to pass a 
bill, we should let you go after the carriers. I mean, they 
have got to be violating some rule.
    Chairman Pai. I would be happy to take a look at the facts.
    Senator Kennedy. Would you look at the facts and get back 
to us in a week?
    Chairman Pai. Happy to do that.
    Senator Kennedy. I mean, this is a serious problem, Mr. 
Chairman, as you know.
    Chairman Pai. Absolutely.
    Senator Kennedy. And I would like a list of the carriers. I 
do not want to deny anybody due process or be unfair to 
anybody, but if you know who they are, I would like to know who 
they are too, okay?

                           WIRELESS SPECTRUM

    Let me talk about spectrum. Bandwidth. What is the proper 
term? Spectrum?
    Chairman Pai. Spectrum is commonly used.
    Senator Kennedy. Okay. We cannot achieve 5G without 
spectrum, right?
    Chairman Pai. Correct.
    Senator Kennedy. You do not have enough spectrum, do you?
    Chairman Pai. For the commercial side, that is correct, 
sir.
    Senator Kennedy. Some Federal Government agencies have some 
of this spectrum, do not they?
    Chairman Pai. Yes, sir.
    Senator Kennedy. Do all those agencies need the spectrum 
that they are hoarding? You do not have to answer that. I think 
all the agencies do not need the spectrum that they are 
hoarding. Some of them do; some of them do not. Some of them 
could share.
    Chairman Pai. Right.
    Senator Kennedy. Could we get the President to issue an 
executive order saying, ``Share your spectrum. We would like to 
get to 5G sometime this millennium''?
    Chairman Pai. Senator that is obviously a decision the 
White House would have to make.
    What I can tell you is that we are always urging our 
Federal partners to either relinquish or share spectrum because 
technology has advanced to the point where we can have a win-
win, and we have worked very cooperatively with some entities 
like the Department of Defense. Others have been a little more 
challenging, but at the end of the day, if as the President 
himself has said that 5G is a national priority that American 
leadership on this is a priority for everybody, we need to make 
sure that we have a spectrum supply that is ready to meet that 
challenge.
    Senator Kennedy. Well, I mean, if the agency needs it, that 
is one thing, but if it is just a question of, ``well, we do 
not need it, but we are not giving it up'', or ``we could share 
it, but we will not'', we need to give them a little incentive. 
And I will talk to the White House about that. If I cannot 
convince them, Senator Van Hollen can.
    [Laughter.]
    Senator Kennedy. Let me ask you just one other thing. Let 
me see where my notes are here.

                              FCC AUCTION

    Oh. When you allocate the spectrum, Mr. Chairman, are you 
doing private sales?
    Chairman Pai. Secondary market transactions, we encourage 
because we believe that that is the best way ultimately to get 
the spectrum to its highest valued use, but we also auction 
spectrum. So we are in the middle of a spectrum auction right 
now.
    Senator Kennedy. How do you know you are getting a better 
deal for the American taxpayer in a private sale versus an 
auction if you do not hold the auction?
    Chairman Pai. So one of the things we have found over the 
years is that if we decide to prohibit those secondary market 
transactions, over time, it will take a lot longer to allocate 
that spectrum to its highest-valued use. And that is part of 
the reason why for the last quarter century, we have been 
encouraging the secondary market transactions. That speed to 
market is one of the factors that has allowed the FCC to 
promote U.S. leadership on 4G, and one of the questions with 
respect to 5G is should we encourage the secondary market there 
as well.
    Senator Kennedy. Well, why cannot we redesign the system so 
that we achieve speed while maximizing the price? An auction is 
going to get you a better price than a private sale, is it not?
    Chairman Pai. It depends. I think the auction would 
certainly raise revenue for the Treasury, which is, of course, 
one of the major considerations that underlayed our authority 
in the first place back in 1993.
    One of the questions has been, does that auction process 
end up taking longer than a secondary market? If you have an 
asset and I want it, should you just be able to sell it to me 
directly as opposed to having a third party administer the 
transition of that asset?
    Senator Kennedy. Can you make recommendations to us on the 
laws we need to change to allow you to achieve maximum revenue 
and do it quickly?
    Chairman Pai. We would be happy to.
    Senator Kennedy. Get me that information.
    Chairman Pai. We would be happy to, Mr. Chairman.
    Senator Kennedy. Senator Coons.
    Senator Coons. Thank you, Mr. Chairman.
    Let me follow up on some issues that we touched on earlier.
    First, Chairman Pai, there were widespread reports that 
mobile carriers were selling customers' precise location data 
without their knowledge or consent. You have a colleague on the 
Commission--I think it is Commissioner Rosenworcel--who is 
concerned this practice may not have stopped and sent letters 
to each of the major mobile carriers asking them about it. Do 
you share her concerns, and is the FCC examining this sale of 
real-time location information?
    Chairman Pai. Senator, I do share the concerns that have 
been expressed, and that is why when we first got reports about 
this practice, I immediately directed our Enforcement Bureau to 
initiate an investigation into any and all carriers that might 
be engaging in the practice.
    Senator Coons. Well, thank you. I hope you will follow that 
up further.

                                PRIVACY

    On privacy, Chairman Simons, the FTC has some authority to 
regulate and protect consumers' privacy. As I mentioned, there 
is news reports--you do not need to comment--that you are close 
to announcing a record action against a particular company.
    While that is encouraging, I am concerned you could be 
doing much more in the data privacy protection area.
    Are there other recent examples of the FTC using its 
current authority to protect a customer's privacy, and what 
risks remain outside your authority that we should address?
    I think in this hearing, you so far mentioned the ability 
to oppose civil penalties for first-time violations and 
authority over nonprofits and common carriers. Did I roughly 
get that right?
    Mr. Simons. Yes.
    Senator Coons. Are there examples you would like to point 
us to of your active use of your existing authorities to 
protect the data privacy of----
    Mr. Simons. Yes. So we just had I think in the last week 
two cases. One was a Children's Online Privacy Protection Act 
(COPPA) case, and the other was a data security case. These 
involved about 8 million consumers, and one of them was 
facilitating contact between adults and--stranger adults and 
children. So we stopped that.
    I think it is important to understand what our privacy 
authorization is currently, and basically, we have the statute 
that is 100 years old or more, a hundred and, whatever it is, 
five. And back then, when the Congress passed that statute, 
they had no idea that these privacy issues would come up, 
obviously.
    So I give a lot of credit to my predecessors at the 
Commission for coming up with our privacy program and building 
it out of a statute that was not designed for it.
    So what we have done is it primarily covers situations 
where the company has a deception about what its privacy policy 
is, and then we bring a case under our deception authority to 
remedy that, or in instances where there is something that 
looks more akin to a privacy tort, like invasion of privacy or 
something like that, we bring that under our fairness count.
    So we do not have the authority--so that and we have it in 
a few statutes like the Fair Credit Reporting Act (FCRA) and 
the Children's Online Privacy Protection Act (COPPA), where we 
have specific authority in the privacy and data security area, 
but that is the limit of our authority.
    People all the time ask me, ``Why do not you do something 
like GDPR?'' Well, we do not have the authority to do that. Our 
authority is actually quite limited, and that is one of the 
reasons we are encouraging the Congress to consider privacy 
legislation.
    Senator Coons. Senator Moran referenced there is a working 
group on Commerce about this. There is also a group of us on 
Judiciary that are beginning to engage in this. Senator Flake 
and I in the last Congress held a number of roundtables with 
industry and advocacy representatives to look at GDPR, to look 
now at the California State law, and then to begin to come to 
some common understanding about what might be inappropriate 
Federal legislative standard.
    I am concerned about the FTC having the resources, the 
ability, the scope to actually effectively implement something 
that we might put in.
    I think if I remember correctly, you said earlier, you have 
40 personnel dedicated to this, whereas the UK has 500.
    Mr. Simons. Right.
    Senator Coons. I want to make sure that we stay in close 
communication about your potential increase in resource needs 
should we be successful in legislating around this.

   MERGERS INVOLVING PHARMACEUTICALS/GENERAL PHARMACEUTICAL ANTITRUST

    Let me ask a last question. There was a hearing earlier 
today on the Judiciary Committee about prescription drug 
prices. My understanding is the FTC does have and use authority 
in terms of pay-for-delay activities, unfair market practices 
that lead to unreasonably high prescription drug prices.
    What else does the FTC do in terms of pharmaceutical 
marketing or pricing, and what more could you do if you had 
additional authorities or resources?
    Mr. Simons. So the things we do, we focus on--of course, 
the first thing we do is we are looking out for anticompetitive 
mergers that involve pharmaceuticals. We are looking for the 
pay-for-delay cases. We are looking for the sham litigation 
cases, and we are looking for--there is one more--exclusive 
dealing cases and those types of matters in law enforcement.
    We are also engaged in--we are monitoring prices. There is 
a CMS survey of the prices that pharmacies pay, and so we are 
monitoring that to see if there are any price spikes, in which 
case we look to investigate what those are and see if there is 
an enforcement action that is appropriate.
    Senator Coons. Thank you. Thank you for your testimony, and 
I look forward to working with both of you in the year ahead.
    Thank you, Mr. Chairman.
    Senator Kennedy. Senator Moran.
    Senator Moran. Chairman, thank you.

                           FAKE TECH SUPPORT

    Chairman Simons, I have heard from Kansas companies about 
criminals who are buying words on search engines that make 
their fake tech support websites show up at the top of the 
list----
    Mr. Simons. Yes.
    Senator Moran [continuing]. When someone searches for a 
tech product support. These criminals run, I assume, complex 
organizations and are able to trick someone into thinking they 
are talking to the tech company's product support and then 
convince the consumer to provide remote access to their 
computers.
    They infect their computers with virus, charge them 
hundreds of dollars to remove the virus, sometimes accessing 
their bank accounts as well.
    Do you have any recommendations for me or this subcommittee 
as to what can be done to prevent consumers from falling 
victim?
    Mr. Simons. Yes. I think one of the things that we focus on 
quite a bit is consumer outreach, so education, consumer 
education to alert them to the fact that these things are 
occurring and to watch out for them and try to avoid them.
    Then, of course, we prosecute them when we find them.
    Senator Moran. How successful have you been in finding and 
prosecuting?
    Mr. Simons. I think we have--we have had our fair amount of 
success, I think. I could get you more information on that.
    Senator Moran. I can see myself being in that circumstance.
    Mr. Simons. Oh, yes. It happened to my wife.
    Senator Moran. So you have an advocate in the household for 
a fix.
    Mr. Simons. Oh, yes. That and robocalls.
    Senator Moran. Very good. She reflects my constituency as 
well.
    Chairman Pai, you and I talked a little bit earlier today. 
Tell me what you see the FCC's role--what leadership can you 
provide in helping Kansans and Americans, particularly rural, 
but those with disabilities, veterans and others, in regard to 
telehealth.
    Chairman Pai. Thank you for the question, Senator.
    This is a major area of interest for me and for the 
Commission. We have a rural health care program that subsidizes 
the connectivity needs of hospitals and other health care 
facilities to the extent that they are providing rural 
telemedicine and telehealth services.
    Under my leadership, for the first time ever, since the 
1990s, since this program was created, we increased the budget 
for that program, 43 percent, up to $571 million for the 
previous year, and it is adjusted for inflation.
    Going forward, one of the things we are exploring is 
setting up a connected care pilot program, essentially allowing 
health care services to follow patients outside of the 
hospital, using wireless connectivity for example, to monitor 
their vital signs, so that health care professionals can 
intervene sooner.
    There are many different regulatory and legislative 
solutions to help broaden the promise of telemedicine. For 
example, I have talked about the need for Congress or some 
other entity to address the issue of State licensing of medical 
professionals. I have been to a whole bunch of rural health 
care facilities where they say, ``We have got a rural community 
in need just across the State border, but we cannot provide 
those telemedicine services because of those licensing 
barriers.''
    I have worked with the CMS Administrator, who is broadening 
the range of telemedicine services that can be reimbursed, and 
in addition to that, I have been working very closely with the 
Veterans Affairs Department.
    One of the things that Congress wisely did last year was to 
break down those licensing barriers for VA facilities, and I 
have visited now--I believe it is five VA facilities from 
Boise, Idaho, to Providence, Rhode Island. And they are doing 
some cutting-edge work on telemedicine, especially on the area 
of veterans who have mental health needs, for example, that is 
gaining massive results, and that is the kind of thing we love 
to see translated over to the civilian side.
    I would love to work with you on it because, as you know 
better than most, in a lot of these rural communities, there is 
no alternative. There is no doctor living in your community. 
You might have to drive an hour or two, if not more, to see 
somebody, and that is not an option for many, many people. If 
you have a child that is sick, you have to take time off work 
and incur all those costs as well.

                      RURAL BROADBAND/FTC PRIVACY

    We think that broadband's promise is great in rural America 
and especially when it comes to telemedicine.
    Senator Moran. Chairman Pai, thank you very much. thanks 
for your leadership on this issue. It is a challenge across the 
country.
    Chairman Pai. I appreciate it.
    Senator Moran. Chairman, thank you.
    Senator Kennedy. Senator Van Hollen.
    Senator Van Hollen. Thank you, Mr. Chairman.
    Chairman Simons, I do want to take this opportunity to 
thank you and your team for participating in a number of the 
consumer protection forums that we have had in the State of 
Maryland. I teamed up with our State Attorney General, Brian 
Frosh, and as you suggested, it is one of the best attended 
gatherings that we have, where we go over all the scams that 
are perpetrated against consumers or constituents. So I want to 
thank your team for that.
    Let me follow up on some of the efforts to protect privacy. 
Coincidentally, in the Banking Committee today, as Senator 
Kennedy knows, we also had a hearing with respect to what the 
Europeans are doing in the JDPR and the California law be given 
the number of financial information, personal information that 
is collected.
    But I want to go back to broadband consumer privacy because 
back in the previous administration, the FCC had adopted the 
Broadband Consumer Privacy Rules. Those were then rescinded. 
They were subject to a CRA here in Congress.
    I think many people believed--and maybe even Chairman Pai 
shares this view--that we could deal with that in the FTC 
forum.
    So my question is, given that--this was an opt-in, opt-out. 
I mean, everyone is talking about it now, but that is what that 
protection was for back then. Can you now, using your existing 
authority, even before we move forward with broader 
legislation, at least with respect to some of these target 
areas like that rule, the broadband consumer privacy rules--can 
you move forward on your own authority in this area?
    Mr. Simons. I do not believe so.
    Senator Van Hollen. Okay.
    Mr. Simons. We need your help.
    Senator Van Hollen. And, Chairman Pai, I thought at one 
point you suggested that maybe the FTC could move forward in 
this area when you overturn the regulation.
    Chairman Pai. I do agree, Senator. I have consistently said 
the consumers should have a uniform expectation of privacy. 
They do not care whether it is a network operator or a Silicon 
Valley tech giant that holds their information. They want that 
information to be protected, and that is part of the reason why 
I think that a uniform level of regulation is something that we 
would welcome--well, I do not want to speak for Chairman 
Simons, but certainly, I think consumers would benefit if 
Congress spoke with a unified----
    Senator Van Hollen. Well, that regulation, I mean, I am 
right, am I not, that that was overturned by you and the 
Commission?
    Chairman Pai. Well, that FCC decision in 2016 only applied 
to Internet service providers, not to edge providers like 
Google and the----
    Senator Van Hollen. Right. And so your argument was that it 
was not within your jurisdiction?
    Chairman Pai. No. My argument was that there should be a 
consistent level of regulation, that consumers have that 
uniform expectation of privacy, and that the FTC----
    Senator Van Hollen. Okay. So even though we were protecting 
lots of people, unless we protected everybody, you were going 
to be against it; is that it?
    Chairman Pai. No, no. In fact, one of the things I pointed 
out in my dissent back in 2016 was that it was asymmetric 
regulation. That Silicon Valley companies that sought every 
kind of information that you had were being left unregulated 
completely, whereas Internet service providers were being 
singled out for asymmetric regulation. I think events over the 
last couple of years, if anything, have proven that----
    Senator Van Hollen. That is no doubt we need--there is no 
doubt. I think there is a consensus here that we need 
protection for consumers. I am not sure about the argument 
about eliminating protections for some as we wait to get 
protections for everybody, but we will debate that.
    And your answer is you do not have the authority in the FTC 
to move forward in this area?
    Mr. Simons. Well, we do not have the authority to pass the 
same rule that the FCC passed.
    Senator Van Hollen. Okay. But you can look at some of these 
other areas. I will follow up.

                                   5G

    Let me ask you, Chairman Pai. I want to get back to 5G for 
a minute because obviously we want to accelerate the deployment 
of 5G here in the United States, and as I indicated, we are 
going to have to sort of review how we got so far behind in 
some parts of 5G here in the United States.
    But we also want to make sure that we protect the security 
of 5G going forward because it is going to be, as I understand 
it, connected to everything, the Internet of Things. So we want 
to make sure that malign actors cannot breach the cybersecurity 
of these systems.
    As I recall back in November 2017, the Obama administration 
had proposed some regulations to deal with the cybersecurity 
concerns on 5G. You thought that might be too burdensome, and 
so we have dispensed with those.
    So my question now is, what is your plan specifically to 
make sure that as we move forward in 5G that we also make sure 
that we do it right from the start? Because obviously, to the 
extent that we get it right from the start, we will not have a 
whole lot of problems. We will have less problems with security 
going forward. What are your specific plans?
    Chairman Pai. Thank you for the question, Senator.
    We are working very extensively with our Federal partners. 
For example, the Cybersecurity and Infrastructure Security 
Agency at the Department of Homeland Security has primary 
jurisdiction over this issue, and we work regularly with Chris 
Krebs, the head of that agency.
    Along with that, I have been working extensively with a lot 
of other Federal partners. You referenced earlier the Prague 
conference, for example. I mean, there we had not just me, but 
representatives from the National Security Council, the 
Department of State, the Department of Commerce, and other 
agencies working together to make sure the security of the ICT 
networks was something that we recognized.
    In addition to that, we have been working with the privacy 
sector to make sure that some of these technical standards for 
5G are being developed, that those security protocols are 
incorporated into the standards. So as I was mentioning 
earlier, this is not something where we just go ahead and build 
it as quickly as we can and then maybe a year or two later 
wonder, ``Oh, maybe we should do something on security.''
    We want security to come in at the front end, and so we 
have been engaging in those conversations as well.
    Senator Van Hollen. Are there going to be any standards 
that are required as best practices in this area?
    Chairman Pai. That is one of the things we are developing, 
and so it might not be the sort of formal FCC regulations that 
might have been proposed in the past because, as I said, the 
DHS has the primary jurisdiction over this, but what we can say 
is we have been urging industry, all stakeholders, to think 
about the security of these 5G networks at the front end. And 
that is a message that has been very well received.
    Senator Van Hollen. All right. I look forward to continuing 
the conversation because it seems to me we want some uniform 
rules of the road so that people know that every carrier, every 
5G provider has built into it important security protections.
    Chairman Pai. And I think that supply chain proceeding that 
I mentioned earlier also serves a very important signaling 
function. If the FCC proposes to ban the use of this Federal 
funding from being used on equipment or services that come from 
companies that present a national security threat, I think that 
obviously sends a signal to our domestic companies.
    We want to take security seriously. We are not going to use 
this funding for any purpose that might compromise national 
security. Even from a business perspective, it may make sense 
in some circumstances.
    Senator Van Hollen. Got it. If I could, Mr. Chairman.
    So I understand you have the authority with respect to the 
public funds. If you thought that there was a component, a 
carrier, U.S. carrier was going to be put in their phone that 
you thought could compromise the system, do you have the 
authority at the FCC right now to say do not do that?
    Chairman Pai. To the extent it is accepting Federal funds?
    Senator Van Hollen. No. Without Federal funds.
    Chairman Pai. Generally speaking, that is one of the issues 
that we are exploring. Our jurisdiction is not as clear as it 
would be in the case of Federal funding that is being expended.
    Senator Van Hollen. Right. I understand that. Maybe we can 
follow up on that as well.
    Chairman Pai. I would be happy to do that.
    Senator Van Hollen. Thanks.
    Senator Kennedy. Senator Daines.
    Senator Daines. Thank you, Chairman Kennedy.

                              DRUG PRICING

    Chairman Simons, our current drug pricing system is full of 
convoluted and opaque practices, and those are probably the 
kind words I could use today.
    As Montanans continue to struggle to afford the medications 
they rely on, I believe we need a better understanding of how 
the drug supply chain works today in order to protect patients 
and, importantly, lower costs. That is why I introduced a bill 
with Chairman Grassley last week that would require the FTC to 
study the role of the middle man, the pharmacy benefit 
managers, in this drug supply chain.
    It is my understanding the last time the FTC examined PBM 
practices was back in 2005.
    Chairman Simons, don't you think it is long overdue for our 
Nation's consumer protection agency to examine whether the 
pharmacy middle men are actually focused on driving down costs 
for patients, because I think about rebates and so forth, 
instead of lining the pockets of their own industry?
    Mr. Simons. Thank you for that question, Senator. I am not 
sure I will take all the characterizations so strongly.
    But we are very concerned. We are focused on looking at how 
the PBMs are behaving. We were trying to do merger 
retrospectives for those and some without success so far, but 
we are also monitoring this sector of the health care industry 
very carefully, and we are looking for problems that we can 
attack with law enforcement.
    Senator Daines. Do I have your commitment to work with me 
on this piece of legislation?
    Mr. Simons. Sure. I would be happy to be as helpful as I 
can in any way possible.
    Senator Daines. I spent 13 years in the consumer products 
world once upon a time, this difference between a list price 
and net price.
    Mr. Simons. Yes.
    Senator Daines. And I am very curious. These rebates, over 
$170 billion of rebates go back in the system, and I would be 
very curious to see how much of that actually gets to the 
consumer to look at in terms of these opaque practices right 
now in the system.
    Mr. Simons. Right.

                       EMERGENCY BROADCAST SYSTEM

    Senator Daines. Chairman Pai, last week, I introduced the 
bipartisan PIRATE Act. Pirate broadcasters hurt not only 
Montana's legitimate radio broadcasters, but can affect our 
emergency broadcast system as well as air traffic control 
communications.
    Could you discuss some of the problems you have with 
cracking down on these bad actors?
    Chairman Pai. Yes. Thank you for the question, Senator.
    One of the problems is that it is somewhat like Whack-A-
Mole. If you shut them down in one location, they may move to 
another location, and that is why one of the FCC's strategies 
in this area has been to go after not just the pirates 
themselves, but those who may be giving them assistance.
    For example, one of our most significant enforcement 
actions to date on this issue under my leadership has been 
going after some individuals who essentially harbored a pirate, 
made their home and other facilities available to this 
individual to do pirate broadcast. That is one of the things 
that we have found that has been a problem.
    I look forward to working with you on your legislation, and 
we welcome any tools that might be able to help us attack this 
problem. It is a major problem for the licensed broadcasters 
who are looking to do the right thing.
    Senator Daines. Thanks, Chairman Pai.
    Another one of my priorities--and this is for you, Chairman 
Pai--has been making sure that Federal dollars for broadband 
and wireless connectivity are directed to unserved, rural areas 
instead of overbuilding existing networks.
    I know you grew up in rural Kansas. Part of this can be 
solved by better communication between the USDA and the FCC. 
Part of it can be resolved with stricter overbuilding rules. I 
believe both of these have been improved with recent 
legislation that I have been a champion of, but there is 
another component that needs to be addressed, and that is 
better information and better mapping.
    Many of my colleagues have discussed this at length, and 
there are a number of possible solutions, including 
partnerships, crowdsource data, shape files. I want to make 
sure we get the best data possible while also protecting the 
privacy of Montanans.
    Could you provide an update on the FCC actions and what you 
might see as possible solutions?
    Chairman Pai. I appreciate the question, Senator, and the 
entire premise of our Mobility Fund Phase II was exactly what 
you enunciated at the beginning of your question, which is that 
we do not want to subsidize a competitor in a part of the 
country that already has service.
    Meanwhile, there are many swaths of Montana, Kansas, other 
States, that do not have any service at all, and that was the 
entire premise when we started in January and February of 2017.
    With respect to the mapping issues, on the fixed side we 
have an ongoing Form 477 proceeding, which is examining, among 
other solutions, the shape files proposal that you mentioned. 
We hope to be able to get some recommendations from our staff 
on how to proceed with the Form 477 updates relatively soon. We 
essentially want to make that more granular so that they are 
more meaningful to us and more meaningful to you as well.
    On the Mobility Fund side, we have the ongoing enforcement 
investigation into a carrier or carriers that may have 
submitted inaccurate data. I expect that our staff is going to 
come to me relatively soon with a recommendation there as well, 
and we can determine what appropriate action to take with 
respect to the investigation and how to proceed with the 
overall Mobility Fund program.
    Senator Daines. Thank you, Chairman Pai.
    Senator Kennedy. Okay. Gentlemen, thank you. I want to 
close with this. Number one, I will now say another word about 
net neutrality. Unlike the last Congress, we have a little more 
flexibility now because the CRA is no longer an option. This is 
just one person's opinion, but I wanted to get this on the 
record. In my judgment, the debate that preceded the partisan 
vote in the House revealed some major flaws in Title II that 
could set our rural communities back, and we talked about the 
importance of our rural communities today.
    I think the debate revealed that these flaws could 
unnecessarily stifle development--we do not want that--along 
with innovation. And it could also undermine broadband 
investment and competition in small towns across this country, 
including but not limited to Louisiana.
    The stakes are very high. I do not need to tell you that, 
Mr. Chairman. The Senate needs to come up with a new bipartisan 
bill, and I am calling on you to help us do that. That bill 
needs to reflect some of the challenges that we face. We need 
to protect consumers in it, and we need to protect rural 
communities and give them broader access to broadband and 
innovative competition.
    Number two, if you work for the FCC or FTC and you are in 
the audience, raise your hand.
    [Show of hands.]
    Senator Kennedy. Thank you for your good work.
    Number three, thank you, Mr. Chairman.

                     ADDITIONAL COMMITTEE QUESTIONS

    If there are no further questions, the hearing record will 
remain open until next Tuesday 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 agencies for response subsequent to the 
hearing:]
                  Questions Submitted to Hon. Ajit Pai
              Questions Submitted by Senator John Kennedy
    Question. I'm concerned about the fraud, waste, and abuse in some 
of the Universal Service Fund programs, specifically, the Lifeline 
program. Last month (April), the FCC's Office of Inspector General 
issued an advisory and said ``Fraud remains a serious problem for the 
Lifeline program.'' This advisory also reminded us that just last year, 
the Office of Inspector General published an audit report which 
estimated the number of improper Lifeline payments at more than $330 
million in fiscal year 2017 alone. What reforms is the FCC engaged in 
and implementing to tackle these improper payments? Does the Office of 
Investigations have the right amount of resources to tackle this job, 
including having enough criminal investigators?
    Answer. I share your concerns about waste, fraud, and abuse in the 
Lifeline program, and am aware of the problems cited in the FCC's 
Office of Inspector General's April 16, 2019 advisory letter. If 
Lifeline is going to be an effective tool for bridging the digital 
divide, we must ensure that every dollar spent in the program is spent 
well.
    Your subcommittee took an important step in assisting us to achieve 
this goal and address USF fraud issues by approving, per your July 11, 
2019 letter, the FCC's creation of a Fraud Division within our 
Enforcement Bureau. The newly organized division will be comprised of 
attorneys and investigators with financial crimes experience to enhance 
and make permanent the FCC's ability to identify fraudulent schemes 
that have resulted in improper disbursements or other fraud on the 
government. By identifying these often-sophisticated schemes, the FCC 
can craft effective and efficient enforcement responses. I will 
certainly keep you apprised should the agency determine that the 
resources available to this division are insufficient for the task 
involved.
    Even before the designation of our new Fraud Division, we 
aggressively addressed problems in the Lifeline program. For instance, 
in 2017, the Commission settled five Lifeline improper payment 
investigations. Under the terms of the relevant consent decrees, these 
five entities are operating under a compliance plan and have made a 
total contribution of $2,355,000 to the United States Treasury. And in 
October 2018, we released a $63 million Notice of Apparent Liability 
against a Lifeline provider for apparently willfully and repeatedly 
violating the Commission's rules governing the Lifeline program.
    We have also implemented a number of important administrative 
changes that will help reduce Lifeline program fraud and improper 
payments. Rolling out the National Verifier is critical to reducing the 
unacceptably high rate of improper payments in the program. The 
National Verifier has launched in 37 States and territories as well as 
the District of Columbia. Commission staff and USAC are working 
diligently to meet the December 2019 nationwide rollout deadline 
established by the 2016 Lifeline Order.
    The National Verifier represents an important step in ensuring that 
unscrupulous providers do not enroll ineligible consumers in the 
program, but it is not enough. USAC has therefore implemented several 
safeguards at my direction to mitigate waste, fraud and abuse and 
reduce improper payments in the Lifeline program. USAC now regularly 
reviews program subscribership to identify and remove: (1) subscribers 
who list a home address that is also used by an excessive number of 
other subscribers; (2) deceased subscribers; and (3) subscribers who 
are otherwise no longer eligible for the program. Since USAC started 
this process in the fourth quarter of 2017, it has identified over $2.1 
million to be recovered from providers and removed over 141,000 
ineligible subscribers from the program. Also, in late 2017 and early 
2018, USAC made several important changes to its reimbursement system 
to prevent Lifeline providers from claiming more funding than they are 
entitled to. Audits are another important piece of improving 
accountability, and at my direction, USAC is conducting for the first 
time forensic audits of several Lifeline providers to assess compliance 
with program rules.
    We are also working with the Inspector General's Office to address 
structural weaknesses in Lifeline that will not be fixed by the 
National Verifier. For example, at my direction, USAC is developing a 
new database that will allow it to account for and monitor the 
registration activity of carrier representatives responsible for 
enrolling consumers in the program. This database will help USAC and 
the FCC identify conduct by sales agents and employees who may be 
attempting to defraud the program.
    The bottom line is that the FCC shares your concern and will always 
aim to prevent and, as appropriate, prosecute those who seek to or do 
in fact defraud the Universal Service Fund.
    Question. Chairman Pai you recently laid out a plan to create a new 
$20.4 billion Rural Digital Opportunity Fund to extend high-speed 
broadband in rural America. How many individuals currently lack access 
to broadband in their homes? Can you provide more details about the 
Rural Digital Opportunity Fund and how you plan to repurpose Universal 
Service Funds?
    Answer. Bridging the digital divide has been my top priority since 
becoming Chairman in 2017. In that time, we've focused on removing 
barriers to infrastructure, promoting competition, and providing 
efficient, effective support for rural broadband expansion through our 
Universal Service Fund programs. As a result of those efforts, the 
digital divide has narrowed substantially, and more Americans than ever 
before have access to high-speed broadband. The number of Americans in 
census blocks wholly lacking at least 25 Mbps/3 Mbps service dropped 
from 26.1 million at the end of 2016 to 21.3 million at the end of 
2017, a decrease of more than 18 percent.
    But more work remains to close the digital divide. That's why I 
circulated a proposal for the FCC's August Open Meeting to establish 
the Rural Digital Opportunity Fund, a modernized approach for 
connecting the hardest-to-serve corners of our country. Building on the 
success of the CAF Phase II auction, the Rural Digital Opportunity Fund 
would, as you observed, provide $20.4 billion over 10 years to support 
up to gigabit service to millions of unserved Americans through a 
competitive auction. This will ensure that the most unserved Americans 
will be covered for the lowest cost possible. The Commission adopted 
the Notice of Proposed Rulemaking addressing the Rural Digital 
Opportunity Fund on August 1.
    Question. Last summer, the FCC announced that it was going to take 
action to address immediate and long-term funding shortages in the 
Rural Health Care Program. When can we expect that you will take action 
in a way that gives assurance to providers that they can rely on the 
program to help get services to rural places in the lower 48 States? If 
that action is already taking place, please provide the subcommittee 
with an enumerated list of what is being done.
    Answer. As you know, the FCC's Rural Health Care (RHC) Program 
helps healthcare providers afford the connectivity that they need to 
better serve patients. We have taken several steps to extend the 
program's impact to those who may not otherwise have access to high-
quality healthcare. For instance, we adopted the first increase to the 
program's budget in a generation. Specifically, in a June 2018 Order, 
the Commission increased the annual RHC Program funding cap by 43 
percent, to $571 million, starting with fiscal year 2017; adjusted the 
RHC Program funding cap for inflation, starting in fiscal year 2018; 
and established a process to carry-forward unused funds from past 
funding years for use in future funding years. Thanks to these 
measures, no rural healthcare providers seeking support from the Rural 
Health Care Program were capped in fiscal year 2018.
    In order to promote the efficient distribution of limited RHC 
Program funds, and increase transparency and predictability for Program 
participants, the Commission adopted a Report and Order at the FCC's 
August Open Meeting which reformed RHC Program rules. The Report and 
Order (1) reformed the distribution of RHC funding to promote 
efficiency and reduced aspects of the Telecommunications (Telecom) 
Program that encourage waste, fraud, and abuse; (2) streamlined and 
simplified the calculations of the discounted rates that healthcare 
providers pay for communications services and the amount of support 
received from the program; (3) directed the Program Administrator to 
create a database of rates that healthcare providers could use to 
quickly and easily determine the amount of support they can receive 
from the Program; (4) targeted funding to the most rural areas and 
those facing shortages of healthcare providers and ensured that 
eligible rural healthcare providers continue to benefit from program 
funding in the event that demand for the Program exceeds its funding 
cap; (5) simplified the application process for Program participants 
and provided more clarity regarding Program procedures; and (6) 
directed the Program Administrator to take a variety of actions to 
increase transparency in the Program and ensure that all applicants 
receive complete and timely information to help inform their decisions 
regarding eligible services and purchases.
    Question. When can we expect to see substantive amounts--versus 
piecemeal amounts--of 2018 Rural Health Care Program monies being 
released to those States that are in need?
    Answer. The Commission has taken steps to ensure that all funding 
requests seeking support from the Rural Health Care (RHC) Program for 
services delivered in fiscal year 2018 are funded to their full 
eligible amounts and are issued as quickly as possible. First, pursuant 
to the measures adopted by the June 2018 RHC Funding Cap Order, the RHC 
Program funding cap for fiscal year 2018 was approximately $581 million 
(as opposed to $400 million when I came into office). Second, in 
October 2018, I announced that all single-year 2018 funding requests 
would be funded to their full eligible amounts, and the Program 
Administrator began processing and issuing those funding decisions 
shortly after. Third, on May 14, 2019, the Commission adopted an Order 
providing full funding for multi-year and upfront payment funding 
requests for services delivered in fiscal year 2018. Because the total 
amount of multi-year and upfront demand exceeded the $150 million 
funding cap on such requests within the Healthcare Connect Fund, absent 
action by the Commission, USAC would have been required to pro-rate 
this funding.
    To avoid significant reductions in support, the Commission 
suspended its pro-ration rule for fiscal year 2018 and directed USAC to 
process the fiscal year 2018 portion of multi-year commitment requests 
as single-year funding requests and treat the underlying multi-year 
contracts as evergreen. That action ensured that the healthcare 
providers that submitted the request received the full funding they 
needed for their fiscal year 2018 services and created a path for them 
to seek the remaining funding requested in subsequent funding years 
without having to rebid the contracts. Taken together, these decisions 
ensured that the healthcare providers could continue to obtain the 
critical telecommunications and advanced services needed for the 
delivery of healthcare services to their rural communities.
    Question. Regarding the 6 GHz proceeding, the FCC told me in a 
recent letter that the FCC believes an automated frequency control 
(AFC) system will prevent interference to utilities and other critical 
infrastructure. I've been told by energy companies in my State that 
this technology has not been proven. Has the FCC actually tested this 
technology and can you vouch that it will work? If not, will you test 
this system prior to taking final action?
    Answer. I've consistently stated that the FCC will ensure that it 
will protect incumbent systems in the 6 GHz band from harmful 
interference. To that end, the NPRM proposes an automated frequency 
control system for the 5.925-6.425 GHz and 6.525-6.875 GHz sub-bands to 
identify frequencies on which unlicensed devices could operate without 
causing harmful interference to fixed point-to-point microwave 
receivers. The Commission has employed automated systems previously to 
enable sharing of spectrum such as in the TV White Spaces and Citizens 
Broadband Radio Service. To be sure, this is a complicated proceeding, 
with the record having only recently closed, so the Commission will 
conduct a thorough review of the record prior to making any final 
decision.
    Question. Regarding the 6 GHz proceeding, energy companies in my 
State have told me that if there is even a threat to disruption of 
their communications networks, they will need to consider relocating to 
another band, which could cost tens of millions. That is assuming it is 
even feasible to relocate, which is not a given. In the 90s, the FCC 
compensated utilities when they were forced into the 6 GHz band. I have 
significant concerns asking Louisiana energy customers to pay for this 
effort. Since this action may force incumbents out of this band, will 
you support compensating those who need to relocate to ensure the 
safety and reliability of the electric grid?
    Answer. As mentioned above, the Commission will ensure that it will 
protect incumbent systems in the 6 GHz band from harmful interference. 
Indeed, it has proposed and is considering rules to ensure interference 
will not occur. Accordingly, the NPRM does not propose to relocate 
energy companies to other spectrum bands, and they are not expected to 
incur any costs under the proposed rules.
    Question. In Louisiana, the FCC's broadband maps show that a number 
of communities remain unserved, especially in rural areas. Even worse, 
the current maps overstate coverage, meaning that many more residents 
lack broadband, but we don't even know where they are. I believe the 
FCC should take immediate steps to update its broadband maps with more 
detailed service area information to identify and spur deployment, 
through private investment or subsidies like the Rural Digital 
Opportunity Fund you've announced. Chairman Pai, will you prioritize 
completing the FCC's proceeding to update its broadband data and maps?
    Answer. I agree that obtaining and using updated and accurate 
broadband deployment data is critical to accomplishing the goal of 
making broadband available to all Americans, regardless of where they 
live. We need to understand where broadband is available and where it 
is not to target our efforts and direct funding to areas that are most 
in need.
    That is why the Commission began a top-to-bottom review of our 
deployment data collection to ensure that broadband data will be more 
precise, granular, and ultimately useful to the Commission and the 
public. Along those lines, the Commission adopted a Report and Order on 
August 1 to create the Digital Opportunity Data Collection, an all-new 
approach to mapping that would yield more granular and more accurate 
broadband maps. That Report and Order also provides for regular updates 
of the filed data to ensure that the maps we rely on are current. I'm 
also proposing that we verify those maps through crowdsourcing--
feedback directly from the public. These updated maps will be used to 
focus funding to expand broadband through future initiatives such as 
the second phase of the proposed Rural Digital Opportunity Fund (RDOF).
    Question. Chairman Pai, I commend your focus on fostering a 
regulatory environment that encourages ongoing private investment, 
including in rural America. One issue that has come to my attention is 
that communities in some parts of the country are imposing additional 
franchise requirements and fees above and beyond what's allowed under 
Federal law. I'm concerned that these extra fees will discourage 
broadband deployment in rural areas that are already more costly to 
serve or make service more expensive for rural residents. Do you share 
these concerns?
    Answer. I do. And the Commission adopted rules on August 1 to 
address this issue. As you know, the Communications Act limits 
franchise fees to 5 percent of cable revenues and defines ``franchise 
fee'' to include ``any tax, fee, or assessment of any kind imposed by a 
franchising authority or other governmental entity on a cable operator 
or cable subscriber, or both, solely because of their status as such.'' 
47 U.S.C. Sec. 542(g)(1). In Montgomery County, Md. et al. v. FCC, the 
U.S. Court of Appeals for the Sixth Circuit held that the terms ``tax'' 
and ``assessment'' were broad enough to encompass nonmonetary 
exactions--such as cable-related, in-kind contributions. 863 F.3d 485, 
490-91 (6th Cir. 2017). But the court held that just because the 
statutory definition of ``franchise fee'' could include such 
nonmonetary contributions did not necessarily mean that it did include 
them, and it remanded the issue to the Commission for further 
consideration. See id. at 491-92.
    In response to this remand, the Commission unanimously issued its 
Second Further Notice of Proposed Rulemaking to consider the scope of 
the congressionally-mandated statutory limit on franchise fees. The 
Commission developed a voluminous record in response to this notice, 
including numerous submissions from local franchising authorities, 
providers of public, educational, or governmental (PEG) programming, 
and cable operators.
    And on August 1, the Commission reached the following conclusions. 
First, concluded that cable-related, ``in-kind'' contributions required 
by a cable franchising agreement are franchise fees subject to the 
statutory 5 percent cap on franchise fees set forth in section 622 of 
the Communications Act, with limited exceptions, including an exemption 
for certain capital costs related to PEG channels. Second, it found 
that under the Communications Act, local franchise authorities may not 
regulate the provision of most non-cable services, including broadband 
Internet access service, offered over a cable system by an incumbent 
cable operator. Third, it found that the Act preempts any State or 
local regulation of a cable operator's non-cable services that would 
impose obligations on franchised cable operators beyond what Title VI 
of the Communications Act allows. Finally, it found that Commission 
requirements that concern local franchise authority regulation of cable 
operators should apply to State-level franchising actions and State 
regulations that impose requirements on local franchising.
    This approach, while grounded in legal interpretation of the 
Communications Act, would have a very real practical impact: freeing up 
capital that could then be used to build, extend, and/or maintain high-
speed broadband networks. This would be particularly helpful in rural 
areas which, as you observe, are too often unserved or underserved.
                                 ______
                                 
            Questions Submitted by Senator Patrick J. Leahy
    Question. You have claimed that, following the repeal of net 
neutrality protections, there would be a boom in private investment. 
During your last appearance before the subcommittee, I asked you to 
provide specific data to show exactly how this would benefit unserved 
rural communities in Vermont. At the time, you declined to provide that 
information. Now that net neutrality has been repealed for more than a 
full year, I expect that you will be able to provide my constituents in 
Vermont with evidence showing exactly how much this supposed boom in 
private investment in broadband networks has benefitted them.
  --How many unserved Vermonters have gained access to service due 
        solely to private investment, excluding investments made as 
        part of government programs like the Connect America Fund?
  --How many Vermonters have seen their broadband bill reduced compared 
        to their December 2017 bill?
    Answer. Our deregulatory approach, including the restoration of the 
bipartisan, light-touch approach to Internet regulation reflected in 
the Restoring Internet Freedom Order, has helped increase broadband 
infrastructure investment in the United States and close the digital 
divide.
    In 2018, for example, fiber was deployed to more new homes in the 
United States than any year ever. Investment in broadband networks 
increased by $3 billion, the second straight year of increased 
investment, which followed 2 years of declining investment at the end 
of the prior administration. And the number of wireless small cells in 
the United States deployed more than quadrupled in 2018. Turning to 
Vermont, I would refer to a letter written to you from Dr. Michel 
Guite, the Chairman and CEO of Vermont Telephone and VTel Wireless 
(``VTel''), on May 25, 2018. In that letter, Dr. Guite wrote: ``As far 
as net neutrality is concerned, . . . I can assure that regulating 
broadband like legacy telephone service would not create any incentives 
for VTel to invest in its broadband network. In fact, it would have 
precisely the opposite effect.'' He continued, ``[y]ou asked Chairman 
Pai to give tangible examples of investment in rural broadband as a 
result of recent FCC policies. I can tell you that, just days ago, VTel 
committed $4 million to purchase equipment and services from Ericsson 
to upgrade its 4G LTE core to enable voice roaming and Wi-Fi calling to 
all our Vermont rural subscribers and to simultaneously begin rolling 
out faster mobile broadband that will start our transition to 5G. This 
commitment represents VTel's largest single technology investment since 
the capital invested in connection with VTel's ARRA awards, and one of 
the largest in the history of our company.'' He further stated that 
``[t]he FCC under Chairman Pai's leadership has created a positive 
regulatory climate to make such investments,'' and concluded, ``VTel is 
quite optimistic about the future, and the current FCC is a significant 
reason for our optimism.'' For your convenience, I have attached to 
this answer a copy of the letter from Dr. Guite.
    Despite the positive strides we have seen over the last two-and-a-
half years, our work to close the digital divide is not complete. This 
will remain our top priority as we continue our efforts to help deliver 
the benefits of broadband to all Americans.




                                 ______
                                 
               Questions Submitted by Senator Jerry Moran
    Question. Your testimony indicated that the FCC was ``applying 
lessons learned from the Connect America Fund Phase II reverse 
auction'' in establishing the recently announced $20.4 billion Rural 
Digital Opportunity Fund. Would you please describe what these 
``lessons'' are? How will the FCC propose to account for them in the 
rulemaking setting up the fund?
    Answer. Among the lessons learned from the CAF Phase II auction--
lessons we hope to apply in the context of the Rural Digital 
Opportunity Fund--are that the mechanism of a reverse auction, with the 
intramodal competition that mechanism allows, is a much more efficient 
system for distributing funding. Similarly, ``weighting'' CAF Phase II 
bids so that proposals to offer higher-speed, lower-latency services 
were given a leg-up over lower-speed, higher-latency bids proved to be 
successful, which over 99 percent of households to be covered in that 
auction served with speeds of at least 25/3 Mbps, most served with 
speeds of at least 100 Mbps, and many served with gigabit speeds.
    Question. I support the FCC's efforts to verify that broadband 
network supported by the Universal Service Fund (USF) are meeting 
program requirements through their performance testing proposal. 
However, testing protocols need to be structured reasonably while 
taking into account the technical, administrative, and financial 
challenges posed to small carriers reliant on USF support. Please 
provide an update on the FCC's work to implement these performance 
testing requirement. Are there currently testing solutions available 
for USF participants that would not require customers installing new 
equipment in their homes?
  --Also, what is the expected timeline for implementation?
    Answer. As you note, performance measures are critical to ensuring 
that consumers receive the level of service that providers have 
committed to deploy thanks in part to universal service high-cost 
support. Under an order the FCC adopted in July 2018, carriers subject 
to performance measures were required to begin testing in the third and 
fourth quarters of 2019 and report these results with an accompanying 
certification by July 1, 2020.
    However, in order to implement the testing regime, the Commission 
needs to develop a mechanism for collecting the testing data and obtain 
Paperwork Reduction Act (PRA) approval. In addition, several petitions 
for reconsideration and applications for review were filed regarding 
the July 2018 order. In light of the issues raised in these filings, 
the need for additional technical development of the interfaces 
required, and the requirement for PRA approval, the Wireline 
Competition Bureau issued a public notice on May 20, 2019 delaying the 
requirement to begin testing and reporting of speed and latency results 
until the first quarter of 2020. The July 2018 order gives service 
providers the flexibility to use software solutions. However, one issue 
raised in the various filings was that testing solutions that can use 
existing customer premise equipment, such as cable modems and gateways, 
was not widely available. Since that time, some service providers and 
software vendors have told the Commission that these software solutions 
are increasingly available for many service providers. Commission staff 
are reviewing these filings and will continue to work to ensure that 
performance testing measures accommodate service providers of all sizes 
and capabilities.
    Question. Your testimony covered the creation of the Office of 
Economics and Analytics. Would you please describe the FCC's plans to 
``expand and deepen'' the use of economic analysis in its upcoming 
decisionmaking?
  --In terms of rulemakings and auctions, what does coordination 
        between the Office of Economics and Analytics and the other 
        Bureaus and Offices look like? What are the resource-based 
        needs of these coordination efforts?
    Answer. The FCC officially launched the Office of Economics and 
Analytics (OEA) in December 2018 after receiving approval for the 
reorganization from your subcommittee. Among its primary goals, OEA is 
elevating rigorous, objective economic analysis throughout the FCC in 
order to better inform policymaking.
    Generally speaking, OEA provides input to the FCC's Bureaus and 
Offices on all matters with significant economic content through all 
stages of the rulemaking process. For example, OEA contributes to 
options memos, prepares questions for NPRMs, and conducts economic 
analysis for an Order. In accordance with the rules the Commission 
adopted when it established OEA, the Economic Analysis Division (EAD) 
within OEA performs an independent economic review of all Commission-
level rulemakings. EAD also reviews other Commission-level items and 
lends its expertise and suggestions as appropriate. As of July 1, 2019, 
EAD had reviewed over 150 Commission-level items, including proceedings 
from every Bureau within the FCC. The extent of the economic review in 
these cases typically depends on the estimated economic impact of the 
action. Items with over $100 million in estimated annual effect on the 
economy must receive a rigorous economically-grounded cost-benefit 
analysis. To date, two items have crossed this threshold.
    Similarly, Auctions Division attorneys and economists coordinate 
with the relevant Bureaus early in the rulemaking process. Auctions 
staff meet with Bureaus as soon as an auction or competitive bidding 
process is contemplated to provide expertise on designing and 
implementing efficient competitive bidding. The Auctions Division and 
other OEA economists are deeply involved in the design and 
implementation of auctions, including creating the legal documents, 
producing intricate auction timelines, providing contractor oversight, 
and conducting and closing of an auction. The coordination efforts take 
place through meetings, emails, and planning documents.
    OEA also provides economic support, as needed, for other types of 
work produced by the Bureaus and Offices, such as merger review and 
enforcement actions. The level of analytic support ranges from 
answering discrete economic questions posed by FCC staff, to embedding 
economic experts throughout a proceeding. At the start of Commission-
level proceedings, OEA and the relevant Bureau/Office meet to jointly 
define work product and responsibilities, develop a communications 
plan, discuss timing and prioritization, and determine the necessary 
review processes. Every Bureau and Office has a designated person in 
the OEA front office for coordination of this process. Most of OEA's 
economic and analytic work is concentrated in EAD and the Industry 
Analysis Division.
    OEA also is responsible for designing and implementing FCC 
auctions; developing and implementing consistent and effective agency-
wide data, collections, practices, and policies; and conducting long-
term economic and analytical research related to communications 
policies to inform future rule-makings. Centralizing the FCC's economic 
functions into one office has contributed to a culture in which 
economists and others focused on economic functions work and 
collaborate effectively to perform independent economic analysis that 
informs the Commission's policymaking decisions. In addition, OEA has 
issued two economic white papers in the past 6 months--the first two 
whitepapers that the FCC has issued since 2012.
    No additional resources were requested for coordination within the 
Agency at this time.
    Question. Last Congress, I was successful in enacting the FCC CIO 
Parity Act, which requires the FCC to ensure that the agency's Chief 
Information Officer (CIO) has a significant role in the budgeting, 
programming, and hiring decisions of the agency. Given the CIO's 
subject matter expertise, prioritizing the replacement of costly and 
vulnerable legacy IT systems would be accounted for in this critical 
decisionmaking. Did the agency's CIO have a significant role in the 
development of the President's fiscal year 2020 budget request?
  --Were any specific ``legacy'' IT systems prioritized for replacement 
        as a result?
    Answer. Thank you for your leadership in elevating the Chief 
Information Officer's (CIO) role within all agencies. At the FCC, our 
CIO is an essential and valued member of the Office of Managing 
Director team and has significant responsibility for developing 
Information Technology (IT) planning, budgeting and office hiring. The 
CIO had a significant role in the development of the President's fiscal 
year 2020 budget request.
    The current acting CIO and his predecessor have focused all 
available resources on following through with the replacement of legacy 
systems and modernization of our systems. The Commission's fiscal year 
2020 Budget CJ, at pages 19-21, provides the current focus on IT 
modernization. Importantly, IT system upgrades and replacement account 
for the entire new investments section of our request at $3.19 million.
    The CIO and FCC IT Team have worked closely with the Commission's 
Bureau and Office leadership to prioritize modernization efforts in the 
areas that will benefit most from replacement of the legacy systems. 
Specific IT systems prioritized for replacement include: Integrated 
Spectrum Auction System (ISAS), International Bureau Filing System 
(IBFS), Universal Licensing System (ULS), Disaster Information 
Reporting System (DIRS), and the OET Frequency Assignment Coordination 
System (OFACS).
    Question. Your testimony acknowledges the importance of making more 
spectrum available for unlicensed operations. Would you please describe 
the role that innovative technologies and sharing techniques play in 
increasing spectrum access for unlicensed operations?
  --As the Chairman of the CJS Appropriations Subcommittee, I remain 
        interested in the research and development taking place at the 
        Institute for Telecommunication Sciences, the primary 
        engineering arm of NTIA. Does the work taking place at the 
        Institute assist the FCC with its decisionmaking around 
        unlicensed operations?
    Answer. Unlicensed devices typically share spectrum with other 
services on a non-interference basis. The Commission has adopted 
provisions to enable unlicensed devices to share spectrum using 
advanced sharing techniques to prevent harmful interference to 
incumbent services. For example, unlicensed devices were provided 
access to the TV White Spaces and the Citizens Broadband Radio Service 
(CBRS) by developing data bases of protected operations that would be 
avoided by the unlicensed devices. We have worked closely with the 
Institute of Telecommunication Sciences (ITS) in testing the CBRS data 
bases and we have a long history of working collaboratively with ITS on 
advanced spectrum sharing techniques for both licensed and unlicensed 
services.
                                 ______
                                 
              Questions Submitted by Senator John Boozman
    Question. When can we expect to see substantive amounts--versus 
piecemeal amounts--of 2018 Rural Health Care Program monies being 
released to those States that are in need?
    Answer. The Commission has taken steps to ensure that all funding 
requests seeking support from the Rural Health Care (RHC) Program for 
services delivered in fiscal year 2018 are funded to their full 
eligible amounts and are issued as quickly as possible. First, pursuant 
to the measures adopted by the June 2018 RHC Funding Cap Order, the RHC 
Program funding cap for fiscal year 2018 was approximately $581 million 
(as opposed to $400 million when I came into office). Second, in 
October 2018, I announced that all single-year 2018 funding requests 
would be funded to their full eligible amounts, and the Program 
Administrator began processing and issuing those funding decisions 
shortly after. Third, on May 14, 2019, the Commission adopted an Order 
providing full funding for multi-year and upfront payment funding 
requests for services delivered in fiscal year 2018. Because the total 
amount of multi-year and upfront demand exceeded the $150 million 
funding cap on such requests within the Healthcare Connect Fund, absent 
action by the Commission, USAC would have been required to pro-rate 
this funding.
    To avoid significant reductions in support, the Commission 
suspended its pro-ration rule for fiscal year 2018 and directed USAC to 
process the fiscal year 2018 portion of multi-year commitment requests 
as single-year funding requests and treat the underlying multi-year 
contracts as evergreen. That action ensured that the healthcare 
providers that submitted the request received the full funding they 
needed for their fiscal year 2018 services and created a path for them 
to seek the remaining funding requested in subsequent funding years 
without having to rebid the contracts. Taken together, these actions 
ensured that the healthcare providers could continue to obtain the 
critical telecommunications and advanced services needed for the 
delivery of healthcare services to their rural communities.
    Question. Last summer, the FCC announced that it was going to take 
action to address immediate and long-term funding shortages in the 
Rural Health Care Program. When can we expect that you will take action 
in a way that gives assurance to providers that they can rely on the 
program to help get services to rural places in the lower 48 States? If 
that action is already taking place, please provide the subcommittee 
with an enumerated list of what is being done.
    Answer. The Rural Health Care (RHC) Program helps healthcare 
providers afford the connectivity that they need to better serve 
patients, and we have taken several actions to address a significant 
increase for Program funds in recent years, as well as to make the 
distribution of funds more efficient and equitable. For instance, in a 
June 2018 Order, the Commission increased the annual RHC Program 
funding cap by 43 percent, to $571 million, starting with fiscal year 
2017, adjusted the RHC Program funding cap for inflation, starting in 
fiscal year 2018 and established a process to carry-forward unused 
funds from past funding years for use in future funding years. Thanks 
to these measures, no rural healthcare providers seeking support from 
the Rural Health Care Program were capped in fiscal year 2018.
    With an eye on the future, and in order to promote the efficient 
distribution of limited RHC Program funds and increase transparency and 
predictability for Program participants, the Commission adopted a 
Report and Order at the FCC's August Open Meeting to reform RHC Program 
rules. The Report and Order (1) reformed the distribution of RHC 
funding to promote efficiency and reduced incentives in the 
Telecommunications (Telecom) Program that encourage waste, fraud, and 
abuse, (2) streamlined and simplified the calculations of way the 
discounted rates that healthcare providers pay for communications 
services and the amount of support received from the Program; (3) 
directed the Program Administrator to create a database of rates that 
healthcare providers could use to quickly and easily determine the 
amount of support they can receive from the Program; (4) targeted 
funding to the most rural areas and those facing shortages of 
healthcare providers and ensured that eligible rural healthcare 
providers continue to benefit from Program funding in the event that 
demand for the Program exceeds its funding cap; (5) simplified the 
application process for Program participants and provide more clarity 
regarding Program procedures; and (6) directed the Program 
Administrator to take a variety of actions to increase transparency in 
the Program and ensured that all applicants receive complete and timely 
information to help inform their decisions regarding eligible services 
and purchases.
                                 ______
                                 
              Questions Submitted by Senator Steve Daines
    Question. I recently wrote a letter to the Commission along with my 
colleague, Sen. Johnson, regarding TV White Spaces technology and the 
need for the Commission finalize two outstanding rules. Thank you for 
taking action and providing certainty on those rules. There are still 
more issues to be resolved (such as enabling connected school buses and 
advancing IoT like precision agriculture). Can you give me an update on 
the outstanding rules regarding TV White Space and are you able to 
conclude those issues by the end of the year?
    Answer. I appreciate your ongoing interest in the Commission's TV 
White Spaces rules. As you are aware, earlier this year, the Commission 
adopted several revisions to its white spaces rules. These revisions 
improved the white space database unlicensed users rely on when 
accessing unused spectrum in the TV bands and modified technical rules 
to permit use of higher antennas in rural areas to enable greater 
coverage when providing broadband services.
    On May 3, 2019, Microsoft filed a petition for rulemaking 
requesting that the Commission further modify the rules for white space 
devices. Specifically, it requested that the Commission provide 
additional technical modifications to its rules to permit: (1) higher 
antenna power limits and heights for certain unlicensed devices; (2) 
more intensive use of unused spectrum where doing so would not cause 
harmful interference to licensed users; (3) further adjustments to the 
rules to support the use of white space channels for narrowband IoT; 
and (4) unlicensed white space device operations on movable platforms 
(such as tractors used for precision agriculture or school buses for 
connected services).
    The Commission released a public notice on May 9, 2019, seeking 
comment on the Microsoft petition. Comments were due on June 10, 2019, 
and reply comments were due on June 25, 2019. Sixteen parties filed 
comments and three parties filed reply comments. The comments were 
generally supportive, although some parties, such as wireless 
microphone manufacturers and broadcasters, expressed certain concerns.
    At this stage, our staff is reviewing the comments carefully. We 
will move forward once we have properly considered all of the comments 
and addressed the issues raised by the stakeholders.
    Question. Now more than ever, kids and parents deserve a safe place 
to access educational and entertainment content. There have been rules 
governing traditional media markets regarding advertising during 
children's program for decades, but little if anything when they are 
online. It has become imperative that we update our privacy laws to 
ensure our children's safety, which is why I introduced the SAFE KIDS 
Act that prevents websites used primarily for preK-12 purposes from 
collecting or using student data. I believe that it is important that 
we modernize children's television advertising rules to balance current 
trends while maintaining a safe space for children to watch educational 
and entertainment programs. Chairman Pai, will you commit to working 
with all stakeholders to modernize children's television advertising 
rules?
    Answer. As a general matter, I support modernizing our rules, 
within statutory constraints, to reflect today's market and technology. 
I am willing to work with all stakeholders to explore whether changes 
to the children's television advertising rules make sense.
    Question. The IP Caption Telephone Service (IP CTS) has enabled the 
hard of hearing community, and specifically certain veterans, to be 
more independent and integrate into the workforce. It is my 
understanding that the FCC is currently undergoing updates to the 
program and I want to make sure that any updates are balanced, well 
informed and broadly supported by the affected community. I believe 
that any updates should not result in an inferior service, specifically 
in regards to the automated speech recognition and access to equipment. 
Chairman Pai, will you commit to do additional studies on any proposed 
updates and work with all affected groups to ensure any existing 
concerns are addressed?
    Answer. I agree that IP CTS is a critical service for individuals 
with hearing loss. The vast majority of captioned telephone services 
already rely on automated speech recognition (ASR). However, those 
services previously have required the interposition of a communications 
assistant between the caller and the speech recognition software to 
``revoice'' a caller's words. This interposition slows transcription, 
reduces the privacy of calls for callers, and increases the costs of IP 
CTS.
    That's why the Commission took steps to modernize IP CTS in June 
2018 by authorizing the use of ASR without a communications assistant. 
We found that ASR has become a viable alternative with its improvements 
in accuracy, speed, and privacy--especially compared to services that 
require the interposition of a communications assistant. And the 
Commission found that consumers will continue to be able to select a 
provider based on quality of service and available methods, as ASR will 
not be the sole means of offering IP CTS.
    Additionally, I want to stress that nothing regarding our reforms 
allows substandard service: Providers using ASR must continue to meet 
the Commission's minimum Telecommunications Relay Service standards and 
report data to the Commission to help us determine if further measures 
are necessary.
                                 ______
                                 
            Questions Submitted by Senator Joe Manchin, III
                       public feedback mechanism
    Question. As long as we continue to rely solely on carrier-reported 
Form 477 data to tell us where there is and isn't coverage of fixed and 
mobile broadband, we will never have a complete picture that accurately 
depicts the real-world experiences of Americans.
  --Will a ``public feedback mechanism'' be considered within the 
        ongoing Form 477 proceeding?
  --Do you need new legislative authorities to consider and implement a 
        ``public feedback mechanism'' or could you do that already?
    Answer. I agree that using updated and accurate broadband 
deployment data is critical to accomplishing the goal of making 
broadband available to all Americans, regardless of where they live. We 
need to understand where broadband is available and where it is not to 
target our efforts and direct funding to areas that are most in need. 
That is why the Commission began a top-to-bottom review of our 
deployment data collection to ensure that broadband data will be more 
precise, granular, and ultimately useful to the Commission and the 
public.
    The Commission voted affirmatively on August 1 on a Report and 
Order I circulated which would yield more granular and more accurate 
broadband maps. It also provides for regular updates of the filed data 
to ensure that the maps we rely on are current. Consistent with our 
current authorities, the Report and Order also enables third-party 
verification through crowdsourcing--feedback directly from the public.
                         mobility fund phase ii
    Question. It has been exactly 5 months since your agency put a hold 
on Mobility Fund Phase II. My State desperately needs this funding.
  --Do you have any idea when you plan to move forward with it?
  --Do you believe we will have to start this entire process over 
        again?
    Answer. In December 2018, the Commission launched an investigation 
into whether one or more major carriers violated the MF-II reverse 
auction mapping rules and submitted incorrect coverage maps. The 
Commission has suspended the next step of the challenge process--the 
opening of a response window--pending the conclusion of this 
investigation, which we are actively working on. I expect Commission 
staff will be able to wrap up their investigation in the near term.
                     rural digital opportunity fund
    Question. Last month as part of your ``5G Fast Plan'', you 
announced the establishment of a $20.4 billion fund designated for 
rural broadband investment called the Rural Digital Opportunity Fund. 
While this announcement signals a positive step forward in bridging the 
digital divide, unless we fix our broadband coverage maps and ensure 
this new program has a dedicated amount set aside for places with 
mountainous terrain, I am concerned West Virginia will not see a dime 
of this funding.
  --I understand that your agency just opened a new docket for the 
        Rural Digital Opportunity Fund so it will take some time to go 
        through the regulatory process at the FCC but how do you 
        envision this proposal will help my State and when do you think 
        it will begin?
  --Can you commit to including a terrain factor or set aside within 
        this program so that places like West Virginia have a fair shot 
        at this funding when it is made available?
    Answer. On August 1, the Commission adopted a Notice of Proposed 
Rulemaking proposing to establish the Rural Digital Opportunity Fund 
(RDOF). This modernized approach for connecting the hardest-to-serve 
corners of our country will be the biggest step yet the Commission has 
taken to close the digital divide, including the gaps I've seen for 
myself in West Virginia.
    Building on the success of the CAF Phase II auction, the RDOF would 
provide more than $20 billion to support up to gigabit service to 
millions of unserved Americans through a competitive auction. This will 
ensure that the most unserved Americans will be covered for the lowest 
cost possible. The RDOF would target support to areas that lack access 
to fixed voice and 25/3 Mbps broadband and would be implemented through 
a two-phase approach.
    Phase I would allocate support to wholly unserved census blocks and 
Phase II would allocate support to unserved locations in partially 
unserved census blocks, along with areas not won in Phase I. The RDOF 
NPRM proposes to use the Connect America Cost Model to set reserve 
prices (as the Commission did with the CAF II auction). The model 
accounts for variations in cost due to terrain and soil conditions and 
are reflected in the reserve price.
    In addition, to encourage the deployment of higher speed services 
and recognizing that terrestrial fixed networks may serve as a backbone 
for 5G deployments, the weights proposed for different performance 
tiers in the RDOF NPRM favor gigabit-speed, low latency services.
    Our aim is to commence Phase I of the auction next year.
                           remote areas fund
    Question. You have stated that your agency plans to move forward 
with the Remote Areas Fund no later than 1 year after the commencement 
of the Connect America Fund II Auction which occurred in July of last 
year.
  --July is only a few short months away, are you still planning to 
        move forward with the Remote Areas Fund?
  --Can you identify which areas in my State are likely to be eligible 
        for this funding?
    Answer. The item adopted at the FCC's August Open Meeting proposing 
to establish the Rural Digital Opportunity Fund (RDOF) seeks comment on 
a budget of at least $20.4 billion over the next decade to support up 
to gigabit service to millions of unserved Americans through a 
competitive auction. As in the CAF Phase II auction, we propose to 
include both high-cost locations and extremely-high cost locations in 
the RDOF auction. Most of the areas that did not receive winning bids 
in the CAF Phase II auction were high-cost areas, and not extremely 
high-cost ones. Because it would be inefficient to conduct a separate 
Remote Areas Fund (RAF) auction for so few locations, we propose to 
make the areas from the CAF Phase II auction that did not attract bids, 
which could have been part of the RAF, eligible for the RDOF auction, 
and to make available the amount of funding the Commission once 
envisioned for the RAF (at least $100 million per year) part of the 
RDOF budget.
                    n11 suicide hotline for veterans
    Question. The National Suicide Hotline Improvement Act of 2018 
(Public Law 115-233), which was signed into law on August 18th, 2018, 
requires the Federal Communications Commission, in consultation with 
the Secretary of the Veterans Affairs, to complete a study on the 
effectiveness of an N11 dialing code for Veterans in crisis no later 
than August 2019.
  --What is your most recent update on the progress of the 
        aforementioned feasibility study for establishing an N11 
        dialing code for Veterans in crisis?
  --What is your timeline for completion of this study?
  --What outreach efforts have you conducted to date and planned in the 
        future to ensure that a representative sample of Veterans, 
        providers, and other relevant stakeholders have a voice in this 
        process?
  --What has the Secretary of Veterans Affairs provided you to complete 
        this study? Please provide any documentation from the VA that 
        has contributed to this study?
  --What is the earliest date that you could implement a three-digit 
        dialing number for Veterans in crisis?
    Answer. As you note, the Act directs the Commission to coordinate 
with the Department of Veterans Affairs (VA), as well as the Department 
of Health and Human Services' Substance Abuse and Mental Health 
Services Administration (SAMHSA), and the North American Numbering 
Council (NANC) in conducting a study examining the feasibility of 
designating a simple, easy-to-remember, three-digit dialing code to be 
used for a national suicide prevention and mental health crisis hotline 
system.
    The Commission's Wireline Competition Bureau issued two Public 
Notices seeking input from interested stakeholders on the issues that 
we must address in the study and the report required by the statute. In 
accordance with the statute, the Commission is also working closely 
with the VA, as well as SAMHSA, and the NANC as we carefully examine 
this important issue. The VA and SAMHSA conducted studies and provided 
reports to the Commission in early February 2019, and the NANC 
submitted its report in May.
    Commission staff is reviewing these reports, as well as comments 
filed by interested parties in the record, including veterans and 
family members of veterans. I personally have met with various 
stakeholders, including Utah Congressman Chris Stewart, the Trevor 
Project, and the American Foundation for Suicide Prevention, to hear 
their views.
    We will submit our report to Congress by the statutory deadline of 
August 14, 2019. Consistent with Congress' directive, the report will 
recommend whether a particular three-digit dialing code should be used 
for a nationwide suicide prevention and mental health crisis system. 
Before implementing any such recommendation, we would seek public input 
through a notice and comment proceeding. Interested parties, including 
veterans and veterans' organizations, would be invited to fully 
participate in that proceeding. Per your request, I've attached the VA 
Report to this response.






























                              ebs spectrum
    Question. On April 30th, 57 rural operators across 22 States 
including West Virginia filed a letter to the FCC stating that 
Educational Broadband Service (EBS) is critical to their ability to 
build out broadband networks in the rural areas they serve. They stated 
support for your plan to give educational entities the first priority 
to apply for an EBS license and enter into a lease with these rural 
operators.
  --Are you still planning to give educational entities first priority 
        to obtain an EBS license and allowing educators the chance to 
        partner with rural operators?
    Answer. On July 10, 2019, the Commission adopted a Report and Order 
that establishes a plan to leverage this vital mid-band spectrum both 
to provide wireless broadband, including 5G, and to help close the 
digital divide across rural America. The Report and Order does not 
adopt the proposal in the NPRM of providing a priority window for 
educational entities, as the Commission concluded that making the 
unassigned EBS spectrum available for flexible use is the best way to 
facilitate the rapid deployment of wireless broadband services, 
including 5G, to the public. We were informed in part by experience; 
today, this valuable public resource of 2.5 GHz spectrum is 
dramatically underused, especially west of the Mississippi River. And 
the overwhelming number of EBS licensees do not provide services 
themselves but rather lease spectrum to wireless carriers. The funds 
they accrue may not necessarily benefit schoolchildren. Indeed, as 
Commissioner Carr mentioned when the item was adopted, ``In the course 
of examining the 2.5 GHz licenses at issue in this order, I discovered 
that many of these national organizations are using this valuable 
public spectrum that they got for free for activities far removed from 
kids and schools. . . .  I am glad my colleagues agreed to include 
language in today's decision that directs the Enforcement Bureau and 
the Wireless Telecommunications Bureau to review these existing license 
holders for compliance with our rules and other applicable laws.''
                          5g in rural america
    Question. You recently unveiled your ``5G Fast Plan'' and while 
this new technology has the potential to yield significant economic 
benefits, expand consumer services and ignite innovation beyond our 
wildest dreams, I am concerned that much like the 3G and 4G 
technologies that have come before it, rural States like mine will not 
see this new 5G technology deployed to their area.
  --How do we ensure rural Americans are not left behind and will have 
        access to this new technology?
    Answer. Bridging the digital divide is the top priority for the 
Commission, and we are working in many ways to ensure that we meet our 
statutory directive to make available, so far as possible, 
communications services in rural America.
    That ethos extends to 5G. 5G-based technologies, both fixed and 
mobile wireless, will play a major role in connecting rural Americans. 
One of the most critical steps that the FCC can take is to approve the 
T-Mobile/Sprint transaction. Right now, Sprint has tremendous mid-band 
spectrum resources. But the record before the FCC makes clear that the 
company standing alone does not have the capability to deploy 5G in 
this spectrum throughout large parts of rural America. On the other 
hand, if the T-Mobile/Sprint transaction is approved, the combined 
company has committed to the FCC that they will deploy mid-band 5G to 
88 percent of our Nation's population, including two-third of rural 
Americans. And there would be significant financial penalties if these 
commitments were not met.
    Another way to ensure that rural Americans benefit from these 
technologies is to get more spectrum into the commercial marketplace--
whether high-band spectrum (like 24 GHz), mid-band spectrum (like 2.5 
GHz), or low-band spectrum (like 1675 MHz). Yet another way is to 
ensure that regulatory barriers to infrastructure deployment are low. 
This means streamlining the process for deploying small cells. This 
means ensuring that fiber deployment in rural areas is as appealing a 
prospect as possible to private sector companies. And this means that 
the FCC's Universal Service Fund--particularly its Rural Digital 
Opportunity Fund initiative, which will devote over $20 billion toward 
high-speed rural connectivity--helps support wireline networks critical 
for rural backhaul. I recognize that the business case for deployment 
in rural America is often difficult, if not impossible, to build. 
That's why I'm committed to modernizing our rules, and supporting 
legislative efforts to help us to do the same--the harder our rules 
make it to deploy 5G in rural areas, the less likely rural Americans 
will benefit from the faster speeds, lower latency, and next-generation 
services 5G could offer.
                               robo-calls
    Question. Do you believe opening a robocall enforcement division 
within the FCC could be a viable step toward combating the scourge of 
unwanted robocalls?
    Answer. The Commission's Enforcement Bureau already has a division 
focused on robocalls. It's called the Telecommunications Consumers 
Division. It aggressively enforces the Telephone Consumer Protection 
Act and the Truth in Caller ID Act, and is responsible for over $200 
million in fines against robocallers and Caller ID spoofers since 2017.
                                 ______
                                 
            Questions Submitted by Senator Chris Van Hollen
    Question. Congress granted local and State governments the ability 
to require cable operators to provide monetary franchise fees, and 
public, educational, and government (PEG) access channels. In a recent 
proceeding, the FCC proposed permitting cable operators to determine 
the fair market value of PEG channels and deduct the value of these PEG 
channels, as well as any broadband and video services provided to 
schools and senior discounts, from the monetary franchise fee 
payments.\1\ In his accompanying statement, Commissioner O'Rielly 
states that current law is ``vastly anachronistic,'' and seems to 
suggest that the FCC should update regulations to reflect the current 
marketplace, and that Congress may then follow his lead, stating ``some 
of these actions may require alterations of law, but doing so would 
provide a pathway for Congress to consider the same, if it was so 
inclined.'' \2\
---------------------------------------------------------------------------
    \1\ In re Implementation of Section 621(a)(1) of the Cable 
Communications Policy Act of 1984 as amended by the Cable Television 
Consumer Protection and Competition Act of 1992 (September 25, 
2018)(FCC 18-131) (``Cable In-Kind/Offset FNPRM'').
    \2\ Id. at page 37.
---------------------------------------------------------------------------
    If you adopt this proposal, I am told the estimated losses in 
franchise fees in my Maryland communities could be as high as 70 
percent and runs into the tens of millions of dollars. No less than 32 
Members of Congress--14 Senators, including my colleague Senator 
Cardin, and 18 members of the House have voiced their objections to 
this proposal that upends more than 35 years of cable franchise rules 
and relations.
  --Due to the strong opposition against this rule, will the Commission 
        consider tabling this proceeding?
  --Will you include a cost benefit analysis in this rulemaking that 
        weights the impact this will have on local communities versus 
        the marginal benefit to cable providers?
  --Do you have evidence in the record that demonstrates that changing 
        the interpretation of the law will have a positive impact on 
        broadband deployment, particularly in rural areas?
    Answer. On August 1, the Commission adopted an item to resolve the 
pending rulemaking and to faithfully implement the law that Congress 
has set forth. As you know, the pending proceeding is a direct result 
of a 2017 remand by the U.S. Court of Appeals for the Sixth Circuit in 
Montgomery County, Md., et al v. FCC. As a result of the remand, the 
Commission was obligated to take another look at how to interpret the 
definition of ``franchise fees'' in Section 622 of the Communications 
Act (47 U.S.C. Sec. 542). Specifically, the court directed the 
Commission to review how non-monetary (``in-kind'') contributions, such 
as those related to PEG channels, fit within the statutory definition.
    The Commission has a duty to implement the statute, and that is 
what it did on August 1. The relevant statute defines a ``franchise 
fee'' to include ``any tax, fee, or assessment of any kind.'' \3\ It 
then sets forth two exceptions to that definition related to PEG 
channels. For franchises in effect back in 1984, when the statute was 
passed, there is a broad exemption for ``payments which are required by 
the franchise to be made by the cable operator during the term of such 
franchise for, or in support or the use of, public, educational, or 
government access facilities.'' \4\ But for franchises granted later, 
the exemption is much narrower, covering only ``capital costs which are 
required by the franchise to be incurred by the cable operator for 
public, educational, or governmental access facilities.'' \5\
---------------------------------------------------------------------------
    \3\ 47 U.S.C. Sec. 542(g)(1) (emphasis added).
    \4\ 47 U.S.C. Sec. 542(g)(2)(B).
    \5\ 47 U.S.C. Sec. 542(g)(2)(C).
---------------------------------------------------------------------------
    This legal framework tells us two things. First, given these 
specific exemptions, the 5 percent cap (and associated franchise fee 
definition) does not include a general exemption from cable-related, 
in-kind contributions. Congress could have--but did not--create one. 
And the specific exemptions would be unnecessary if there were such a 
general exemption. The Supreme Court has made clear that it is 
```reluctan[t] to treat statutory terms as surplusage' in any 
setting.'' \6\ We took the same approach.
---------------------------------------------------------------------------
    \6\ Duncan v. Walker, 533 U.S. 167, 174 (2001), quoting Babbitt v. 
Sweet Home Chapter, Communities for Great Ore., 515 U.S. 687, 698 
(1995).
---------------------------------------------------------------------------
    Second, with respect to post-1984 franchises, capital costs are the 
only PEG costs that are exempt from the definition of franchise fees. 
The broader exemption by its plain terms only applies to franchises in 
existence back in 1984. Congress was therefore aware of the distinction 
between existing and post-1984 franchises when it established these 
exemptions, and the Commission does not have the authority to rewrite 
the statute to expand the narrower, post-1984 one. Congress, on the 
other hand, is free to do so.
    From a policy perspective, I believe that the steps we took on 
August 1 are good for American consumers. That's because costs imposed 
by LFAs through in-kind contributions and fees imposed on broadband 
Internet access service get passed on to consumers. Evidence in the 
record suggests that every dollar paid in fees beyond the statutory cap 
is a dollar that cannot and will not be invested in upgrading and 
expanding networks. For example, comments in the record from small and 
mid-sized cable operators indicate that requests for in-kind 
contributions from local franchising authorities have a direct impact 
on their ability to invest in broadband deployment. See Ex Parte from 
Small and Mid-Sized Cable Operators, MB Docket No. 05-311 (Feb. 4, 
2019). This discourages the deployment of new services like faster home 
broadband or better Wi-Fi or Internet of Things networks.
    Question. In 2017, the FCC eliminated requirements put in place 
under the Obama administration that wireless companies acquiring 
spectrum likely to be used for 5G networks (called millimeter wave 
spectrum) have cybersecurity plans to ensure the security of 
communications over their networks that use public airwaves. Hackers of 
any company or entity that is beholden to foreign governments are 
always improving their ability to break into our digital 
infrastructure. Yet the computer systems running our satellites haven't 
kept up, making them prime targets for an attack. This makes our space 
assets a massive vulnerability--and it could get much worse if we're 
not careful. This past weekend, SpaceX won approval from the Federal 
Communications Commission to increase the number of low-flying 
satellites as part of its Starlink project so that they can provide 
faster Internet access to the world. Unfortunately, access will be 
faster for both legitimate users and hackers alike. The FCC does not 
require applicants to publicly demonstrate how they will secure these 
satellites or the Internet they plan to provide. SpaceX, like other 
private space companies, has shared virtually no information about its 
cybersecurity efforts or plans. This is extremely troubling considering 
the potential harm caused by a satellite being hacked. As experts have 
pointed out, the most mundane outcome is that the satellite will no 
longer function, but the other extreme is for an attacker to break into 
a satellite and take over any thrusters (which SpaceX has insisted its 
satellites will have) and then propel the satellite into critical 
infrastructure and military satellites in other orbits. In other words, 
attackers could possibly use the hacked satellite as a kinetic weapon.
  --Chairman Pai, with FCC eliminating these rules, what are your 
        alternative plans to address these huge risks of hackers and 
        malicious entities from gaining power, access, and control 
        inside our telecommunications networks?
  --What specific measures is the FCC taking go address ensure these 
        systems are secure?
    Answer. Threats to the Nation's communications infrastructure have 
been a long-standing concern for U.S. Government officials. The 
Department of Homeland Security's Cybersecurity and Infrastructure 
Security Agency (CISA) has the lead role for overseeing the 
cybersecurity of our Nation's communications networks. The FCC 
generally and I personally have supported CISA's efforts in this area. 
Among other things, the Commission serves as a member of the Department 
of Homeland Security's Information and Communications Technology Supply 
Chain Risk Management Task Force. It also participates in interagency 
meetings regarding the implementation of May 2019 Executive Order on 
Securing the Information and Communications Technology and Services 
Supply Chain.
    In addition, we have acted within the scope of our authority to 
advance the important values of security. For example, last year the 
Commission sought comment on whether to require encryption for 
telemetry, tracking, and command communications for satellites with 
propulsion capabilities. In a separate item last year, the Commission 
also proposed to prohibit universal service funding from being used to 
purchase equipment or services from any company that poses a threat to 
the national security of our communications networks or the 
communications supply chain. Most recently, in May 2019, the Commission 
denied China Mobile USA's application to provide telecommunications 
services between the United States and foreign destinations.
    In addition, I have interacted with numerous foreign government 
counterparts to express the views of the United States Government with 
respect to the security of communications networks. For instance, this 
past May, I was part of the United States delegation to an 
international conference on 5G network security hosted by the Czech 
Republic, where there was a broad consensus that the ``security of 5G 
networks is crucial for national security, economic security and other 
national interests and global stability.'' And earlier this month, at 
the 7th Congreso Latinoamericano de Telecommunicaciones in Argentina, I 
reminded the attendees that, ``when making decisions that affect 5G 
security, we need to remember that the implications are wide-ranging. 
5G will affect our militaries, our industries, our critical 
infrastructure, and much more.''
    Question. Chairman Pai, in April you released a public notice 
proposing a rechartering of the Communications Security, Reliability, 
and Interoperability Council or CSRIC (pronounced CIZRIC). Currently 
the CSRIC provides recommendations to the FCC to ensure, among other 
things, optimal security and reliability of communications systems, 
including telecommunications, media, and public safety. However, it is 
unclear what CSRIC's mission will be under this reorganization.
  --Please indicate where you will make 5G security and cybersecurity a 
        priority for CSRIC and what standards for such cybersecurity, 
        if any, they will be asked to apply.
    Answer. The Commission received recommendations from CSRIC VI on 5G 
security in its September and December 2018 reports, and 5G security 
will remain a top priority for CSRIC VII. I have directed CSRIC VII to 
address issues related to 5G security, with a focus on managing 
security risk in the transition to 5G and in emerging 5G 
implementations. More information about CSRIC VII is available on the 
CSRIC VII website: https://www.fcc.gov/about-fcc/advisory-committees/
communications-security-reliability-and-interoperability-council-vii.
                                 ______
                                 
              Questions Submitted to Hon. Joseph J. Simons
               Questions Submitted by Senator Jerry Moran
    Question. Your testimony highlighted the FTC's increasing need for 
expert witnesses in the complex investigations and litigation for both 
competition and consumer protection matters. Would you please expand 
upon the distinct uses of expert witnesses between the agency's 
competition cases and consumer protection cases?
  --Specific to the FTC's consumer protection efforts related to data 
        privacy and security, would you please describe the resource 
        needs for expert witnesses related to these efforts?
  --What additional value do these experts bring beyond that of the FTC 
        staff, inclusive of its technologists, investigators, and 
        lawyers?
    Answer. Thank you for your attention to this important issue. Our 
expert witness engagements are complex, which we would like to explain 
to the subcommittee. In general, the Commission employs experts outside 
the agency to support its litigation matters when necessary. In 
antitrust litigation in particular, expert economic testimony has 
become an essential component of helping the adjudicator assess the 
facts and apply the law. Sometimes, economists from the Bureau of 
Economics prepare to testify as an expert witness, either in an 
administrative proceeding or in Federal court. But preparing to testify 
is a time-consuming endeavor that limits that economist's availability 
to work on other investigations or enforcement actions. Choosing to 
employ an outside economic expert is a resource decision made in 
matters that appear to be heading toward litigation. Of course, the 
agency often relies on outside experts other than economists when it 
lacks specific in-house expertise.
    Given some significant differences between competition and consumer 
protection cases, this response breaks out information separately for 
each of our two enforcement missions.
Competition Cases
    A variety of factors such as the type of case and the complexity of 
the industry in which the parties under investigation operate can 
affect the amount of time and the financial and human resources 
required to litigate competition cases. Moreover, as companies generate 
and store more data, that adds to what FTC staff must review and 
process in order to conduct relevant economic analyses. In short, 
competition litigation can be resource intensive, and those constraints 
are only growing over time.
    External experts, however, provide critical support in helping the 
agency meet the resource constraints that we face in litigating 
competition cases. Outside testifying experts and their support staff 
provide the significant back-end support needed to review and process 
voluminous datasets and conduct empirical analyses at the rapid pace 
required in many fast-moving litigation matters. That is particularly 
true in merger litigation cases where outside parties dictate the 
volume, nature, and timing of their deals thus compelling agency staff 
to move quickly to build a case. Testifying experts also often bring 
litigation experience and subject matter expertise to our competition 
cases.
    But, despite the critical role that outside experts play in our 
litigation work, the large size and growth in expert costs present 
another set of challenges to the Commission. When a competition case 
goes to litigation (versus settlement or closing), expert witness costs 
typically increase exponentially and may lead to millions of dollars in 
additional expert fees. Even very small changes in the total number of 
competition cases per year can have a dramatic impact on the agency's 
overall spending on expert fees.
    Unfortunately, the agency has a limited ability to control this 
primary driver of our expert costs. The Commission votes out a 
complaint when it has reason to believe that a competition enforcement 
action is in the public interest. But, after the vote, the course of 
litigation (and possible settlement) is determined in large part by the 
defendants and, of course, the judge or judges. Among other factors, 
defendants may choose to retain one or more experts of their own, which 
can affect our expert strategy.
    In general, we have observed that the kinds of experts qualified 
for this kind of work are becoming more expensive. In an increasingly 
data-rich world, each case requires more of an expert's time, and 
significant support resources to process data and increasingly large 
volumes of documents. Our expert budget is depleted not only by higher 
prices per hour worked, but also by the need for experts to spend more 
time preparing for each case, and the need for more support resources 
to manage each case.
    On the competition side, we have determined that the range of total 
expert costs for cases that are fully litigated (meaning a preliminary 
injunction, administrative hearing on the merits or both) in the last 5 
years is $583,100-$6.90 million.
    The remaining, requested data points for our competition cases are 
as follows:

------------------------------------------------------------------------
            Fiscal Year                       Expert Spending *
------------------------------------------------------------------------
2008                                  $3.05 million
2009                                  $3.40 million
2010                                  $3.16 million
2011                                  $2.97 million
2012                                  $2.09 million
2013                                  $2.98 million
2014                                  $4.84 million
2015                                 $10.03 million
2016                                 $12.21 million
2017                                 $11.46 million
2018                                 $15.80 million
------------------------------------------------------------------------
* Some years' expenditures may change due to ongoing work.

    To date, the Commission has managed allocated funds to pay the 
expert witness fees needed to pursue vigorous competition enforcement 
on behalf of consumers. We are, however, increasingly concerned with 
our ability to continue to do so.
Consumer Protection Cases
    Many of the expert challenges identified above--such as the 
increased amounts of data, fast-paced nature of litigation, and time-
consuming nature of expert work--apply equally in our consumer 
protection cases. Evolving technologies also continue to increase the 
complexity of our privacy and data security investigations and 
litigations.
    The Commission currently employs five technologists, three of whom 
work full time on privacy and security matters. These technologists 
provide expert assistance on privacy and security cases, for example, 
by helping attorneys draft discovery requests, participating in 
meetings with opposing parties and assisting staff in better 
understanding technical issues, and reviewing pleadings for technical 
accuracy.
    However, additional resources for expert witnesses in these cases 
continue to be a critical area of need for our agency. Although we have 
requested additional resources hire new staff technologists, we will 
need to supplement those technologists with outside consulting and 
testifying experts, who can address specific issues in cases as they 
arise. Indeed, in privacy and data security litigation, it is almost 
always necessary to have third-party testifying experts not employed by 
the agency. For example, in past cases we have hired external experts 
to testify on such matters as (1) whether a company's security 
practices were reasonable; (2) actual and likely harms resulting from 
data breaches and identity theft; and (3) the operation of peer-to-peer 
networks.
    Average expert cost per case: Between fiscal year 2016 and fiscal 
year 2018, the Commission filed an average of 71 consumer protection 
cases (mostly in Federal court) per year, spending approximately 
$30,000 per case on expert witness contracts. The Commission uses 
experts in approximately 44 consumer protection matters per year, 
spending an average of approximately $49,000 on expert witness 
contracts in each of those cases.
    Total yearly expert costs: Between fiscal year 2016 and fiscal year 
2018, the Commission spent approximately $2.16 million on expert 
witness contracts for consumer protection cases per year, and is on 
track to obligate $2.28 million during fiscal year 2019.
    Expert spending over past 10 years: The Commission's expert 
spending on consumer protection cases has remained steady over the past 
10 years. In fiscal year 2008, the Commission expended approximately 
$2.07 million on expert contracts in consumer protection cases, and is 
on track to obligate $2.28 million during fiscal year 2019.
    Question. As for the IT modernization efforts of the FTC, I found 
the current Hart-Scott-Rodino Premerger Filing Process example that you 
cited in your testimony to be particularly troubling. Was the FTC's 
Chief Information Officer (CIO) consulted in the development of the 
FTC's fiscal year 2020 budget request? Are other IT modernization 
projects included in the request?
    Answer. The FTC is pursuing a multi-year modernization program to 
update its IT and the underlying support in terms of contracting, 
security, and governance. The agency has already implemented a Blanket 
Purchase Agreement (``BPA'') to update its IT services, including those 
in support of HSR. Use of the BPA has already led to updates in the 
agency's security architecture necessary to support modernization of 
HSR practices. Through the Digital Roadmap activities directed by the 
21st Century Integrated Digital Experience Act (IDEA), the agency will 
evaluate several analytic platforms to improve the user experience for 
practitioners who submit filings to the FTC--including HSR filings. 
Each of these efforts has been led by the CIO or one of his delegated 
staff.
    Question. In January, I joined Senator Casey in introducing the 
Stop Senior Scams Act, which would ensure retailers, financial 
institutions and wire transfer companies have the resources to train 
employees to help stop financial frauds and scams on seniors. 
Specifically, the bill would create a Federal advisory council at the 
FTC to develop educational materials for companies from these specific 
industries to use to train employees on how to identify and stop 
financial scams at the point of sale. Based on my conversations with 
consumer advocates and industry representatives, education and 
awareness remains one of the key tools in preventing fraudulent 
practices in the first place. Do you agree that effective training of 
employees to identify consumer fraud and stop it would be valuable to 
consumers?
    Answer. I fully agree that training employees to identify and stop 
fraud is critically important. Consumer education is a vital tool in 
preventing consumer harm, and the Commission tailors its educational 
materials and messages for specific audiences, such as older adults, 
small businesses, and parents. Commission staff have spoken with many 
companies about their training programs and efforts to minimize fraud 
through store signage, employee training, and technology that creates 
speed bumps or triggers inquiries at the check-out counter when certain 
transactions are conducted (e.g., large denomination purchases for gift 
cards). We also hear of individual store employees who successfully 
assist customers to prevent a scam.\1\
---------------------------------------------------------------------------
    \1\ FTC Consumer Blog, Scam Spotted thanks to a Clever Store Clerk 
(Jan. 18, 2018), https://www.consumer.ftc.gov/blog/2018/01/scam-
spotted-thanks-clever-store-clerk.
---------------------------------------------------------------------------
    Question. In March, the FTC utilized its Section 6(b) authorities 
from the FTC Act to issue orders to seven U.S. Internet broadband 
providers and related entities seeking information about the companies' 
privacy policies, procedures, and practices. The FTC has conducted 
similar examinations in the past including their 2014 report on data 
brokers. Does the FTC plan to initiate additional 6(b) special reports 
related to consumer data privacy in other industries or sectors? Do 
these special reports require significant resources?
    Answer. The Commission frequently uses its authority under Section 
6(b) of the FTC Act, which allows it to conduct industry-wide studies. 
In the past few years alone, we have studied the practices of data 
brokers and mobile device manufacturers and, as you mention, we are 
undertaking a study of Internet service providers. These types of 
studies are best suited to areas in which we can make apples-to-apples 
comparisons across a range of companies. We are considering further 
6(b) studies in other industries.
    Question. As you are aware, enactment of the Better Online Ticket 
Sales (BOTS) Act in 2016 provided the FTC and State attorneys general 
authority to treat any ``circumvention of a security measure, access 
control system, or other technological measures'' (including online 
bots) to surpass ticket purchasing limits as an ``unfair or deceptive 
practice'' under the FTC Act. Since the enactment of this law, has the 
FTC taken any enforcement actions against bad actors utilizing ``online 
bots'' to harm consumers?
  --If not, why? Are there resource issues that are preventing the FTC 
        from enforcing under this authority?
    Answer. To date, the FTC has not taken any action under the BOTS 
Act. While I cannot comment on whether any non-public investigations 
are or are not underway, as a general matter capturing the use of bots 
in any context, and identifying the individuals or companies operating 
ticket bots, can be extremely complex and time consuming.
    The FTC continues to engage with primary ticket sellers, ticket 
resellers, foreign agencies, and State attorneys general about 
strategies for stopping bots. Most recently, we held a public workshop 
concerning ticket bots and other consumer protection issues related to 
the online event-ticket marketplace.\2\
---------------------------------------------------------------------------
    \2\ FTC, Online Event Tickets Workshop (June 11, 2019), https://
www.ftc.gov/news-events/events-calendar/2019/03/online-event-tickets-
workshop.
---------------------------------------------------------------------------
                                 ______
                                 
              Questions Submitted by Senator John Boozman
                    regarding the contact lens rule
    Question. What evidence does the Commission have from official 
Congressional proceedings during consideration of the Fairness to 
Contact Lens Consumers Act that indicates Congressional intent to 
include automated telephone calls in the Act's definition of direct 
communication?
    Answer. With respect to official Congressional proceedings during 
consideration of the Fairness to Contact Lens Consumers Act, there is 
relatively little in the evidentiary record that explicitly discusses 
or implicates automated telephone calls. There is evidence that the 
American Optometric Association informed members of Congress that 
contact lens sellers were using ``automated phone calls'' to verify 
prescriptions, and that optometrists viewed such calls as a significant 
cause for concern.\3\ However, Congress did not expressly exclude the 
use of automated technology for verification purposes in the FCLCA, and 
did not otherwise include the phrase ``automated telephone call,'' 
instead defining the term ``direct communication'' to include 
``communication by telephone, facsimile, or electronic mail,'' and 
noting that this list is ``not exclusive.'' \4\
---------------------------------------------------------------------------
    \3\ See ``Fairness to Contact Lens Consumers Act: Hearing Before 
the Subcomm. on Commerce, Trade, and Consumer Protection of the H. 
Comm. on Energy and Commerce,'' 108th Cong. 1 (2003) (statements of J. 
Pat Cummings, American Optometric Association, discussing what he 
viewed as problematic automated verification messages, and noting that 
such messages can be ``difficult, if not impossible for doctors to 
respond to'').
    \4\ H.R. Rep. No. 108-318, at 10 (2003). The Committee Report also 
noted, ``It is the intent of the Committee that 'direct communication' 
means a message has been both sent and received.''
---------------------------------------------------------------------------
    Following enactment of the FCLCA, the Commission, in 2004, issued 
the Contact Lens Rule, and echoed the language of the FCLCA for its 
definition of ``direct communication'' as meaning ``completed 
communication by telephone, facsimile, or electronic mail.'' \5\ The 
Commission further explained, in its Statement of Basis and Purpose, 
``The Act expressly authorizes sellers to send verification requests by 
telephone, which is commonly understood to include automated telephone 
systems. It would thus seem to be contrary to Congressional intent to 
prohibit the use of this technology.'' \6\ The Commission has always 
emphasized, however, that automated telephone systems must fully comply 
with all applicable Rule requirements in order for the verification 
request to be valid. For example, telephone requests--whether automated 
or spoken by a live person--must be delivered at a volume or cadence 
capable of being understood by a reasonable person.\7\
---------------------------------------------------------------------------
    \5\ Contact Lens Rule, 69 Fed. Reg. 40,509 (July 2, 2004) (codified 
at 16 C.F.R. 315).
    \6\ Id. at 40,489.
    \7\ Id. (stating ``direct communication by telephone would require 
reaching and speaking with the intended recipient, or clearly leaving a 
voice message on the telephone answering machine''); see also FTC Facts 
for Business, Complying with the Contact Lens Rule (2005), https://
www.ftc.gov/tips-advice/business-center/guidance/complying-contact-
lens-rule (``Automated telephone verification messages must be 
delivered in a volume and cadence that a reasonable person can 
understand'' and ``[a] request delivered by an automated telephone 
system doesn't comply with the Rule if: it isn't delivered in a volume 
and cadence that a reasonable person can understand; it contains 
incomplete verification information; or it requires the prescriber's 
office to provide an immediate response.'').
---------------------------------------------------------------------------
    The Commission has reiterated its view on the use of automated 
telephone verifications under the FCLCA and CLR on several occasions 
since 2004. Most recently, in the May 28, 2019 Supplemental Notice of 
Proposed Rulemaking (``SNPRM''), the Commission proposed several 
changes to improve the passive verification process and make automated 
telephone verifications more effective. The Commission proposed that 
sellers who use automated telephone verification messages would have 
to: (1) record the entire call and preserve the complete recording; (2) 
begin the call by identifying it as a prescription verification request 
made in accordance with the Contact Lens Rule; (3) deliver the 
verification message in a slow and deliberate manner and at a 
reasonably understandable volume; and (4) make the message repeatable 
at the prescriber's option. This amendment is intended to enable 
prescribers to better fulfill their role as protectors of patients' eye 
health since prescribers cannot correct or police invalid, inaccurate, 
and expired prescriptions if they cannot comprehend a seller's 
verification request.
    Question. Please describe the Commission's test-buy activities and 
other methods used to ensure compliance with the Rule.
    Answer. The Commission monitors the marketplace by engaging in its 
own review of the practices of contact lens sellers and by receiving 
complaints. The Commission also works collaboratively with the FDA in 
its monitoring of contact lens sellers. When staff determines it is 
appropriate, it purchases contact lenses through the use of undercover 
accounts. The Commission recently announced an enforcement action 
against a contact lens seller challenging the sale of contact lenses 
without a valid prescription. The order banned the defendant from 
selling contact lenses and imposed a $575,000 civil penalty.\8\ The 
Commission has also sent warning letters to sellers, including letters 
to ten contact lens sellers in 2016.\9\ We will continue to monitor the 
marketplace, taking action against violations as appropriate.
---------------------------------------------------------------------------
    \8\ U.S. v. Lawrence L. Duskin, No. 1:18-cv-07359 (N.D. Cal. Dec. 
6, 2018).
    \9\ See FTC Press Release, FTC Issues Warning Letters Regarding the 
Agency's Contact Lens Rule (Apr. 7, 2016), https://www.ftc.gov/news-
events/press-releases/2016/04/ftc-issues-warning-letters-regarding-
agencys-contact-lens-rule.
---------------------------------------------------------------------------
    Question. Please provide information on what percentages of 
verifications are filled through the following methods: fax, electronic 
means, personal live calls, or automated calls.
    Answer. The Commission does not have information on the specific 
percentages of verifications that occur by the various permissible 
means. Through discussions with industry, the Commission knows that the 
preferred method varies by seller.
    Question. How many sellers does the Commission audit annually for 
verification compliance? How many have been the recipient of some form 
of enforcement action?
    Answer. The Commission does not conduct annual audits of sellers or 
prescribers for compliance with the verification process. The 
Commission investigates sellers and prescribers based on complaints 
received and through Internet surveillance. Since the Rule's passage, 
the Commission has taken law enforcement action against eleven contact 
lens sellers who violated the Rule by, inter alia, failing to properly 
verify prescriptions.\10\
---------------------------------------------------------------------------
    \10\ U.S. v. Lawrence L. Duskin, No. 1:18-cv-07359 (N.D. Cal. Dec. 
6, 2018); U.S. v. Gene Kim, No. 1:11-cv-05723 (E.D.N.Y. Feb 7, 2012); 
U.S. v. Royal Tronics, Inc., No. 0:11-cv-62491 (S.D. Fla. Jan. 27, 
2012); U.S. v. Thy Xuan Ho, No. 1:11-cv-03419 (D. Minn. Dec. 27, 2011); 
U.S. v. Gothic Lens, LLC, No. 1:11-cv-00159 (N.D. Ga. Feb. 3, 2011); 
U.S. v. Jokeshop, LLC, No. 1:11-cv-11221 (D. Mass. Nov. 29, 2011); U.S. 
v. Contact Lens Heaven, Inc., No. 0:08-cv-61713 (S.D. Fla. Dec. 3, 
2008); U.S. v. Chapin N. Wright, II, No. 1:08-cv-11793 (D. Mass. Oct. 
31, 2008); U.S. v. BeWild, Inc., No. 2:07-cv-04896 (E.D.N.Y. Dec. 3, 
2007); U.S. v. Pretty Eyes, LLC, No. 1:07-cv-02462 (D. Colo. Nov. 28, 
2007); U.S. v. Walsh Optical, Inc., No. 2:06-cv-03591 (D.N.J. Aug. 30, 
2006).
---------------------------------------------------------------------------
    Our settlement orders have provided injunctive relief that, among 
other things, prohibited the defendants from: selling contact lenses 
without obtaining a prescription from a consumer; selling contact 
lenses without verifying prescriptions by communicating directly with 
the prescriber; and failing to maintain records of prescriptions and 
verifications. In addition, the Commission has sent numerous warning 
letters to both sellers and prescribers who potentially violated the 
Rule.
    Question. Does the Commission track the effectiveness of the 
verification process for stopping expired prescriptions from being 
filled? If so, how many expired prescriptions are filled each year in 
the United States? How many are not filled?
    Answer. The Commission does not have specific data on the 
effectiveness of the verification process in stopping the filling of 
expired prescriptions. However, the Commission investigates sellers 
based on complaints received for, among other things, selling lenses on 
expired prescriptions, and will take action as appropriate.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin
    Question. I frequently get robocalls myself--just a few months ago, 
I received a scam call from someone claiming to be part of the Social 
Security Administration. Chairman Simons, what more can the FTC be 
doing to educate consumers about scams--including Social Security scams 
and calls purporting to be from the Internal Revenue Service? What 
resources would allow the FTC to more effectively pursue these bad 
actors scamming Americans out of billions of dollars every year?
    Answer. Because we have seen an alarming growth in the number of 
reports about government imposters--largely driven by Social Security 
Administration imposter scams--the FTC is engaged in a concerted effort 
to bring attention to government imposter scams. Earlier this month, 
the FTC published a Data Spotlight to highlight the top government 
imposter scams that are reported to the FTC and to identify tactics 
these fraudsters use to scare consumers and get their money.\11\ Along 
with it, we released an interactive infographic, which enables people 
to find the top government imposter for any year since 2014, and for 
any of those, the aggregate dollar losses reported, the median 
individual dollar losses reported, and the number of people who 
reported losing money.\12\ These are just the latest in a series of FTC 
data publications, with the goal to educate the public more broadly 
about the tactics such scammers employ so consumers can recognize a 
scam call, hang up, and avoid losing money.
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    \11\ FTC Consumer Protection Data Spotlight, Government imposter 
scams top the list of reported frauds (July 1, 2019), https://
www.ftc.gov/news-events/blogs/data-spotlight/2019/07/
government-imposter-scams-top-list-reported-frauds.
    \12\ Explore Government Imposter Scams (June 26, 2019), https://
public.tableau.com/profile/
Federal.trade.commission#!/vizhome/GovernmentImposter/Infographic. 
These resources are also available by accessing www.ftc.gov/data.
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    On the enforcement side, the FTC is working with other Federal 
agencies to identify where these calls are coming from and to develop 
strategies for combating such fraud. In late June, the FTC convened its 
fourth India Call Center roundtable to enable industry and law 
enforcement personnel to share information and collaborate on 
strategies to stop these government imposter calls.\13\
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    \13\ See U.S.-India Business Council & FTC, 4th Annual Round Table 
on Stepping Up to Stop Indian Call Center Fraud (June 20, 2019), 
https://www.usibc.com/event/4th-annual-round-table-on-stepping-up-to-
stop-indian-call-center-fraud/.
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    As discussed more fully in the Commission's written testimony, 
Congress should eliminate the outdated common carrier exemption, which 
impedes our ability to tackle illegal robocalls, among other 
enforcement initiatives. For example, removing the common carrier 
exemption would allow the FTC to reach carriers that assist and 
facilitate illegal telemarketing and obtain complete relief for 
consumers when there are multiple parties to a scheme.
                                 ______
                                 
            Questions Submitted by Senator Joe Manchin, III
              ensuring privacy after deleting social media
    Question. I believe that the pictures and videos that you take 
belong to you. Even if you post them on a social media site they should 
still belong to you, and you should be able to choose to remove them.
    In November of 2011, your agency found that social networking 
sites, like Facebook, were allowing third parties to access photos or 
videos that a user had uploaded and had been stored by the site, even 
after the user had deleted his or her account.
  --Are social media platforms still allowing access to data even after 
        a user has deleted his or her account?
  --Can users retrieve their data that has already been shared to third 
        parties?
  --What can Congress do to ensure these companies are not using, 
        disclosing, or in any way monetizing the content that a user 
        has requested be removed?
    Answer. As background, the FTC Act prohibits companies from making 
deceptive statements about consumers' ability to delete information 
from their accounts. For example, in 2012, the Commission alleged that 
Facebook had made deceptive statements about users' ability to delete 
content, and required in its 2012 consent agreement that Facebook block 
third parties from accessing content that users thought they had 
deleted. In the new order just announced on July 24, Facebook is now 
also required to remove such deleted content from its servers.
    In the absence of deception, the FTC Act generally does not 
prohibit social media platforms or other companies from accessing user 
data after a user has deleted his or her account. In some instances, 
this may be a good thing. For example, consumers may change their mind 
about deletion and prefer not to have to re-create their entire social 
media profile. Deleted information may be needed for law enforcement 
purposes, such as locating missing or exploited children. At the same 
time, the right to access, correct, and delete serves an important 
privacy purpose. To the extent Congress considers developing privacy 
legislation that requires social media platforms or other companies to 
provide access, correction, or deletion rights to consumers, I would 
urge Congress to balance these considerations.
       deceptive treatment practices for opioids and other drugs
    Question. On multiple occasions, the Federal Trade Commission and 
the U.S. Food and Drug Administration have worked together to issue 
warning letters to marketers and distributors for illegally marketing 
products with unproven claims about their ability to help treat opioid 
addiction. Last year, in July 2018, FTC Commissioner Rohit Chopra wrote 
a letter to Congress about widespread abuse in the drug treatment 
industry.
  --Do you need new legislative authorities to address and combat this 
        behavior?
    Answer. Congress recently provided the Commission with additional 
authority to address the deceptive marketing of drug treatment products 
and services. In October 2018, the President signed into law the 
``Substance Use-Disorder Prevention that Promotes Opioid Recovery and 
Treatment for Patients and Communities Act,'' or the ``SUPPORT for 
Patients and Communities Act.'' The Act makes it unlawful to engage in 
an unfair or deceptive act or practice with respect to any substance 
use disorder treatment service or substance use disorder treatment 
product, and authorizes the FTC to enforce violations and obtain civil 
penalties. In light of this newly-obtained authority, we do not believe 
that additional legislative action is needed at this time.
                     opioid sales over the internet
    Question. FTC's efforts to investigate deceptive advertising and 
marketing practices in the opioid treatment industry are commendable. 
In April 2019, FDA Commissioner Gottlieb identified the rise in illegal 
sales of opioids over the Internet as a critical public health concern 
and major focus attention of the FDA. Since 2017, the FDA has 
identified more than 450 websites illegally offering opioids for sale. 
Major social media sites have repeatedly been identified as hosting 
ads, posts, and other messages directing users toward drug sales. Many 
of these ads are driven by algorithms and it can take days and weeks 
for social media companies to identify and take them down. Tech 
companies have been warned about illegal drug sales on their platforms 
for years, but these companies have resisted taking practical steps to 
find and remove opioid-related listings.
  --While the DEA has jurisdiction over illegal sales, the FTC works to 
        protect and educate consumers. What actions are you taking to 
        protect consumers from deceptive or illegal ads on social 
        media?
    Answer. The FDA has primary jurisdiction over the advertising of 
all prescription drugs, including opioids, under an FDA-FTC Memorandum 
of Understanding. However, with regard to advertising in general, the 
Commission evaluates advertising on social media under the same 
standards as it does advertising in traditional media and devotes 
substantial resources to addressing social media and influencer 
marketing.
    For example, the FTC recently issued joint warning letters with the 
FDA to four marketers of flavored e-liquid products whose products were 
promoted by influencers on social media sites including Facebook, 
Instagram, and Twitter.\14\ These letters reminded the marketers that 
their advertisements must disclose material health or safety risks of 
the promoted product, as well as any material connections (such as 
monetary payments) between the marketer and influencers promoting the 
products.
---------------------------------------------------------------------------
    \14\ See FTC Press Release, FTC and FDA Send Warning Letters to 
Companies Selling Flavored E-liquids About Social Media Endorsements 
without Health Warnings (June 7, 2019), https://www.ftc.gov/news-
events/press-releases/2019/06/ftc-fda-send-warning-letters-companies-
selling-flavored-e-liquids.
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    Similarly, in other recently-announced actions, we have targeted 
advertising that included promotion through social media.\15\
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    \15\ See, e.g., Warning letter from FDA and FTC to TEK Naturals 
(Feb. 5, 2019), https://www.ftc.gov/system/files/attachments/press-
releases/ftc-fda-send-warning-letters-companies-selling-dietary-
supplements-claiming-treat-alzheimers-disease/
tek_naturals_warning_letter_
wl_565026.pdf (regarding products claimed to treat conditions including 
Alzheimer's and Parkinson's disease, that were marketed online, 
including through Facebook, Instagram, and Twitter); FTC Press Release, 
PR Firm and Publisher Settle FTC Allegations They Misrepresented 
Product Endorsements as Independent Opinions, Commercial Advertising as 
Editorial Content (Nov. 13, 2018), https://www.ftc.gov/news-events/
press-releases/2018/11/pr-firm-publisher-settle-ftc-allegations-they-
misrepresented (insect repellent promoted by celebrity athlete 
endorsers on social media).
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                          SUBCOMMITTEE RECESS

    Senator Kennedy. The committee meeting is adjourned.
    [Whereupon, at 4:09 p.m., Tuesday, May 7, the subcommittee 
was recessed, to reconvene subject to the call of the Chair.]