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


 
 OVERSIGHT OF THE FEDERAL COMMUNICATIONS COMMISSION: SPECTRUM AUCTIONS 
                                PROGRAM

                              ----------                              


                       THURSDAY, OCTOBER 17, 2019

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

    The subcommittee met at 10:01 a.m., in room 138, Dirksen 
Senate Office Building, Hon. John Kennedy (Chairman) presiding.
    Present: Senators Kennedy, Moran, and Boozman.

                   FEDERAL COMMUNICATIONS COMMISSION

               OPENING STATEMENT OF SENATOR JOHN KENNEDY

    Senator Kennedy. The Subcommittee on Financial Services and 
General Government of the Appropriations Committee of the 
United States Senate will come to order.
    Good morning to everyone. This morning, we will be 
conducting an oversight hearing with our friends from the 
Federal Communications Commission.
    As most of you know, our responsibility, and when I say 
our, I mean the subcommittee's responsibility is to evaluate 
agencies' budget requests and to appropriate money in a prudent 
manner. Our job is not finished once an agency receives an 
appropriation. It is also critically important to conduct 
oversight of how agencies use those resources to make sure that 
they are used efficiently and economically and in the public 
interest, and I know our esteemed Chairman shares that 
sentiment with me.
    The agency before us today, the Federal Communications 
Commission, is one of the most consequential agencies under 
this subcommittee's jurisdiction. The transmission of 
information has come to play a dominant role in our lives, both 
economically, civically, socially, and commercially. It has 
made the world smaller and I think, on balance, better.
    It is incumbent upon this subcommittee, in my judgment, to 
ensure that the FCC is using its resources to appropriately 
execute its responsibility to implement and enforce America's 
communications laws and regulations.
    Now today's hearing is going to focus specifically on the 
FCC's Spectrum Auctions Program. This subcommittee's 
appropriation bill not only sets the FCC's top line budget 
number but it also sets the amount of resources that may be 
retained by the agency for the purpose of spectrum auctions.
    Now these auctions, as you know, are the means by which the 
Federal Government allocates the right to transmit signals over 
specific bands of the electro-magnetic spectrum: including the 
radio, television, satellite, and cellular communications.
    The allocation of spectrum, low band, mid band, high band, 
but particularly with respect to the sweet spot in terms of 5G, 
C band. By sweet spot, I mean in terms of both striking 
appropriate balance between capacity and coverage. That is a 
very critical issue. It is a critical issue to this 
subcommittee as we continue implementation of fifth generation 
or 5G cellular network technology.
    A day does not go by that we do not hear about the Race to 
5G and the need to get there quickly, and we do need to get 
there quickly. However, none of us should be willing to 
tolerate a situation where rural Louisianans or rural Kansans 
or rural West Virginians or any rural Americans are left 
behind.
    Congress and the administration must work together to make 
sure that every American gets there so that when the United 
States wins the 5G race, and we will, we will win it together, 
and the C-band spectrum is an integral part of the 5G debate 
and how we accomplish that end.
    The FCC is in the process, as the Chairman knows well, of 
determining how it is going to allocate C band and when I talk 
about C band, I am talking about the mid band, if you will. I 
am talking about the 500 megahertz that my understanding is 
totally within the C band and how that is going to be 
allocated, and I know the FCC, has been for about 2 years, and 
is in the middle of that discussion.
    The issue is how we are going to allocate it. Are we going 
to allow a private spectrum deal with foreign-owned satellite 
companies, which say they can do it faster, or are we going to 
do a public auction?
    Now my mind could be changed, but I have read everything I 
can get my hands on, and I confess my bias at the moment is for 
a public auction. Luxembourg should not reap these profits. The 
American taxpayer should.
    I know the Chairman is a big believer in transparency. I'm 
new to Washington but I'm not new to government and it's been 
my experience that the best way to resist temptation in 
government and in life is a proper upbringing, a strong set of 
values, and witnesses, and that's why public auctions work 
because everybody gets to see how the sausage is being made.
    Now by allocating the C band through a public auction, we 
can ensure that billions of dollars in revenue will go to the 
American taxpayer. I have seen estimates that the initial value 
of the C band, not the total of 500 megahertz but the 300 to 
400 megahertz that the FCC is talking about allocating, could 
generate as much as $60 billion. That is nine zeroes.
    We toss around--I want us to understand what is at stake 
here. We toss around the term ``a billion'' here in Washington 
as if it was a nickel. If I started counting to one billion 
right now and counted one digit per second, I would not finish 
until 2051. I would die first.
    I did a little math this morning. A billion seconds ago was 
1986. Ronald Reagan was president. A billion minutes ago, the 
Romans were conquering Mesopotamia. A billion hours ago, 
Neanderthals were roaming the earth. Some may still be in the 
Senate, but that is a separate subject.
    We are talking 60 of those, $60 billion. I did a little 
more math. For $60 billion, we could send one million kids to 
college. For $60 billion, we could hire one million new cops 
for a year. You want to get control of the crime problem in 
America? You want to stop the murders in Chicago? For $60 
billion, we could build 7,000 miles of new interstate. It is a 
lot of money and that is what is at issue here.
    I will also note that I think the FCC, under the leadership 
of this Chairman and others, has done an extraordinary job in 
conducting public auctions. Since 1994, you have conducted over 
a hundred auctions, generating about a $123 billion for the 
American people, and I thank you for that, Mr. Chairman.
    Over the past year, the FCC has completed two spectrum 
auctions, both for 5G, 24 gigahertz band and 28 gigahertz band. 
Therefore, we know it can be done.
    Lastly, I want to talk a little bit about the proposal to 
open up the 6 gigahertz band unlicensed users. This is causing 
a lot of concern, as you know, Mr. Chairman, among the users of 
that spectrum, particularly those who operate critical 
infrastructure systems, like our electric grid.
    Those systems have to be extraordinarily reliable to meet 
mandatory standards and the potential for interference with 
those systems by unlicensed users concerns me and I know it 
concerns you, Mr. Chairman, and I hope we can talk about that 
issue today, as well.
    Today, we are going to hear from two panels. Our first 
panel is the distinguished Honorable Ajit Pai, the Chairman of 
our Federal Communications Commission.
    Our second panel will feature representatives from two 
nonprofit government-spending watchdogs.
    We all know this but it bears repeating. The Chairman was 
unanimously confirmed as an FCC Commissioner in May of 2012. In 
January of 2017, the President demonstrated good judgment in my 
opinion in designating the Chairman as Chairman of the agency.
    Ajit is originally from Parsons, Kansas. He graduated from 
Harvard University and the University of Chicago Law School, 
and he previously has served as an attorney at the Department 
of Justice, the FCC Office of General Counsel, and the Senate 
Judiciary Committee.
    And with that, I would like to invite the Chairman to make 
his opening statement, unless my--let me do this first.
    My colleague from Kansas may have something to say.
    Senator Moran. Mr. Chairman, two things. I agree with you 
in many ways in your opening statement.
    First of all, I want to commend you for having oversight 
hearings, something I think is very valuable to the United 
States Senate and, more importantly, to the American people. In 
my view, we ought to do as this kind of circumstances often as 
we can find the time and get the witnesses before us. How we 
spend money is important and I am appreciative of the direction 
you are taking this subcommittee.
    I would welcome my fellow Kansan to the dais, and I look 
forward to his testimony.
    Senator Kennedy. Thank you, Senator.
    Mr. Chairman, welcome. The floor is yours.
STATEMENT OF HON. AJIT PAI, CHAIRMAN, FEDERAL 
            COMMUNICATIONS COMMISSION
    Chairman Pai. Thank you, Chairman Kennedy, both for the 
kind words and for holding this hearing. I appreciate this 
chance to discuss the FCC's Spectrum Auctions Program before 
the witnesses, as the Chairman aptly put it.
    Before I begin my remarks, however, I do want to note that 
both the function you are discharging as well as the first word 
of the title of this hearing is ``oversight,'' and we lost, of 
course, a critical Member of the oversight community this 
morning.
    I want to express my condolences to the family of 
Representative Elijah Cummings. He served many years with 
distinction in the 7th District of Maryland as well as the 
Maryland House of Delegates, also served as a role model for 
millions of Americans with the story of how he progressed from 
grade school to law school. Rest in peace, sir, and I wish all 
of the members of the Cummings family some peace in the time 
ahead.
    Senator Kennedy. Well said, Mr. Chairman.

                            DEPLOYMENT OF 5G

    Chairman Pai. Chairman Kennedy and Senator Moran, good 
spectrum policy is critical to securing our Nation's position 
as a global leader in the deployment of 5G, the next generation 
of wireless technology.
    The FCC favors a market-based approach in order to make 
more spectrum available for 5G and what that means is whenever 
feasible, we favor the flexible use of wireless spectrum over 
command and control top-down mandates coming from Washington.

                       SPECTRUM AUCTIONS PROGRAM

    Now one important component of this approach is our 
Spectrum Auctions Program. As you know, Congress over a 
generation ago authorized the FCC to conduct spectrum auctions 
in the Budget Reconciliation Act of 1993 and since then, the 
Commission has conducted some 93 spectrum auctions and our 
Spectrum Auction Program has been critical to the explosive 
growth in wireless communications over the last two and a half 
decades.
    The FCC Spectrum Auctions Program has also been good for 
American taxpayers, as the Chairman mentioned. Overall, it has 
generated some $116.5 billion in revenue for the U.S. Treasury 
with administrative and personnel costs constituting only 1.7 
percent of that amount.

       SPECTRUM AUCTIONS PROGRAM--FINANCIAL AND LICENSES AWARDED

    Each year, Congress, thanks in part to this subcommittee 
and you, Mr. Chairman, sets an auctions spending cap for the 
FCC and I want to express my gratitude for this subcommittee's 
strong financial support for our Spectrum Auctions Program.
    Recently, the Commission's Spectrum Auctions Program has 
been extremely active as we move aggressively to make more 
spectrum available for 5G services. As Chairman Kennedy 
mentioned, on November 24, 2018, we began our 28 gigahertz 
auction, which concluded on January 24 of this year. It made 
available 850 megahertz of spectrum and raised over $700 
million for the U.S. Treasury. Overall, 33 bidders won almost 
3,000 licenses in that auction.
    Then on March 14 of this year, we started our 24 gigahertz 
auction. That auction ended on May 28 of 2019 and made 
available 700 megahertz of spectrum for the commercial 
marketplace. It raised over $2 billion for the U.S. Treasury 
and again almost 3,000 licenses were awarded to 29 bidders 
overall.
    Each of these auctions was successful and combined they 
pushed almost 1,550 megahertz of spectrum into the commercial 
marketplace, and this will be critical to supporting the high 
bandwidth ultra low-latency applications that will be made 
possible for 5G.

                       MID-BAND SPECTRUM AUCTIONS

    Now this is major progress, but we cannot and will not be 
complacent. Indeed, we have already scheduled two more spectrum 
auctions that will begin within the next few months.
    On December 10, bidding will commence on what we are 
calling Auction 103. This auction will be making available more 
spectrum than any auction in American history with 3,400 
megahertz available in the upper 37, 39, and 47 gigahertz 
bands.
    And next, the FCC will turn to mid-band spectrum auctions.
    Senator Kennedy. What band was that?
    Chairman Pai. The upper 37, 39, and 47 gigahertz bands, 
3,400 megahertz across those three bands.
    Next, we will turn to mid-band auctions. Mid-band spectrum, 
of course, is important for 5G because, as the Chairman put it, 
it matches coverage with capacity and so on June 25 of 2020, 
the FCC will start an auction of spectrum in the 3.5 gigahertz 
band.
    Seven 10 megahertz channels will be made available for a 
total of 70 megahertz of spectrum. Bidders will pay for the 
right to use a 10 megahertz channel, but they will not bid on a 
specific channel. Instead, the specific frequencies that they 
will use will change periodically as a result of a new 
technology, dynamic spectrum sharing, between Federal and non-
Federal users. The FCC in this auction will offer over 22,000 
licenses, which will be the most ever.
    Following the 3.5 gigahertz auction, the FCC plans to hold 
an auction in the 2.5 gigahertz band. With almost 200 
megahertz, this band is the largest continuous band of 
terrestrial flexible use spectrum below 3 gigahertz in the 
entire country, but that band is dramatically underused today.
    Existing licenses cover only about one-half of the country 
and the spectrum is barely even assigned west of the 
Mississippi River. We have not yet scheduled a start date for 
this auction but I am aiming for it to begin next year.

                                 C BAND

    Finally, Mr. Chairman, I know there is significant interest 
in the Commission's rulemaking regarding the 3.7 to 4.2 
gigahertz band, commonly called the C band. Our C band 
proceeding involves a very complicated array of legal and 
policy and factual issues and I haven't yet made a final 
decision on the way forward, but in my view, we must accomplish 
four goals.

                              C-BAND GOALS

    First, we must make available significant amount of 
spectrum for 5G. Second, we must make the spectrum available 
for 5G quickly. Third, we must generate revenue for the Federal 
Government. Fourth, we must ensure that the services currently 
delivered using the C-band spectrum will be continued to be 
delivered to American consumers.
    Chairman Kennedy, Members of the subcommittee, thank you 
once again for holding this hearing, and I look forward to 
answering your questions and continuing to work with you and 
your staffs in the time to come.
    [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 discuss the Federal Communications Commission's 
spectrum auctions program.
    Good spectrum policy is critical to securing our Nation's position 
as the global leader in the deployment of 5G, the next generation of 
wireless technology. In my testimony before this subcommittee in May, I 
outlined the Commission's three-pronged strategy for Facilitating 
America's Superiority in 5G Technology--the 5G FAST Plan. This plan 
calls for freeing up more spectrum for commercial use, making it easier 
to install wireless infrastructure, and modernizing our regulations to 
encourage the deployment of fiber.
    The FCC favors a market-based approach in order to make more 
spectrum available for 5G. We have eschewed command-and-control, top-
down mandates in favor of flexible use for wireless spectrum whenever 
feasible. The free market best determines what technology should be 
deployed in what band, especially as the pace of technology accelerates 
more rapidly and demand for spectrum continues to grow.
    One important component of this market-based approach to spectrum 
policy is our spectrum auctions program. As you know, Congress 
authorized the FCC to conduct spectrum auctions in the Budget 
Reconciliation Act of 1993. Since then, the Commission has conducted 93 
spectrum auctions. Among other things, these spectrum auctions have 
been critical to the explosive growth in wireless communications over 
the last two-and-a-half decades. For example, the AWS-1 and 700 MHz 
spectrum auctions conducted during the Bush administration were 
critical to the United States leading the world in 4G LTE deployment.
    The FCC's spectrum auction program has also been good for our 
Nation's taxpayers. Because of our spectrum auctions, the FCC is one of 
the few government agencies that generates more money for the U.S. 
Treasury that it spends. Overall, the Commission's spectrum auction 
program to date has generated $116.5 billion in revenue for the U.S. 
Treasury, with administrative and personnel costs constituting only 1.7 
percent of that amount. Each year, Congress sets an auction spending 
cap for the FCC. For fiscal year 2019, that cap is $130,284,000. And 
for fiscal year 2020, both the House and Senate subcommittee bills have 
set the fiscal year 2020 level at $132,538,680. The Commission 
appreciates this subcommittee's financial support for the spectrum 
auctions program.
    With ever-increasing demand for and technological advances in 
spectrum use, spectrum policy is becoming more complicated. That's one 
reason why Congress provided the FCC in 2012 with incentive auction 
authority. In 2017, the FCC concluded its first incentive auction, 
which provided payments to broadcast television stations that chose to 
relinquish their spectrum. That auction ended up making available 70 
megahertz of spectrum for mobile broadband use in the 600 MHz band. It 
also generated about $19.3 billion in revenue. About $10.05 billion of 
that money went to pay broadcasters that relinquished their spectrum, 
more than $7 billion was directed to the U.S. Treasury for deficit 
reduction, and more than $2 billion is being spent to compensate 
broadcasters for their relocation costs as a result of the post-
incentive auction spectrum repack. I am pleased to report that the 
repack is going well. Most broadcast television stations that need to 
be moved from their old frequencies have already done so. The process 
for compensating stations for their relocation costs has been running 
smoothly. And wireless carriers are already using much of the 600 MHz 
spectrum that they won at the auction to provide service across the 
country. Looking forward, we'll keep our eye on the ball and make sure 
that this repack is brought to a successful conclusion.
    Recently, the Commission's spectrum auction program has been very 
active as we move aggressively to make more spectrum available for 5G 
services. On November 14, 2018, we began our 28 GHz auction, which 
concluded on January 24, 2019. It made available 850 megahertz of 
spectrum and raised over $700 million for the U.S. Treasury. Overall, 
33 bidders won a total of 2,965 licenses.
    Then, on March 14, 2019, we started our 24 GHz auction. That 
auction ended on May 28, 2019 and made available 700 megahertz of 
spectrum for the commercial marketplace. It also raised over $2 billion 
for the U.S. Treasury. Overall, 29 bidders won a total of 2,904 
licenses.
    Each of these auctions was successful, and combined, they pushed 
1,550 megahertz of high-band spectrum into the commercial marketplace. 
This spectrum will be critical to supporting the advanced high-
bandwidth, ultra-low latency applications that will be made possible 
for 5G.
    But we can't and won't be complacent. Indeed, we've already 
scheduled two more spectrum auctions that will begin within the next 9 
months. On December 10, bidding will commence in what we are calling 
Auction 103. This auction will make available more spectrum than any 
auction in American history. 3,400 megahertz of spectrum in the Upper 
37 GHz, 39 GHz, and 47 GHz bands will be on the auction block.
    One notable feature of this auction is that we are making use of 
our incentive auction authority to reorganize the band. But while the 
broadcast incentive auction used separate forward and reverse auctions, 
Auction 103 will use an innovative voucher system that will allow 
incumbents to receive payments for relinquishing their existing 
licenses or apply the value of their current licenses for new licenses 
won at the auction. This creative solution illustrates why Congress' 
decision to give the FCC flexibility in structuring auctions was a wise 
one.
    Following Auction 103, the FCC will turn to mid-band spectrum 
auctions. Mid-band spectrum is important for 5G deployment because 
these bands combine good coverage with good capacity. On June 25, 2020, 
the FCC will start an auction of spectrum in the 3.5 GHz band. For this 
band, the Commission adopted an innovative regulatory regime for 
commercial use known as dynamic sharing. We set up a three-tiered, 
hierarchical framework to coordinate shared Federal and non-Federal 
use. Incumbents, which are Federal users, comprise the highest tier and 
receive protection from all other users, followed by Priority Access 
Licenses (PALs) on the second tier, and General Authorized Access (GAA) 
on the third tier. PALs receive protection from GAA operations and must 
accept interference from incumbents. GAA is licensed-by-rule and must 
accept interference from all other users.
    Automated frequency coordinators, known as Spectrum Access Systems, 
will coordinate operations, and Environmental Sensing Capability 
operators will manage a sensor system designed to detect the presence 
of Federal incumbent radar transmissions and communicate that 
information to the SASs. Just last month, we authorized five such 
frequency coordinators so that initial commercial deployments could 
commence.
    Next June, we will start auctioning the PALs in the 3.5 GHz band. 
Seven 10-megahertz channels will be made available, for a total of 70 
megahertz of spectrum. But while bidders will be paying for the right 
to use a 10-megahertz channel, they will not be bidding on a specific 
10-megahertz channel. Rather, the specific frequencies that they will 
be using will change periodically as a result of the dynamic spectrum 
sharing described above. A total of 22,631 PALs will be offered in this 
auction, which will be the most licenses ever offered in an FCC 
spectrum auction.
    Following the 3.5 GHz band auction, the FCC plans to hold an 
auction in the 2.5 GHz band. With almost 200 megahertz, the 2.5 GHz 
band is the largest contiguous band of terrestrial, flexible use 
spectrum below 3 GHz in the United States. But that band is 
dramatically underused today--existing licenses cover only about one-
half of the country, and the spectrum is barely assigned west of the 
Mississippi River. In July, the FCC revised the rules for the band, 
allowing more entities to access the spectrum and eliminating 
unnecessary restrictions. The Commission will soon open a Tribal 
priority window to give Tribes an opportunity to obtain this spectrum 
to provide wireless services on rural Tribal lands. Following this 
window, we will hold an auction to assign the remaining unused portions 
of the band for commercial use. We have not yet scheduled a start date 
for this auction, but my goal is for it to begin next year.
    Finally, I would like to conclude by discussing a relatively recent 
change to the Commission's management of its spectrum auction program. 
Until late last year, the program was run by the Auctions Division of 
the Wireless Telecommunications Bureau. But auctions aren't limited to 
the wireless space. The Commission also auctions spectrum for broadcast 
radio and television licenses. This summer, for example, we held an 
auction for FM translator licenses. And the Commission now holds 
reverse auctions of universal service support to promote rural 
broadband deployment. In 2018, for example, we held the Connect America 
Fund Phase II reverse auction, which allocated almost $1.5 billion to 
deploy broadband to over 713,000 homes and businesses in rural America. 
Next year, we intend to launch the Rural Digital Opportunity Fund, 
which will allocate over $20 billion for rural broadband deployment 
using a reverse auction format. And in December of this year, the 
Commission will hold an auction of new toll-free numbers.
    In light of the Commission's increasingly diverse auctions 
portfolio, it no longer made sense for the Auctions Division to remain 
under the purview of the Wireless Telecommunications Bureau. So when we 
created the new Office of Economics and Analytics, we decided to move 
the Auctions Division there. This was a good fit because good auction 
design must be based on sound economics. I am pleased to report that 
this transition has been smooth and, as evidenced by the Commission's 
busy auctions schedule, has not disrupted our important auctions work.

                                *  *  *

    Chairman Kennedy, Ranking Member Coons, and Members of the 
subcommittee, thank you for this opportunity to testify. I would be 
pleased to answer your questions.

    Senator Kennedy. Thank you, Mr. Chairman.

                                 C BAND

    Let me ask you a couple of questions about the C band. As I 
understand it, we are talking about the airwaves from 3.7 
gigahertz to 4.2, is that right?
    Chairman Pai. Correct. That is one portion of the C band, 
space to earth.
    Senator Kennedy. And there's a C-Band Alliance comprised of 
some foreign-owned satellite companies who have approached the 
FCC with the proposal to let them handle the auction and they 
are proposing, as I understand it, to sell a 180 megahertz. Am 
I right so far?
    Chairman Pai. The proposal has changed over time, but that 
is the core of the proposal, yes.
    Senator Kennedy. Who owns the C band?
    Chairman Pai. Ultimately, sir, this is a public resource 
that is owned by the American people, the airwaves. The FCC, as 
imbued by Congress with authority, is the steward of that 
spectrum.
    Senator Kennedy. So this is a strategic American asset, 
which is owned by the American people. I understand that the C-
Band Alliance, three, maybe four companies, I understand two 
are from Luxembourg, one from Canada, the French company may 
have dropped out but they could come back in. So when I say the 
foreign-owned satellite companies, they have control of it 
right now, is that correct?
    Chairman Pai. That is correct, sir, yes.
    Senator Kennedy. Okay. I am just trying to set the table 
here, and they are offering to handle the allocation of this 
very valuable C band which is critical to 5G and keep most of 
the money. Why in God's name would we do that?

               C-BAND PRIVATE SALE TO WIRELESS COMPANIES

    Chairman Pai. Senator, as I understand their proposal, they 
use the C band currently to sell satellite delivery program to 
content companies,----
    Senator Kennedy. Right.
    Chairman Pai [continuing]. Broadcasters, and cable 
companies and others. So what they are proposing to do is 
essentially transition a portion of the C band to wireless 
companies through a private sale and move some of the content 
companies that I just mentioned to a different portion of the 
band and the argument that they have made to us is that that 
would be a win-win for the United States Government as well as 
for the various industries that would be involved and that's 
one of the proposals the FCC is evaluating right now.
    Senator Kennedy. Well, why don't we do it and keep all the 
money for the American people? I mean, I do not mean--look, I 
am a free enterprise guy, you know. I believe companies are 
supposed to serve their stockholders. I am not much into the 
serving the stakeholder stuff, but we did not take these to 
Luxembourg and one Canadian, one French company to raise here. 
This asset is ours. Why do we need them?
    Chairman Pai. I appreciate the question, Senator. From our 
perspective at least, I embrace those four principles I 
outlined in my opening statement, spectrum for 5G, timeliness, 
revenue for the Treasury, as well as making sure that those 
services will continue to be delivered, and so those are the 
four factors that I'm thinking about and I want to make sure 
that whatever course we chart forward, it's a course that 
respects each of those four principles, including the important 
factor of revenue to the Treasury.

                            C-BAND ALLIANCE

    Senator Kennedy. Well, how do we know the C-Band Alliance--
and I do not mean this to sound pejorative. I am just really 
trying to understand the advantage of doing it this way. How do 
we know the C-Band Alliance, which is going to conduct this 
sale itself, has not already presold it? Do we know whether 
they have or not?
    Chairman Pai. So as far as I know, they have not because in 
part, that would be contingent on the FCC making a decision in 
this particular band, but, again, what I would say is that we 
want to make sure that we respect each of those four 
principles.
    Senator Kennedy. Yes, but how do you know the C-Band 
Alliance--I am not saying they would or would not. How do you 
know they have not gone out to others, the real principals, and 
said, hey, I do not know if we can talk this the FCC into doing 
this, but if we can, let's go ahead and do a deal already and 
they already have it presold.
    Chairman Pai. Right. Again, I cannot speak to what 
conversations or decisions or actions the C-Band Alliance might 
have taken.
    Just from our perspective,----
    Senator Kennedy. Don't you think we ought to ask them, see 
how much money we are leaving on the table?
    Chairman Pai. From our perspective at least, our job is to 
vindicate the public interests, not the private----
    Senator Kennedy. Yes.
    Chairman Pai [continuing]. Interests of any entity or 
organization.
    Senator Kennedy. I've heard one argument--the only thing 
I've been able to find, and I don't pretend to have your 
expertise. I mean that, I don't, but I've read a lot on this. 
The only argument that I can find to doing the deal with C 
band, to which I mean no disrespect, is that they say they can 
do it faster and it would take the FCC 7 years, is that right?
    Chairman Pai. That is one of the arguments they have made, 
is the relative timeliness.
    Senator Kennedy. But is it true?

                                AUCTIONS

    Chairman Pai. So that's one of the things we're evaluating 
right now; we have auctions on the table and one of the things 
we're studying, in coordination with our Technical Staff, is 
how quickly would the various auctions yield some of the 
spectrum?
    Senator Kennedy. How long would you think it would take you 
to do a public auction, if we start today?
    Chairman Pai. That is one of the questions that is very 
difficult because of this particular band. If this was 
Greenfield spectrum, then that is the bread and butter of the 
FCC's----
    Senator Kennedy. I know. I get it. It will be hard.
    Chairman Pai. With incumbents, it does----
    Senator Kennedy. How long?
    Chairman Pai. That is one of the difficult questions. 
Several years is the estimate that we have heard.
    Senator Kennedy. A couple? One?
    Chairman Pai. One would be fairly ambitious.
    Senator Kennedy. Two?
    Chairman Pai. That is more closer than one would be.
    Senator Kennedy. So two, two and a half? I feel like we are 
bidding against each other. Would it be fair to say you can do 
it in 3 years?
    Chairman Pai. It is difficult to say, Senator, because some 
of the incumbents we have to accommodate, as well, and so 
that's----
    Senator Kennedy. Well, it is not going to take you 7 years, 
is it?
    Chairman Pai. We do not have a firm estimate.
    Senator Kennedy. Let me make a suggestion to you. I am not 
trying to tell you how to run your business, but you have done 
over a hundred auctions. Your people have generated a lot of 
money.
    Would you consider calling in all your people in charge of 
these auctions and specifically with the C band auction and 
say, ``I want this done in 3 years?'' We have already wasted 2 
talking about the C band deal. Would you call in all your 
people and say, ``I want this done in 3 years?'' I will give 
you a bonus if you can do it in 2 and a half or 2.
    Now I have been around government long enough. There's 
going to be one, if not more, that's going to go, oh, Mr. 
Chairman, you don't know how hard it is. It is going to take us 
7 years. That is the one you fire and you say, ``you are going 
to do this in two to 3 years.'' If C band can do it, then we 
can do it, and if they cannot do it, fire somebody and let us 
go on Zip Recruiter and find somebody who can do it.
    I mean, I am serious, Ajit. The only argument I have been 
able to find is that they can do it faster. Maybe they can do 
it faster; I am not alleging this, because they have got the 
deal presold.
    All right. I am going to hush and turn to my colleagues, 
but I have a couple more.
    Chairman Pai. Absolutely.
    Senator Kennedy. Okay. Senator Moran.
    Senator Moran. Chairman, I could defer to you if you want 
to do your couple more.
    Senator Kennedy. No, no. You go right ahead.
    Senator Moran. I want to make sure that I am not the guy 
that says you cannot ask your questions in less than 7 years.
    Mr. Chairman, thank you very much.
    Ajit, Chairman Pai, thank you for being here today. Thank 
you for the conversations we have been able to have in the 
Commerce Committee and here in the Financial Services and 
General Government (FSGG) Subcommittee, and again to the 
Chairman, oversight is so important and, in my view, lacking in 
too many instances in the United States Senate. So thank you 
again.

 HIGH-SPEED BROADBAND AND 5G MOBILE WIRELESS TECHNOLOGY TO PLACES LIKE 
                                 KANSAS

    I'll start by commending the FCC for continuing to pursue 
policies that enhance the availability of high-speed broadband 
to my constituents, our constituents, including the expeditious 
deployment of 5G mobile wireless technology that contributes a 
lot to our country's economic growth, creating jobs and, 
importantly, technological competitiveness to the advantage of 
the United States.
    I also understand that mid-band spectrum, like C band, has 
critical capacity and coverage characteristics to meet those 
service needs.
    In my view, it is critical to ensure that the content-
providing customers of the satellite incumbents currently 
operating in the C band, such as broadcast television stations 
and cable programmers, are effectively accounted for in any 
future repurposing of that spectrum through an auction.
    The services that these businesses provide are particularly 
important to the places that I represent and that I come from, 
and it is absolutely necessary for the benefit of places like 
Kansas. If they are not relocated, then they deserve protection 
from harmful interference.

                    STAKEHOLDERS AND RURAL CUSTOMERS

    I understand and my impression is that the FCC is already 
considering the importance of the stakeholders and rural 
customers based upon the agency's questions that were posed in 
the Order and Notice of Proposed Rulemaking considering new 
commercial wireless services in the C band.
    So would you explain to me how the agency plans to protect 
those services, the incumbents, and the benefits that accrue by 
the services we have today in a place like Kansas?
    Chairman Pai. Appreciate the question, Senator. That's part 
of the reason why one of the critical factors to me, to the 
agency, is making sure that those services that are delivered 
today using the C band will continue to be delivered to 
American consumers because we recognize that whether you want 
to see Kansas State win on Saturday afternoons or have small 
cable operators across our State be able to deliver some of 
that programming, they need a method of distribution. That's 
important for millions of consumers of video content around the 
country and around our State.

               NOTICE OF INQUIRY AND PROPOSED RULEMAKING

    One of the reasons why, to go to the Chairman's point about 
transparency, one of the reasons why we have been considering 
this issue for a while is that we started with the Notice of 
Inquiry in 2017. Then we moved to a Notice of Proposed 
Rulemaking in 2018. It was important for me, for us, for the 
American public to have a greater understanding about some of 
the issues involving some of the customers who rely on the C-
band spectrum, which is part of the reason why we put out not 
one but two public notices this year, one on May 3 and another 
on July 19. We simply wanted to understand the full range of 
issues that are involved here.
    So one of the things that we'll be looking at is of the 
various proposals that are on the table, how can we make sure 
that that content that consumers are continuing to rely upon 
from their providers can continue to be delivered, and we want 
to make sure that we don't leave those customers behind, as the 
Chairman put it in his opening remarks.

                  MOBILE NOW ACT AND 6 GIGAHERTZ BAND

    Senator Moran. Chairman, let me ask you about 6 gigahertz 
in particular. The need for additional unlicensed spectrum, we 
have acknowledged in Congress, as has the FCC. We did so in the 
Mobile NOW Act. In 2018, the FCC adopted a Notice of Proposed 
Rulemaking seeking comments on permitting unlicensed devices to 
operate in the 6 gigahertz band.
    It proposes to use automatic frequency coordination to 
protect incumbents in that band, but the development and 
regulatory certification of this innovation will take, I would 
think, maybe not 7 years but a significant amount of time, 
probably years.

                          UNLICENSED SPECTRUM

    What are your thoughts about addressing the urgent needs of 
additional unlicensed spectrum in the near term while 
protecting incumbents from harmful interference?
    Chairman Pai. Great question, Senator, and I've 
consistently said that we recognize that the incumbent users of 
that band, in particular electric utilities, need to be 
protected from harmful interference and you've got my guarantee 
that I will work with our career staff to do the technical 
analysis necessary to ensure that that happens.
    But I truly believe that American consumers can have the 
best of both worlds. They can have the electric utilities using 
the spectrum in a way that allows them to deliver power more 
efficiently and they can have the benefit of unlicensed 
innovation. To give you a sense of why this matters, what I 
propose to do is to free up for unlicensed use from 5925 to 
7125 megahertz to some extent for unlicensed innovation.
    Currently, most consumers use 2.4 gigahertz or 5 gigahertz 
spectrum for Wi-Fi. A lot of times, the Wi-Fi is slow. Those 
channels are congested. With this massive swath of new 
spectrum, consumers could benefit from super-fast Wi-Fi 
services delivered over 160 megahertz of channels. That is a 
lot of gobbledygook, but to the American consumer, what does it 
mean?

                          WI-FI IN RURAL AREAS

    Well, I will tell you. A couple months ago, I was in a 
small town in our home State and I sat next to a seventh grade 
girl on the bus named Adaya and using Wi-Fi, she was able to do 
her homework and to upload it in a way that would be 
unthinkable to those of us who grew up in the era when the 
cutting edge technology was a Number 2 pencil.
    So using this kind of Wi-Fi, especially in rural areas, 
could be a game-changer for America's schoolchildren and that 
is just one application.
    We're talking about precision agriculture, telemedicine, 
and all the other new applications that unlicensed innovation 
could unleash. That is part of the reason why we think it is 
important to have this conversation.
    Let us protect the incumbent users, but let us also have 
our eyes on the future and the future in many cases is 
dependent on Wi-Fi.
    Senator Moran. Chairman, thank you. Let me see if I can get 
one more question in in 39 seconds.
    Chairman Pai. Sure.

                           BROADCASTER REPACK

    Senator Moran. We have directed you, the FCC, to provide 
monthly reports to the Commerce Committee regarding the status 
of the construction schedule and the relief granted for the 
Broadcaster Repack following their incentive auction.
    I appreciate the details in the report, but I wanted to 
highlight this issue and give you the chance to give me a brief 
update on the current status of that Repack.
    Chairman Pai. Thanks for the question, and thank you, 
Senator, for both advocating for this issue here and FSGG as 
well as your approach on Commerce. You have flagged the 
importance of this issue for quite some time.
    We are now happily done. There are 10 phases in the Repack. 
Phase 5 ended on September 6 and I'm pleased to report that as 
of that date, 533 of the 987 broadcasters that were required to 
move from the pre-auction channel have in fact moved. That is 
54 percent, which puts us ahead of the game.
    Phase 6 ends tomorrow and my expectation is that we'll have 
a hundred additional stations that will have successfully 
moved. So we will be over two-thirds of the way through, all of 
which to say that I think we are on track. We're continuing to 
monitor the situation and, in particular, for the low-powered 
TV and translators, which are important especially west of the 
Mississippi, thanks in part to the resources afforded by this 
subcommittee, we have now--back in March, the FCC adopted some 
rules to reimburse them, as well, for certain costs they incur 
through the Repack and so we want to make sure that this is a 
smooth transition for everybody and thus far, I'm happy to 
report that it is.
    Senator Moran. No requests of Congress in this regard?
    Chairman Pai. In this regard, I have plenty of others that 
I will be sure to write to you about.
    Senator Moran. Thank you, Mr. Chairman, and you, Mr. 
Chairman.
    Senator Kennedy. The distinguished Senator, senior Senator 
and former football star from the great State of Arkansas.
    Senator Boozman. I like that. I need to carry you around 
and introduce me all over.
    Senator Kennedy. I just speak the truth.
    Senator Boozman. Thank you, Mr. Chairman. Thank you for 
having this hearing. It is always great to have the Chairman 
over. We appreciate all of your hard work and especially I know 
that you are very, very well versed, lots of people are well 
versed on our urban problems, but I think you genuinely 
understand Rural America and the challenges that they're going 
through right now.

                            6 GIGAHERTZ BAND

    I'd like to follow up on Senator Moran's question about the 
6 gigahertz band and trying to encompass it for the very 
reasons that you talked about in the sense of looking forward. 
You know, there is great opportunity and great need.
    There is real concern, though, not only among the 
electrical grid users but also the first responders. I know my 
Governor Asa Hutchinson, who does a tremendous job, so well 
respected; he has real concern in visiting with the people in 
my State as to how that is going to be effective.
    It is my understanding that the Department of Energy has 
offered to make the National Labs available to test the safety 
and security of allowing unlicensed users to share the 6 
gigahertz band with the critical infrastructure companies.
    Have you considered this offer? Does the FCC have the 
capacity to test and evaluate the continued effectiveness of 
utility operations yourselves?
    Chairman Pai. Thanks for the question, Senator, and having 
personally visited the Idaho National Laboratory about a year 
ago, I have a firsthand appreciation for the terrific work that 
they do, including on some of these spectrum experimentation 
issues.
    I'm working with our career staff in the Office of 
Engineering and Technology on some of the technical issues, 
that although I'm not an engineer, I can rely on them for the 
ability to tell it like it is, and so we are working through 
some of those issues and I'd be happy to take a look at the 
Department of Energy's proposal in due course.
    Senator Boozman. Good. Well, I think that that certainly 
merits a good look at and anything we can do to work together 
to solve these problems is great.

               LIABILITY AND DISRUPTION BY UNLICENSED USE

    The other issue is liability. Who would be liable if 
incumbent users are disrupted by the unlicensed use?
    Chairman Pai. That is a legal question that I would have to 
rely on our Office of General Counsel to answer fully, but 
that's one of the concerns that we will take a look at.
    Senator Boozman. Right. Again like I say these are things 
that are very important and I think my Governor is not the only 
one that has concerns in this area. So hopefully we can all 
work together to see if we can make it such that those kind of 
concerns are resolved in the future.
    Chairman Pai. Happy to do so, Senator. I have learned in 
Washington there are three things you do not discuss in polite 
society, religion, politics, and spectrum usage, but, 
nonetheless, we are committed to going forward in a way that 
accommodates all users.
    Senator Boozman. I think that is well said. After the nice 
introduction, I am going to yield back my time to you, Mr. 
Chairman, so that you can continue with your concerns.

    [Clerk's note: Senator Boozman submitted the following 
letter on the next page to be included in the record of the 
hearing:]






    Senator Kennedy. Thank you. Thank you, Senator.

                     ALLOCATION TO RURAL BROADBAND

    I share my colleague's concern about rural broadband. I 
think we all do. If we do a competitive bid for C band and 
brought in 60 billion, maybe more, why couldn't we allocate 20 
billion to rural broadband? Start with Arkansas. Why couldn't 
we?
    Chairman Pai. Senator that would be a decision within 
Congress's purview. We are required by law to deposit any 
proceeds from an auction into the Treasury. So that would be a 
decision that Congress would have to make.
    Senator Kennedy. But we can--I know, and I appreciate your 
discretion there, but maybe we can all agree that would help 
solve the rural broadband issue.
    My biggest worry about 5G is that our folks who do not live 
in the largest population centers are going to see it last and 
that is not fair. That is not fair.
    Chairman Pai. So I could not agree more with you and that 
is part of the reason why if you look at some of our decisions 
in recent months, they have all been tailored to make sure that 
we meet your priority of making sure that no American is left 
behind.

                          T-MOBILE-SPRINT DEAL

    For example, with the T-Mobile-Sprint deal, 99 percent 
coverage within 6 years. The 2.5 gigahertz band, making sure 
that rural-tribal carriers get first bite at that apple. The 
3.5 gigahertz band, making sure we adopt a county-sized license 
so that smaller providers serving rural Americans can compete.
    These are the kinds of building blocks that will enable 
rural Americans not to look with envy upon their urban brethren 
but to actually be the leaders of this digital revolution.

            PUBLIC AUCTION--EXCLUDING COMPANIES FROM BIDDING

    Senator Kennedy. If we do a public auction, could we not 
exclude from bidding a company that might be perceived to be an 
enemy of the United States?
    Chairman Pai. I would have to take a look at legally 
whether we could do that on that ground. That is a question 
that we have not, to my knowledge at least, explored of late.
    Senator Kennedy. Well, let me put it another way. If we do 
a public auction and a certain country that has the second 
largest economy in the world said we'll buy it, we could say 
no, no, I don't think so, couldn't we?
    Chairman Pai. I believe--if I understand your question 
correctly, I think we would have the power to do that.
    Senator Kennedy. Yes.
    Chairman Pai. To present it in national security terms.

                           COMMUNICATIONS ACT

    Senator Kennedy. My reading of the Communications Act tells 
me that you have to do a public auction, that this private deal 
is not permissible under the Communications Act.
    Chairman Pai. Senator,----
    Senator Kennedy. What do your lawyers say about that?
    Chairman Pai [continuing]. That's one of the things they 
are diving deep into, is Section 309 and the other authorities 
granted under the Communications Act, and as a recovering 
lawyer myself, I don't pretend to know as well as they do, but 
they're preparing analyses of the various provisions at issue 
and----

                        C-BAND ALLIANCE PROPOSAL

    Senator Kennedy. Well, and again, I do not want this to 
come out the wrong way. I do not have anything against the C-
Band Alliance. I am just really trying to understand the 
advantage of taking their proposal.
    They say they can do it faster than the 7 years that they 
say it will take the FCC. Now that--what I heard you to say 
today is it will not take 7 years. So that kind of offends me 
that somebody is saying it would take this long. That is a 
denigration of our good people at the FCC.
    But I know, Mr. Chairman, you can do it quicker than 7 
years. I think you can do it in 2, 2 and a half. I have got 
complete confidence in you, especially if you fire a couple 
people, as we talked about.
    But if that's a fair reading, and I'm not saying I'm an 
expert either because I'm not, but I think a fair reading of 
the Communications Act says this has to be bid out.
    If you accept a private deal, we're going to be in 
litigation a lot longer than 7 years, are we not?

                PRIVATE DEAL AUCTION OF C-BAND SPECTRUM

    Chairman Pai. Senator, what we understand, there are 
different litigation risks for different auctions and that is 
one of the things we're evaluating, is what does the law says, 
and I can tell you that in this matter, as in all matters, 
we're going to be driven by two things and two things only. The 
facts on the ground in our record as well as the laws Congress 
has set for it.
    Senator Kennedy. Well, if we do take the private deal and 
there is litigation, then the argument that we in the private 
sector can do it faster is no more, am I correct?
    Chairman Pai. Well, litigation is, of course, a delay in 
any context.
    Senator Kennedy. Well, we are talking $60 billion here. I 
mean, anybody who knows the litigation environment, who knows a 
law book from a J.Crew catalog knows there is going to be a 
lawsuit separate, and they're not going to be completed in 6 
months. It will take years. Probably go to the United States 
Supreme Court over the straightforward issue, which you would 
have to defend of why we did a private deal as opposed to a 
public auction of a valuable American asset.
    Does it give you--if we do this private deal and we give 
this C band, valuable C band to a foreign-owned satellite 
company, does that concern you in terms of national security?
    Chairman Pai. Senator, that is one of the concerns we 
always think about, is making sure that whatever decision we 
make comports with the public interest and there is no 
component of the public interest greater than our national 
security.
    Senator Kennedy. Well, I am not saying it's just the cash. 
Please do not misinterpret. But any private company that comes 
to us and says, hey, I've got a win-win for me and the American 
people and I can do it faster and we're going to beat those 
Chinese and let me handle it and keep the money, what if 
they've got it presold to Huawei?
    Chairman Pai. Right.
    Senator Kennedy. That would not be cool, Mr. Chairman.
    Chairman Pai. I would share concerns in that circumstance.
    Senator Kennedy. You would get a call from the President on 
that one and, I mean, that concerns me.
    All right. I do not want to beat this to death, but I would 
like you--and I do not want to add to your workload. I am 
really trying to understand the advantages of the private deal 
and I just don't see them, other than we can do it faster.
    Well, we have already spent 2 years, have we not, talking 
about the private deal? So we've wasted--not wasted, but we 
used 2 years, and when I ask, well, why can you do it faster, I 
never get an answer. They just say, ``we can,'' and I do not 
believe it. I have confidence in your leadership and your 
ability to do it a lot faster than the 7 years and that is the 
only advantage that I can see.

                 5G AIRWAVES TO FOREIGN-OWNED COMPANIES

    The disadvantage, we are giving control of the 5G airwaves 
to foreign-owned companies. We are going to have lawsuits out 
the wazoo. We are going to leave at least $60 billion on the 
table and it may be more. I am not saying the C-Band Alliance 
would do this, but I know the C-Band Alliance only wants to 
offer a 180. I mean, if they are good business people, I am 
sure, if you have a private profit motive, you're going to 
offer the 180, get the price up, and once the price is up, 
you're going to offer the rest. So it may be more than 60 
billion.
    Look, I am a free enterprise guy but that money ought to go 
to the American people. Think of what we can do with it. This 
would solve all the President's law problems. I mean, I am 
really worried about this, Mr. Chairman.
    When do you think you all would make a decision? By you 
all, I mean the FCC.
    Chairman Pai. So I had said, Senator, that we would make a 
decision this fall, so a couple months left, I guess, in the 
fall, so somewhere within that time frame, and if I might offer 
two other quick points.
    One is that again, I have not made a decision yet, but we 
would be happy as appropriate to keep Members of Congress 
informed as we have in the past couple of years.

                             AUCTIONS TEAM

    The second thing is I do want to give plaudits to our 
Auctions Team. They have done heroic work and that's important 
because we have reorganized them into the Office of Economics 
and Analytics and so now, because they handle auctions not just 
on spectrum but on universal service support and other 
programs, they've done just heroic work helping to close the 
Digital Divide and so I do want to say that their leadership 
and the career staff there have been fantastic to work with and 
I have a firsthand appreciation for how difficult and 
interdisciplinary their work is and I'm glad we have talented 
public servants like that.
    Senator Kennedy. Well, I could not agree more with you. I 
think they can do it, given their experience. Nobody has 
experience doing spectrum auctions like your people, and I just 
do not believe that--I love the people of Luxembourg and Canada 
and France, but I do not believe they are better than our 
people at doing this, and I am glad you mentioned that.
    I am probably going to call you. I'm thinking about doing a 
second hearing and asking your auction folks to come over and 
tell us where they are and ask them straight up, you know, some 
people say it will take you 7 years, is that true, and, if so, 
why, because I don't believe it will.
    But I want to thank you. I know you're busy, Mr. 
Chairman,----
    Chairman Pai. No, no.
    Senator Kennedy [continuing]. And we really appreciate you 
coming by today. You are one of the smartest guys I have met in 
government and I just want to thank you for your service.
    Chairman Pai. Well, you are very kind to say that and 
hopefully I will continue to live up to the acclimation.
    Senator Kennedy. You will. Thank you, sir.
    Chairman Pai. Thank you.
    Senator Kennedy. Folks, we are going to recess for 5 
minutes because I have to go to Judiciary and make a quorum or 
my office will be in Roanoke, but I will be back. In 5 minutes 
and we will do our second panel.
    [Recess.]
    Senator Kennedy. We will now turn to our second panel of 
distinguished witnesses. They represent two very fine 
organizations in my judgment, two government watchdogs, the 
Citizens Against Government Waste and the Taxpayers Protection 
Alliance, Mr. Tom Schatz--am I saying that right, Tom?
    Mr. Schatz. Yes, Senator.

                   CITIZENS AGAINST GOVERNMENT WASTE

    Senator Kennedy. Serves as the President of Citizens 
Against Government Waste. His organization, we are all familiar 
with it, was founded in 1984. It was the successor to the Grace 
Commission established by President Reagan. It is dedicated to 
eliminating waste, fraud, abuse, and mismanagement in 
government.
    Mr. Schatz has served as President of that organization 
since 1992 and is a respected authority and expert on efforts 
to protect taxpayer dollars.

                     TAXPAYERS PROTECTION ALLIANCE

    Mr. David Williams, we are happy to have him with us today. 
He serves as the President of Taxpayers Protection Alliance. 
The Alliance was founded in 2011, I believe, as a nonprofit 
educational advocacy organization. It is dedicated to educating 
the public through the research, analysis, and dissemination of 
information on the government's effects on the economy, and I 
can say that the Alliance's work and the Citizens Against 
Government Waste work, I read their analyses often and they're 
always well done and insightful, and I thank them for that.
    What else? Mr. Williams is a strong advocate of good 
government and an opponent of government waste, as is Mr. 
Schatz, and has offered testimony on these efforts in State 
legislatures and before foreign governments.
    And with that, I will start with Mr. Williams, and I thank 
you both for being here very much. Help us understand this 
important issue.
STATEMENT OF MR. DAVID WILLIAMS, PRESIDENT, TAXPAYERS 
            PROTECTION ALLIANCE
    Mr. Williams. It would be my pleasure to, and good morning 
and thank you, Mr. Chairman, for this opportunity to testify 
today about C band.
    Now before we talk about the C band, let us get one thing 
straight. These are the people's airwaves. These are not the 
airwaves of private companies. This is the spectrum that is the 
people's spectrum. It is owned by taxpayers. It is regulated by 
the FCC. So let us get that out of the way.
    You know, it is funny because over the years, people often 
ask me, what is the biggest taxpayer rip-off? I have been doing 
this for 26 years. People say what is the biggest taxpayer rip-
off you have seen. This is in the top 10. I mean, this is 
significant. This is in the top 10 of taxpayer rip-offs I have 
seen in 26+ years.
    You have my written testimony. I am not going to read it. I 
will give the Cliff Notes and give some highlights.
    Senator Kennedy. I have it and I promise I am going to read 
it later.
    Mr. Williams. Fantastic. Thank you.

                            C-BAND SPECTRUM

    So C-band spectrum, as you mentioned earlier, is the sweet 
spot of spectrum. It is the mid band. It can go far distances 
and we are talking about 5G that is going to be at least 10 
times faster than 4G.
    So this is going to do two things. The spectrum is two 
things. First, it is a taxpayer asset. $60 billion. We are 
talking about a lot of money, $60 billion, but we are also 
talking about closing the Digital Divide in this country.
    Right now, inner city kids are going to a Starbucks or 
going to McDonald's to do their homework. That is unacceptable. 
Right now in rural areas, people just do not have broadband.
    So when we get this spectrum, we will utilize it for 5G, 
we're going to close the Digital Divide without taxpayer money. 
In fact, it is going to be a net gain for taxpayers when we 
sell the spectrum.
    Rural areas, we are talking about farmers. We are talking 
about just communities but also telemedicine. The ideas are 
limitless when it comes to--we have a doctor shortage in rural 
areas. 5G is going to connect rural communities with hospitals 
so they can make immediate diagnosis, potentially remote 
surgery. So this is really fascinating stuff we are talking 
about here when it is closing the Digital Divide and that's why 
it has to happen quickly.

             C-BAND ALLIANCE--SELL 5G IN THE PRIVATE MARKET

    Now we have talked about the C-Band Alliance and their 
offer to sell this in the private market. Well, we have a lot 
of concerns. The first is that they want to sell 180 megahertz. 
Experts have said we need at least 300 megahertz for it to be 
real, to use the mid-band spectrum in a real way. That is the 
first problem.
    The second problem, the taxpayer. Where is the taxpayer in 
all these discussions?

                            C-BAND ALLIANCE

    So about 5 months ago, the C-Band Alliance called me and I 
had about a 40-or-50-minute lecture from the C-Band Alliance as 
to why we were so wrong about this issue and why we were 
stopping the deployment of 5G and that, you know, we didn't 
like the country.
    So after this 40-or-50-minute lecture, I asked a very 
simple question. I said, okay, you sell the spectrum. How much 
are taxpayers getting? Silence, absolute silence. He said, 
well, it is going to be a voluntary contribution. What does 
that mean? Is that a dollar? Is that $10? Is that a billion 
dollars?
    Five months later, they still cannot answer that 
fundamental question. What are taxpayers getting from this 
spectrum? So that was the reddest of red flags during my 
conversation, plus I didn't appreciate a 50-minute lecture. I 
have been doing this a long time. I think I know my business by 
now.
    They railed against the FCC. They showed an incredible 
amount of contempt for the FCC and the FCC process. Another red 
flag. Listen. What Ajit Pai, Chairman Pai has done in the last 
couple of years has been amazing. To close the Digital Divide, 
really, you know, to increase speeds of the Internet.
    A group of companies, is it four or three because one 
backed out, I think they are coming back in, I do not know, but 
everything always changes with the C-Band Alliance. You notice 
that. So there is a lot of uncertainty with even who their 
members are, but here you have the C-Band Alliance who rely on 
spectrum disparaging the Federal Communications Commission, an 
agency that they should be very thankful of because they got a 
lot of spectrum and they've made a lot of money off of the 
spectrum.
    Again, they receive the spectrum for free. So that is our 
concern, is what the C-Band Alliance is doing and what they are 
saying.
    So our choice----
    Senator Kennedy. Could you repeat that, Mr. Williams?
    Mr. Williams. Yes.
    Senator Kennedy. The C-band spectrum or C-Band Alliance, 
rather, got the C band. They hold it now. They got it for free.
    Mr. Williams. Yes, this was given to them and they received 
the spectrum for free and now they want to profit off of it.
    So, Senator Kennedy, we have two choices. We have the FCC, 
which, as you heard earlier, has done this hundreds of times in 
the past. Taxpayers have gotten a $120 billion; I think is the 
estimate to the Treasury from these spectrum sales. It is an 
open, it is a transparent process.
    Then we have the C-Band Alliance, totally in the dark. We 
do not know whom they are going to sell it to. We do not know 
for what price, what taxpayers are going to get from it, how 
long it is going to take. We don't know any of these answers 
from the C-Band Alliance, and isn't that what we deserve, some 
answers?
    There is going to be lawsuits. As soon as a private sale is 
announced, there will be lawsuits and, quite honestly, the 
Taxpayers Protection Alliance, we never get involved in 
lawsuits, but this is pretty damn tempting because this is a 
lot of money left on the table for taxpayers and this is a 
bipartisan issue.
    We have public knowledge on our side. We are a conservative 
organization. I can count the amount of time that we have 
agreed with public knowledge on one finger. We have the New 
America Foundation. They are looking at this in a legal way to 
look if the FCC can even do this. This was brought up earlier, 
also. Can the FCC even do this?
    So, please, for the sake of taxpayers, for the sake of 
closing the Digital Divide, we hope that your subcommittee 
continues to look at this and urges the FCC to look at this as 
the people's spectrum. This is not the spectrum for these four 
companies. This is the people's spectrum and it needs to be 
treated as such.
    Thank you very much.
    [The statement follows:]
                  Prepared Statement of David Williams
    Good morning and thank you for the opportunity to testify today. My 
name is David Williams, president of the Taxpayers Protection Alliance 
(TPA). TPA was founded to be a rapid-response nonpartisan taxpayer and 
consumer advocacy group. When the government neglects its citizens and 
makes decisions in the interests of a connected few at the expense of 
all Americans, TPA sounds the alarm through op- eds, coalition letters, 
and the media. We pride ourselves in quickly and loudly responding to 
these taxpayer and consumer issues, and keeping citizens educated on 
what their government is up to.
    I've come to testify on a pressing issue that many people may not 
know about, but will nonetheless be greatly impacted by with tens of 
billions of taxpayer dollars and faster Internet speeds at stake. That 
issue lies in the valuable piece of mid-band spectrum commonly known as 
the C-band, which has unique properties critical to the nationwide 
deployment of 5G wireless services. The C-band part of the spectrum is 
especially important for making sure that consumers will have 5G access 
in their homes, at work, and everywhere in-between, because of its 
ability to support larger volumes of mobile data than lower 
frequencies. And, by using this mid-band spectrum to deliver 5G to 
millions of consumers, Internet providers can be sure that information 
gets transmitted over the digital domain quickly and effectively. And 
that's important, because 5G is at least 10 times faster than 4G and 
doesn't require the pricey infrastructure currently required to get 
Internet out to rural areas. That's right: Internet providers can use 
C-band spectrum to close the digital divide, meaning that valuable 
taxpayer resources won't have to be spent on government-owned networks 
which typically waste more than $50 million while serving few 
residents.
    With 5G, consumers can get Internet access via small-cell 
deployments the size of pizza-boxes attached to telephone poles. And I 
assure you, the costs of these small-cell deployments are far lower 
than laying cable through long stretches of rural America. 5G means 
Internet far faster than 4G, and the capacity for powering telemedicine 
and the Internet of things. And, let me repeat, 5G means closing the 
digital divide WITHOUT taxpayer money.
    There's a well-documented shortage of doctors in rural America, and 
having a surgeon coordinate a procedure in real-time on a patient 2,000 
miles away is a possibility with high-speed, high-quality Internet. But 
things like remote procedures can only happen with better Internet 
standards, and the standards promised by 5G will only be a reality if 
there's sufficient bandwidth for Internet providers.
    Lower income folks won't have to pay for expensive fiber to the 
home or sit at a McDonald's or Starbucks to have access to fast 
broadband.
    Some have argued that, in order to harness the power of the C-band 
for 5G, we need an alternative to the proven history of Federal 
Communications Commission (FCC) auctions. A group of three--used to be 
four--satellite companies known as the C-Band Alliance (CBA) has been 
lobbying the agency and lawmakers for the right to commandeer C-band 
and sell it privately in order to clear the spectrum of current users. 
There's just one small problem: their proposal leaves the FCC and 
taxpayers--the current owners of the spectrum--out of the equation 
entirely. That's right, nowhere in the CBA's proposal is a plan or 
guarantee that taxpayers will be made whole. The satellite group talks 
a lot about making a ``voluntary contribution'' to the Treasury once 
their private, opaque transaction is complete, but interestingly 
enough, there are never any details provided.
    TPA meticulously analyzed the ins-and-outs of CBA's proposal 
shortly after it was announced. I had deep concerns after hearing about 
this ``voluntary contribution'' to taxpayers, so I had a call with the 
C-Band Alliance and shared these concerns with a senior employee at the 
organization. This employee kept reassuring me that spectrum owners, 
taxpayers, would see their due at the end of the day, but repeatedly 
refused to provide any concrete details. He also railed against the FCC 
and its auction process, despite a proven track record by the agency in 
conducting more than 100 spectrum auctions since 1994 and compensating 
taxpayers more than $120 billion over the past 25 years. Instead of 
acknowledging this effective, transparent way of doing business, the 
employee claimed that a truly free market approach would sidestep the 
FCC entirely. It is amazing that an organization like the C-Band 
Alliance (which has benefitted greatly from the current spectrum 
allocation process) wouldn't trust the FCC, an agency that has given 
them so much.
    The CBA claims to be pro-free market, while proposing a process 
that would make a mockery of free enterprise. To make their plan work, 
the CBA would need the FCC to give them a monopoly on the selling of C-
band spectrum. TPA believes that government-granted monopolies 
undermine markets and make things more expensive and difficult to 
obtain. And of course, when a market exchange takes place, there is 
usually some sort of pre-agreed upon payment that happens during the 
transaction.
    If the CBA gets their way, they'll receive all the benefit from 
selling C-band spectrum without any guarantee that the true owner of 
the spectrum--taxpayers--will see a single cent of the proceeds. And 
the stakes are too high to ignore, since the proceeds from a C-band 
auction could generate upwards of $60 billion for taxpayers. According 
to CBA's description of their proposal, they want taxpayers to believe 
that this is a special situation in which a large amount of spectrum 
needs to quickly and efficiently be sold off, otherwise America will 
lose the race to 5G. Except, the CBA's proposal provides nowhere near 
enough spectrum to meaningfully aid in the nationwide deployment of 5G.
    These satellite companies want FCC permission to clear just 180-
megahertz, which would not be nearly enough to meet the Trump 
administration's laudable goals of 5G deployment. Experts in the field 
recommend that, in order for America to have comprehensive 5G coverage, 
each mobile operator should have access to at least 100-megahertz worth 
of contiguous mid-band spectrum. That's certainly what other countries 
are doing. China and Japan are in the midst of allocating at least 100-
megahertz to most of their carriers and freeing up at least 500-
megahertz total mid-band spectrum in their countries.
    CBA would free up less than half the spectrum that other countries 
are freeing up, despite our Nation having one of the largest and most 
complicated digital markets in the world. America's lopsided deal with 
a handful of satellite companies would force 330 million Americans to 
rely on too little spectrum at far too high of a price. And even that 
assumes that the CBA's actions will ever come to fruition. Their 
``private sale'' proposal almost certainly runs afoul of FCC 
regulations, particularly Section 309(j)(6)(E) of the Communications 
Act, which reaffirms the obligation of the FCC to ``avoid mutual 
exclusivity in application and licensing proceedings.'' Current law is 
designed to protect the public interest of citizens and taxpayers, and 
for good reason. If the FCC were to sidestep the auctions process and 
empower a government-granted monopoly to sell spectrum, there would 
almost certainly be an avalanche of lawsuits. And if a judge rules 
post-FCC approval that CBA's proposal does in fact violate the 
Communications Act, it'll be back to the drawing board for the U.S. as 
other countries move forward in providing 5G. A sale by the FCC would 
incur no legal recourse and make the deployment of 5G faster.
    Even before the FCC comes to a decision about C-band spectrum, 
there are large cracks emerging in the supposed ``alliance'' of 
satellite companies. On September 3, Eutelsat decided to drop out of 
the CBA, citing significant member disagreements about the share of 
proceeds and the ``voluntary contribution'' to be given to taxpayers. 
Eutelsat chief executive Rodolphe Belmer claimed that there's no real 
agreement within the CBA about how much taxpayers should be compensated 
post-sale, a statement that undermines the stated position of the 
alliance's leadership. This clearly doesn't bode well for taxpayers, 
who can't seem to get a clear answer as to whether they will receive 
any compensation from the CBA under their plan. But it also means that 
the FCC can't be too sure as to who they're dealing with. Post 
Eutelsat's exit, the FCC has to wonder if CBA will further splinter in 
coming months, and what impact continuing disagreements will have on 5G 
deployment.
    But there's good news: America has other, better alternatives to 
the CBA's non-plan. The 5G Plus Plan, proposed by America's 
Communications Association, the Competitive Carriers Association, and 
Charter Communications, would free up more than double the amount of 
spectrum that CBA's proposal would, without jeopardizing the law and 
making a mockery of free enterprise. Under this plan, the FCC would do 
what it does best and auction off at least 370 megahertz of critical 
mid-band spectrum for broadband deployment.
    Since the FCC would be running the show, proceeds from winning bids 
would actually be deposited in the Treasury, just as they have been for 
every spectrum auction run by the FCC since 1994. Taxpayers would see 
dividends from the valuable spectrum assets that they own, instead of 
losing them in a fly-by- night sale devoid of any transparency. Under 
the 5G Plus Plan, the delivery of cable and other video programming 
would be shifted from satellite systems to a comprehensive network of 
terrestrial fiber facilities. Since most of the satellite bandwidth in 
the C-Band is consumed by the delivery of video programming, 
transitioning to fiber solves the pressing problem of spectrum 
availability and makes it possible to free up a historically-large 
block of mid-band spectrum.
    This freeing-up of spectrum can and must be done through lawful, 
transparent channels that guarantee compensation for taxpayers. It must 
be done in a way that avoids lawsuits and any unnecessary delays in 5G 
deployment. And it must be done in a way that keeps companies from 
rigging the system in the future. If the FCC makes a habit out of 
granting government-guaranteed windfalls for businesses that received 
spectrum for free, other companies will quickly jump on the gravy train 
of cronyism. Imagine a future status-quo where companies sit on 
spectrum for decades, waiting for the FCC's green light to form cartels 
of their own and sell taxpayers' property without having to compensate 
taxpayers. That will send all the wrong signals to taxpayers, 
consumers, and Internet providers, but that's the future we're looking 
at if these satellite companies get their way.
    This decision is an important one, with ramifications that go well 
beyond Treasury proceeds and future FCC policy. More than 20 million 
Americans currently lack access to Internet at a speed and quality 
deemed adequate by the FCC. There's been plenty of progress made on 
broadband access since Ajit Pai became Chairman in 2017. Under his 
watch, the agency has made sure that unnecessary regulations don't get 
in the way of deploying high-speed Internet. But the remaining 
Americans without access to quality, high-speed Internet will continue 
to be locked out of the digital domain until the costs of rural 
deployment go down. Currently, it makes little sense for Internet 
providers to expand their networks out to places like Burlington, 
Vermont or rural Kentucky.
    The costs of laying the cable required to connect these places to 
the Internet are simply too high for the number of consumers covered. 
The economics just don't work out, but that hasn't stopped city, 
county, and State governments across the country from trying to build 
out their own networks to connect the 20 million Americans without 
Internet access. And almost always, these government attempts to build 
out Internet networks end in failure. Kentucky is trying to build out 
their own state-wide broadband network, but costs have ballooned from 
$330 million to $1.5 billion without any real plan to connect rural 
residents to broadband. Additional Federal and State tax dollars are at 
risk of being spent and wasted.
    Burlington, Vermont has had to take $20 million from critical 
public services to invest in their own broadband boondoggle, which just 
like in Kentucky, is failing to deliver Internet. You can see countless 
more examples of these failed undertakings on our website 
munibroadbandfailures.com, which features an interactive map complete 
with project descriptions and cost estimates. If you take the time and 
scroll around that map, you'll quickly see far too many pins across the 
50 States than there should be. The truth is, the list of failed 
government broadband projects is far too high. And that list will only 
continue to grow unless the broken status-quo of Internet deployment 
changes.
    Of the proposals presented for clearing critical mid-band spectrum, 
only the 5G Plus Plan delivers the goods without destroying the 
spectrum markets that policymakers worked so hard to build for decades. 
And with enough spectrum cleared for 5G deployment, high-tech companies 
currently considering which countries to invest in would give the U.S. 
another look.
    For the past century, America has been a pioneer in game-changing 
technologies and led the way on biomedical technologies, aviation 
innovation, Internet development, and yes, the Popeye's chicken 
sandwich. Pro-innovation policies have been the result of consistent, 
principled U.S. leadership, reinforced by diligent decisionmaking 
across dozens of agencies. Now, lawmakers and the FCC must decide how 
to power next-generation Internet and close the digital divide between 
rural and urban America. There is a way to get this done, an approach 
that would preserve the rule of law, make taxpayers whole, and end the 
burden of broadband boondoggles across the country. But if policymakers 
abandon their leadership and empower a government-granted monopoly to 
sell off spectrum, America will forfeit a critical opportunity and make 
millions of taxpayers and consumers worse off.
    As such, our organization urges you to embrace the promise and 
potential of FCC auctions and ensure that taxpayers are justly 
compensated for the use of their assets. Tens of billions of dollars, 
and most importantly, the lives of millions of consumers are at stake. 
So please, do the right thing and embrace markets and innovation.
    I am happy to answer any questions at this time.

    Senator Kennedy. Thank you, Mr. Williams.
    Mr. Schatz.
STATEMENT OF MR. TOM SCHATZ, PRESIDENT, CITIZENS 
            AGAINST GOVERNMENT WASTE

                                   5G

    Mr. Schatz. Thank you very much, Mr. Chairman. I appreciate 
being here, as well, and I appreciate Dave's comments about the 
reasons why we should be adding more 5G capacity to our 
Nation's spectrum, to our communications, and I know that 5G is 
real because I saw an ad at the bus stop on the way over here 
today. So it is here, but we need more of it and we certainly 
need the mid band, as everyone has mentioned. It is the sweet 
spot.

                            C-BAND ALLIANCE

    Dave mentioned New America Foundation. I was at a briefing 
earlier this year. The first thing I mentioned was the property 
rights issue. C-Band Alliance does not own it. The taxpayers 
do. I asked the same question that Dave asked at the end of his 
discussion or lecture, I should say, which is what are the 
taxpayers getting out of this? I was met with the same silence. 
It was a room of about 50 or 60 people. They never said a word 
about how the taxpayers will benefit from this.
    So in my written statement, which I offer to the record, 
along with CAGW's report called ``The Race to 5G: Protecting 
Taxpayers Through Spectrum Auctions,'' I ask they both be 
entered into the record.

            ANALYSIS GROUP STUDY--ALLOCATING C-BAND SPECTRUM

    One of the things I would point out is that there's a 
February 2019 Analysis Group study that's found allocating 400 
megahertz of C-band spectrum would lead to $154 billion in 
capital expenditures by wireless providers on 5G networks over 
7 years, add $274 billion to U.S. GDP, and create 1.3 million 
new direct and indirect jobs. That is just 400. I know we have 
talked about 300, but it is a large number, much larger than 
the $60 billion that the taxpayers should be getting from this 
deal.
    For the C-band spectrum sold through the normal FCC 
process, there would be strong oversight, proceeds would go to 
the taxpayers, all of the incumbents would be assured of being 
protected, and the spectrum would be used for 5G development 
and deployment.

                            C-BAND ALLIANCE

    C-Band Alliance has never said they would even be using it 
for that purpose. They would just be selling it. No guarantee 
it would be used for anything, other than whatever the people 
they sell it to would like to do with it.
    There are, of course, questions about their ability to sell 
something they do not own. Imagine that somebody is leasing a 
piece of Federal property and they say, hey, I would like to 
sell this now. I do not own it, I am just using it. I got a 
license and I got a lease, but I want to sell it. This is what 
we are looking at with this process.

                           COMMUNICATIONS ACT

    You asked about the Communications Act. I am not an expert 
in that, but certainly the FCC can figure it out, but I think 
you are correct that the Communications Act is very clear that 
spectrum, regardless of where it is, is an asset of the U.S. 
taxpayers. Unless the licenses are sold, nobody can sell them 
again.
    There is a secondary market process, but companies that 
sell on the secondary market have already purchased the 
licenses from the FCC. They cannot sell them without purchase 
and that has been tried before. Dave worked with me for many 
years and we went through with Cyren Call, North Point and 
Winstar, all of whom tried to do something with spectrum they 
either did not own or they just tried to get it for free, 
promising they would do something really interesting with it, 
like first responders, which we are finally dealing with.
    Since 1994, the FCC has conducted a 102 spectrum auctions, 
generated more than a $122 billion to taxpayers. I am not 
disagreeing with the Chairman's estimate. He was talking about 
since the Balanced Budget Act, but there were prior auctions, 
as well.
    Given this track record of success and the FCC's expertise, 
I do not see any reason that anyone other than the FCC should 
be conducting the C-band auction.

KERRISDALE CAPITAL MANAGEMENT--PRIVATE SALE ESTIMATES FOR INTELSAT AND 
                                  SES

    You know, again one of the issues we have raised in this 
report is the ownership one and the C-Band Alliance (CBA) 
apparently thinks that they do own it because people are 
calling this a windfall for them if they are able to sell it. A 
hedge fund, Kerrisdale Capital Management, estimated that a 
private sale would increase Intelsat's value by 757 percent and 
the European satellite company SES's value by 217 percent.
    So this is a wonderful deal for them.

                   C-BAND ALLIANCE--FOREIGN COMPANIES

    Senator Kennedy. These are the foreign companies.
    Mr. Schatz. These are two of the three or whatever the 
number. These are two that are still in the C-Band Alliance, 
yes.
    And this was written a year ago when they first made this 
proposition. So, of course, their stock immediately went up. 
So, yes, it is certainly going to benefit them, but we do not 
know who else it's going to benefit.
    You mentioned the pre-selling concept. It may be there, may 
not be there, but if it is there and the C-Band Alliance goes 
forward, you cannot undo that. That would mean there would be 
no competition.

                        C-BAND ALLIANCE PROPOSAL

    Chairman Pai mentioned all of the companies that have been 
able to purchase licenses over the past 2 years and will do so 
in the future, that is open, fair, and transparent. None of 
that appears in the C-Band Alliance proposal.
    So I think your subcommittee's--I should say the 
committee's comments in the fiscal year 2020 Appropriations 
Bill are accurate that the FCC should be conducting this 
auction.
    Senator Danes and Representative Gianforte have sent a 
letter to the FCC urging a traditional public process that 
offers transparency and equal opportunity and we certainly very 
much agree with that, as I said, as well as the language in 
there, and we very much appreciate your strong leadership on 
this issue.
    We know that you have concerns about helping to bridge the 
Digital Divide and giving Rural America access to the latest in 
telecommunications technology, and we think that whatever 
happens with that $60 billion, using some of that for that 
purpose would be totally appropriate.
    Thank you very much, Mr. Chairman.
    [The statement and the report ``The Race to 5G: Protecting 
Taxpayers Through Spectrum Auctions'' follows:]
                 Prepared Statement of Thomas A. Schatz
    My name is Thomas A. Schatz, and I am president of Citizens Against 
Government Waste (CAGW). CAGW was founded in 1984 by the late 
industrialist J. Peter Grace and nationally-syndicated columnist Jack 
Anderson to build support for implementation of President Ronald 
Reagan's Grace Commission recommendations and other waste-cutting 
proposals. Since its inception, CAGW has been at the forefront of the 
fight for efficiency, economy, and accountability in government. CAGW 
has more than one million members and supporters nationwide, and, over 
the past 35 years, the organization has helped save taxpayers $1.3 
trillion through the implementation of Grace Commission findings and 
other recommendations.
    CAGW does not accept government funds. The organization's mission 
reflects the interests of taxpayers and covers a wide variety of 
issues, including technology and telecommunications. The sale of 
Federal assets, including spectrum, has been part of CAGW's agenda for 
many years.
    The October 25, 2018 Presidential Memorandum on Developing a 
Sustainable Spectrum Strategy for America's Future made it clear that 
access to spectrum is a critical component to maintaining America's 
lead in next generation technologies, particularly 5G network 
deployment.\1\ The widespread use of wireless 5G will dramatically 
change mobile communications across the Nation and lay the groundwork 
to support an increasing number of Internet of Things applications and 
devices. While 5G networks are currently being deployed using high-band 
millimeter wave and low-band spectrum, deployment of 5G using mid-band 
spectrum is essential. CAGW appreciates the Subcommittee on Financial 
Services and General Government and particularly Chairman Kennedy's 
leadership to ensure that taxpayers are protected throughout the 
process of determining how to make as much mid-band spectrum as 
possible available for this purpose.
---------------------------------------------------------------------------
    \1\ The White House, ``Presidential Memorandum on Developing a 
Sustainable Spectrum Strategy for America's Future,'' October 25, 2018, 
https://www.whitehouse.gov/presidential-actions/presidential-
memorandum-developing-sustainable-spectrum-strategy-americas-future/.
---------------------------------------------------------------------------
    Mid-band is considered the sweet spot of spectrum, with unique 
properties that make it especially effective for 5G infrastructure 
deployment. According to an August 2, 2017 Intel blog, ``Mid-Band 
spectrum is especially well suited for mobile broadband due to its wide 
coverage, and potential for low latency, and high reliability.'' \2\ 
Mid-band doesn't require several small cells to be located in a 
condensed area because data signals can travel through a larger range 
in the spectrum; its wide channels also allow for high-speed data 
transfers.
---------------------------------------------------------------------------
    \2\ Peter Pitsch, ``5 Reason Why We Need Mid-Band Spectrum for 
5G,'' Intel, August 2, 2017, https://blogs.intel.com/policy/2017/08/02/
5-reasons-need-mid-band-spectrum-5g/#gs.9d7mdu.
---------------------------------------------------------------------------
    The economic impact of mid-band spectrum utilization was examined 
in a February 2019 Analysis Group study, which found that reallocating 
400 MHz of spectrum in the 3.45 to 4.2 GHz range for licensed mid-band 
spectrum would lead to $154 billion in capital expenditures by wireless 
providers for 5G networks over 7 years, add $274 billion to U.S. GDP, 
and create 1.3 million new direct and indirect jobs.\3\
---------------------------------------------------------------------------
    \3\ David W. Sosa, Ph.D. and Greg Rafert, Ph.D., ``The Economic 
Impacts of Reallocating Mid-Band Spectrum to 5G in the United States,'' 
Analysis Group, https://api.ctia.org/wp-content/uploads/2019/02/The-
Economic-Impacts-of-Reallocating-Mid-Band-Spectrum-to-5G-1.pdf.
---------------------------------------------------------------------------
    On July 12, 2018, the FCC adopted an Order and Notice of Proposed 
Rulemaking on Expanding Flexible Use of the 3.7 to 4.2 GHz Band (GN 
Docket No. 18-122) to review the potential for using this mid-band 
spectrum, also known as the C-band, for further 5G deployment.\4\ This 
500 MHz swath of prime spectrum is currently used by satellite and 
video content providers for content distribution, and satellite phone 
service for those areas where existing landline or cellular 
capabilities are non-existent or unreliable.
---------------------------------------------------------------------------
    \4\ Federal Communications Commission, ``In the Matter of Expanding 
Flexible Use of the 3.7 to 4.2 GHz Band,'' GN Docket No. 18-122, Order 
and Notice of Proposed Rulemaking, Adopted July 12, 2018, https://
docs.fcc.gov/public/attachments/FCC-18-91A1.pdf.
---------------------------------------------------------------------------
    However, C-band spectrum is underutilized. The satellite industry 
has indicated a willingness to vacate 200 MHz of the 500 MHz, but there 
is an ongoing debate over whether this is sufficient, as well as how 
the spectrum might be re-purposed and sold.
    If C-band spectrum is sold through the normal FCC auction process 
with strong oversight, the proceeds would go to the taxpayers, 
incumbent users of the spectrum would be protected, and the spectrum 
would be used for 5G development and deployment. If it is sold through 
a private sale or auction conducted by a small group of satellite 
companies, there are questions about their ability to sell something 
they do not own; there is no guarantee taxpayers would see any of the 
revenues generated from the sale; incumbent users are not assured they 
will be made whole; and there would be limited FCC oversight. The 
government has a strong interest in making sure this process works like 
other auctions, because spectrum is unlike any other public asset in 
terms of its value and strategic importance for the future of the 
economy and national security.
    Since 1994, the FCC has conducted 102 spectrum auctions, which have 
generated more than $122 billion for taxpayers.\5\ An auction of C-band 
spectrum has the potential to add $11 billion to $60 billion to that 
total, depending on the amount of spectrum made available for sale and 
the amount of net proceeds available following reimbursement for the 
cost of vacating and reallocating the spectrum.\6\ Given this track 
record of success, it is difficult to see why any entity other than the 
FCC should be permitted to conduct the C-band spectrum auction.
---------------------------------------------------------------------------
    \5\ Federal Communications Commission, ``Auctions Summary: 
Completed Auctions,'' July 17, 2019, https://www.fcc.gov/auctions-
summary.
    \6\ Deborah Collier and Thomas Schatz, ``The Race to 5G: Protecting 
Taxpayers through Spectrum Auctions,'' (``The Race to 5G'') Citizens 
Against Government Waste, April 2019, https://www.cagw.org/reporting/
race-to-5g.
---------------------------------------------------------------------------
    There have been several proposals provided to the FCC on how best 
to utilize the C-band spectrum and sell portions of the spectrum for 
5G. One suggestion is to use the incentive auction authorization 
provided by the Middle Class Tax Relief and Job Creation Act of 2012, 
which included provisions to increase the amount of spectrum available 
for mobile use by allocating additional federally held unused spectrum 
to be auctioned by the FCC.\7\ This law also provided authorization for 
the FCC to conduct the first reverse incentive auctions to make 
additional spectrum available to mobile providers, from which the 
proceeds are being used for nationwide deployment of FirstNet, a first 
responder communications network, and deficit reduction.
---------------------------------------------------------------------------
    \7\ ``H.R. 3630 (112th): Middle Class Tax Relief and Job Creation 
Act of 2012,'' govtrack.us, February 22, 2012, https://www.govtrack.us/
congress/bills/112/hr3630.
---------------------------------------------------------------------------
    If this process was used for C-band, satellite owners and their 
customers would be reimbursed for vacating a certain amount of spectrum 
through a reverse auction, and then the FCC would repackage the vacated 
spectrum and sell it in a forward auction to mobile carriers. Another 
proposal would increase the amount of available spectrum to at least 
370 MHz of spectrum by recommending that the net proceeds from an FCC 
conducted C-band auction are used to bring the content carried over 
satellite back to earth by building out fiber across the country to 
deliver the data between the broadcast stations.
    The most widely-publicized and controversial proposal for mobile 
carriers to gain access to the C-band has been proposed by the C-Band 
Alliance (CBA), a consortium of satellite owners who have agreed to 
vacate their customers from the lower 200 MHz of C-band spectrum and 
sell this spectrum in the private market. In April 2019, CAGW published 
a report, ``The Race to 5G: Protecting Taxpayers Through Spectrum 
Auctions.'' Auctions.'' \8\ I ask that the report be included along 
with my written testimony for the record.
---------------------------------------------------------------------------
    \8\ Collier and Schatz, ``The Race to 5G.''
---------------------------------------------------------------------------
    One of the issues raised in CAGW's report is whether the satellite 
companies have or can obtain the authority to sell something they do 
not own, but only have a license to use. In FCC auctions, the 
government is selling spectrum that it owns. In secondary market sales, 
companies that purchased spectrum licenses from the FCC may sell them 
to another company. Therefore, ownership is paramount to the ability to 
sell Federal assets.
    Rights to the C-band spectrum are more complicated than some 
respondents to the FCC's notice of proposed rulemaking would make it 
seem. According to the International Telecommunication Union (ITU) 
Constitution, radio frequencies and satellite orbits are limited 
natural resources, and therefore must be used in a manner that will 
allow for equitable access.\9\ Globally, the ITU Radiocommunications 
Sector (ITU-R) manages radio-frequency spectrum and satellite orbits to 
ensure a rational, equitable, efficient, and economical use of the 
radio-frequency spectrum of all radiocommunications systems, including 
those using satellite orbits.\10\
---------------------------------------------------------------------------
    \9\ International Telecommunication Union, ``Constitution of the 
International Telecommunication Union, Article 44, Use of the Radio-
Frequency Spectrum and of the Geostationary-Satellite and Other 
Satellite Orbits,'' https://www.itu.int/council/pd/constitution.html.
    \10\ International Telecommunications Union, ``Welcome to ITU-R,'' 
https://www.itu.int/net/ITU-R/
index.asp?category=information&rlink=itur-welcome%2525E2%25258C%2525A9=e
n.
---------------------------------------------------------------------------
    The C-band spectrum is governed by a ``full-band, full-arc'' policy 
which means that rather than users receiving and holding an ownership 
right to one specific frequency in the band, the FCC has given all 
users of the band equal access to the entire 500 MHz of spectrum within 
the band, allowing ground stations to point their satellite dishes in 
every direction toward every possible geosynchronous satellite.\11\ 
Because incumbent users of the C-band spectrum have authorization to 
access the entire 500 MHz as part of the full-band, full-arc policy, 
individual corporate rights within the C-band are amorphous, but the 
government's rights are clear.
---------------------------------------------------------------------------
    \11\ Mitchell Lazarus, ``Fixed Service versus Full-Band, Full-Arc 
Coordination,'' National Spectrum Management Association, May 16, 2017, 
https://nsma.org/wp-content/uploads/2017/05/2017-06-nsma-fixed-service-
versus-full-band-full-arc-coordination.pdf.
---------------------------------------------------------------------------
    Questions have also been raised about whether the lower 200 MHz of 
spectrum described in the CBA plan will be enough for 5G deployment. 
GSMA, which represents mobile operators around the world, recommends 
that regulators allocate at least 80-100 MHz of contiguous mid-band 
spectrum and around 1 GHz of millimeter wave bands (26/28 GHz) to each 
mobile operator. \12\ China has already begun assigning a minimum 100 
MHz to each of their mobile operators within the C-band.\13\ Based on 
one of the CBA's submissions to the FCC, of the 200 MHz they plan to 
clear for mobile use, only 180 MHz would be available, due to the 
necessity of a 20 MHz guard band between the lower mobile portion of 
spectrum use and the upper satellite use. This means that only two 
carriers would have access to barely enough spectrum to deploy 5G 
networks in the mid-band using this spectrum, and if the spectrum was 
sold through a private sale or auction, the CBA would be placed in the 
untenable position of picking winners and losers in the U.S. 
marketplace.
---------------------------------------------------------------------------
    \12\ GSMA, ``5G Spectrum GSMA Public Policy Position,'' July 2019, 
https://www.gsma.com/
spectrum/wp-content/uploads/2019/09/5G-Spectrum-Positions.pdf.
    \13\ Joseph Waring, ``China releases 5G spectrum to state-run 
operators,'' Mobile World Live, December 10, 2018, https://
www.mobileworldlive.com/asia/asia-news/china-releases-5g-spectrum-to-
state-run-operators/.
---------------------------------------------------------------------------
    The CBA's second-price, sealed bid auction proposal is 
exceptionally complex and lacks transparency in how winning bids would 
be determined, creating uncertainty for mobile providers. The novelty 
of the CBA proposal would require additional time as bid evaluation 
metrics are developed and auditing and transparency protocols are 
created to ensure a fair bidding process. Potential bidders must also 
be educated on how such a sale would be conducted. Yet, the CBA claims 
its process would be more efficient and faster than an FCC auction.
    Any delay in the sale of the spectrum is a luxury the U.S. 
Government does not have in its race with China and other countries to 
deploy 5G. By contrast, the FCC-conducted public auction process is 
well-documented and administratively simple, encouraging a broad 
spectrum of bidders from a variety of incumbents, and new entrants.
    A 2014 GSMA study reviewed the costs of re-allocating 400 MHz of C-
band spectrum in Australia and Indonesia, noting that based on the 
number of providers in the area, this is optimal amount of spectrum 
that could be reused for mobile broadband purposes in the APEC 
area.\14\ This same amount of spectrum could provide four carriers in 
the U.S. with sufficient spectrum, keeping 100 MHz of spectrum 
available for satellite use.
---------------------------------------------------------------------------
    \14\ ``Economic assessment of C-band re-allocation,'' Frontier 
Economics, January 2014, https://www.gsma.com/spectrum/wp-content/
uploads/2014/11/GSMA.-Frontier-report-on-Economic-assessment-of-C-band-
re-allocation-2014.pdf.
---------------------------------------------------------------------------
    Finally, there is a question about how the proceeds from any sale 
of the C-band spectrum would be allocated. Under the CBA proposal, the 
satellite owners would retain any profits achieved from the sale of the 
spectrum after expenses of reallocating, vacating, and repurposing the 
spectrum are deducted.
    The deal is being called a ``windfall'' for the members of the 
CBA.\15\ Hedge fund Kerrisdale Capital Management estimated that a 
private sale would increase Intelsat's value by 757 percent and SES's 
value by 217 percent, and that the total value of the sale of the 
spectrum could be as much as $60 billion.\16\ The CBA has offered a 
small ``contribution'' to the U.S. Treasury, but Eutelsat's withdrawal 
leaves this in doubt.\17\
---------------------------------------------------------------------------
    \15\ Chris Forrester, ``Satellite's Multi-Billion Dollar 
Windfall,'' ibc.org, October 10, 2018, https://www.ibc.org/publish/
satellites-multi-billion-dollar-windfall/3374.article.
    \16\ Ibid.
    \17\ Caleb Henry, ``Eutelsat leaves C-Band Alliance as spectrum 
decision looms,'' Space News, September 3, 2019, https://spacenews.com/
eutelsat-leaves-c-band-alliance-as-spectrum-decision-looms/.
---------------------------------------------------------------------------
    As CAGW noted in its April 19 report: ``The C-Band Alliance has 
received commitments from its members to 'undertake, manage, and 
complete all necessary actions to effectuate' customer migration and 
has proposed covering the moving expenses of their satellite service 
customers with 120 percent of the costs of repacking them onto new 
satellites.\18\ However, this commitment only applies to members of the 
C-Band Alliance and provides little assurance to incumbents using other 
satellite providers that their video and audio content will continue to 
be delivered as expected.'' \19\
---------------------------------------------------------------------------
    \18\ Collier and Schatz, ``The Race to 5G.''
    \19\ John Eggerton, ``C-Band Alliance Outlines Compensation for 
Repack,'' Multichannel, April 3, 2019, https://www.multichannel.com/
news/c-band-alliance-outlines-compensation-for-repack.
---------------------------------------------------------------------------
    During the July 12, 2018 FCC meeting, Commissioner Michael O'Reilly 
said, ``any reallocation must fully protect the incumbent users that 
currently use the C-band to bring many services to consumers. ... That 
does not mean they all must be accommodated on remaining C-band 
spectrum, but their ability to offer services cannot be disrupted.'' 
\20\
---------------------------------------------------------------------------
    \20\ Federal Communications Commission, ``Statement of Commissioner 
Michael O'Reilly, Re: Expanding Flexible Use of the 3.7 to 4.2 GHz 
Band, GN Docket No. 18-122; Expanding Flexible Use in Mid-Band Spectrum 
Between 3.7 and 24 GHz, GN Docket No. 17-183; Petition for Rulemaking 
to Amend and Modernize Parts 25 and 101 of the Commission's Rules to 
Authorize and Facilitate the Deployment of Licensed Point-to-Multipoint 
Fixed Wireless Broadband Service in the 3.7-4.2 GHz Band, RM-11791; 
Fixed Wireless Communications Coalition, Inc., Request for Modified 
Coordination Procedures in Band Shared Between the Fixed Service and 
the Fixed Satellite Service, RM-11778, July 13, 2018, https://
docs.fcc.gov/public/attachments/DOC-352520A3.pdf.
---------------------------------------------------------------------------
    Due to the questions about property rights associated with this 
spectrum; the broad experience of the FCC in conducting public 
auctions; the obscure secondary market auction proposed by the CBA and 
its failure to assure the protection of all incumbents and users; and 
the lack of a guarantee that taxpayers will benefit from the sale or 
that the spectrum would be used for 5G in the CBA plan, CAGW believes 
that only an FCC-led public auction can provide the best and most 
objective outcome for all interested parties, including satellite 
operators, cable operators, broadcasters, and programmers. As FCC 
Commissioner Brendan Carr noted during the FCC's April 12, 2019 
meeting, the agency's auction proceedings are ``a model for the 
world.'' \21\
---------------------------------------------------------------------------
    \21\ Federal Communications Commission, ``Statement of Commissioner 
Brendan Carr, Re: Incentive Auction of Upper Microwave Flexible-Use 
Service Licenses in the Upper 37 GHz, 39 GHz, and 47 GHz for Next-
Generation Wireless Services, AU Docket No. 19-59,'' April 12, 2019, 
https://docs.fcc.gov/public/attachments/DOC-356984A3.pdf.
---------------------------------------------------------------------------
    Several senators and representatives support the FCC auction 
process for the C-band, including Sen. Steve Daines (R-Mont.) and Rep. 
Greg Gianforte (R-Mont.) who sent a letter to the FCC on July 25, 2019, 
urging the agency to conduct the assignment of 5G licenses in the C-
band ``through a traditional public process that offers transparency 
and equal opportunity.'' \22\
---------------------------------------------------------------------------
    \22\ Sen. Steve Daines (R-Mont.) and Rep. Greg Gianforte (R-Mont.), 
``Letter to FCC Chairman Ajit Pai,'' July 25, 2019, https://
www.ccagw.org/sites/default/files/Gianforte%20Daines%20
FCC%20C-Band%20Letter%202019.07.25.pdf.
---------------------------------------------------------------------------
    CAGW also appreciates Chairman Kennedy's strong leadership on this 
issue. His efforts to support the public auction of this spectrum will 
provide transparency to taxpayers and prevent U.S.-owned spectrum from 
being sold on the private market. Such an auction will ensure the 
taxpayers' interests are protected, and any proceeds above and beyond 
relocation costs and expenses should revert to the treasury. The 
chairman's continued advocacy to ensure that auction proceeds are 
repurposed to help bridge the digital divide and give rural America 
access to the latest in telecommunications technology will also enhance 
and maintain the Nation's leadership in 5G.
    Report language has been included in the fiscal year 2020 Senate 
Financial Services Appropriations Act that suggests only the FCC should 
conduct a public auction of the C-band spectrum: ``The Committee 
encourages the FCC to prioritize resources toward exploring 
opportunities for spectrum to help accelerate the deployment of 5G to 
rural communities. The mid-band spectrum, specifically the C-band, is 
particularly well-suited for 5G services. However, the Committee 
remains concerned by proposals that entail limited FCC oversight and 
public input, and contain no guarantee that taxpayers and the U.S. 
Treasury benefit from revenues generated by the sale of 5G licenses. 
The airwaves are a public resource, and the Federal Government has a 
responsibility to exercise appropriate oversight of its allocation. 
Therefore, the Committee encourages the FCC to conduct a public auction 
of the C-band spectrum that is fair, open, and transparent.'' \23\
---------------------------------------------------------------------------
    \23\ Senate Committee on Appropriations, ``Financial Services and 
General Government Appropriations Bill, 2020,'' September 19, 2019, 
https://www.appropriations.senate.gov/imo/media/doc/
FY2020%20FSGG%20Appropriations%20Act,%20Report%20116-111.pdf.
---------------------------------------------------------------------------
    CAGW agrees with this report language, which sends a strong message 
to the FCC that the airwaves are a public resource and any sale of C-
band spectrum should be conducted through an FCC public auction to 
protect the taxpayers' interests.
    I would like to thank the subcommittee and in particular Chairman 
Kennedy for your efforts to ensure that as much spectrum as possible is 
made available for 5G and other mobile and Wi-Fi uses, and the proceeds 
from the sale of any publicly-held spectrum benefits taxpayers, the 
economy, and U.S. global technological leadership. I appreciate you 
inviting me to testify and I am prepared to answer any questions you 
may have.



























    Senator Kennedy. Thank you, gentlemen.
    Maybe you can help me understand this. I do not hate 
anybody and I do not mean to disparage anybody. I may disagree 
with folks, but I do not hate anybody, and I am a free 
enterprise guy, and there are instances when a private company 
or a private entity is more efficient than government. We know 
that.

                              PRIVATE SALE

    But I am trying to understand why that may be so in this 
case, and the only argument I have been able to find for doing 
a private deal is speed.
    Now we all share that concern. We would like to be first in 
5G. I do not want to exclude anybody else in the world from 5G, 
but at the same time, we do not want to be excluded either. So 
speed is important.
    But I do not understand how a private deal, fairly done--
well, let me approach it another way. I don't understand why it 
will take the FCC 7 years and that's what I keep reading, and 
I'm thinking about holding another hearing and asking our 
colleagues at the FCC who are in charge of public auctions to 
come over here and tell us about their experience and tell us 
if it will take 7 years and, if so, why.
    What is the advantage of a private sale?
    Mr. Williams. Well, it's going to take a lot less than 7 
years for the FCC to do this and a private sale is going to--
the private sale may actually take the 7 years because there 
will be litigation because this is out of the norm for the FCC. 
You are going to have people suing the FCC for this process, 
and I appreciate your question and your concern about the 7 
years.
    The FCC can do this in 2 and a half or 3 years and I will 
leave that obviously to the experts at the FCC, but this is 
what they have done in the past. If history is any indication 
of what they can do, then they should be able to do this and 
that is why one of the reasons we are against the private sale.
    This could actually slow the deployment of 5G. The FCC 
ultimately will be a quicker process than a private sale, and 
we just do not know who is going to get the spectrum, but the 
FCC is going to be an open, transparent process.
    There have been hiccups in the past that they have 
addressed and that they have moved past. If there are hiccups 
with the private sale, there is no recourse. What is our 
recourse with the private sale? What is your recourse as a 
subcommittee Chairman if there's a problem with the private 
sale? Virtually nothing. The oversight is gone.
    Mr. Schatz. One of the reasons they may be saying it might 
be faster is, as you have discussed and we have heard around, 
is that they may have already figured out to whom they are 
selling it. That would make it faster because they have already 
made a deal. I do not know if that is correct or not.
    Senator Kennedy. I understand.
    Mr. Schatz. But that would make it faster. We already have 
something set up and if the FCC allows them to do that in that 
manner, then, as Dave said, there is no transparency, there is 
no competition, but it would be quick. It would not be fair. It 
would not be right. Money would not go to the taxpayers, but, 
sure, that would be one way to do it. Again, they are selling 
something they do not own.
    Senator Kennedy. If you make--if you want it fast, just go 
give it to somebody.
    Mr. Schatz. Right.
    Senator Kennedy. That is pretty fast.
    Mr. Schatz. Right. And again, we do not know what may or 
may not be involved in that.
    The FCC is going to have to oversee this auction, which 
also begs the question why don't they just do it themselves 
since they are the experts?

                            C-BAND ALLIANCE

    The C-Band Alliance has never sold spectrum, and the other 
piece of this is that within the C band, this whole 500 
megahertz of spectrum, they have what is called ``full band/
full arc access.'' Everybody has access to the entire band.
    So how do you say who owns what? What about all the other 
satellite companies that are not part of the C-Band Alliance? 
Three of these satellite companies are not domestic-owned. It 
does not matter. They are the ones that will be getting the 
proceeds. They have not said they would share it with the 
satellite companies. They do not own it and even if they said 
all the satellite companies who use it will get the monies, you 
still run into the same problem, maybe a little more equitable, 
but they certainly have not said that. That is why you see the 
small satellite owners objecting to this and others, as well, 
saying we do not think that this is fair.
    They also argue, by the way, that they would be able to 
more quickly determine how the incumbent users could be moved 
to the other piece of the spectrum, the higher band.
    Senator Kennedy. It has to be dealt with.
    Mr. Schatz. Right. But the FCC is already doing that with 
broadcast repacking and moving these licensees, as the Chairman 
said, now faster than they expected. Low-power stations and 
others are moving to new bands, but the FCC knows how to do 
that, too. So they could do that with these current users.
    Senator Kennedy. So the incumbent--helping the incumbent 
users' issue, as I call it, there is no reason the FCC cannot 
deal with that itself.
    Mr. Schatz. No, and that is what Commissioner O'Reilly has 
said, that this is of paramount importance. I am paraphrasing, 
but he said this is critical to the C band, is to protect the 
incumbents, all of them.
    Again, we do not know if the C-Band Alliance will protect 
all of them or some of them or maybe even they have some deals 
with some of them. We do not know anything. It is completely 
opaque.
    Mr. Williams. And let me just repeat something Tom said. I 
think it is important that the FCC is still going to be 
involved in this. So tax dollars are still going to be spent 
to, you know, make sure the spectrum is used properly.
    So why not just get the taxpayer benefits? If we're going 
to spend taxpayer money to make sure that the private sale that 
the spectrum is used properly, why not just get the benefits 
and the money because the FCC is not going to allow a private 
sale and just walk away and shut their doors. They are still 
going to be very much involved in the process.

                    PUBLIC SALE VERSUS PRIVATE SALE

    Senator Kennedy. Well, the--I'm not an expert by any means 
on this, but the analogy I use, which is familiar to many of my 
people, we're an oil-rich State and not only on onshore, as we 
say, but from the seabed off the coast of Louisiana. The 
minerals--this is an oversimplification. I will say many of the 
minerals out there are owned by the American taxpayer. They are 
owned by Louisiana but also the citizens of other states, and 
it is important to get the wells drilled and to get the energy 
produced.
    But if I went to the Department of Interior and said speed 
is of the essence, time is of the essence, here is the deal, 
give me all the Federal minerals and I will get them leased in 
a week, they would call security on me, and I don't understand.
    I mean, I could do it faster than a public bid. I mean, I 
think I could do it probably in a couple hours, but I would get 
to keep all the money, and I don't understand why this is any 
different. I am not disparaging anyone, and I'm not attributing 
that scenario to C band.
    I am thinking in terms of public sale versus private sale.
    Mr. Williams. And royalties are paid on the extraction of 
oil and minerals. So the taxpayer is made whole on that.
    You can build a house really quickly. It could be an awful 
house that has a terrible foundation, but you can do anything 
quickly. That doesn't mean quick is the right way, especially 
in something as sensitive as spectrum, and what we're trying to 
accomplish as a nation technologically, this needs to be timed 
the right way, and again, you know, I don't mean to keep on 
repeating myself, but what if something goes wrong in the 
private sale? What oversight is there to make sure that it is 
done properly and correctly? I would say there is virtually no 
oversight.

                           COMMUNICATIONS ACT

    Mr. Schatz. Well, and again, the Communications Act, as you 
mentioned, does control this entire process. So again, without 
disparaging anybody, I do not know why it has taken this long 
to figure out whether anyone else, other than the FCC, has the 
authority to conduct an auction under the Communications Act.
    It seems to me it would be a pretty straightforward 
situation where it says the FCC conducts auctions, period. This 
is the taxpayers' spectrum. They have done it before.
    My other concern is if this is an exception to the rule and 
an exception to the law, again after it's done, Congress comes 
back and says, wait a second, you shouldn't have done that, 
then we've got to redo everything else, not that we don't think 
the Communications law should be updated, but I think in this 
case, it's going to set a bad precedent not just for spectrum 
but for other Federal assets, as you've just pointed out.
    One of the things that we both have consistently talked 
about over the years is if you can sell something that is owned 
by the Federal Government and have it run by or owned by the 
private sector, they're going to do a much better job with that 
particular asset, whether it's property or anything else, but 
spectrum is really the ultimate property.
    We have gotten $122 billion. I cannot think of another 
asset that has been sold as effectively and efficiently and 
really made the United States the leader in technology. So I do 
not know what these companies are going to do or how they are 
going to do it and unless we do know that and your questions 
are answered and the taxpayers are protected, I do not know why 
we are even talking about it.

    C-BAND ALLIANCE--EVASIVE PROPOSAL WITH AMOUNT OF MONEY GOING TO 
                                TREASURY

    Mr. Williams. And with all due respect, Senator Kennedy, 
the C-Band Alliance has been very evasive with their proposal, 
with the amount of money that they are going to give back to 
the Treasury.
    I do not like when people are evasive and they will not 
answer and, listen, I don't take it personally that they 
lectured me for almost an hour. You know, that is my job. But I 
do take it personally, when they are leaving $60 billion worth 
of taxpayer dollars on the table and that's what the FCC could 
potentially do with a private sale.
    So this is--you know, I am from Philadelphia. I take 
everything personally. $60 billion I take very personally.
    Senator Kennedy. Let me ask you one last question. I really 
do appreciate your time today.
    Help me understand. What is this about a voluntary 
contribution? What is that?
    Mr. Schatz. Well, it is because they have not said what 
they will give. Their proposal does not include any commitment 
or any kind of money that will go to the Treasury. That is why 
they did not answer Dave's question how much goes to the 
Treasury or my question directly to one of their 
representatives. How much are you saying will go to the 
Treasury? They do not have an answer because it is not in their 
proposal. None of it is in their proposal. Even when they said 
maybe we will go from 180 to 300 MHz or whatever else they are 
amending, that has not changed.
    There is no commitment for any of the money that may go to 
them to be turned back to the taxpayers. That is why they are 
saying, quote unquote, voluntary after all of our costs are 
covered or after we, you know, help the incumbents move.
    Well, I am putting this together and I am saying, wait, my 
profit is whatever is left over after I help the incumbents 
move. That is what it costs me to do this. How do we know if 
that is accurate? But if it is done by the FCC, other than the 
money that's needed to move these incumbents, goes to the 
taxpayers.
    Mr. Williams. So, look, Senator Kennedy, look at it this 
way. We know that a $120 billion has gone to the Treasury from 
these spectrum auctions. We have a lot of information about 
what the spectrum auctions have been. That is gone.

                    PUBLIC SALE VERSUS PRIVATE SALE

    I mean, what kind of information will we have after this 
process? What kind of information will this private sale hide? 
We have an incredible amount of transparency from the FCC and 
this is not just Republican administrations. This has happened 
at the FCC with Democrats and Republicans that we have had a 
transparent process that has put a lot of money into the 
Treasury. That is out the window with this private sale. It is 
gone.
    The voluntary contribution really sends, you know, chills 
down my back because it could be a dollar. They could say, 
well, we had all these costs of transition. We had all these 
other things. So here is a $100 million. You guys happy? No? 
Well, tough because that is what we are going to give.

             C-BAND ALLIANCE BIDDING IN THE PUBLIC AUCTION

    Senator Kennedy. Well, if we do a public auction, if the 
FCC in its wisdom decides to do a public auction, do you know 
of any prohibition against the companies, which I am sure, are 
fine companies that comprise the C-Band Alliance, from bidding 
in the public auction?
    Mr. Schatz. Well, if they want to use the spectrum for 5G, 
sure, that is not actually what they do, but, yes, they could 
do that.
    Senator Kennedy. But they could bid like everybody else, 
right?
    Mr. Schatz. Right. Exactly. They could bid on purchasing 
the spectrum they've been licensed to use essentially, which 
happens often that somebody has a piece of property that 
they've been leasing and the government says, well, we're going 
to sell it. Well, if you like it, then you buy it.
    Mr. Williams. And to be clear, they are not worried about 
the spectrum because they are in the position of selling it. 
They know that they can sell the spectrum and just do fine 
enough with their satellite companies. So this is not about 
taking away a scarce resource from the satellite companies 
because they are ready to get rid of it anyway. I mean, they 
are ready to sell it. So, you know, they'll believe them if 
they say that this is about scarcity because they're----
    Senator Kennedy. Well, there is always a risk in a private 
sale that the asset is going to be flipped.
    Mr. Williams. Yes.
    Mr. Schatz. Exactly.
    Mr. Williams. So one thing the FCC does is makes sure that 
you have a bunch of different bidders. You just do not have the 
big incumbents bidding on this. There are programs to make sure 
that other bidders can come in and serve rural areas.

                      PRIVATE SALE AND RURAL AREAS

    We have zero assurance from a private sale that that will 
take place.
    Senator Kennedy. That the rural areas----
    Mr. Williams. Yes.
    Senator Kennedy [continuing]. Will be addressed?
    Mr. Williams. Yes.
    Senator Kennedy. That is a good point.
    Mr. Williams. Because if they sell it to one big incumbent 
and they do not use rural connectivity, yet the FCC will ensure 
that either the money is used for that or the spectrum is used 
for rural connectivity, and, I mean, your State needs it, you 
know.
    Senator Kennedy. Yes. We do.
    Mr. Williams. Yes.
    Senator Kennedy. We all do.
    Well, thank you, gentlemen. I want to thank you again for 
testifying today. I want to thank the Chairman, Chairman Pai, 
Ajit, for coming over. I know he is busy.

                     ADDITIONAL COMMITTEE QUESTIONS

    The record will remain open for one week for our 
subcommittee Members to submit any statements or questions for 
the witnesses for the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Commission for response subsequent to the 
hearing:]
                  Questions Submitted to Hon. Ajit Pai
              Questions Submitted by Senator Steve Daines
    Question 1. Chairman Pai, great to have you here to update us on 
the work the FCC is doing to expedite moving spectrum into the 
marketplace for 5G and broadband expansion. This is a topic we have 
discussed before and you know better than most the importance of 
clearing more spectrum, especially in the mid-band, for 5G technology. 
The U.S. cannot afford to lose the race to 5G to China or any other 
country. 5G, like 4G, will open up a whole new digital economy, and 
making sure the U.S. is leading should be a top priority for all of us 
here today. What more do you need from congress to help you expedite 
getting more spectrum into the marketplace so the U.S. can continue to 
lead in 5G deployment?

    Answer. Securing American leadership in 5G is a national priority. 
That's why the FCC has been pursuing a strategy to Facilitate America's 
Superiority in 5G Technology--the 5G FAST Plan. By executing that plan, 
the Commission has already made an unprecedented amount of spectrum 
available for commercial, flexible wireless use, promoted wireless 
infrastructure, and modernized regulations to encourage fiber 
deployment. We appreciate the authority that Congress has granted us to 
pursue the 5G FAST Plan, including the authority to repurpose spectrum 
for 5G use. We will work with the Congress and this Committee if and 
when any resource issues arise.

    Question 2. Chairman Pai, one of the bands for 5G that I have been 
very active on is the C-band, including writing you a letter on it in 
July. I want to stress the importance of getting this spectrum out to 
the market quickly. We cannot wait five plus years for it to be 
available. But I also want to make sure that we don't steam roll 
Montana's rural communities in the process or push out current 
incumbents. I believe any auction of the C-band should be open and 
transparent, allowing for both our small, rural companies to 
participate as well as our national carriers. If only one company or a 
small number of carriers have access to this spectrum then rural 
Montana will be left behind again. Can you commit to me that you will 
find a solution that is open and transparent, protects [C-band] 
incumbents, and has real benefits for our rural communities?

    Answer. Promoting broadband access in rural communities and closing 
the digital divide is one of the Commission's top priorities, and mid-
band spectrum will play a major role in achieving this. Making 
additional mid-band spectrum available offers incalculable benefits to 
the American public, including promoting job growth, increasing access 
to healthcare and education, and modernizing infrastructure in the 
United States.
    I am pleased to report that on February 28, 2020, the Commission 
adopted rules to make 280 megahertz of C-band spectrum available 
through an FCC-led auction. C-band spectrum is widely seen as a 
critical swath of mid-band spectrum that could help drive American 
leadership in 5G, the next generation of wireless connectivity. This 
spectrum offers both geographic coverage and the capacity to transmit 
large amounts of data--a combination that is appealing to entrepreneurs 
and wireless consumers alike.
    The decision meets each of the four priorities I've identified in 
this proceeding. It frees up a significant amount of C-band spectrum 
for 5G. It does so quickly. It generates revenue for the U.S. Treasury. 
And it protects the services that are currently delivered using this 
spectrum. The Commission will commence an auction later this year--on 
December 8. I believe that a public auction, run by our outstanding 
staff here at the FCC, is the best way to ensure that we assign this 
spectrum in a fair, trusted, and transparent manner. The Commission has 
a quarter-century track record of designing and implementing open and 
transparent spectrum auctions to promote the development and deployment 
of new technologies in all areas of the United States, including in 
rural areas.
    The Order establishes bidding credits for smaller entities and 
rural service providers to facilitate their participation in the 
auction and will, in turn, increase the availability of 5G service in 
rural areas. The item also adopts Partial Economic Areas (PEAs) as the 
geographic license area for the new flexible-use licenses. The 
Commission has found that using PEAs--a smaller license area than some 
may have wanted--encourages auction participation by a diverse group of 
buyers and generates competition among large, regional, and small 
carriers across various geographic areas.
    The item is a win for innovators who want to introduce new services 
in the C-band. It is a win for incumbents who will be fairly 
compensated during this transition. And, most importantly, it is a win 
for the American people, including those in rural America, who will 
enjoy the rollout of new 5G services.

    Question 3. Chairman Pai, as you know spectrum has many different 
uses. It can be used for fixed-wireless broadband, WiFi systems, 5G, 
public safety, cable and broadcast television, and so much more. 
Balancing these uses can be tricky especially when dealing with 
unlicensed spectrum. The 6 GHz band is one of those tricky bands where 
we are looking to expand unlicensed use while simultaneously protecting 
current uses. Are you optimistic that the FCC will be able to 
successfully protect incumbents while also expanding uses in this band?

    Answer. I have consistently stated that the Commission is committed 
to protecting incumbent systems in the 6 GHz band from harmful 
interference. The Commission's technical experts in our Office of 
Engineering and Technology have spent considerable time reviewing the 
substantial record that has been compiled in this proceeding and 
meeting with interested stakeholders. The record reflects several 
detailed technical studies and analyses relating to the potential 
impact of unlicensed use on incumbent use of the 6 GHz band and 
technical and operational methods to mitigate harmful interference. Our 
Office of Engineering and Technology has been evaluating a variety of 
issues, such as indoor and outdoor use cases and a variety of power 
levels, to discern whether and to what extent unlicensed operations can 
exist alongside incumbent uses. I can assure you that the Commission's 
ultimate decision will be grounded in sound engineering analysis. And I 
remain optimistic that we will be able to develop a set of technical 
rules that will both safeguard incumbent users and allow for unlicensed 
operations throughout the band.

    Question 4. Chairman Pai, Montana is a big State, with populations 
spread all over. What we have found is that some companies, sometimes 
unknowingly, sometimes intentionally, will buy spectrum and only build 
out in high-populated areas, missing our rural communities. I believe 
it is important that when building the rules for spectrum auctions that 
we focus on the needs of rural America. Buildout requirements that 
focus on meeting specific population goals or rules that disincentive 
subleasing or sharing spectrum hurt rural Montana. What can the FCC do 
to better prioritize rural Montana when creating its build out 
requirements and other rules during spectrum auctions?

    Answer. My top priority has been to ensure that we close the 
digital divide so that every American, including those living in rural 
areas, enjoys the benefits of 5G and other advanced wireless services, 
and I have taken several key steps to fulfill that goal.
    First, I have supported the adoption of robust construction 
requirements in all the bands that the Commission has made available 
during my tenure. Buildout or construction requirements have functioned 
as a core part of the Commission's wireless policy for decades. Such 
requirements are an important tool for ensuring that spectrum does not 
lie fallow and that new services are built out to businesses and 
consumers. The Commission, when establishing construction requirements 
for spectrum, considers a variety of factors to encourage deployment, 
particularly in rural areas. We carefully consider various 
characteristics of a spectrum band, including the availability of 
equipment, before we establish construction requirements, and we 
generally seek public comment on construction timeframes.
    Second, I have supported the adoption of appropriate license area 
sizes to ensure that small or rural providers have opportunities to 
serve rural areas; for example, in the 3.5 GHz band, I supported the 
adoption of counties as the geographic license area, which is the 
smallest license area size that the Commission has auctioned. These 
providers are likely to be focused on building out aggressively in the 
areas in which they have obtained a license from the Commission.
    Third, I have ensured the adoption of bidding credits in many of 
our auctions to create additional opportunities for small businesses, 
rural service providers, and entities that serve Tribal lands.
    And finally, I have recognized that in some cases, the private 
sector alone cannot create a business case for serving rural, sparsely 
populated areas. Those are cases in which the FCC can and should help. 
In particular, the FCC must take decisive action to target Universal 
Service Fund support to rural America. That's why I will be proposing 
the creation of the 5G Fund to deliver $9 billion to facilitate the 5G 
deployment in rural America, including $1 billion that is specifically 
set aside of precision agriculture needs.
                                 ______
                                 
            Questions Submitted by Senator Richard J. Durbin
    Chairman Pai, you and I share a concern for closing the digital 
divide. I recently introduced a bill that would help to accomplish this 
goal, the Promoting Access to Broadband Act. This legislation would 
award grants to States to increase awareness of, and enrollment in, the 
Federal Communications Commission's (FCC) Lifeline program. Although 50 
percent of non-broadband users cite cost as a reason they do not have 
broadband at home, the Lifeline program had just a 28 percent 
participation rate in 2017. I am very concerned that current proposals 
being considered by the FCC will decrease enrollment even further and 
make it more difficult for low-income Americans to afford 
telecommunications services. Rather than moving forward with harmful 
proposals such as capping the Universal Service Fund or establishing 
lifetime caps on benefits, I believe we should be focused on expanding 
access to the Lifeline program.

    Question 1. Do you agree that we should increase enrollment in the 
Lifeline program to benefit more low-income Americans, and will you 
support my proposal to help States increase enrollment?

    Answer. The Commission's top priority is closing the digital divide 
and bringing the benefits of the Internet age to all Americans, 
including low-income Americans. I agree that additional consumer 
outreach can help inform consumers of the options they have for 
affordable broadband, both through the Federal Lifeline program and 
through private efforts such as the Connect2Compete initiative.

    Question 2. What actions can the Commission take to boost 
enrollment in the Lifeline program?

    Answer. The Commission has taken a number of steps to inform 
qualifying low-income consumers about the Lifeline program and 
facilitate enrollment. For example, the Universal Service 
Administrative Company, which administers the Lifeline program, 
provides consumers with information on how they can (1) qualify for 
Lifeline benefits; (2) enroll in the program; and (3) find service 
providers in their area. Additionally, USAC offers educational 
materials on its website that consumer advocacy groups, social service 
agencies, and other organizations that support Lifeline-eligible 
consumers can distribute in their communities. And the National 
Verifier offers a consumer-friendly system for prospective Lifeline 
subscribers to check their eligibility and enroll in the Lifeline 
program without having to rely on a Lifeline carrier. In particular, a 
consumer web portal enables Lifeline applicants to check eligibility 
directly with the National Verifier--a process that usually takes only 
a few minutes--and then receive a list of participating Lifeline 
carriers in their area from which they can choose.
                                 ______
                                 
            Questions Submitted by Senator Joe Manchin, III
    Question 1. C-BAND Auction

    I am aware that there is an alternative plan to the private auction 
being considered by the FCC that would free up even more spectrum by 
using the proceeds from a transparent, public auction to build out 
fiber to provide high-speed broadband to unserved rural areas. This 
seems much more reasonable to me.
  --How do you intend to ensure that small carriers and rural areas are 
        not left behind in the upcoming auction?

    Answer. Promoting broadband access in rural communities and closing 
the digital divide is one of the Commission's top priorities, and mid-
band spectrum will play a major role in achieving this. Making 
additional mid-band spectrum available offers incalculable benefits to 
the American public, including promoting job growth, increasing access 
to healthcare and education, and modernizing infrastructure in the 
United States.
    I am pleased to report that on February 28, 2020, the Commission 
adopted rules to make 280 megahertz of C-band spectrum available 
through an FCC-led auction. C-band spectrum is widely seen as a 
critical swath of mid-band spectrum that could help drive American 
leadership in 5G, the next generation of wireless connectivity. This 
spectrum offers both geographic coverage and the capacity to transmit 
large amounts of data--a combination that is appealing to entrepreneurs 
and wireless consumers alike.
    The decision meets each of the four priorities I've identified in 
this proceeding. It frees up a significant amount of C-band spectrum 
for 5G. It does so quickly. It generates revenue for the U.S. Treasury. 
And it protects the services that are currently delivered using this 
spectrum. The Commission will commence an auction later this year--on 
December 8. I believe that a public auction, run by our outstanding 
staff here at the FCC, is the best way to ensure that we assign this 
spectrum in a fair, trusted, and transparent manner. The Commission has 
a quarter-century track record of designing and implementing open and 
transparent spectrum auctions to promote the development and deployment 
of new technologies in all areas of the United States, including in 
rural areas.
    The Order establishes bidding credits for smaller entities and 
rural service providers to facilitate their participation in the 
auction and will, in turn, increase the availability of 5G service in 
rural areas. The item also adopts Partial Economic Areas (PEAs) as the 
geographic license area for the new flexible-use licenses. The 
Commission has found that using PEAs--a smaller license area than some 
may have wanted--encourages auction participation by a diverse group of 
buyers and generates competition among large, regional, and small 
carriers across various geographic areas.
    The item is a win for innovators who want to introduce new services 
in the C-band. It is a win for incumbents who will be fairly 
compensated during this transition. And, most importantly, it is a win 
for the American people, including those in rural America, who will 
enjoy the rollout of new 5G services.

    Question 2. Allowing Consumers to Challenge FCC Maps

    I have been providing you with real coverage data from people on 
the ground in West Virginia and a brief description of the challenges 
they face personally, professionally, and economically as a result of 
their unreliable broadband service. To this day, I have sent 25 
individual letters that highlight the challenges that hard working West 
Virginians are facing daily.
  --Are you finding the data that we are sending to be useful and 
        beneficial for updating broadband coverage maps?
  --When can the public expect to see a process in which they can 
        directly send the data included in these letters directly to 
        the FCC?
  --What additional data would you require to ensure that these letters 
        are providing the information you need to update and create 
        accurate broadband maps?

    Answer. I appreciate all feedback on our data collection efforts. 
Knowing which Americans have access to broadband and which do not is 
critically important to the Commission. That's why last August the 
Commission adopted the Digital Opportunity Data Collection Report and 
Order and Notice of Proposed Rulemaking. The Report and Order departs 
from the census block-level reporting that the Commission adopted in 
2013, and will instead collect granular, precise data about broadband 
service availability.
    For fixed broadband, providers will be required to submit polygons 
depicting their actual service footprints or coverage areas using 
technical reporting standards developed by our staff. For mobile 
broadband, the Commission sought comment on using standardized radio 
frequency propagation prediction and standardized coverage maps for 
mobile services. The Commission also sought comment on ways to verify 
carrier data with on-the-ground data, such as stationary and drive 
testing, to ensure the quality of mobile broadband deployment maps.
    To further ensure that these new granular broadband service 
availability maps accurately reflect the facts on the ground, the 
Universal Service Administrative Company is developing a portal for 
direct input from State, local, and Tribal governments, along with 
members of the public, on the map's accuracy. The Commission sought 
comment on how to best collect that feedback and incorporate it into 
the map. It also sought comment on the kinds of data that individuals 
and entities wishing to dispute the map should submit, such as the 
speeds offered at the consumer's location and the speed the at which 
the consumer is currently subscribed.

    Question 3. 6 Gigahertz (GHz) Band

    Last year, your agency announced that it was considering a proposal 
to open up 1,200 megahertz of spectrum in the 6 GHz band for different 
types of unlicensed use. This band is utilized for microwave services 
that support utilities, public safety, and wireless backhaul. I 
strongly believe we must ensure that incumbent users are protected 
before there are any changes in any band of spectrum and I am concerned 
that there has not been enough testing of the proposed Automatic 
Frequency Coordination (AFC) mitigation technology or meaningful 
conversations with relevant Federal agencies like FERC to ensure this 
proposal will not negatively impact the incumbent users.
  --What assurance can you give me that incumbents that utilize this 
        band will not be harmed if this proposal moves forward?
  --Have you or your staff discussed this proposal with FERC?
  --Can you commit to further test the AFC technology in consultation 
        with FERC before moving forward with the proposal?

    Answer. I have consistently stated that the Commission is committed 
to protecting incumbent systems in the 6 GHz band from harmful 
interference. The Commission's technical experts in our Office of 
Engineering and Technology have spent considerable time reviewing the 
substantial record that has been compiled in this proceeding and 
meeting with interested stakeholders. The record reflects several 
detailed technical studies and analyses relating to the potential 
impact of unlicensed use on incumbent use of the 6 GHz band and 
technical and operational methods to mitigate harmful interference. Our 
Office of Engineering and Technology has been evaluating a variety of 
issues, such as indoor and outdoor use cases and a variety of power 
levels, to discern whether and to what extent unlicensed operations can 
exist alongside incumbent uses. I can assure you that the Commission's 
ultimate decision will be grounded in sound engineering analysis. And I 
remain optimistic that we will be able to develop a set of technical 
rules that will both safeguard incumbent users and allow for unlicensed 
operations throughout the band.
    The Commission has also been following the well-established 
interagency process for receiving the views of other Federal agencies 
with equities in this proceeding. That process to date has included 
routine discussions and meetings with NTIA on behalf of other Federal 
agencies and consultation with the Department of Energy and the Federal 
Energy Regulatory Commission. FCC personnel are regularly in contact 
with their counterparts at FERC on this and other issues of concern to 
both agencies.

    Question 4. Low Power TV Stations

    Low Power TV (LPTV) stations provide locally-oriented service to 
small and rural communities. LPTV programming can be tailored to 
viewers in a more localized manner and is less expensive and more 
flexible than a traditional TV station. This carriage is optional for 
satellite carriers, even though many customers in rural areas--like 
those in my home state--rely on satellite service when cable does not 
or cannot reach their home. WVUX, a local LPTV carrier in my home 
county, has had difficulty getting carried by DirecTV or DISH. They 
have sought relief from the FCC by petitioning for a Declaratory Ruling 
that satellite carriers observe the must carry rules for qualified low-
power stations. Can I work with your office to receive an answer from 
FCC for WVUX?
  --Do you foresee benefits to rural areas in requiring satellite 
        carriers to carry the signals of local LPTV stations or local 
        public broadcasting?
  --What would be the challenges in doing so?
  --Can you make this change on your own or do you need congressional 
        clarification in order to do so?

    Answer. The Media Bureau issued a Memorandum Opinion and Order on 
October 24, 2019 that denied the petition for declaratory ruling and 
demand for carriage of WVUX. In its decision, the Bureau indicated 
that, as an LPTV station, WVUX does not have mandatory carriage rights 
on satellite systems pursuant to section 338 of the Communications Act 
even if the station may be qualified to be carried by cable systems 
under a different provision of the Act. WVUX filed an Application for 
Review of the Bureau's decision on November 22, 2019 and that AFR is 
currently pending. I hope that the Bureau can provide its 
recommendations for the full Commission's consideration in the near 
term. As you know, I have long been a supporter of local broadcast 
stations and the service that they provide to their communities--
whether the stations are full power or LPTV stations. However, Congress 
has been explicit in its intent when it comes to mandatory carriage 
issues and the Commission must faithfully apply the statutory 
provisions as written. Of course, Congress is always free to modify the 
Communications Act to provide LPTV stations with additional carriage 
rights if it chooses to do so.

                          SUBCOMMITTEE RECESS

    With that, the subcommittee is adjourned.
    [Whereupon, at 11:32 a.m., Thursday, October 17, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]