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


 
  FINANCIAL SERVICES AND GENERAL GOVERNMENT APPROPRIATIONS FOR FISCAL 
                               YEAR 2020

                              ----------                              


                      THURSDAY, NOVEMBER 21, 2019

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

    The subcommittee met at 11:02 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. John Kennedy (Chairman) presiding.
    Present: Senators Kennedy, Van Hollen, and Coons.

                   FEDERAL COMMUNICATIONS COMMISSION

               OPENING STATEMENT OF SENATOR JOHN KENNEDY

    Senator Kennedy. All right. The subcommittee meeting of the 
Financial Services and General Government Subcommittee of the 
Appropriations Committee in the United States Senate shall come 
to order. We have a number of distinguished witnesses today. 
Senator Coons, the Ranking Member will be here shortly.
    I thought I would begin by just making a few general 
comments. As you know, the FCC for some time has been 
deliberating about how best to allocate the C band 3.7 
gigahertz to 4.2 gigahertz. We have discovered it will be very 
valuable for fifth generation wireless technology because it 
can reach a large geographical area and carry lots and lots of 
data. And there has been a public and some private discussion 
for a while of how best to allocate that spectrum.
    One option that was before us as policymakers is to do a 
public auction. The FCC in my judgment is very experienced 
doing public auctions of spectrum. I know you have raised $117 
billion, which is rounded off. You have done 93 public 
auctions, and you have done them well.
    There has been a competing proposal offered by a number of 
our friends who are satellite companies, including but not 
limited to some foreign satellite companies. Some of whom are 
using the spectrum now. They have an association called the C-
Band Alliance. Their argument is that the FCC is too slow and 
too inefficient to quickly allocate through a public auction, 
the C band, and that they can do it faster despite the fact 
that they have never done an auction of spectrum; public, 
private, or otherwise.
    That is one of the subjects that I hope we can address 
today is the speed with which, and thoroughness, with which an 
auction can be done. The C-Band Alliance has also proposed, in 
addition to their allegation that they can do it quickly, that 
they should get to keep all of the money.
    A number of investment bankers have weighed in on this 
subject. I have seen estimates as low as $40 billion and as 
high as $60 billion, that they would get to keep. They meaning 
the C-Band Alliance. I believe any fair-minded person would 
have to conclude that this spectrum is a strategic American 
asset that belongs to the American people, which is why the C-
Band Alliance has asked for an order from the FCC to give them 
the spectrum so that they can auction it off and keep the 
money.
    Now to be fair, I understand that the C-Band Alliance 
recently has filed a new proposal with the FCC that would 
suggest they would give some of the money to the American 
taxpayer.
    I think of this in terms of my own State. In my State 
offshore are enormous quantities of oil and gas. Some of the 
sea beds are owned by the American people and our Bureau of 
Ocean Energy Management (BOEM), on a pretty consistent basis, 
auctions off oil and gas leases to private companies to drill. 
They do this on behalf of the American people because the 
American people own this valuable resource. They give the 
American people money and they give them their share of the 
royalties.
    If I went to the BOEM tomorrow and said, look, even though 
you've done thousands of auctions and you bring in $30 billion 
a year, I can do it faster and we need to be energy independent 
and I can get those leases out to the private sector much 
faster and I want you to turn them all over to me and I will do 
it. And I'll get to keep all of the money. If I made that 
proposal to BOEM, I suggest respectfully, I would end up either 
in handcuffs or a straightjacket, or both. That is the problem 
I have had with the private auction.
    Two of my colleagues have introduced a bill to require a 
public auction, which I of course the concept I support. We are 
going to have some discussion; it seems to me about the amount 
of money from those auctions, according to these bills that 
would go to the public treasury. The bill introduced by two of 
my esteemed colleagues for whom I have great respect basically, 
I think would, would set a ceiling on the amount of money, 50 
percent that would go to the American people. Now the obvious 
question becomes who gets the rest.
    Last night I introduced a bill--competing bill--that will 
require the FCC to hold a public auction of the C band 
spectrum. It would allow for no less than 200 megahertz and no 
more than 300 megahertz of C band spectrum to be auctioned off. 
It would ensure, my bill would ensure that incumbent C band 
users would be protected. My bill will direct that all of the 
money goes to the United States Treasury and that $10 billion 
of the funds be specifically set aside to build out and 
maintain rural broadband infrastructure in unserved rural 
communities.
    Chairman Pai announced last week that he is bringing a 
recommendation to the FCC to do a public auction. A large 
portion will be auctioned publicly and transparently; so that 
everybody has equal chance, and a portion will be reserved for 
current programming.
    Let me talk for just a second about ownership of the C 
band. My understanding that the current users of the C band 
paid no money for it. They do not have a license. I am not sure 
the exact legal term that gives them the right--the privilege 
rather to use the C band, but I liken it to a 30-day month-to-
month lease. I think the property right here is something that 
we should address. Even if they did have a license, they 
meaning the satellite companies, the Communication Act is very 
explicit, in my judgment, that license would not equate to 
ownership.
    If you look at Section 301 and 309(h), it says that just 
because you have a license, does not mean you own the spectrum. 
If you look at Section 304, it requires every licensee to sign 
a waiver and that waiver says, ``Hey, I know I have a license 
but I totally don't own this spectrum and I waive any claim 
that I have against the regulatory power of the United States 
because of based on my prior use of the spectrum.'' And then if 
you go look at Section 309(j), it says quote ``absolutely 
nothing about distributing licenses by auction changes Section 
301, 304, or 309(h).''
    So if you have a license, you don't own the license, and 
you have already stipulated in writing. No matter what you 
think, no matter what your lawyers say, at any time the FCC can 
come in and make modifications; that's Section 316. The FCC in 
its considered judgment can make any modifications to any 
license it wants. All they have to do is give a 30-day notice 
in writing. Which they do by issuing a notice of proposed 
rulemaking. Now that is the law.
    And there's precedent. This is exactly what the FCC did 
back in 2007. You had a very successful auction of the 700. I 
think you referred to it as 700 megahertz option.
    It is in the statute and not just my opinion. In addition, 
the FCC's authority here has been upheld repeatedly by our 
Federal courts. If you do not believe me, I found one 
particular case called Mobile Relay Associates versus FCC, 457 
F. 3d 1 from the DC Circuit in 2006 and you can find more.
    A final point about the litigation. There is $60 billion at 
stake here, maybe less, but not much less. It has been my 
experience when government makes a decision that you are sued 
anyway. If somebody is happy and somebody is sad, you're going 
to get sued and I fully expect whatever the FCC does, public or 
private auction, you're going to get sued. But good luck 
finding a Federal judge who's going to issue an injunction and 
he's going to shut this down. And I think the case law, in my 
opinion, on the FCC side.
    And I guess my bottom line is that I know there are a lot 
of people, I'm very proud of the Chairman of the FCC, it was a 
very courageous thing that he did. It shouldn't be. Following 
the law shouldn't take courage but around here it does. And I 
know some people are not happy, but I would respectfully say to 
them, those who aren't happy and say that the FCC can't do it. 
You know, those who say it can't be done ought to get out of 
the way of those who are going to do it.
    With that, I will turn to my colleague Senator Coons.

               STATEMENT OF SENATOR CHRISTOPHER A. COONS

    Senator Coons. Thank you Chairman Kennedy. Thank you for 
convening this hearing, which will address critical issues 
about how we provide telecommunications companies that need C 
band spectrum to deploy 5G in the United States and how we do 
it in a prompt and appropriate and transparent way.
    And I also want to start by saying happy birthday, Mr. 
Chairman.
    Senator Kennedy. Thank you.
    Senator Coons. I cannot imagine a more enjoyable way to 
spend your birthday than to consider a C band auction.
    [Laughter.]
    Senator Coons. How we make sure that the entities involved 
in this reallocation are fairly compensated for their costs and 
how we make sure the American taxpayer is fully protected. The 
process is our main purpose today. Mr. Chairman, as I've gotten 
to know you better as the Chairman of this subcommittee, I 
respect your fierce advocacy for the American taxpayer and I 
think I quote ``you have been on it like a hobo on a ham 
sandwich.'' I can't deliver it in the same style, but I 
certainly respect the instinct.
    The sale of this spectrum could, as you just said, deliver 
over $60 billion to the taxpayer and we need to work hard 
together to protect those interests and freeing up spectrum for 
5G deployments, important for all Americans and not only to 
deliver this cutting edge technology across our country and to 
be a strong engine for economic growth, but to keep us 
competitive with other nations that are racing ahead with their 
5G development and deployment.
    I am also concerned about some who have said that a 5G 
public auction will take too long. I am looking forward to 
hearing from our qualified technical witnesses about whether 
this is the case and what, if anything Congress can do to 
expedite the auction process. And whether or not funding and 
technical competence is a relevant specific issue.
    As we discussed the promise of 5G, we also can't forget 
those parts of our country, including parts of Delaware and 
Louisiana that still are without reliable access to broadband. 
In the best of worlds, some of the money raised by an auction 
could be used to expand rural broadband. I'll also explore with 
our witnesses today whether that is possible and how we might 
improve our investment in rural access. 5G, I think, will make 
access even more important than 4 and 3G have been.
    Chairman Pai laid out four principles to guide the Agency 
in conducting this approaching C band proceeding they're 
included in your testimony, but briefly I'll restate them. 
First, making available significant amount of spectrum for 5G. 
Second, making it available quickly. Third, generating revenue 
for the Federal Government and the taxpayer. And fourth, 
ensuring the service currently used by the C band will continue 
to be delivered to the American people. And I agree with those 
core principles.
    Congress and the FCC must work together and make sure this 
process is a win for everyone, taxpayers and consumers. I look 
forward to working with you. Mr. Chairman on this and I look 
forward to the testimony of our witnesses today.
    Senator Kennedy. Thank you Senator Coons. We're fortunate 
to have today with us Mr. Julius ``Julie'' Knapp and Dr. Giulia 
McHenry. Mr. Knapp is Chief of the Office of Engineering 
Technology at the FCC. He's worked at the FCC for 45 years. You 
need to write a book. He became Chief of this office in 2006. 
This office is the Commission's primary resource for 
engineering expertise and technical support. Mr. Knapp has a 
Bachelor's degree in Electrical Engineering from the City 
College of New York.
    Dr. Giulia McHenry. She is the Acting Chief of the Office 
of Economics and Analytics. That office manages the FCC's 
auctions program. Dr. McHenry previously served as Chief 
Economist of the National Telecommunications and Information 
Administration, which is the executive branch agency within the 
Department of Commerce that is responsible for 
telecommunications policy and managing Federal use of spectrum. 
Dr. McHenry has a Ph.D. from the University of Maryland, a 
Bachelor of Arts from Wesleyan University, and she is married 
to Congressman Patrick McHenry.
    Thank you for being here. The floor is yours. Is it true 
that it's going to take you 7 years to auction off the C band?
    Ms. McHenry: Is this working?
    Senator Kennedy. Now we're working.
STATEMENT OF MS. GIULIA MCHENRY, ACTING CHIEF OF THE 
            OFFICE OF ECONOMICS AND ANALYTICS
ACCOMPANIED BY JULIUS KNAPP, CHIEF OF THE OFFICE OF ENGINEERING AND 
            TECHNOLOGY

    Ms. McHenry: Chairman Kennedy, Ranking Member Coons, and 
Members of the subcommittee on behalf of Julie Knapp and 
myself, thank you for the opportunity to discuss the Federal 
Communications Commission's Spectrum Auction Program.
    The Office of Economics and Analytics draws upon economic 
and data analytics expertise to ensure that the Commission is 
taking the most efficient and effective approach in all 
auctions. In designing and holding spectrum auctions, the 
Commission adheres closely to the objectives established by 
Congress when it granted the FCC auction authority. Following 
Congress's guideposts, the Commission has conducted 93 spectrum 
auctions and generated $116.5 billion in revenue for the U.S. 
Treasury.
    Now that greenfield spectrum has become more rare, the 
decision of whether and how to license particular spectrum 
bands has become more complex. In each case we must either find 
a way to accommodate those existing services in a different 
part of the radio spectrum or develop a set of rules and tools 
to share the spectrum, all while ensuring that incumbents and 
their customers are not harmed and providing certainty and 
clarity to bidders.
    Many successful past auctions illustrate how we've been 
able to balance these needs of incumbents and prospective 
bidders. From our first auction in 1993, where Broadband 
Personal Communications Services (PCS) license winners were 
required to relocate the incumbent services to higher 
frequencies to the 2014 Advanced Wireless Services (AWS-3) 
auction in which Federal users were successfully transitioned 
to other bands due in large part to Congress establishing the 
spectrum relocation fund for Federal users to recover costs 
from a portion of the auction proceeds. Each incumbent 
transition situation is unique and so the solutions must be 
unique.
    To facilitate our efforts to free more spectrum for 
flexible use, Congress provided the FCC with incentive auction 
authority in 2012. In 2017, the FCC concluded its first 
incentive auction. The entire process was one of the most 
complex engineering exercises that the Commission had ever 
undertaken. We appreciate Congress's support of innovative 
techniques such as the incentive auctions and are continuing to 
use this authority constructively.
    The Commission recently adopted an incentive auction 
mechanism that will make available more spectrum than any 
auction in American history: 3,400 megahertz of spectrum 
throughout the upper 37 gigahertz, 39 gigahertz, and 47 
gigahertz bands. Bidding for these licenses in Auction 103 will 
begin on December 10. The Commission has also adopted an 
innovative regulatory regime that allows for dynamic sharing in 
the 3.5 gigahertz band between Federal incumbent and non-
Federal users and makes mid-band spectrum available for 5G. On 
June 25, we will begin the auction of a total of 22,631 
licenses, which will be the most licenses ever offered in an 
FCC spectrum auction.
    The C band at 3.7 to 4.2 gigahertz perhaps illustrates the 
complexity of re-purposing spectrum. The primary users of the 
band are fixed satellite service downlinks, which deliver 
content to cable systems and broadcasters. Unlike other bands 
that we have repurposed, where the incumbents were exclusive 
licensees, here multiple satellite operators have a 
nonexclusive right to use the entire C band.
    Chairman Pai has laid out four principles to guide the 
agency's approach to the C band. First, we must make a 
significant amount of spectrum available for 5G. Second, we 
must make the spectrum available quickly. Third, we must 
generate revenue for the Federal Government. And fourth, we 
must ensure that the services currently using the C band will 
continue to be delivered to the American people.
    Earlier this week, Chairman Pai announced his view that the 
FCC should proceed with a public auction of 280 megahertz of C 
band spectrum conducted by Commission staff. This approach best 
achieves the Chairman's four goals. Guiding the Chairman's 
decision was his view that the proposed private sale offered by 
the C-Band Alliance was unlikely to be fair and transparent. 
Given that bidders across the board have repeat have repeatedly 
stated that the rules and protections of an FCC run auction are 
necessary for this potentially multibillion dollar sale, the 
Chairman concluded that the tried and true method of a public 
auction was the fastest and best means to get the spectrum to 
market.
    The Chairman has announced that he expects a Commission 
vote on the public auction early next year and we are planning 
to conduct a fair and transparent auction while preserving the 
upper 200 megahertz of this band for the continued delivery of 
programming. We are confident that we can commence this auction 
before the end of 2020.
    Chairman Kennedy, Ranking Member Coons and Members of the 
subcommittee. Thank you for the opportunity to testify. We 
would be pleased to answer your questions.

    [The joint statement of Julius Knapp and Giulia McHenry 
follows:]

                           JOINT STATEMENT OF

                              JULIUS KNAAP

              CHIEF, OFFICE OF ENGINEERING AND TECHNOLOGY

                   FEDERAL COMMUNICATIONS COMMISSION

                             GIULIA McHENRY

            ACTING CHIEF, OFFICE OF ECONOMICS AND ANALYTICS

                   FEDERAL COMMUNICATIONS COMMISSION

     Hearing on Oversight of the Federal Communications Commission:

                   Spectrum Auctions Program, Part 2

    Chairman Kennedy, Ranking Member Coons, and Members of the 
Financial Services and General Government Subcommittee, thank you for 
the opportunity to discuss the Federal Communications Commission's 
spectrum auctions program.
    Since Congress authorized the FCC to conduct spectrum auctions in 
the Budget Reconciliation Act of 1993, auctions have been one of the 
primary spectrum management tools of the Commission. While auctions may 
be the most visible of such tools, the Commission employs a broad array 
of mechanisms for making spectrum available and resolving mutual 
exclusivity in spectrum use as required by the Communications Act. 
Other examples of these mechanisms include unlicensed and license-by-
rule frameworks that have made technologies like Wi-Fi pervasive and 
successful.
    Auctions are an increasingly integral part of the Commission's core 
missions. In light of the Commission's diverse auctions portfolio, 
which goes beyond spectrum auctions for mobile wireless use, and 
because good auction design must be based on sound economics, the 
Auctions Division was moved from the Wireless Telecommunications Bureau 
to become a fundamental part of the new Office of Economics and 
Analytics (OEA). We appreciate the Appropriations Committee's grant of 
reorganization authority, without which the Commission would not have 
been able to establish OEA and bring economic and data analysis and 
auction design and execution under one roof.
    OEA draws upon economic and data analytics expertise to ensure that 
the Commission is taking the most efficient and effective approach in 
all auctions and spectrum management more generally. In designing and 
holding spectrum auctions, the Commission adheres closely to the 
objectives established by Congress in 47 U.S.C. 309(j)(3), including 
``the development and rapid deployment of new technologies, products, 
and services for the benefit of the public.'' Consistent with 
Congress's mandate, the Commission balances the aforementioned 
objective with other statutory objectives such as ensuring the 
spectrum's efficient and intensive use, and providing parties with 
adequate time to consider and comment on auction procedures, develop 
business plans, and assess market conditions.\1\
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    \1\ 47 U.S.C. Sec. Sec. 309(j)(3)(D), (E).
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    Once a spectrum band is identified for licensing and technical 
rules for the licenses are established, the Commission determines the 
most effective type of auction for that particular band. When 
determining the type of auction to use, the Commission considers 
several factors, such as the number and size of the geographic areas 
and spectrum blocks that will be made available, the likely use cases 
for the licenses and any interference issues, the potential need to 
transition or accommodate existing incumbent users, and the number of 
potential bidders to ensure that the auction will be efficient and that 
bidding will not be prolonged unnecessarily. We then seek comment on 
proposed application and bidding procedures to allow potential bidders 
and other interested parties or experts the opportunity to provide 
feedback on our proposals.
    After considering the public input, the Commission resolves any 
issues and establishes final auction procedures prior to opening a 
filing window, during which prospective bidders apply to participate in 
the auction. Commission staff then reviews bidder applications, working 
with potential bidders to ensure their applications are complete. 
Commission staff also reviews the upfront payments submitted by 
applicants with complete applications and announces the list of 
qualified bidders. Beginning with the application stage and proceeding 
up until the start of the auction, Commission staff provide seminars 
and other educational materials and field questions to ensure that 
bidders are familiar with application bidding systems and aware of 
their obligations.
    Following the guideposts established by Congress in 309(j), the 
Commission has conducted 93 spectrum auctions and generated $116.5 
billion in revenue for the U.S. Treasury.
    Innovative and modern spectrum management principles are essential, 
especially now that greenfield spectrum has become rarer. The decision 
of whether and how to license a particular spectrum band has become 
more complex and depends on the unique characteristics of the band in 
question. In each case, we must either find a way to accommodate those 
existing services and licensees in a different part of the radio 
spectrum or develop a set of rules and tools to share the spectrum 
without causing harmful interference. Where spectrum bands have 
incumbents, we must develop a plan to ensure that they and their 
customers are not harmed, while providing certainty and clarity to 
bidders as to what and when the spectrum will be available.
    Several successful past auctions illustrate how we've been able to 
balance the needs of incumbents and prospective bidders. These examples 
illustrate how different each incumbent transition situation is--and 
how unique the solutions must be. In our first spectrum auction in 
1993, personal communications service license winners were required to 
relocate the incumbent point-to-point microwave services to higher 
frequencies that Commission staff had determined were available.
    The auction for Advanced Wireless Services-3 spectrum successfully 
transitioned Federal users to other bands due in large part to Congress 
establishing a mechanism for Federal users to recover relocation costs 
from a portion of the proceeds of the auction, which were transferred 
to the Spectrum Relocation Fund pursuant to the Commercial Spectrum 
Enhancement Act. The Federal Government also published the transition 
plan for its users to provide certainty to the auction bidders about 
when they would be able to use the spectrum. This involved an extensive 
effort by our partners at the National Telecommunications and 
Information Administration and other Federal agencies.
    To facilitate our efforts to free more spectrum for flexible 
wireless use, Congress provided the FCC with incentive auction 
authority in 2012. In 2017, the FCC concluded its first incentive 
auction, which provided payments to broadcast television stations that 
chose to relinquish their spectrum and repacked other stations so that 
they could maintain operations while using a narrower range of 
spectrum. That auction ended up making available 70 megahertz of 
licensed spectrum for mobile broadband use in the 600 MHz band. The 
entire process was one of the most complex engineering exercises the 
Commission had ever undertaken. Today we are far along in the repack of 
the TV stations, and wireless carriers are already offering service in 
the spectrum that was cleared, thanks in large part to the careful 
initial planning of the FCC.
    We appreciate Congress's support of innovative techniques such as 
incentive auctions, and we are continuing to use this authority 
constructively as we deal with spectrum already licensed and in use. 
The Commission recently adopted an incentive auction mechanism that 
will make available more spectrum than any auction in American 
history--3,400 megahertz of spectrum throughout the Upper 37 GHz, 39 
GHz, and 47 GHz bands. While the broadcast incentive auction used 
separate forward and reverse auctions, for Auction 103 the Commission 
provided a reconfiguration process for incumbents that allowed them to 
relinquish their rights or accept modified licenses suitable for use 
with new technologies. As a result, the clock phase of Auction 103 will 
determine the prices paid to incumbents relinquishing their existing 
licenses, which may be applied to the value of any new licenses won at 
the auction. Bidding for these licenses in Auction 103 will begin on 
December 10th.
    The Commission has also adopted a novel, innovative regulatory 
regime that allows for dynamic sharing in the 3.5 GHz band between 
Federal incumbents and non-Federal users and opens up mid-band spectrum 
for 5G and other commercial uses. The three-tiered, hierarchical 
framework prioritizes incumbent Federal users. Second-tier Priority 
Access Licenses (PALs) in turn receive protections from third-tier 
General Authorized Access (GAA), which is license-by-rule. Automated 
frequency coordinators, known as Spectrum Access Systems (SAS), will 
coordinate operations, and Environmental Sensing Capability operators 
will detect the presence of Federal incumbent radar transmissions and 
communicate with the SASs. On June 25, 2020, we will begin the auction 
for seven 10-megahertz channel PALs in every county across the 
country--a total of 22,631 licenses, which will be the most licenses 
ever offered in an FCC spectrum auction.
    In sum, every spectrum band the Commission has auctioned required 
careful consideration of the band's circumstances and characteristics 
to determine how best to make it available. And because we are packing 
more services into a finite spectrum resource, each new band presents 
more complex challenges than the ones before.
    The C-band at 3.7-4.2 GHz perhaps best illustrates this point. One 
of the three prongs of the Commission's strategy for Facilitating 
America's Superiority in 5G Technology--the 5G FAST Plan--is to make 
spectrum available in low-, mid-, and high-frequency bands. The 3.7-4.2 
GHz band falls in that mid-band range and is particularly attractive 
for deployment of advanced wireless services because it offers a great 
balance of both coverage and bandwidth.
    The primary user of the 3.7-4.2 GHz band is Fixed Satellite Service 
downlinks. These links provide connectivity for delivery of content to 
cable systems, broadcasters, and religious organizations. The satellite 
service is provided by several satellite licensees to more than 20,000 
registered earth stations spread throughout the continental United 
States.
    Unlike other bands that we have repurposed, where the incumbents 
had exclusive licenses, here eight different satellite operators have 
non-exclusive rights to use the C-Band to provide service to the 
continental United States. They deliver service via transponders that 
are mapped across the 500 megahertz and deliver the content to 
satellite earth station dishes that are aimed at satellites. In other 
words, the satellite systems are integrated in ways that were 
engineered by the licensees such that their cooperation is critical to 
the process of freeing up spectrum.
    Chairman Pai has laid out four principles he has said would guide 
the agency in approaching the C-Band proceeding. First, we must make 
available a significant amount of spectrum for 5G. Second, we must make 
this spectrum available for 5G quickly. Third, we must generate revenue 
for the Federal Government. And fourth, we must ensure that the 
services currently using the C-Band will continue to be delivered to 
the American people. And Chairman Pai has previously announced that he 
would make a decision on how the FCC should proceed by this fall.
    Earlier this week, Chairman Pai sent letters to Senators and 
members of the House of Representatives that had expressed an interest 
in the C-Band proceeding announcing his view that the FCC should 
proceed with a public auction of 280 megahertz of the C-Band conducted 
by Commission staff. This approach best achieves the Chairman's four 
goals, which are consistent with Congress's 309(j) objectives. With a 
quarter-century track record of transparent and successful auctions, we 
are planning to conduct a public auction that will afford all parties a 
fair opportunity to compete for this 5G spectrum, while preserving the 
availability of the upper 200 megahertz of this band for the continued 
delivery of programming. And we are confident that we can commence this 
auction before the end of 2020.
    Guiding the Chairman's decision was his view that the proposed 
private sale offered by the C-Band Alliance was unlikely to be fair and 
transparent. Small bidders were unlikely to participate in the C-Band 
Alliance's original planned auction that one commenter described as 
``fiendishly complex.'' And the Alliance's most recent pitch rejected 
industry-standard online bidding mechanisms, reducing the transparency 
of the auction and making it more likely to simply fail. Given that 
bidders across the board have repeatedly made clear that the rules and 
protections of an FCC-run auction were needed for this potentially 
multi-billion sale, the Chairman concluded that the tried-and-true 
method of a public auction was the fastest and best means to get this 
spectrum to market.
    The Chairman has announced that he expects a Commission vote on the 
public auction early next year. In the coming weeks, we will continue 
to work toward resolutions that will create a fair, transparent, and 
swift process consistent with the Chairman's goals and Congress's 
objectives.

                                 * * *

    Chairman Kennedy, Ranking Member Coons, and Members of the 
subcommittee, thank you for this opportunity to testify. We would be 
pleased to answer your questions.
                                 ______
                                 
[Clerk's Note: Mr. David Williams, President of the Taxpayers 
Protection Alliance was unable to attend the hearing, but 
submitted his statement for the record.]

                      TESTIMONY OF DAVID WILLIAMS

                               PRESIDENT

                     TAXPAYERS PROTECTION ALLIANCE

    Thank you for the opportunity to testify today. My name is David 
Williams, president of the Taxpayers Protection Alliance (TPA). TPA's 
mission is to serve as a rapid-response organization that keeps 
taxpayers and consumers informed as to what their government is, or 
isn't, doing. That's why, for the past several months, we have been 
closely and intently following developments regarding the ``C-band'' 
section of radio spectrum, which is valued at more than $60 billion. 
First, I want to thank you on behalf of all of our members and 
supporters for your hard work on this issue.
    As the staff of the Federal Communications Commission (FCC) and 
lawmakers of this subcommittee are well aware, this segment of mid-band 
spectrum is critical for the deployment of 5G due to its ability to 
carry sizable bits of data over relatively long distances. Freeing up 
spectrum for 5G deployment is an important issue because 5G is at least 
10 times faster than current 4G LTE, and 5G can make significant 
progress in helping close the digital divide. During months of 
deliberation on how best to make C-band spectrum available, all sides 
of the debate cited the plight of the 20 million Americans that lack 
ready, reliable access to high-speed Internet. Closing the digital 
divide and protecting taxpayers have been the top two priorities for 
TPA in the C-band discussion.
    Last month, TPA testified on the need for a public auction to 
ensure a fair and open process. Well, on November 18, FCC Chairman Ajit 
Pai listened to TPA, you, and millions of taxpayers and consumers 
across the country and announced a public auction. In a letter to 
lawmakers, Chairman Pai stated that, ``With a quarter-century track 
record of transparent and successful auctions, I am confident that they 
[FCC staff] will conduct a public auction that will afford all parties 
a fair opportunity to compete for this 5G spectrum, while preserving 
the availability of the upper 200 megahertz of this band for the 
continued delivery of programming.'' Chairman Pai, and his staff, 
should be commended for their hard work on this issue. Moving forward 
with a public auction confirms his commitment to closing the digital 
divide and protecting taxpayers.
    This was an important decision because it not only will help close 
the digital divide, it reaffirms the principle that spectrum is a 
national asset and must be managed to best serve the citizens of the 
country.
    TPA is confident that the FCC will be able to publicly auction C-
band auction in an expedited process while providing guaranteed revenue 
for taxpayers. First, let's talk about who owns the spectrum. The 
Communications Act of 1934, as amended by the Telecom Act of 1996, 
makes it clear that taxpayers are the ultimate owners of the spectrum. 
In fact, due to the procedure set forth in Section 304 of the 
legislation, licensees must sign a waiver saying that they are simply 
spectrum tenants. The government is free to make modifications to 
leases under Section 316, provided that the FCC gives 30 days of 
written notice. Just as an apartment owner should behave respectfully 
and with reasonable predictability toward a tenant, the U.S. Government 
should exercise caution in clearing incumbent users from spectrum even 
if they can bluntly do so in a short period of time. Fortunately, 
innovative instruments such as incentive auctions allow for such 
clearings to occur while ensuring that all parties are treated fairly.
    In moving forward with a public auction, the FCC and lawmakers must 
know what to expect from previous auctions. It is also important to 
learn from any previous mistakes to make for a fair, expedited process.
    The FCC has a stellar track-record in making spectrum available in 
record time once it commits to an auction. In the agency's early years 
of conducting public auctions, the process was often slow and 
unpredictable. But in recent years, the FCC has demonstrated that it is 
capable of learning from its previous missteps and pursuing the 
expedited leasing out of taxpayer spectrum assets.
    In May 2014, agency staff began seeking comments on the proposed 
Advanced Wireless Services (AWS-3) auction. Just 9 months later, the 
auction concluded with gross bids of nearly $45 billion and net 
taxpayer proceeds totaling more than $41 billion. Sure, there were 
plenty of incumbent relocation and frequency-sharing issues and FCC 
agency staff faced many headaches as the bidding process got underway 
in the last couple of months of 2014. But, the end result of 341 rounds 
of bidding over 13 weeks was the public auctioning of a critical slice 
of spectrum at unexpectedly-high prices.
    Then, a little more than a year after the successful AWS-3 auction, 
the FCC hit another historic milestone. In March of 2016, the agency 
embarked on a two-sided auction (known as the Broadcast Incentive 
Auction) in order to clear nearly 90 megahertz of spectrum used by 
incumbent broadcasters. The stakes could not have been higher, as 
Internet providers made clear to the agency and incumbent license 
holders the need for flexible-use licenses to spearhead 5G deployment. 
This auction was a complicated balancing act: the FCC had to ensure 
that broadband providers and broadcasters agreed on the ``right'' price 
for spectrum reallocation, while ensuring that taxpayers were given 
their due as the ultimate spectrum owners. This process was a 
resounding success, and the auction took just over a year to complete. 
More than $19 billion in revenue was generated from the process, of 
which $10 billion was given to the broadcasters to vacate the spectrum 
and more than $7 billion was allocated to taxpayers.
    Prior to Chairman Pai's November 18 announcement that the FCC would 
pursue a public C-band auction, a consortium of incumbent satellite 
companies proposed selling spectrum on their own through an opaque, 
vaguely-articulated process and bequeathing a ``voluntary 
contribution'' to U.S. taxpayers. The percentage contribution to the 
Treasury would be based on the amount of net proceeds from sales but 
would at a minimum be 30 percent. Note that this is substantially less 
than the 37 percent of proceeds given back to taxpayers following the 
conclusion of the Broadcast Incentive Auction in March of 2017.
    The ``net proceeds'' at the center of the ``voluntary 
contribution'' determination would have been calculated by estimating 
the costs to plan for and implement the ``private sale.'' If a private 
monopoly is given carte blanche to control that process and determine 
cost, they could simply make costs look high on paper and avoid 
compensating taxpayers for the value of spectrum. This would have been 
a significant problem for a ``private sale'' of the C-band, and it 
continues to be a potential issue if the FCC considers similar 
approaches in the future.
    The government in general doesn't have the best track-record in 
keeping operational costs under control, and TPA will hold the FCC and 
any other government agency accountable for any cost overruns. But at 
least the FCC has a successful track-record in making cost estimates of 
its auctioneering process available and compensating taxpayers in 
reasonable proportion to costs and total spectrum awards. Public-
private partnerships in which a single private entity holds all the 
cards and can rig numbers to its benefit is dangerous, as TPA and other 
free-market groups have witnessed repeatedly via the proliferation of 
no-bid contracts throughout government.
    Competitive and public auctions ensure that all stakeholders have a 
seat at the table while prices emerge organically. We tend to take this 
competitive, market-based process for granted, but the FCC didn't 
always embrace innovative bidding procedures. Before the advent of 
competitive bidding, the agency adhered to a command-and-control model 
where bureaucrats would award spectrum haphazardly to private and 
public entities while keeping taxpayers in the dark as to where their 
holdings were headed. This unfortunate state of affairs led famous 
economist Ronald Coase to write a 1959 treatise excoriating the FCC for 
this top-down dictation of spectrum assignment, but it would take 35 
years for the agency to fully listen to him and embrace spectrum 
auctions. And the FCC's announcement this week rejecting the creation 
of an artificial, government-granted monopoly was a powerful 
affirmation of Coase's vision of markets and competitive bidding.
    But far more work needs to be done to ensure that FCC spectrum 
auctions live up to their full potential and offer taxpayers the full 
value of their assets.
    Even from the historically-successful AWS-3 and Broadcast Incentive 
Auctions, there are ample lessons that the FCC can take away from these 
experiences for the future. For instance, there were multiple 
opportunities for pairing licenses within the AWS-3 spectrum, which 
would make the bidding process less complicated for prospective 
spectrum users. Prospective leasees may find value in acquiring many 
different licenses, but these licenses are strongly complementary and 
have diminished value if they are not acquired as a part of a ``package 
deal.'' Research from Dr. George Ford and Lawrence Spiwak of the 
Phoenix Center finds that a more thorough and complete pairing of 
spectrum blocks during the AWS-3 auction would have resulted in more 
than $20 billion in additional revenue for taxpayers.
    By some estimates, further bidding liberalization and complementary 
spectrum pairing could raise revenues to the Treasury by more than 30 
percent above the current auction status-quo. In addition, the FCC 
could stand to improve its risk-management policies regarding the 
spectrum auctioning process. In 2018, an audit by the inspector general 
(IG) revealed that the agency ``has weaknesses in internal controls 
which result in increased risk of non-compliance'' with long-standing 
regulatory requirements.
    The report found that bid monitoring could stand to be improved, 
and the FCC has taken important strides since then to increase 
monitoring over the process and ensure comprehensive oversight.
    In response to the inevitable problems that will arise with the 
significant task of allocating spectrum, TPA and other taxpayer 
advocacy groups will continue to sound the alarm and press for reforms. 
But regular oversight by the IG and efficiency-minded reforms will only 
happen if spectrum auctions remain firmly in the public arena. By way 
of analogy, the owner of an apartment condo may find it acceptable if a 
tenant attempts to transfer some of their lease to another tenant, but 
not without the owner doing his or her due diligence, assessing 
relevant costs, and being adequately compensated.
    The process for the clearing of C-band is particularly high stakes, 
given the significant promise of 5G in bridging the digital divide and 
delivering cutting-edge technological services across the country. In 
recognition of these benefits, I'm pleased that the FCC has chosen to 
move ahead with a public auction to make mid-band spectrum available 
for 5G deployment. The FCC and lawmakers should work together to make 
sure this is an expedient process that works for everybody, including 
taxpayers and consumers.
    Finally, I want to thank you for your leadership on this issue. 
Without your hard work and follow through, the country would not be on 
the verge of closing the digital divide without spending taxpayer 
dollars. In fact, we are on the verge of closing the digital divide 
while also saving taxpayer dollars.
    I am happy to answer any questions at this time.

                       RURAL BROADBAND DEPLOYMENT

    Senator Kennedy. Senator Coons, you go ahead first.
    Senator Coons. Forgive me if I might. Let me just open with 
a question that is based in part on my opening statement.
    Now, can you comment on the economic importance of 
broadband in rural areas, especially given the deployment of 
5G? What the barrier is to using any revenue from an auction 
for purposes other than assisting with repurposing? And would 
you recommend that we could do so if we could use auction 
revenues to expand rural access?
    Ms. McHenry: So certainly as an economist who has been 
studying these issues for a long time, I think there are a wide 
variety of reasons why broadband is important for the economic 
development in rural areas. Broadband facilitates better 
educational tools, it facilitates better health tools, and it 
brings a marketplace of resources to rural areas that would 
otherwise not be available.
    In terms of what are the roadblocks to using that funding 
to the spectrum auction. As you know, by statute, all spectrum 
auction revenues go into the U.S. Treasury. For us to do 
anything else with them would be up to Congress to make that 
available. In terms of what is the best use of funding, the 
Chairman, as you know, earlier this year, laid out $20 billion 
for the USF's Rural Digital Opportunity Fund to bring more 
broadband to rural areas.
    So we are working through that approach and certainly using 
any other funding would be up to the Congress.

                             C-BAND AUCTION

    Senator Coons. And what do you expect to be the complexity 
and costs associated with compensating existing licensees for 
repacking.
    Ms. McHenry: So we are still working out the details of how 
that approach would go. But certainly we plan to keep, 
according to the Chairman's priorities, we plan to keep 
services ongoing and are working in the best way to ensure that 
happens.
    Senator Coons. And what impact do you expect this to have 
on--are there eight operators? I think something like 35,000 
earth stations.
    Ms. McHenry: So there are, there are at least 20,000 
registered earth stations and probably about 8 satellite 
operators. Certainly, you know, we think we have a path forward 
to transition the band and I'm sure Julie could speak more to 
the technical challenges there. But we think we have a path 
forward to work with all the incumbents to move them out of the 
band.
    Mr. Knapp. Yes, absolutely. This is all about all of those 
licensees are able to offer service over 500 megahertz of 
spectrum. And so the thing that we need to do is clear the 
bottom part of the spectrum----
    Senator Coons. Right.
    Mr. Knapp [continuing]. And re-accommodate all of those 
existing users in the upper part, it's a bit more complex than 
it sounds.
    Senator Coons. So essentially the 500 is more than they 
currently all need and use getting 280 or 300 available for new 
auction requires sort of reconfiguring all the different----
    Mr. Knapp. It is operating more efficiently. Yes.
    Senator Coons. Yes. Okay. Which is essentially what 
repacking.
    Mr. Knapp. Yes. Yes.

                             PUBLIC AUCTION

    Senator Coons. And do you--I'm interested in either of you, 
do you really think that the private auction can happen faster? 
Excuse me. C-Band Alliance argues that a private auction can 
happen faster than a public auction. Give us some input on how 
you assess that.
    Ms. McHenry: So obviously as the Chairman mentioned, C-Band 
Alliance has never performed an auction, so it's unclear to us 
exactly how quickly that could happen. I can tell you that we 
are confident that we can plan and begin an auction within 
2020.

                              FCC FUNDING

    Senator Coons. And my recollection is we cap the total 
funds available to the FCC for implementing auction activities?
    Ms. McHenry: Yes.
    Senator Coons. Would it be useful for us to increase that 
auction's cap or do you think you can conduct this entire 
exercise within that cap?
    Ms. McHenry: So we are always happy to talk about 
resources, but we think we have the resources available to 
conduct the auction.
    Senator Coons. Terrific. Thank you both.

                             C-BAND AUCTION

    Senator Kennedy. Thank you. Senator. The issue it seems to 
me is not only speed but also fairness.
    I can auction off this spectrum this afternoon. I'll just 
invite all the telecommunication companies to meet in my office 
and say let's start bidding this and the highest bidder gets 
it, but that's not fair and that's not thorough and that's not 
going to protect the incumbents.
    Now as I appreciate it. We have 500--I will call it 500 
capacity here. And the current users of it, they don't need all 
of it. They can make do with roughly 200, so we can free up the 
other 300 for 5G. Am I right?
    Mr. Knapp. Yes. There is a little bit of a buffer we need 
to put between.
    Senator Kennedy. Sure.
    Mr. Knapp. But yes, you are essentially right.
    Senator Kennedy. And you have done that before, have you 
not?
    Mr. Knapp. Yes.
    Senator Kennedy. You did it with the 700 megahertz option 
in what, 2007?
    Mr. Knapp. Yes. So the 700 megahertz auction was a benefit 
from the transition to digital television.
    Senator Kennedy. Right.
    Mr. Knapp. Where the more efficient digital technology 
enabled us to put TV broadcasters in less space and free up a 
pretty sizable block of spectrum.
    Senator Kennedy. And that worked well?
    Mr. Knapp. Yes.
    Senator Kennedy. Okay. Who owns the spectrum? Not just this 
spectrum, any spectrum?
    Mr. Knapp. So I am the engineer----
    Senator Kennedy. I understand.
    Mr. Knapp. But I have been at it long enough to know it is 
the U.S. people.
    Senator Kennedy. Yes. Okay. And I talked a little bit about 
the law. You issue licenses all the time. In this case, the 
incumbents don't have a license. I'm not sure--they have a sort 
of a privilege to use. They don't have a full-fledge license, 
but even if they have a license, the Communications Act is very 
clear, as sustained repeatedly by our courts that the FCC can 
say, ``we reserve the right to modify the license'', at any 
time. Am I correct?
    Ms. McHenry: So recognizing that neither of us is an 
attorney here.
    Senator Kennedy. I know.
    Ms. McHenry: Yes.
    Senator Kennedy. Okay. Now I want to be sure I understand. 
The C-Band Alliance has said that if we give you the green 
light to conduct a public auction, and frankly, we cannot give 
you anything, the Communications Act already requires that you 
conduct a public auction, but they say it is going to take you 
7 years. Is that accurate?
    Ms. McHenry: So certainly, we think we have a path forward 
to actually conduct the auction in a year, as I have said.
    Senator Kennedy. One year, 365 days?
    Ms. McHenry: One year. Once we get started. Yes. So we 
would be able to complete--well, to start an auction by the end 
of 2020.
    Senator Kennedy. Okay. And has it your been your experience 
that when the FCC makes important decisions like this, that 
you're going to get sued anyway, right? Is that generally what 
happens?
    I mean, there have been many threats of lawsuits. Do you 
think--well, I'm sorry, I'm asking too many questions at once. 
Do you often get sued?
    Mr. Knapp. Of course. We work closely with our General 
Counsel's office to make sure that the Commission's actions are 
legally consistent with the law and legally defensible.
    Senator Kennedy. Okay. Let's suppose that the Chairman had 
decided, nope, the better course of action would be a private 
auction. Do you think there would being litigation if he did 
that?
    Mr. Knapp. I can only speculate.
    Senator Kennedy. That is what I am asking.
    Mr. Knapp. Yes, most likely.
    Senator Kennedy. Yes sir. Okay. I just have a couple of 
more here. Walk me through just briefly the steps you are going 
to take to complete the auction by the end of 2020.
    Ms. McHenry: So as the Chairman noted, the first step would 
be for the Commission to vote on a public auction option.
    Senator Kennedy. Right.
    Ms. McHenry: Once we have that vote, then we will turn to a 
comment public notice in which we see comment on an auction 
proposal and an auction methodology. We then let any interested 
parties comment. And of course this is very important to the 
transparency of the process of running a public auction. So 
once we get those comments in and evaluate the record, we will 
then post another public notice in which we provide the final 
requirements and procedures for the auction.
    Along with those steps, we are also ensuring that we have 
the software prepared, so that we can run a public auction 
successfully.
    Senator Kennedy. Yes, ma'am.
    Ms. McHenry: And then we are educating bidders quite a bit 
on how to participate in the auction. We are accepting 
applications from the bidders, reviewing those applications, 
ensuring--running essentially mock auctions for the bidders, 
and ensuring that all of the bidders are well prepared and 
positioned to participate in the auction successfully.
    Senator Kennedy. Okay. Very helpful. Thank you. Senator Van 
Hollen.
    Senator Van Hollen. Thank you Mr. Chairman and happy 
birthday to you.
    Senator Kennedy. Thank you.

                     WEATHER SATELLITE INTERFERENCE

    Senator Van Hollen. Welcome to our witnesses. I also want 
to thank our Ranking Member for all his leadership. And I want 
to say to the Chairman, that I've supported his efforts to have 
a public auction and our office has been in touch with the FCC 
about some of the ideas that have been discussed in terms of 
using some of those proceeds to expand rural broadband, which 
is a big issue in Maryland especially in the Eastern Shore and 
Western Maryland, but other places as well.
    So I want to raise another, what I think is a very 
important issue related to the freeing up of 500 megahertz for 
5G. And I agree like all of us that we want to free up a big 
part of the spectrum for that purpose. It's important to 
consumers, important to businesses. But there are--and most 
current Federal and private uses of the spectrum can be moved 
for these purposes, but some cannot.
    And one example relates to critical measurements that the 
government uses to accurately measure weather and water events 
and climate. And I would point out that currently weather 
events, water events, climate events cause an average of 650 
American deaths every year and $15 billion in property damage. 
So getting weather prediction right is important for life and 
property. In fact, we've invested over $19 billion in a fleet 
of polar weather satellites to measure weather. And about one 
third of our economy is sensitive to weather events.
    Now, one of the things these satellites measure Mr. 
Chairman, Mr. Ranking Member, is water vapor. What are vapor 
vibrates at a certain frequency? The Federal Government has a 
lot of power, but we can't change the laws of physics. We can't 
tell water vapor to vibrate at a different frequency than it 
does.
    So we need to figure out how much of a buffer is going to 
be required around that frequency in order to make sure we 
preserve our current ability to measure because water vapor 
vibrates in a frequency that we're talking about within this 
spectrum. A Northrop Grumman analysis shows that you need a 
buffer of negative-58 decibel watts in order to protect our 
ability to do this measurement in a sound way.
    In fact, it's my understanding that NOAA and NASA have 
similar analyses. They show that you need a buffer around 
negative-52 decibel watts in order to protect this----
    Senator Kennedy. How much?
    Senator Van Hollen. Fifty-two. So Northrop Grumman, 58, 
NASA/NOAA, 52. Yet the FCC, reportedly under a lot of pressure 
from industry, has only provided right now a much smaller 
buffer, negative-28 decibel watts, which according to the 
physicists will undermine our ability to undertake these very 
important measurements to predict weather.
    So my question to the two of you, I guess this is probably 
for Mr. Knapp, as the engineer. Can you provide me and the 
Committee today with a study that shows how the negative-28 
decibel watts buffer provided by the FCC, recommended by the 
FCC, will in fact protect these vital weather measurements?
    Mr. Knapp. Thank you. So the standards that we adopt are 
done through a rulemaking proceeding and that's where we 
arrived at the original numbers. There's actually, I should say 
first off that we are committed to both protecting weather and 
enabling 5G.
    The bands that we're talking about are actually separated 
by a pretty sizable buffer, so what we're talking about is any 
noise that might fall outside that band and how it might add 
up. There's a World Radio Conference going on right now. It 
actually will decide on what the appropriate level is. The 
conference concludes tomorrow so we'll have a better idea then.
    Senator Van Hollen. Mr. Chairman, Mr. Knapp. Thank you. I'm 
well aware of the ongoing conference and my concern is the 
position the United States is taking in that conference, is one 
that's inconsistent with the analysis by our own scientists at 
NOAA and NASA.
    We are calling in that conference for a buffer zone of 
negative-28 decibel watts. Other countries are pushing for more 
protective buffer zones. And my question to you is, do you have 
a study? Can you show us a study that shows us that the 
position the United States is taking under the current FCC of 
negative-28 decibel watts is enough to protect these vital 
weather measurements.
    Do you have a study that you can present to this 
subcommittee?
    Mr. Knapp. So in the course of the preparation for----
    Senator Van Hollen. This is just a yes or no. Is there a 
study that to your knowledge shows that the negative-28 decibel 
watts buffer zone is sufficient to protect these weather 
measurements, that just a yes or no question?
    Mr. Knapp. The study is what we conducted through our 
rulemaking.

    [The information follows:]

    Mr. Knapp retired from the FCC at the end of the 2019 calendar 
year. He asked that by way of clarification, the record show that he 
was attempting to explain to Senator Van Hollen that the Commission 
reviews the data submitted by all stakeholders for the record, analyzes 
their conclusions and then makes interference determinations based on 
the FCC's Office of Engineering and Technology's (OET) analysis. The 
FCC's engineers do not independently conduct a study outside the 
rulemaking process or prejudge the final analysis in order to maintain 
the integrity, fairness and transparency of the rulemaking process.
    The rulemaking represents the Office of Engineering's final 
analysis of all data submitted for the record and summarizes the 
studies utilized to reach the OET conclusion, as per the Commission's 
rules and the Administrative Procedure Act . All of the data used for 
the final engineering analysis is contained in the voluminous record of 
the proceeding for public examination online or in person at the FCC's 
headquarters.
    Mr. Knapp referenced the ongoing 2019 World Radiocommunication 
Conference (WRC-19) and noted that the process was concluding the next 
day. On the same date as this hearing, delegates to the WRC-19 reached 
a compromise on out-of-band emission limits in the 24 gigahertz band to 
protect passive weather satellites in adjacent spectrum. Under the 
compromise, member States will adhere to an unwanted emission limit of 
-33 dBW/200 megahertz for SG base stations until 2027, which then 
switches to -39 dBW/200 MHz. This decision was reached based on the 
input of member States after review of all engineering data and 
studies.

    Senator Van Hollen. No. A rulemaking is--no.
    Do you have a scientific study? I mentioned a Northrop 
Grumman analysis. There are other analysis that have been done 
by the U.S. Government that show we need a bigger buffer to 
protect these weather measurements. We've invested $19 billion 
in polar satellites.
    I know industry wants to make sure that they can use up 
every little piece of the spectrum. I get it, but not if it's 
going to compromise our ability to accurately forecast the 
weather, which is very important to lives and property in this 
country. So I take it from your answer that there is no 
scientific study that you can bring to this subcommittee right 
now that justifies the negative-28 decibel watt band.
    Mr. Knapp. We have gone through the analysis of the studies 
that you have talked about.
    Senator Van Hollen. Yes.
    Mr. Knapp. And like any study they are based on the 
assumptions and the assumptions that we went through with those 
analyses did not hold up as representative of what----
    Senator Van Hollen. Okay. Can you provide this subcommittee 
with those studies?
    Mr. Knapp. The NOAA/NASA studies that we have gone through?
    Senator Van Hollen. No. I know what the NOAA and NASA 
studies show.
    Mr. Knapp. Yes.
    Senator Van Hollen. But you did not--you decided to pick a 
different number. And so, I'm looking for the studies that 
justify picking a different number than that arrived at by 
Northrop Grumman and by NOAA and NASA.
    Mr. Knapp. So the Chairman had sent a letter to NOAA and 
NASA that explained some of the problems with the studies.
    Senator Van Hollen. I would like to see the studies that 
justify--you are telling me why there are problems with the 
other studies. I want to know if you have a study that shows 
that a negative-28 decibel watt buffer zone is sufficient to 
protect these weather measurements. You do not have that study, 
do you?
    Mr. Knapp. We have participated in all of the international 
studies that have been going on to come up with the appropriate 
protection.
    Senator Van Hollen. Can you provide this subcommittee with 
a study that shows that a negative-28 decibel watt buffer zone 
is sufficient to protect these measurements. Yes or no?
    Mr. Knapp. I can explain to you----
    Senator Kennedy. Let me make a suggestion. Can you send the 
Senator, me, and Senator Coons--you did a proposed rulemaking.
    Mr. Knapp. Yes.
    Senator Kennedy. And you have documentation in support of 
why you adopted the rule.
    Mr. Knapp. Yes, absolutely.
    Senator Kennedy. Which I presume will discuss these 
studies. Would it be helpful to get a copy of that?
    Mr. Knapp. Certainly the rulemaking. The studies were part 
of the preparation for the World Radio Conference that is going 
on right now and we would be happy to comment, I think once the 
results come out of the World Radio Conference, which discussed 
these many studies.
    Senator Kennedy. Okay.
    Mr. Knapp. I'd be happy to----
    Senator Van Hollen. I'm looking Mr. Chairman for the 
studies.
    Senator Kennedy. Okay.
    Senator Van Hollen. I think this--I mean this is a big 
issue.
    Senator Kennedy. I get it.
    Senator Van Hollen. And I think this subcommittee should be 
entitled to get the studies that apparently were used that were 
inconsistent with studies that we are aware of.
    Senator Kennedy. Would you send----
    Senator Van Hollen. So, I'd like to see them.
    Senator Kennedy. Would you send to me anything you have?
    Mr. Knapp. Sure.
    Senator Kennedy. Study, semi-study?
    Mr. Knapp. Absolutely.
    Senator Kennedy. Quasi-study? And that will make sure that 
everybody gets a copy.
    Mr. Knapp. Yes.
    Senator Kennedy. The Senator makes a good point. As I 
understand it, and please correct me if I'm wrong, there's an 
agreement that there needs to be a buffer zone. The question is 
how much.
    Is that basically right?
    Mr. Knapp. This is something called an out of band 
emissions limit. In other words, how much energy might spill 
into a remote band?
    Senator Kennedy. Right. If we did a private auction, do we 
have any assurances that the private auctioneers would give any 
kind of buffer zone?
    Mr. Knapp. So we set technical standards that would apply 
to protect these other bands, irrespective of whether it would 
be a private or public auction.
    Senator Kennedy. Right. All right. If they sold the buffer 
zone, would they get to keep the money?
    Mr. Knapp. I can't answer that question.
    Senator Kennedy. Okay. All right.
    Senator Van Hollen. Mr. Chairman--if I could--just a quick 
follow up----
    Senator Kennedy. Sure, I'm sorry I interrupted you.
    Senator Van Hollen. Well, no. So I look forward to getting 
these studies.
    Mr. Knapp. Yes.

                        SPECTRUM RELOCATION FUND

    Senator Van Hollen. Because as I said, we have what I think 
are good scientists in the U.S. Government who have made a 
different conclusion. If it turns out that the negative-28 is 
not sufficient, again, I don't know what's going to come out of 
the world--you know, the world body decision the World Radio 
Conference, but one area to potentially mitigate any negative 
impact is the spectrum relocation fund. Is that right?
    In other words, if it turns out that the FCC is wrong and 
the World Radio Conference says that, okay, that's the number, 
we can't change the laws of physics, but maybe we can try and 
get the same information through different means, would that be 
an appropriate use of the Spectrum Relocation Fund?
    Mr. Knapp. I can't comment on the Relocation Fund, but I 
can commit to you that if we were to see that we have the 
problem or that the analysis that were done before were 
incorrect, we'd make a course correction.
    Senator Van Hollen. Okay. Thank you. I appreciate that. 
Thank you.
    Senator Kennedy. Okay. And send us what you have.
    Mr. Knapp. Absolutely.

                             C-BAND AUCTION

    Senator Kennedy. I'm going to first, thank you both. 
There's more, I wanted to ask you, I've read a lot about how 
you have developed options through the years. I know fairly 
recently you've made a lot of improvements to the auctions 
process. It's fair, not everybody's always happy, but I don't 
think anybody ever says it's not, well, they probably say it, 
but not accurately that it's not fair. And you've done 93 of 
them and you brought in a lot of money for the American people.
    And I heard you say today, I'm not trying to put words in 
your mouth, that you can do it by the end of 2020. Am I 
correct?
    Ms. McHenry: We can certainly start the auction by the end 
of 2020.
    Senator Kennedy. And we can agree that is faster than 7 
years.
    Ms. McHenry: Definitely faster than 7 years.
    Mr. Knapp. Do that math.
    Senator Kennedy. We're in agreement on that.
    Ms. McHenry: Yes.
    Senator Kennedy. Thank you both so much. I am going to 
temporarily suspend the hearing. I've got to go vote. We have 
one more witness and then I shall be back and I'll have 
everybody out in time for Thanksgiving. Okay.
    Mr. Knapp. Thank you.
    Ms. McHenry: Thank you.
    Senator Kennedy. We will adjourn just for a few minutes.
    [Recessed.]

                     ADDITIONAL COMMITTEE QUESTIONS

    [The following questions were not asked at the hearing, but 
were submitted to the Commission for response subsequent to the 
hearing:]
      Questions Submitted to the Federal Communications Commission
Hearing on Oversight of the Federal Communications Commission Spectrum 
                        Auctions Program, Part 2
            Questions Submitted by Senator Joe Manchin, III
    Question 1. C-BAND Auction. I understand that the FCC has announced 
that they intend to move forward with a public auction of C-Band 
Spectrum that would free up this spectrum for the deployment of 5G. I 
know there are a lot of national security and economic reasons for the 
push to 5G, but here in West Virginia, we're lucky to even get 1G which 
is unacceptable. I've heard from several emergency service coordinators 
who tell me landlines in my State are unreliable for those who need to 
call for help during an emergency but unfortunately that is the only 
option they have. Having better quality cell phone coverage could mean 
the difference between life and death for us in West Virginia.
  --Have you considered setting aside a portion of the funds from this 
        auction for building out fiber to rural areas that will likely 
        never see 5G deployed in their area?
  --Have you considered providing compensation to the rural ground 
        operators that receive these satellite signals? This could be 
        used to expand C-Band or for a variety of upgrades to ensure 
        they expand their reach to their rural customers.

    Answer. I agree that it is essential for us to close the digital 
divide, including in rural areas. However, under the Miscellaneous 
Receipts Act, the Commission does not have the authority to direct 
proceeds from the C-band auction to support rural broadband deployment. 
This is a longstanding issue and not specific to the C-band. And that's 
why, as a Commissioner back in 2016, I proposed that Congress adopt a 
``rural dividend'' so that 10 percent of auction proceeds would go 
toward rural broadband deployment. I stand ready to work with you and 
your colleagues to get such a proposal adopted.
    As for rural ground operators, the Report and Order we adopted in 
February ensures that all incumbent earth stations will be fully 
compensated for any costs they incur in the transition.

    Question 2. Broadcast Issues in West Virginia. Last year, the FCC 
granted a request by two West Virginia counties and three stations in 
my State to modify their satellite markets so that West Virginia 
viewers could get local news, sports, and other programming. They had 
previously only received Pennsylvania stations from the Pittsburgh 
designated market area (DMA). However, these issues still persist in 
wireline connections. West Virginia University, our State's land grant 
university, is still located in the Pittsburgh DMA. The Eastern 
Panhandle of my State faces similar issues. Rural TV providers such as 
Hardy Telecommunications in Hardy County, West Virginia, are forced to 
pay for and carry broadcast channels in their DMA (Washington, D.C.) 
and must get permission to carry any corresponding broadcast channel 
outside of their DMA, even if that outside channel is more relevant to 
West Virginia consumers. For example, a Clarksburg, West Virginia, 
station offering West Virginia-related news provides much more relevant 
and important content to rural West Virginia residents than a D.C. 
station that offers none.
  --Given today's technology and availability of programming, are you 
        considering an update to the DMA-restrictive system to allow a 
        free market approach for TV service providers, especially those 
        in rural areas where most consumers can no longer receive major 
        broadcast channels off the air?
  --What methods do you have in place to ensure that broadcast stations 
        are negotiating ``in good faith'' with TV service providers?
  --Have you considered reforms to allow TV service providers and 
        subsequently their consumers more choice in choosing a la carte 
        programming and not allowing broadcast channels to force 
        ``sidecar'' channels on providers with additional fees and 
        carriage requirements?

    Answer. I have been a long supporter of over-the-air broadcast TV 
stations and the service that they provide to consumers. And I 
understand the frustrations that some consumers face when they cannot 
access the broadcast TV stations they desire through their multichannel 
video programming distributor (MVPD). However, Congress has 
specifically determined through the Communications Act which TV 
stations are considered ``local'' to a particular area and thus 
required to be carried by either a cable system or satellite provider.
    Specifically, Section 614(h)(1)(A) says that a local television 
station is one that is assigned to the same television market as the 
cable system. In implementing this requirement, the FCC defined a 
station's ``television market'' as the station's designated market area 
(DMA) as assigned by Nielsen Media Research. For satellite providers, 
Congress was even more explicit by specifically defining in statute 
that the local stations are determined by Nielsen's DMA map. See 47 
U.S.C. Sec. 338(k)(4) (defining ``Local Market'' as the same as the 
meaning provided in 17 U.S.C. Sec. 122(j)). Section 122(j) defines 
``Local Market'' as the designated market area as determined by Nielsen 
Media Research. See 17 U.S.C. Sec. 122(j)(2)(A) and (C). Congress did 
allow for some flexibility by providing the Commission with the 
authority to modify markets to add or delete communities in a 
commercial television station's local market if a petitioner can show 
it meets specific statutory factors. However, the Commission does not 
have the authority to modify markets on its own accord. I would 
encourage your local stations or smaller MVPDs to look into whether the 
market modification process could be an option to pursue.
    The Commission has in place specific good faith negotiation rules 
that govern retransmission consent negotiations between broadcast 
stations and MVPDs. See 47 C.F.R. Sec. 76.65. The rules outline nine 
specific actions that would be considered a per se violation of the 
good faith negotiation requirement, along with a totality of the 
circumstances test that also can be applied. The Commission relies on a 
party to file a complaint with the Commission alleging a violation of 
the rules, and generally is not involved in the private negotiations 
between the parties absent a complaint. Neither the Communications Act, 
nor the Commission's rules, prohibit a station from negotiating for 
carriage of other programming when it is in retransmission consent 
negotiations for the carriage of its primary signal. In addition, 
Commission rules do not prohibit an MVPD from providing its programming 
on an a la carte basis if it chooses to do so.

                         CONCLUSION OF HEARINGS

    Senator Kennedy. We are adjourned.
    [Whereupon, at 11:51 a.m., Thursday, November 21, the 
hearings were concluded, and the subcommittee was recessed, to 
reconvene subject to the call of the Chair.]

                                [all]