[Senate Hearing 109-855]
[From the U.S. Government Printing Office]
S. Hrg. 109-855
NOMINATIONS TO THE FEDERAL
COMMUNICATIONS COMMISSION AND TO THE DEPARTMENT OF COMMERCE (NATIONAL
TELECOMMUNICATIONS AND INFORMATION
ADMINISTRATION)
=======================================================================
HEARING
before the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 12, 2006
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana Chairman
TRENT LOTT, Mississippi JOHN D. ROCKEFELLER IV, West
KAY BAILEY HUTCHISON, Texas Virginia
OLYMPIA J. SNOWE, Maine JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada BARBARA BOXER, California
GEORGE ALLEN, Virginia BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire MARIA CANTWELL, Washington
JIM DeMINT, South Carolina FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana E. BENJAMIN NELSON, Nebraska
MARK PRYOR, Arkansas
Lisa J. Sutherland, Republican Staff Director
Christine Drager Kurth, Republican Deputy Staff Director
Kenneth R. Nahigian, Republican Chief Counsel
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Samuel E. Whitehorn, Democratic Deputy Staff Director and General
Counsel
Lila Harper Helms, Democratic Policy Director
C O N T E N T S
----------
Page
Hearing held on September 12, 2006............................... 1
Statement of Senator Boxer....................................... 5
Statement of Senator Burns....................................... 10
Statement of Senator DeMint...................................... 6
Statement of Senator Dorgan...................................... 4
Statement of Senator Pryor....................................... 35
Statement of Senator Rockefeller................................. 3
Statement of Senator Stevens..................................... 1
Statement of Senator Sununu...................................... 3
Witnesses
Burr, Hon. Richard, U.S. Senator from North Carolina............. 2
Kneuer, John M.R., Nominee to be Assistant Secretary for
Communications and Information; Administrator of the National
Telecommunications and Information Administration (NTIA),
Department of Commerce......................................... 17
Prepared statement........................................... 19
Biographical information..................................... 20
Martin, Hon. Kevin J., Renominated to be Chairman, Federal
Communications Commission...................................... 10
Prepared statement........................................... 12
Biographical information..................................... 15
Appendix
Inouye, Hon. Daniel K., U.S. Senator from Hawaii, prepared
statement...................................................... 41
Response to written questions submitted to John M.R. Kneuer by:
Hon. Conrad Burns............................................ 43
Hon. Jim DeMint.............................................. 45
Hon. Daniel K. Inouye........................................ 45
Hon. Frank R. Lautenberg..................................... 47
Hon. Bill Nelson............................................. 49
Hon. Ted Stevens............................................. 42
Response to written questions submitted to Kevin J. Martin by:
Hon. Conrad Burns............................................ 84
Hon. Maria Cantwell.......................................... 76
Hon. Jim DeMint.............................................. 86
Hon. Daniel K. Inouye........................................ 52
Hon. Frank R. Lautenberg..................................... 82
Hon. Bill Nelson............................................. 61
Hon. John D. Rockefeller IV.................................. 58
Hon. John E. Sununu.......................................... 87
Wright, Frank, Ph.D., President/CEO, National Religious
Broadcasters (NRB), letters, dated September 11, 2006, to:
Hon. Daniel K. Inouye........................................ 41
Hon. Ted Stevens............................................. 41
NOMINATIONS TO THE FEDERAL
COMMUNICATIONS COMMISSION AND TO THE DEPARTMENT OF COMMERCE
(NATIONAL TELECOMMUNICATIONS AND
INFORMATION ADMINISTRATION)
----------
TUESDAY, SEPTEMBER 12, 2006
U.S. Senate,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Committee met, pursuant to notice, at 10 a.m. in room
SR-253, Russell Senate Office Building, Hon. Ted Stevens,
Chairman of the Committee, presiding.
OPENING STATEMENT OF HON. TED STEVENS,
U.S. SENATOR FROM ALASKA
Senator Stevens. Good morning. We have a hearing this
morning on nominations from the President for the Chairman of
the Federal Communications Commission and the nominee for the
Assistant Secretary of Commerce for Communications and
Information. We welcome all of you and thank you for coming,
and thank the nominees for their willingness to serve.
Kevin Martin is currently serving as Chairman of the FCC,
and has been with the agency since 2001. Prior to joining the
FCC, Mr. Martin served as a Special Assistant to the President
for Economic Policy, as well as an advisor to FCC Commissioner
Harold Furchtgott-Roth.
Mr. Martin, I understand Senator Burr is here to introduce
you this morning, and we look forward to his remarks.
As many of you know, this Committee recently passed the
communications reform bill which would address many of the
policy issues that are also before the FCC, and we look forward
to hearing from Chairman Martin about the agency's activities.
John Kneuer has been nominated to be an Assistant Secretary
of Commerce for Communications and Information. If confirmed,
Mr. Kneuer will oversee the National Telecommunications
Information Administration, which we call NTIA, and that is the
principal advisor to the President on telecommunications
information policy. Mr. Kneuer was named Deputy Assistant
Secretary of NTIA in 2003, has been the Acting Assistant
Secretary since Mr. Gallagher stepped down.
NTIA is charged with carrying out a number of provisions in
last year's budget reconciliation bill that impact both the DTV
conversion and the $1 billion for interoperability grants for
first responders.
We understand that the nominees have family and friends
today. We ask them to introduce their families as they come to
the table.
First, however, we'll hear from our colleague Senator Burr.
STATEMENT OF HON. RICHARD BURR,
U.S. SENATOR FROM NORTH CAROLINA
Senator Burr. Mr. Chairman, thank you. It is a good
morning, and it's my pleasure to introduce the Chairman of the
Federal Communications Commission, and my friend, Kevin Martin.
I want to take this opportunity--and I will be brief--to
strongly recommend that you confirm Kevin Martin as the next
Chairman of the FCC.
As the FCC Commissioner, Kevin's consistently served as an
ambassador on behalf of the Commission at a time of great
change and uncertainty in the world of telecommunications. He
has a unique ability to bring together diverse groups, be they
urban or rural or of opposing philosophies, and to forge
consensus on complex issues. I've always found his door, as
well as his mind, to be open to all who have had issues and
concerns before the Commission.
Throughout his tenure at the FCC, Kevin has had the best
interest of the Commission at heart. And although our policy
views have differed at times, he's always been thoughtful and
diplomatic at exploring these differences. Kevin's vision of
the industry he currently regulates, and his attention to
details, make him eminently qualified and the best person to
lead the Commission and help move this industry forward in the
21st century.
Hailing from my home State of North Carolina, I'm proud to
call Kevin Martin a fellow North Carolinian, and also a friend.
I will also be proud to call him Chairman, once again, when
this committee acts. I trust, Mr. Chairman and my colleagues,
that all the members of this committee will confirm Kevin
Martin as the next Chairman of the FCC as expeditiously as we
can.
I thank the Chair, and I thank the Committee for their
attention to what I believe is absolutely one of the most
crucial sectors of our economy, and that's telecommunications,
and the rules and the legislation that it takes for that to
flourish in the days, weeks, months, and years ahead.
I thank the Chairman.
Senator Stevens. Thank you very much, Senator.
Do you have any questions, Senator Rockefeller, of our
colleague?
Senator Rockefeller. No.
Senator Stevens. We'll not ask you any questions, my
friend. We appreciate your coming to join us.
Senator Burr. Thank you, Mr. Chairman.
Senator Stevens. Now, let me turn to Senator Rockefeller to
see if he has an opening statement, first.
STATEMENT OF HON. JOHN D. ROCKEFELLER IV,
U.S. SENATOR FROM WEST VIRGINIA
Senator Rockefeller. I'll make this very quick, Mr.
Chairman.
I guess I just need to say this directly--I don't think
that we've had a real concentration on communications policy in
this Administration. The President outlined a goal of universal
broadband connectivity by 2007. Clearly, we're not going to
meet that goal. We've fallen much farther behind Europe and
Asia in the next-generation broadband deployment. I know that
many in the industry say that they're doing all that they can,
but I, frankly, would disagree. I think access to broadband
communications has to be a matter for rural areas, as well as
for urban areas. That is not an impossible thing. Wireless will
one day take care of that, but it doesn't yet. But a full 25
percent of my constituents in West Virginia have absolutely no
access to any form of broadband. I think that Japan is now
producing over 90 percent of the world's fiberoptic broadband
deployment. However you want to look at it, it's very, very
dramatic.
So, I think we have to have an aggressive group of folks on
the FCC. Chairman Martin is that, cares very much about these
things. I fully support not only his nomination, but also the
nomination of Mr. Kneuer.
And I thank the Chairman.
Senator Stevens. Thank you.
Senator Sununu, do you have any opening comments?
STATEMENT OF HON. JOHN E. SUNUNU,
U.S. SENATOR FROM NEW HAMPSHIRE
Senator Sununu. Yes, I do, Mr. Chairman.
I appreciate the opportunity for the hearing--this is an
important position--and certainly appreciate the introduction
of Senator Burr, and would agree with Senator Burr that
Chairman Martin, among the nominees that we're going to be
hearing from today, is amicable, is thoughtful, and has tried
to lead the Commission to the best of his ability.
My concern, though, and the questions that I have today,
have to do with policy and what kind of policies we're going to
pursue, what kind of vision and leadership we're going to have
at the FCC, given the current dynamic environment in
telecommunications and Internet policy today.
Chairman Martin will have an opportunity to provide
testimony. I hope we have an opportunity for questions and
answers. But, without a doubt, he has pursued policies to
restrict marketing of Internet services in an age where those
Internet voice services are growing and providing new
opportunities for customers today. He's pushed to establish
must-carry regulations for multicasting. He's advocated price
controls on cable television. And all the while, I think it's
fair to say, the Commission has failed to address some of the
enormous inequities we see in the universal service system
today. And this committee has had hearing after hearing about
those problems, about the contribution factor, about weaknesses
in distribution, about limitations in access in rural areas.
And I think many of those problems fall on the shoulders of a
Universal Service Fund that is failing to meet the valuable
objective for which it was established. We've failed to address
the access-charge regimes, which are antiquated. We have access
charges of 10, 12, and 14 cents a minute, in parts of the
country, that make no economic sense whatsoever.
So, I do think these are significant problems in the policy
direction that's been established for the FCC. They're issues
that I've been outspoken on, but I think others in the House
and Senate have raised them, as well. And these policies are
particularly problematic in an environment where we have
enormous growth in services, choices, options for customers,
and new entrants. As a result, it's particularly problematic
when the FCC seeks to protect existing business models or
enforce specific business models on the industry. It's a
dynamic environment; there are some people that don't like
that. It's a very fragmented market; there are some people that
don't like that.
But I think it's good, from a consumer standpoint, that we
have such a proliferation of services and choices on the
Internet, choices and--channels and new products and new
content being provided by satellite and by cable and by DSL.
And it's a mistake to look at what we've had in the way of
market structure in the past, or rules or regulations in the
past, and say we automatically need to enforce these business
models on any future competitors.
There's a great deal of power vested in the FCC, and I
think that that power needs to be used very judiciously. And I
would hope that, in the comments and the responses we hear from
the Chairman, it's made clear that in a dynamic environment we
ought to exercise the utmost restraint in imposing new
regulations that will adversely affect the competitive
structure.
Thank you, Mr. Chairman.
Senator Stevens. Senator Dorgan, do you have any opening
comments?
STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
Senator Dorgan. Mr. Chairman, I do.
Mr. Chairman, the position of the Chairman of the Federal
Communications Commission is an incredibly important position.
I like Kevin Martin, the Chairman. We've had a chance to meet
and talk. I hope to be able to stay; we have an Energy
Committee hearing going on, and I hope to stay long enough to
ask a series of questions--I'm very concerned about what
happens at the Federal Communications Commission, for reasons,
perhaps, in some cases similar, in some cases different than my
colleague has just explained.
In 2003, the FCC began revising media ownership rules. They
came up with a rule that would have said in America's larger
cities it's OK for one company to own eight radio stations,
three television stations, the dominant newspaper, and the
cable company, all under the same ownership. It's not all right
with me. I don't think it's all right with other people in this
country. That is vesting far too much power in increasingly
concentrated media.
It's vesting far too much power in a few hands. We have
about four or five hands in this country in which most of the
media exists, and this would further concentrate it. I think
it's a horrible mistake.
Chairman Martin has announced that he intends to begin new
media ownership rule considerations now. Senator Trent Lott and
I have sent him a rather lengthy letter about that. My hope is
that this committee will address that very aggressively.
Chairman Martin was a part of a majority that created those
rules that the Court had stayed. My hope is that we will see a
different type of ownership rule proceeding come out of the
FCC, and a different result, because I think the result they
were headed toward is a result that increases concentration,
increases the power in the hands of a few, and is, I think,
devastating to the future of communications in this country.
So, I hope to be able to be here long enough to ask
Chairman Martin a series of questions. I appreciate him being
here. I welcome his family. And I look forward to the
discussion.
Senator Stevens. Senator Boxer?
STATEMENT OF HON. BARBARA BOXER,
U.S. SENATOR FROM CALIFORNIA
Senator Boxer. Thank you very much, Mr. Chairman, for
holding hearings on these two very important nominations.
I would like to welcome Chairman Martin. And I hear his
daughter is communicating very freely or--is that your daughter
or--OK, your son.
The FCC has the vast responsibility of regulating
interstate communications. And now, more than ever, Americans
rely upon various forms of communications to enrich their lives
and to conduct their daily business. Whether watching TV or
making a call or accessing the Internet, consumers rely on the
FCC to be the watchdog over the companies providing these
services. And I think that's really worth repeating. Consumers
are counting on the FCC to be the watchdog over the companies
providing these services. Companies have a voice. The consumers
often find they don't.
Currently, there are a number of communications and media
issues before the FCC that are of particular interest to the
public. These include the FCC's media ownership proceeding,
reports that companies are turning customer phone records over
to the Federal Government without a warrant, and net
neutrality. All of these are very hot-button, tough issues.
I'm deeply concerned that a loosening of the media
ownership rules will allow already-large media corporations to
grow. These media giants already use--I kind of want to play
with the baby--is what's going on.
[Laughter.]
Senator Boxer. I am deeply concerned that a loosening of
the media ownership rules will allow already-large media
corporations to grow. These media giants already use multiple
media outlets to promote their views and dominate public
debate. Americans have made it clear that a diversity of
viewpoints and localism are extremely important to them, and I
hope the Commission listens.
On August the 10th, I sent Chairman Martin a letter urging
him to conduct a public hearing in California regarding its
recently released media ownership Further Notice of Proposed
Rulemaking. I'm very pleased that the Commission just announced
that its very first field hearing will be held in Los Angeles
on October the 3rd. And, having said that, I hope the
Commission will now pay attention to the public at these field
hearings.
It's also vital that the FCC aggressively protect the
privacy rights and reasonable expectations of consumers.
Reports that telephone companies are handing customer
information over to the government without a warrant are very
troubling, and I hope that the Commission will examine any
allegations of such activity.
As the head of the FCC, Chairman Martin is in a unique
position to influence the Commission's activities. I have a
number of questions regarding these issues and other issues,
and look forward to hearing his answers.
And I also welcome Mr. Kneuer. He's been nominated to head
the National Telecommunications and Information Administration,
an agency less known to the general public. But as a result of
the Deficit Reduction Act, the NTIA has been charged with a
number of new and important projects, including the
establishment of a $1 billion program to promote interoperable
communications, something I think we all agree has to happen,
and the establishment of a program to distribute analog-to-
digital converter boxes, another very important project. So,
I'm very interested in hearing from Mr. Kneuer about NTIA's
progress on implementing these important programs.
Mr. Chairman, again, thank you for holding these hearings,
and I look forward to hearing from these nominees.
Senator Stevens. Senator DeMint, do you have an opening
statement?
STATEMENT OF HON. JIM DeMINT,
U.S. SENATOR FROM SOUTH CAROLINA
Senator DeMint. Thank you, Mr. Chairman.
Chairman Martin, I commend you on your renomination to the
FCC. I am very interested in a lot of what you've been involved
with, but I want to mention one thing, particularly, today,
very quickly, if I can skip around in my statement.
I have been working on, along with a number of members of
this committee for the last year, an emergency alert upgrade
system called the WARN Act. It has passed the Committee here,
and, with the help of Chairman Stevens and Ranking Member
Inouye, Ben Nelson, and others on this committee, it is headed
for the floor today to be added to the port security bill. The
same bill is being done on the House side by Congressman John
Shimkus.
And my concern, at this point, is, the FCC has proceeded
with rulemaking on an emergency alert system, similar to the
WARN Act, which would set up a mandatory structure which we
believe would diminish the potential of a new emergency alert
system using wireless technology all across the country. In a
number of hearings and meetings with the wireless networks
across the country, the potential of competition for the best
system is clearly there. And my fear is, if the FCC moves ahead
with its own mandates, that we'll end up with another
government top-down, one-size-fits-all system that does not use
the innovative possibilities that we have.
As many of you know who have worked on this bill, the
ability, in the event of a terrorist attack or a hurricane,
tornado, earthquake, to use wireless technologies to not only
be warned of a possible disaster, but to use NOAA information
of wind directions and other available information to tell
people which way to evacuate, where food and shelter is, a lot
of other information that we've seen in Katrina and other
problems, that is not currently available. I believe that if
this Federal Government sets up the infrastructure to provide
these signals and warnings, that our free-market economy can
create the best delivery systems that the world has ever seen.
And my request today, as we have done to your folks
already, is to delay this rulemaking until we see what Congress
finishes here before the end of the year, so that we can
capture the will of the Congress instead of a mandate of the
FCC.
And, again, I look forward to your confirmation, but would
request, I think, as others have today, that we let the free
market work and use government mandates only as the last
resort.
Thank you, Mr. Chairman. I yield back.
Senator Stevens. Senator Pryor, do you have any comments?
Senator Pryor. I don't, Mr. Chairman, thank you.
Senator Stevens. Would the Chairman and Mr. Kneuer please
come to the table? Thank you.
As Senator DeMint has just said, his amendment is pending
on the floor at 10:30, and I will have to leave at that time.
Mr. Chairman, would you please introduce your family for
us?
Mr. Martin. Yes, Mr. Chairman.
Let me start with my mother, who's here with us today and
my older sister, Pam. And my wife and our new son, Luke, have
just come back in the room, as Senator Boxer was indicating.
He's been anxious to communicate with all of you, as well.
[Laughter.]
Mr. Martin. So, I'm sure that he will probably continue to
try to do so. But I do want to thank my mother and my sister
for being here, and for all of their support in the past, and
certainly my wife for all of her support, without which I
wouldn't be able to be here and do the things at the Commission
that are required. And I do want to make sure and emphasize
Luke, whose birth has certainly been the most exciting thing
over the last year to happen to our family.
Thank you.
Senator Stevens. Thank you.
Senator Burns. How old is Luke?
Mr. Martin. He's 10 months old.
Senator Burns. Send him up here. I know how to quiet him
down.
[Laughter.]
Senator Stevens. You can give him to me. You could have
more; I can't.
[Laughter.]
Senator Stevens. Mr. Kneuer.
Mr. Kneuer. Thank you, Senator.
I've got a cast of thousands here. First and foremost, my
lovely and very patient wife, Mimi, my daughter, Christine.
I've got the two Josephs, my son and my father. My mother is
here--they came from New Jersey--as well as my brother and
sister-in-law, Paul and Melissa Kneuer. And, by a happy
coincidence, my mother-in-law's sisters were in town from Texas
to see Washington. They're getting a bit of an interactive tour
they weren't expecting, but I'm glad that they could be here,
as well. We also have our children's nanny, Margaret Bedawa,
who is a dear member of the family, as well. And my sister,
Ann. And my sister Ann.
[Laughter.]
Senator Stevens. Well, you're very fortunate to have such a
lovely family. We welcome you.
And I want to take the prerogative of the Chair to turn
this over to Senator Burns in just a minute. If I may, I'd just
like to ask a couple of questions before I go manage the bill
on the floor.
Mr. Chairman, net neutrality was the most hotly debated
portion of our communications bill. And it is the subject
that's holding up the communications bill, and may well lead to
its total defeat this year, after 19 months of work on that
bill.
I want to ask you, Have you seen any abuse by cable
companies or telephone companies in providing access to the
Internet? And do you have a system in place for monitoring and
identifying any such abuses?
Mr. Martin. Well, Mr. Chairman, as you know, the Commission
adopted a set of net neutrality principles last August in which
we talked about the importance of consumers being able to have
access to all of the information that's available for free over
the Internet. And we continue to make sure and monitor the
situation in the marketplace to see if we've identified any
particular problems. And there has only been one instance
that's been brought to the Commission's attention, where there
was a telephone company that had been preventing consumers from
getting access to some of the content that's available on the
Internet, and the Commission took action in that instance. We
were able to reach an enforcement agreement with them to stop.
So, we reacted swiftly to it.
And so, I think that the Commission has continued to
monitor the marketplace, has been vigilant about it, has tried
to continue to make sure that we are enforcing the net
neutrality principles, to make sure that consumers aren't
having access blocked.
I am, obviously, aware of the debate that has occurred
within this Committee on net neutrality. Certainly one of the
helpful proposals that I think was included in your bill was
the prospect of the Commission continuing to do ongoing
monitoring, including officially issuing a notice asking for
people to comment and identify any other problems that might be
occurring, even if they haven't been brought to us in the
context of a complaint. And so, I have asked the staff to
prepare a notice seeking public comment on that, just as the
draft legislation that came out of this committee would
propose.
But I think we do have in place some steps to monitor the
situation.
Senator Stevens. Do you think you have any existing
authority to take action if a problem develops before this bill
becomes law?
Mr. Martin. I do. The Commission, I think, does have
authority, under Title I of the Communications Act. And,
indeed, last summer the Supreme Court, in affirming the
Commission's Brand X decision determining that cable modem
service is an information service, stated that the Commission
had ancillary authority to adopt additional rules over the
infrastructure providers of broadband access, if they needed
to. So, I think we do have that authority.
Senator Stevens. In our bill, we develop a new concept for
universal service and eliminate the concept that only long-
distance users pay into the Universal Service Fund. You have
discussed a reverse auction concept whereby rural telephone
companies, wireless companies, and other competitors would
compete for the right to use the Universal Service Fund's
support. The rural telephone companies in my state have serious
problems with that concept. Could you explain that? And is this
something you believe you could do without any further
authorization?
Mr. Martin. Well, there are significant problems with the
Universal Service Fund, both with the number of carriers and
providers that contribute into the fund and with the way that
the current resources are distributed. The Commission has tried
to take action on both. And I think that there are additional
steps we need to take on both, both broadening the base of
people that are contributing, to make sure that we've got an
assessment rate on a broad base that's as low as possible.
There are various proposals in front of us. I've talked, in the
past, about trying to assess fees based upon telephone numbers.
But I also think we need to do some additional work on the
distribution side.
Currently, we've seen a significant increase, just during
my time at the Commission, on the number of carriers that are
receiving so-called ``competitive Universal Service grants.''
When I arrived at the Commission, those grants totalled less
than a million dollars. There is close to a billion dollars
being distributed to competitive carriers today. That's putting
an incredible strain on the Universal Service Fund, and I think
that we need to make sure that we are distributing Universal
Service resources in the most efficient manner possible.
I grew up in a rural area of North Carolina. My mother
still lives on the gravel road where I grew up. My address was
Rural Route 3, Waxhaw, North Carolina, when I was growing up.
So, I appreciate and understand how important it is to make
sure that people in rural areas don't get left behind, but we
have to do so in the most efficient manner possible. I think a
reverse auction methodology is a serious proposal we should
consider.
Senator Stevens. Well, by definition, an entity with a
fixed system, embedded system, having a wireless competitor
would always lose. If you put it on a competitive basis, I
don't see how existing technology can possibly survive against
new technology, so you automatically have a revolving door, as
far as Universal Service is concerned.
Mr. Martin. I hope that we develop a system that actually
encourages the development and deployment of the best new
technologies. We should be determining the adequate level of
service that people in rural areas deserve to have. But then,
we want to make sure that we have a system that doesn't freeze
in place one set of technologies, but, rather, encourages the
most efficient technology to be able to go in and serve those
consumers. So, I think that we need to make sure that we don't
do so in a way that causes significant problems for carriers.
We need to have it over a lengthy enough period of time to
allow them to recover the resources that they've invested. But
I think that we want to have a system that encourages the
deployment and moving to new, more efficient technologies.
Senator Stevens. But if a small rural carrier in a small
community that's met the needs of that community for years is
facing a national company that comes in and wants just to
replace it completely with a wireless system, and do that
nationally, the larger company has got enormous advantage over
the local provider. I would hope you really take a look at the
concept of continuity and, really, community presence, because
the absentee owner, once they get the ability to serve, they
have no further interest in that community, as the local
provider who started the system, does. And I really think that
it's going to be a system whereby the existing local providers
are just going to be wiped off the map. And I hope that's not
the case.
Mr. Kneuer, I do apologize for mispronouncing your name at
the beginning. I have a question for you concerning the
question of the DTV converter boxes. I'll give it to you and
hope you'll answer it for the record.
And, again, I must go and turn this over now to Senator
Burns, who will chair the Committee.
I failed to do this. Commissioner McDowell and Commissioner
Adelstein, we appreciate your being here. I think it's one of
the few times you've been present at the same time.
STATEMENT OF HON. CONRAD BURNS,
U.S. SENATOR FROM MONTANA
Senator Burns. [presiding] Well, did we have opening
statements by the appointees?
Mr. Martin. No.
Senator Burns. Do you have an opening statement, Mr.
Chairman?
Mr. Martin. I do.
Senator Burns. Maybe we should go to those opening
statements. And could you keep them short, while I attain the
batting order up here?
Mr. Martin. OK.
Senator Burns. If you would, please, and thank you very
much. Your full statement will be made part of the record.
STATEMENT OF HON. KEVIN J. MARTIN, RENOMINATED TO BE CHAIRMAN,
FEDERAL COMMUNICATIONS COMMISSION
Mr. Martin. Thank you, Mr. Chairman and all the Members of
the Committee, for this invitation to be here with you this
morning. I want to thank Senator Burr for his introduction, and
Commissioner McDowell and Commissioner Adelstein for their
presence this morning.
I do have a brief opening statement and then look forward
to answering your questions.
Senator Burns. You might want to pull that microphone a
little closer.
Mr. Martin. I've been fortunate to serve on the Federal
Communications Commission for over 5 years, and I've had the
opportunity to serve as the agency's chairman since March of
last year. The job is not easy, and is, at times, a very
humbling experience, but it has also been an enormous
privilege, and it would be an honor to continue to serve the
American people for a second term.
As I told this Committee 5 years ago, I recognize that the
FCC is an independent agency and a creature of Congress. Our
highest priority, therefore, is to implement the will of
Congress. If reconfirmed, I'll continue to look to this
Committee and to Congress for advice and guidance.
When I came before this committee for my first confirmation
hearing, I was asked to make several commitments, all of which
I feel I have fulfilled. Senator Stevens asked me to visit
Alaska. Over the last few years, I've had the privilege of
visiting Alaska several times. The vast beauty was
breathtaking, and the communication challenges facing its
citizens were eye-opening. Senator Rockefeller, you made me
promise to protect the Schools and Libraries Program, which I
have faithfully done. And finally, Senator Dorgan, you asked me
to have children so that I could fully understand the
importance of media from the perspective of a parent. Senator
Dorgan, I'm proud to introduce you to my son, Luke, who was
born last November.
[Laughter.]
Mr. Martin. As you know well, the communications industry
is going through a time of unprecedented change. Television
programs are sold on the Internet and streamed wirelessly to
mobile devices. Teenagers use IM and MySpace, not the
telephone. DVRs mean you can watch your favorite TV program
whenever you want. And mobile phones show movies, play songs,
and photograph your kids. In this fast-paced technological
environment, regulations often struggle to keep up.
If reconfirmed, I would continue to make decisions based on
the fundamental belief that a robust, competitive marketplace,
not regulation, is ultimately the greatest protector of the
public interest. Competition drives prices down and spurs
innovation, creating better products, and at lower prices.
Government, however, still has an important role to play.
We should focus on creating a regulatory environment that
promotes investment and competition by setting the rules of the
road so that players can compete on a level playing field. And
we must be vigilant in our protection of the consumer interest,
quick to act when it might be harmed.
In the last 18 months, the Commission has worked hard to
create a regulatory--or, rather, a deregulatory environment
that promotes broadband deployment. We have removed legacy
regulations, like tariffs and price controls, which discourage
investment in broadband networks. We have also worked to create
a level playing field among broadband platforms so that high-
speed Internet access offered by phone companies is treated the
same as high-speed Internet access offered by cable companies.
And we have begun to see some success as a result of these
policies.
A recent Pew research report found that the number of
Americans with broadband at home has increased by 40 percent
from March 2005 to March 2006, twice the growth rate of the
year before. And according to the study, the prices of
broadband service have also dropped.
But perhaps most important, the study found that the
significant increases in broadband adoption were widespread,
increasing by 70 percent among middle-income households and
those without a high school diploma, and by over 120 percent
among African Americans.
I also believe that the government must act when doing so
is necessary to achieve broader social goals. While eliminating
economic regulations, we must recognize that there are issues
that the marketplace alone might not fully address. Government
should ensure that people with disabilities still have access
to communications, that people in rural areas, schools, and
libraries have access to affordable current technology, and
that the local police and fire department can communicate
seamlessly during a crisis.
As memories of Hurricane Katrina and 9/11 continually
remind us, basic public-safety requirements must be met. We
must ensure that the public has the tools necessary to know
when an emergency is coming, and to call for help, that the
police, fire, and rescue can communicate seamlessly, and that
commercial services can be quickly restored when a disaster
strikes. The Commission has taken important steps to ensure
that public safety keeps pace with the technological
advancements in communications.
During my tenure as Chairman, the Commission has taken a
balanced approach to policy, eliminating burdensome economic
regulations while protecting consumers and preserving our
broader social goals. But I am perhaps most proud of the fact
that my colleagues and I have been able to achieve such a
balanced approach in a bipartisan, collegial manner.
Thank you very much for your time and for your attention
this morning. I appreciate the opportunity to share with you
some of the recent progress the Commission has made, and I look
forward to your questions.
[The prepared statement and biographical information of Mr.
Martin follow:]
Prepared Statement of Hon. Kevin J. Martin, Renominated to be Chairman,
Federal Communications Commission
Good morning Chairman Stevens, Co-Chairman Inouye, Members of the
Committee. Thank you for this invitation to be here with you this
morning. I have a brief opening statement, and then I look forward to
answering any questions you may have.
I have been fortunate to serve at the Federal Communications
Commission for over 5 years, and I have had the opportunity to serve as
the agency's Chairman since March of 2005. This job is not easy; it is
at times a very humbling experience; but it also has been an enormous
privilege. It would be an honor to continue to serve the American
people for a second term.
As I told you 5 years ago when first before this Committee, I
recognize that the FCC is an independent agency and a creature of
Congress. Our highest priority, therefore, is to implement the will of
Congress. If reconfirmed, I will continue to look to this Committee and
the Congress for advice and guidance.
As you know well, the communications industry is in a time of
unprecedented change. Technological advances, converging business
models, and the digitalization of services create unparalleled
opportunities and considerable challenges. Television programs are sold
on the Internet and streamed wirelessly to mobile devices; teenagers
communicate over IM, SMS and MySpace, not the landline phone; DVRs mean
you watch your TV when and where you want; mobile phones show movies,
play songs, photograph your kids, and even send you emergency messages.
In this fast-paced technological environment, regulations struggle to
keep up.
If reconfirmed, I would continue to make decisions based on a
fundamental belief that a robust, competitive marketplace, not
regulation, is ultimately the greatest protector of the public
interest. Competition is the best method of delivering the benefits of
choice, innovation, and affordability to American consumers.
Competition drives prices down and spurs providers to improve service
and create new products.
Government, however, still has an important role to play. The
Commission should focus on creating a regulatory environment that
promotes investment and competition, setting the rules of the road so
that players can compete on a level playing field. For example, high-
speed Internet access offered by a phone company should be treated the
same way as high-speed Internet access offered by a cable operator.
Government also must act when necessary to achieve broader social
goals. Thus, while I support eliminating economic regulations, I
recognize that there are issues that the marketplace alone might not
fully address. For instance, government should ensure that people with
disabilities have access to communications in the same manner as all
Americans, that people in rural areas, schools and libraries have
access to affordable, current technology, and that the communications
needs of the public safety community are met.
During my tenure as Chairman, the Commission has taken important
steps to remove economic regulations and encourage the deployment of
new technologies while protecting consumers and preserving these
broader social goals.
Increasing Broadband Deployment
I have made broadband deployment my highest priority at the
Commission. Broadband technology is a key driver of economic growth.
The ability to share increasing amounts of information, at greater and
greater speeds, increases productivity, facilitates interstate
commerce, and helps drive innovation. But perhaps most important,
broadband has the potential to affect almost every aspect of our lives.
It is changing how we communicate with each other, how and where we
work, how we educate our children, and how we entertain ourselves.
During my tenure as Chairman, the Commission has worked hard to
create a regulatory environment that promotes broadband deployment. We
have removed legacy regulations, like tariffs and price controls, that
discourage carriers from investing in their broadband networks, and we
worked to create a regulatory level playing-field among broadband
platforms.
We have begun to see some success as a result of the Commission's
policies. A recent report from Pew Internet and American Life Project
found that the number of Americans with broadband at home increased 40
percent from March 2005 to March 2006 (from 60 million in March 2005 to
84 million in March 2006), twice the growth of the year before. And,
according to the study, the price of broadband services has also
dropped in the past 2 years. But perhaps most important, the study
found that the significant increases in broadband adoption were
widespread and cut across demographics. According to this independent
research:
Broadband adoption grew by almost 70 percent among middle-
income households (those with incomes between $40,000 and
$50,000 per year).
Broadband adoption grew by 120 percent among African
Americans.
Broadband adoption grew by 70 percent among those with less
than a high school education.
Broadband adoption grew by more than 60 percent among senior
citizens.
Broadband growth in rural areas was also brisk (39 percent),
although overall penetration rates in rural areas still lag
behind those in urban areas.
In addition, wireless services continue to grow dramatically.
Today, wireless competition is robust, with over 90 percent of the
people in this country living in areas where there are at least four
cell phone providers. And increasingly, wireless is not just voice, it
is also data. Blackberries, hand-held devices, and laptops are
increasingly providing broadband connections using traditional
cellular, WiFi, and WiMax technologies.
While we continue to further reduce the burden of economic
regulation on the telecommunications sector, the Commission has worked
also to ensure that law enforcement, public safety, and other public
interest needs are met.
Ensuring Public Safety and Emergency Preparedness
When I first became Chairman, I identified public safety and
emergency preparedness as another top priority. As memories of
Hurricane Katrina and 9/11 continually remind us, one of our most
important objectives is to ensure that basic public safety requirements
are met. We must make sure that the public has the tools necessary to
know when an emergency is coming and to contact first responders. And
we must enable first responders to communicate seamlessly. We have
taken steps to ensure that public safety keeps pace with the
technological advancements in communications.
For instance, last year the Commission expanded its emergency alert
system rules to include a broader array of technologies, including
providers of digital broadcast and cable TV, digital audio
broadcasting, satellite radio, and direct broadcast satellite services.
In addition to making sure that people are alerted to impending
emergencies and disasters, we must also ensure that Americans are able
to call for help when they need it. That means that new technologies
must be able to communicate with emergency operators.
As these new communications technologies come into use, the
Commission also has worked to ensure that law enforcement continues to
have the necessary tools to obtain appropriate access to them.
Finally, we recognize that wireless communications are vital to
Federal, state, and local emergency first responders. We have taken
steps over the past year to help ensure that public safety authorities
have access to sufficient spectrum to meet their needs.
Serving Those With Disabilities
Accessing communication services is vital to the ability of the
individuals with disabilities to participate fully in society. With the
passage of the Americans with Disabilities Act in 1990, the Commission
was directed to ensure that hearing or speech disabilities not pose a
barrier to participating in today's communication revolution.
The Commission has taken a number of important actions over the
past year to fulfill our statutory goal of ensuring that every person
has equal access to this Nation's communications services. These
actions include initiating a proceeding to explore solutions for the
disabled to access 911 services; extending video relay services;
providing Federal support for the provision of Spanish video relay
service, allowing persons who communicate in sign language to
communicate with those who speak Spanish; and providing for the Federal
certification of carriers, which increases competition and facilitates
more provider choices for consumers.
Maintaining Universal Service
The United States and the Commission have a long history and
tradition of making sure that rural areas of the country are connected
and have the same opportunities for communications as urban areas. In
the 1996 Act, Congress explicitly required that the Commission ensure
that consumers in all regions of the Nation have access to services
that ``. . . are reasonably comparable to those services provided in
urban areas.'' Specifically Congress required the Commission to
establish Universal Service Fund mechanisms that are ``. . . specific,
predictable and sufficient . . . to preserve and advance universal
service.''
Changes in technology and increases in the number of carriers who
are receiving Universal Service support have placed significant
pressure on the stability of the fund. Over the past year, the
Commission has taken several steps to ensure a sufficient and
sustainable mechanism to collect and disburse funds in an efficient
manner. As a result of our actions, the Universal Service contribution
rate has decreased from over 11 percent to 9 percent. The Commission is
also actively considering establishing a contribution system that is
more technology neutral, and a distribution mechanism that is more
efficient. The Commission remains committed to pursuing fundamental
Universal Service contribution and distribution reform as needed.
Managing the Agency
Since becoming Chairman last year, I have been most proud of the
collaborative manner in which my colleagues and I work. For the first
14 months of my tenure, we had two Republicans and two Democrats, and
we were able to tackle extremely complex and controversial issues in a
collegial, bipartisan manner. Even since we have had a full complement
of Commissioners, almost every Commission item has had bipartisan
support. We continue to work together effectively to address the broad
range of day to day management issues and respond to the more
extraordinary challenges we face.
For example, the Commission is responsible for managing spectrum,
an invaluable public resource. We have worked hard to improve our
auctions processes to ensure more efficient distribution and use of
spectrum resources. This market-driven approach maximizes the benefits
to American consumers by making spectrum available for widespread
deployment of new innovative wireless services. Today, the Commission
is currently auctioning 90 MHz of spectrum for advanced wireless
services. To date, the auction has raised more than $13.85 billion. The
Commission had sold nearly all of the available licenses (1,082 out of
1,122) to 105 different bidders, more than half (57) of which are small
businesses. The licensing rules for this spectrum included some
smaller, more manageable license areas that can facilitate access to
spectrum by entities seeking to provide service to rural areas.
During the past year, the Commission has also met unprecedented
management challenges. In the face of Hurricanes Katrina, Rita, and
Wilma, the agency responded quickly and comprehensively in meeting
government, industry, and consumer needs. The Commission staff worked
around the clock to cut bureaucratic ``red tape,'' reach out to the
impacted industries, and help identify resources for use by disaster
personnel. We granted more than 90 requests for Special Temporary
Authority and more than 100 temporary frequency authorizations for
emergency workers, organizations, and companies to provide wireless and
broadcast services in the affected areas and shelters around the
country. In most cases, these requests were granted within 4 hours,
with all requests approved within 24 hours. We are working hard to
implement the lessons learned from Hurricane Katrina.
Conclusion
Thank you for your time and attention today. I appreciate the
opportunity to share with you some of the recent progress the
Commission has made. With that, I would be happy to answer any
questions you may have.
______
A. BIOGRAPHICAL INFORMATION
1. Name (Include any former names or nicknames used): Kevin Jeffery
Martin.
2. Position to which nominated: Member, Federal Communications
Commission.
3. Date of Nomination: April 25, 2006.
4. Address (List current place of residence and office addresses):
Residence: (Information not released to the public).
Office: 445 12th Street, SW, Washington, DC 20554.
5. Date and Place of Birth: December 14, 1966; Charlotte, North
Carolina.
6. Provide the name, position, and place of employment for your
spouse (if married) and the names and ages of your children (including
stepchildren and children by a previous marriage).
Catherine Jurgensmeyer Martin. Deputy Assistant to the
President and Deputy Communications Director for Policy and
Planning, Executive Office of the President.
Luke Jeffery Martin, son, age 8 months
7. List all college and graduate degrees. Provide year and school
attended.
Bachelor of Arts, University of North Carolina at Chapel Hill
(1989).
Masters in Public Policy, Duke University (1993).
Juris Doctorate, Harvard University (1993).
8. List all management-level jobs held and any non-managerial jobs
that relate to the position for which you are nominated.
Chairman, Federal Communications Commission.
Commissioner, Federal Communications Commission.
Special Assistant to the President for Economic Policy,
Executive Office of the President.
Deputy General Counsel, Bush-Cheney Transition Team.
Deputy General Counsel, Bush for President.
Legal Advisor to Commissioner Harold Furchtgott-Roth, Federal
Communications Commission.
Associate, Wiley, Rein & Fielding.
Judicial Clerk, United States District Judge William M.
Hoeveler.
9. List any advisory, consultative, honorary or other part-time
service or positions with Federal, State, or local governments, other
than those listed above, within the last five years: None.
10. List all positions held as an officer, director, trustee,
partner, proprietor, agent, representative, or consultant of any
corporation, company, firm, partnership, or other business, enterprise,
educational or other institution within the last five years: Executor/
Trustee, Richard H. Martin Estate (father's estate).
11. Please list each membership you have had during the past ten
years or currently hold with any civic, social, charitable,
educational, political, professional, fraternal, benevolent or
religious organization, private club, or other membership organization.
Include dates of membership and any positions you have held with any
organization. Please note whether any such club or organization
restricts membership on the basis of sex, race, color, religion,
national origin, age or handicap.
Member of the District of Columbia Bar Association (1996-
present).
Member of the Florida Bar Association (1995-present).
Member of the Federal Communications Bar Association (1998-
present).
The University of North Carolina Alumni Association (1989-
present).
The Federalist Society (1998-1999); Vice Chair of the
Telecommunications Committee.
12. Have you ever been a candidate for public office? If so,
indicate whether any campaign has any outstanding debt, the amount, and
whether you are personally liable for that debt: No.
13. Itemize all political contributions to any individual, campaign
organization, political party, political action committee, or similar
entity of $500 or more for the past 10 years: Bush for President,
$1,000.00 (1999)
14. List all scholarships, fellowships, honorary degrees, honorary
society memberships, military medals and any other special recognition
for outstanding service or achievements.
Phi Beta Kappa; University of North Carolina Tuition Scholarship;
UNC Honorary Societies (Orders of the Golden Fleece, Grail & Old Well):
Pi Sigma Alpha; UNC James J. Parker Award for Student Achievement.
15. Please list each book, article, column, or publication you have
authored, individually or with others, and any speeches that you have
given on topics relevant to the position for which you have been
nominated. Do not attach copies of these publications unless otherwise
instructed.
Articles and Editorials:
``Make Cable A La Carte,'' with Senator John McCain, Los
Angeles Times, 5/25/06.
``Why Every American Should Have Broadband Access,'' Financial
Times, 4/3/06.
``Broadband,'' The Wall Street Journal, 7/7/05.
``Family Friendly Programming: Providing More Tools for
Parents,'' Federal Communications Law Journal, 5/03.
``What's Next: Competition's Future,'' Telephony Magazine, 5/
13/02.
Speeches: I have delivered numerous speeches in my official
capacity at the Federal Communications Commission.
16. Please identify each instance in which you have testified
orally or in writing before Congress in a non-governmental capacity and
specify the subject matter of each testimony: I have not testified
before Congress in a non-governmental capacity.
B. POTENTIAL CONFLICTS OF INTEREST
1. Describe all financial arrangements, deferred compensation
agreements, and other continuing dealings with business associates,
clients, or customers.
Federal Thrift Savings Plan.
Executor/Trustee. Richard H. Martin Estate (father's estate).
Spouse:
Federal Thrift Savings Plan.
Steptoe & Johnson 401K (no further contributions being made).
Russell Aggressive CI D.
Russell Equity Aggressive CI D.
Texas Thrift Savings Plan (no further contributions being
made).
2. Do you have any commitments or agreements, formal or informal,
to maintain employment, affiliation or practice with any business,
association or other organization during your appointment? No.
3. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated: None.
4. Describe any business relationship, dealing, or financial
transaction which you have had during the last 5 years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated: None.
5. Describe any activity during the past 5 years in which you have
been engaged for the purpose of directly or indirectly influencing the
passage, defeat, or modification of any legislation or affecting the
administration and execution of law or public policy: None other than
in my work as FCC Commissioner and Chairman.
6. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items.
To the extent that a conflict of interest arises of which I am
not currently aware, I plan to consult with agency ethics
counsel and comply with all appropriate laws and regulations.
C. LEGAL MATTERS
1. Have you ever been disciplined or cited for a breach of ethics
by, or been the subject of a complaint to any court, administrative
agency, professional association, disciplinary committee, or other
professional group? No.
2. Have you ever been investigated, arrested, charged, or held by
any Federal, State, or other law enforcement authority of any Federal,
State, county, or municipal entity, other than for a minor traffic
offense? No.
3. Have you or any business of which you are or were an officer
ever been involved as a party in an administrative agency proceeding or
civil litigation? No.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere) of any criminal violation other than a minor traffic
offense? No.
5. Please advise the Committee of any additional information,
favorable or unfavorable, which you feel should be disclosed in
connection with your nomination: None of which I am aware.
6. Have you ever been accused, formally or informally, of sexual
harassment or discrimination on the basis of sex, race, religion or any
other basis? No.
D. RELATIONSHIP WITH COMMITTEE
1. Will you ensure that your department/agency complies with
deadlines for information set by Congressional committees? Yes.
2. Will you ensure that your department/agency does whatever it can
to protect Congressional witnesses and whistle blowers from reprisal
for their testimony and disclosures? Yes.
3. Will you cooperate in providing the Committee with requested
witnesses, including technical experts and career employees, with
firsthand knowledge of matters of interest to the Committee? Yes.
4. Are you willing to appear and testify before any duly
constituted committee of the Congress on such occasions as you may be
reasonably requested to do so? Yes.
Senator Burns. Thank you very much, Chairman Martin.
Mr. Kneuer?
STATEMENT OF JOHN M.R. KNEUER, NOMINEE TO BE
ASSISTANT SECRETARY FOR COMMUNICATIONS AND
INFORMATION; ADMINISTRATOR OF THE NATIONAL
TELECOMMUNICATIONS AND INFORMATION
ADMINISTRATION (NTIA), DEPARTMENT OF COMMERCE
Mr. Kneuer. Thank you, Mr. Chairman and Members of the
Committee. It is my distinct honor and privilege to be before
you today as the President's nominee to serve as the Assistant
Secretary for Communications and Information at the Department
of Commerce and as the Administrator of the National
Telecommunications and Information Administration.
Since 2003, it's been my privilege to serve in the Commerce
Department under the leadership of both Secretary Evans and
Secretary Gutierrez. I'm also honored to have had the
opportunity to work alongside the dedicated men and women who
have devoted their careers to NTIA and to the American people.
If confirmed, I'm committed to working every day to follow the
example they set through their dedication and to give them the
leadership that they deserve.
As you know, among its responsibilities NTIA provides
telecommunications policy analysis to the Secretary of Commerce
and the President, and manages the Federal radio waves.
Throughout the Bush Administration, this intersection of
telecommunications policy and spectrum management has been the
key focus of NTIA. Working with our partners in industry and
across government, we have made large amounts of spectrum
available for wireless broadband, and other innovative
services, as well as maintaining access for critical Federal
and public-safety services.
Indeed, as we meet here today, the FCC is in the final
stages of an auction of licenses for 90 megahertz of spectrum
for advanced wireless services. As of last night, that auction
had generated net high bids of nearly $14 billion. More
important than the money being raised, however, is the
potential for this new spectrum in the marketplace. Once
deployed, this spectrum will allow every licensed wireless
carrier to be a broadband provider, as well. Carriers that are
currently providing broadband services would be able to expand
and improve those services. New market entrants will enter the
marketplace for the first time. Together, these broadband
services and other new technologies are critical to bringing
competition to the incumbent cable and fixed-line broadband
services, and extending services to rural and other hard-to-
serve markets.
Now, while this auction is an important event, the process
that made it possible is also as significant, as it represents
a real model of intergovernmental cooperation. Before this
spectrum could be made available for auction, more than 50
Federal agencies needed to coordinate relocation to alternative
spectrum. In order for the agencies to be reimbursed for the
costs of this relocation, Congress had to act to pass the
Commercial Spectrum Enhancement Act. I'm grateful for the
leadership of this committee in passing this important piece of
legislation. Finally, the FCC, in addition to making 45
megahertz available from their own allocations, has obviously
done the laboring work in issuing service rules and conducting
the auction.
As this process demonstrates, new technologies no longer
fit easily into regulatory stovepipes. The introduction of new
services and new innovative technologies requires cooperation
amongst the Administration, the FCC, and Congress. If I'm
confirmed, I'm committed to repeating that example and working
with my colleagues across government, at the FCC, and Congress
so that we can continue to have an environment for future
American innovation and competitiveness.
In addition to its traditional role, NTIA has also recently
been entrusted with significant responsibilities related to the
digital television transition. These include providing
financial assistance to consumers to acquire digital-to-analog
conversion devices, as well as funding for state and local
governments' acquisition and implementation of interoperable
communications equipment. We are currently working to ensure
these critical programs are executed as efficiently and
equitably as possible. And, if confirmed, I'm committing to
working with the Congress to make the DTV transition a success
for all Americans.
Thank you, again, and I'll look forward to any questions.
[The prepared statement of Mr. Kneuer follows:]
Prepared Statement of John M.R. Kneuer, Nominee to be Assistant
Secretary for Communications and Information; Administrator of the
National Telecommunications and Information Administration (NTIA),
Department of Commerce
Chairman Stevens, Co-Chairman Innouye, Members of the Committee, it
is my distinct honor and privilege to appear before you today as the
President's nominee to serve as the Assistant Secretary for
Communications and Information at the Department of Commerce, and
Administrator of the National Telecommunications and Information
Administration (NTIA).
Since 2003, it has been my pleasure to serve in the Commerce
Department under the leadership of both Secretary Evans and Secretary
Gutierrez. I am also honored to have had the opportunity to work
alongside the hundreds of dedicated men and women within NTIA who have
devoted their careers to serving the American people. If confirmed, I
am committed to working everyday to follow the example they have set
through their dedication and to provide the leadership they deserve.
As you know, among its responsibilities, NTIA provides
telecommunications policy analysis to the Secretary of Commerce and the
President, and manages the Federal Government use of the radio
spectrum. Throughout the Bush Administration, this intersection of
telecommunications policy and spectrum management has been the key
focus of NTIA. Working collaboratively with our partners in industry
and across government, we have made large amounts of spectrum available
for wireless broadband and other innovative services while continuing
to provide access for critical Federal and public safety systems.
Because of technology and competition policies, American consumers
have access to a wide array of innovative services and American
companies continue to lead the world in the development and deployment
of new technologies, creating global markets for American products.
Today, American consumers have access to licensed wireless
broadband services offered by multiple providers, using competing
technologies at higher speeds than are available to consumers in Europe
or Japan. At the same time, American companies continue to innovate
with new unlicensed technologies like WiFi and WiMax. Now these
services are rapidly evolving from small local ``hot spots'' in places
like airports and coffee shops to large area networks that cover
hundreds of square miles and provide service quickly and cheaply to
entire rural communities.
Indeed, as we meet here today, the FCC is in the final stages of an
auction of licenses for 90 MHz of spectrum for Advanced Wireless
Services. As of last night, this auction had generated net high bids of
nearly $14 billion dollars.
But more important than the money being raised is the potential for
this new spectrum in the marketplace. Once deployed, this spectrum will
enable every licensed wireless carrier to be a broadband provider.
Incumbent wireless carriers already offering broadband services will be
able to expand and improve their services; other carriers will enter
the wireless broadband marketplace for the first time. Together these
wireless broadband services and other new technologies are critical to
bringing competition to incumbent cable and fixed-line broadband
services especially in rural and other hard-to-serve communities.
Now while this auction is an important event, the process that made
it possible represents a model of intergovernmental cooperation and
coordination. Before this spectrum could be made available for auction,
more than 50 Federal agencies needed to coordinate plans to move to
alternative spectrum. In order for the agencies to be reimbursed for
the costs of their relocation, Congress needed to act to pass the
Commercial Spectrum Enhancement Act. I am grateful for your leadership
and the efforts of this Committee in moving this critical legislation.
Finally, the FCC, in addition to making 45 MHz of spectrum available
from its own allocations, has drafted service rules and is conducting
the auction. As this process demonstrates, new technologies no longer
fit easily into defined regulatory stovepipes. To enable future
innovation, we need to work collaboratively together. If confirmed, I
am committed to work with the Congress and my colleagues at the FCC and
across government to ensure that we continue to create an environment
for future American innovation.
In addition to its traditional role, NTIA has recently been
entrusted with significant responsibilities related to the digital
television transition. These include providing financial assistance to
consumers for the purchase of digital-to-analog conversion devices, and
funding state and local government's acquisition and implementation of
interoperable communications equipment. We are already working to
ensure that these critical programs are executed as efficiently and
equitably as possible. If confirmed, I am committed to working with the
Congress to make the DTV transition a success for all Americans.
Thank you again for the opportunity to testify before you today. I
look forward to any questions you may have.
______
A. BIOGRAPHICAL INFORMATION
1. Name: John M.R. Kneuer.
2. Position to which nominated:
Assistant Secretary for Communications and Information,
Department of Commerce;
Administrator, National Telecommunications and Information
Administration.
3. Date of Nomination: May 1, 2006.
4. Address:
Residence: (Information not released to the public).
Office: 1401 Constitution Ave., N.W., Rm. 4898 Washington, DC
20230.
5. Date and Place of Birth: October 7, 1968; Long Branch, New
Jersey.
6. Provide the name. position, and place of employment for your
spouse (if married) and the names and ages of your children (including
stepchildren and children by a previous marriage).
Spouse: Mimi Simoneaux Kneuer, Executive Vice President,
Pharmaceutical Research and Manufacturers Association.
Children: Joseph K. Kneuer, 3; Christine A. Kneuer, 1.
7. List all college and graduate degrees. Provide year and school
attended: Catholic University of America, B.A. 1990; J.D. 1994.
8. List all management-level jobs held and any non-managerial jobs
that relate to the position for which you are nominated.
10/2003-Present: Deputy Assistant for Secretary Communications
and Information, Department of Commerce.
8/1998-10/2003: Senior Associate, DLA Piper Rudnick (f.k.a.
Verner, Liipfert, Bernhard, McPherson, and Hand).
6/1997-8/1998: Executive Director Government Affairs,
Industrial Telecommunications Association.
6/1996-6/1997: Attorney Adviser, Federal Communications
Commission.
9. List any advisory, consultative, honorary, or other part-time
service or positions with Federal, State, or local governments, other
than those listed above, within the last five years: None.
10. List all positions held as an officer, director, trustee,
partner, proprietor, agent, representative, or consultant of any
corporation, company, firm, partnership, or other business, enterprise,
educational or other institution within the last five years.
Member of the Board of Directors, United States
Telecommunications Training Institute. The USTTI is a non-
profit joint venture between leading U.S.-based communications
and IT corporations and leaders of the Federal government who
together provide tuition-free management, policy and technical
training for talented professionals from the developing world.
11. Please list each membership you have had during the past ten
years or currently hold with any civic, social, charitable,
educational, political, professional, fraternal, benevolent, or
religious organization, private club, or other membership organization.
Include dates of membership and any positions you have held with any
organization. Please note whether any such club or organization
restricts membership on the basis of sex, race, color, religion,
national origin. age, or handicap.
Member, University Club of Washington, D.C.
The above listed organization does not restrict membership on
the basis of sex, race, color, religion, national origin, age,
or handicap.
12. Have you ever been a candidate for public office? If so,
indicate whether any campaign has any outstanding debt, the amount, and
whether you are personally liable for that debt: No.
13. Itemize all political contributions to any individual, campaign
organization, political party, political action committee, or similar
entity of $500 or more for the past 10 years.
Saxby Chamblis for Senate, $250, 7/31/03.
Richard Burr for Senate, $500, 5/9/03; $250, 6/30/03.
Harold Ford, Jr. for Tennessee, $250, 9/30/00.
Billy Tauzin Congressional Committee, $250, 7/18/00.
Bayou Leader PAC, $500, 9/02/99.
Bruce C. Harris for Congress, $500, 7/28/99.
Bush-Cheney 2004, $1,000, 6/30/03; $1,000, 3/19/04.
National Republican Congressional Committee, $1,000, 10/18/
2002.
Dick Monteith for Congress, $250, 4/24/02.
Texas Freedom Fund, $375, 7/05/03.
14. List all scholarships, fellowships, honorary degrees, honorary
society memberships, military medals, and any other special recognition
for outstanding service or achievements: None.
15. Please list each book, article, column, or publication you have
authored, individually or with others, and any speeches that you have
given on topics relevant to the position for which you have been
nominated. Do not attach copies of these publications unless otherwise
instructed.
Public Speaking Engagements
05/18/06 Washington Space Business Roundtable
(WSBR) (Speaking)
Satellite Broadband and Satellite
Spectrum
``Advising on Telecommunications
Policy''
University Club, University Hall
Washington, DC
05/17/06 Computer & Communications Industry
Association (Speaking)
Washington Caucus, ``Telecom Reform''
Regis Hotel, Washington, DC
05/09/06 Pike & Fischer's 2nd Annual Broadband
Policy Summit 2006 (Speaking)
``Charting the Road Ahead
Madison Hotel
Washington, DC
05/03/06 Aspen Institute Roundtable on Spectrum
Policy (Roundtable)
Clearing the Air: Convergence and the
Safety Enterprise
Queenstown, MD
05/03/06 The Federalist Society (Speaking)
Telecommunications & Electronic Media
Practice Group
Cable Franchising: Is it Time for Reform
Washington, DC
04/18-19/06 Telecom IQ--International Quality &
Productivity Center (Speaking)
2nd Annual ENUM Summit
The U.S. Department of Commerce's View
on ENUM
Boston, MA
04/10/06 National Cable & Telecommunications
Association (NCTA) (Roundtable)
Annual Convention and Exposition
Panelist: Public Policy
Atlanta, GA
04/04-05/06 CTIA's Wireless 2006 Annual Conference
(Roundtable)
Plenary Session `'Wireless Industry
Regulatory Hot Topics''
Las Vegas, NV
03/28/06 Catholic University of America's
Columbus School of Law (Speaking)
``Bringing America up to Speed:
Delivering on Our
Broadband Future Without Sacrificing
Local Identity''
Washington, DC
12/19/05 European American Business Council
(Panelist)
6th Annual Digital Economy Workshop
``Enabling Wireless Markets &
Technologies''
Regis Hotel, Washington, DC
11/29-12/1/05 Government Advisory Committee (Speaker)
Represent the US delegation to the
Government Advisory Committee
(GAC) of ICANN
Vancouver, Canada
11/15/05 Int'l Institute of Communication (IIC)
(Speaker)
Telecommunications Forum: ``Rethinking
Telecommunications
Policy--What's So Different''
Washington, DC
11/08/05 Mississippi Technology Alliance
(Speaker)
6th Annual Conference on High Technology
Jackson, Mississippi
10/31/05 Defense Spectrum Summit (Panelist)
Advanced Ideas in Communications
DOD Spectrum Summit: ``Spectrum Reform
Efforts: Nest Step Toward
Implementation''
Annapolis, MD
10/20/05 MILCOM 2005 Conference (Panelist)
``The Presidential Spectrum Initiative''
Atlantic City, NJ
09/27/05 CTIA Wireless IT & Entertainment
(Speaking)
``Regulatory Panel--Facilitating
Wireless Evolution--From
Voice to Broadband and Beyond''
San Francisco, CA
09/15/05 Law Seminars International (Speaking)
Spectrum Management Conference
``Evolving Public Policy: Key Government
Players,
the Way They View Their Roles and Their
Policy Priorities''
McLean, VA
07/25/05 High Level Consultative Commission on
Telecommunications (Speaking)
United States--Mexico ``Seventh
Meeting''
Mexico City, Mexico
06/20/05 Software Designed Radio Forum (Speaking)
Regulatory Panel: ``Global Regulatory
Summit on SDR & Cognitive Radio''
Fairmont Hotel, Washington, DC
06/16-17/05 University of Texas (Speaking)
Workshop on Internet use in the Americas
``Keynote overview of US policy in the
area of
Broadband and Internet connection''
Washington, DC
06/06--7/05 Multiparty Roundtable at SUPERCOMM 2005--
(Roundtable)
Telecommunications Industry Assoc. (TIA)
re: to discuss on mechanisms
to address the funding problems and
technical areas in which Federal
funding should be directed.
Chicago, Illinois
05/02/05 American Petroleum Institute
Telecommunications Mtg (Speaking)
re: General Overview of the Agency
Washington, DC
04/19/05 Land Mobile Communications Council
(Speaking)
re: Direction of spectrum policy at NTIA
& how it may impact the land
mobile community
Holiday Inn, Rosslyn-Key Bridge
Arlington, VA
03/14-16/05 CTIA Wireless 2005 Annual Conference
Policy Outlook Track Panel 1
``Facilitating Intermodal Competition''
Las Vegas, NV
01/05-8/05 International Consumer Electronics
Assoc. (CEA) Show, 2005
IPV6 Panel ``An Introduction to the New
Internet: What is IPV6 and how
will it effect consumer electronics?''
10/28/04 DoD Spectrum Summit (Roundtable)
``Spectrum Transformation: How Military/
Commercial
Spectrum Sharing Can Work
Annapolis, MD
10/26/04 National Cable & Telecommunications
Assoc. (NCTA) (Roundtable)
NARUC-NEC broadband summit
``Broadband Deployment''
Arlington, VA
10/18-21/04 Northern Ireland and Republic of
Ireland) w/Under Sec. Of Technology
Meeting Dublin, Ireland
10/06/04 Chamber of Commerce (Panelist)
``The Telecommunications Landscape--
Administration
and Congressional Perspectives''
Washington. DC
09/16/04 Law Seminars International Spectrum
Management Conference (Speaker)
NTIA: The President's spectrum
initiative for the 21st century and the
Perspective of Federal Government
spectrum users
08/15-18-04 Aspen Institute Conference on
Telecommunications Policy (Speaker)
``Restructuring Telecommunications''
Aspen, Colorado
08/09/04 Electronic Industry Alliance (EIA)
(Panelist)
22nd EIA Annual Legislative & Regulatory
Roundtable
Hot Springs, VA
07/22/04 New Jersey Technology Council (NJTC)
(Speech)
``Domestic and international
telecommunications and
information technology issues''
Voorhees. New Jersey
05/19/04 United Telecom Council (Panelist)
Annual Conference and Exposition
``The Hunt for Critical Infrastructure
Spectrum''
Nashville, TN
05/13/04 Heritage Foundation (Speaker)
Broadband by 2007: A Look at the
President's Initiative
Washington, DC
03/08/04 Consumer Electronics Association (CEA)
(Panelist )
``Public Forum on Spectrum Management''
Santa Clara, CA
02/23/04 National Emergency Number Association
(NENA) (Speech)
Second Annual 911 Goes to Washington
Critical Issues Forum
Grand Hyatt, Washington, DC
16. Please identify each instance in which you have testifies
orally or in writing before Congress in a non-governmental capacity and
specify the subject matter of each testimony: None.
B. POTENTIAL CONFLICTS OF INTEREST
1. Describe all financial arrangements, deferred compensation
agreements, and other continuing dealings with business associates,
clients, or customers: None.
2. Do you have any commitments or agreements, formal or informal,
to maintain employment, affiliation, or practice with any business,
association. or other organization during your appointment? No.
3. Indicate any investments, obligations, liabilities, or other
relationships which could involve potential conflicts of interest in
the position to which you have been nominated: None.
4. Describe any business relationship, dealing, or financial
transaction which you have had during the last 5 years, whether for
yourself, on behalf of a client, or acting as an agent, that could in
any way constitute or result in a possible conflict of interest in the
position to which you have been nominated: None.
5. Describe any activity during the past 5 years in which you have
been engaged for the purpose of directly or indirectly influencing the
passage, defeat, or modification of any legislation or affecting the
administration and execution of law or public policy.
During my employment at my former law firm. DLA Piper Rudnick
(f.k.a. Verner, Liipfert, Bernhard, McPherson and Hand), I represented
a number of clients with interests before the Congress. During the
covered period my representation included supporting the initial
application to transfer control of DIRECTV to EchoStar, and the
eventual sale of DIRECTV to NewsCorp. This representation was on behalf
of DIRECTV's former parent corporation, General Motors. I also
represented a variety of transportation, defense, and financial
services clients monitoring legislative activity. During the covered
period this representation did not entail advocacy directly or
indirectly related to specific legislation.
During my tenure as Counselor to the Acting Assistant Secretary,
and Deputy Assistant Secretary in the Department of Commerce, I have
supported Administration initiatives before the Congress, most notably
the passage of the Commercial Spectrum Enhancement Act (Pub. L. 108-
494).
6. Explain how you will resolve any potential conflict of interest,
including any that may be disclosed by your responses to the above
items.
If appointed to the position of Assistant Secretary for
Communications and Information, I will take the following actions to
avoid a conflict of interest.
As required by 18 U.S.C. Sec. 208, I will continue to disqualify
myself from participating personally and substantially in any
particular matter that has a direct and predictable effect on my
financial interests or those of any other person whose interests are
imputed to me, unless such participation is authorized or permitted by
regulatory exemption or written waiver.
In particular, I will not participate in a particular matter that
will have a direct and predictable effect on my spouse's employment
with the Pharmaceutical Manufacturers and Research Association, unless
authorized pursuant to a written waiver. In addition, I will not
participate in a particular matter involving specific parties in which
the Pharmaceutical Manufacturers and Research Association is a party or
represents a party, unless authorized or permitted pursuant to ethics
regulations.
Within 90 days of my confirmation, I will issue a statement
memorializing these recusals.
Also, within 90 days of my confirmation, I will divest my holdings
in Omnicom.
With respect to my financial interests (including Omnicom) from
which disqualification is not presently required because of the
applicability of a regulatory exemption, should a financial interest no
longer qualify for an exemption, I will immediately disqualify myself
from participating personally and substantially in any particular
matter that has a direct and predictable effect on the interest, unless
my participation is covered by another exemption, or unless I obtain a
written waiver.
C. LEGAL MATTERS
1. Have you ever been disciplined or cited for a breach of ethics
by, or been the subject to any court, administrative agency,
professional association, disciplinary committee, or other professional
group? No.
2. Have you ever been investigated, arrested, charged, or held by
an Federal, State, or other law enforcement authority of any Federal,
State, county, or municipal entity, other than for a minor traffic
offense? No.
3. Have you or any business of which you are or were an officer
ever been involved as a party in an administrative agency proceeding or
civil litigation? No.
4. Have you ever been convicted (including pleas of guilty or nolo
contendere of any criminal violation other than a minor traffic
offense? No.
5. Please advise the Committee of any additional information,
favorable or unfavorable, which you feel should be disclosed in
connection with your nomination: None.
6. Have you ever been accused, formally or informally, of sexual
harassment or discrimination on the basis of sex, race, religion, or
any other basis? No.
D. RELATIONSHIP WITH COMMITTEE
1. Will you ensure that your department/agency complies with
deadlines for information set by Congressional committees? Yes.
2. Will you ensure that your department/agency does whatever it can
to protect Congressional witnesses and whistle blowers from reprisal
for their testimony and disclosures? Yes.
3. Will you cooperate in providing the Committee with requested
witnesses, including technical experts and career employees, with
firsthand knowledge of matters of interest to the Committee? Yes.
4. Are you willing to appear and testify before any duly
constituted committee of the Congress on such occasions as you may be
reasonably requested to do so? Yes.
Senator Burns. Thank you.
And, Mr. Sununu?
Senator Sununu. Thank you, Mr. Chairman.
Mr. Kneuer, I apologize for ignoring you. We've got--I hope
I have more than a minute and 15 seconds, but I imagine it's
about 5 minutes, and I do have a few questions I want to ask
Chairman Martin, and I'll probably submit most of these for the
written record so you can expand, you don't feel the need to
make every single point in your oral testimony.
First, a few questions about the Internet. Let me just ask
a few. You can answer them all together.
Do you think that the Internet should be regulated the same
as we regulate--with the same regimes that we regulate other
communication mediums? Do you support taxing Internet access?
And should the FCC be allowed to regulate Google Video and
YouTube?
Mr. Martin. No, I don't think that the Internet should be
regulated in the same manner as other telecommunications
networks. And I actually have been opposed to any kind of taxes
on Internet access. And, indeed, I've been opposed to any
extension of our universal-service requirements to Internet
access. I think that would only discourage people from
subscribing to Internet access services, if we raise those
prices on it. It's one of the reasons why I've been trying to
focus on a telephone-number-based methodology. Telephone
numbers are the key to using the public-switched telephone
network, and I think that would be a more equitable means of
contributing for those who are taking advantage of that public-
switched telephone network.
So, no, I'm opposed to taxing the Internet access, and I
don't think they should be regulated the same.
Senator Sununu. And Google Video and YouTube video
services, should the FCC have the power to regulate those?
Mr. Martin. No, I don't think that's necessary, at this
time.
Senator Sununu. You mentioned universal service and your
desire to make some changes with regard to both distribution
and revenue collection, but the FCC keeps raising the
contribution factor. We're over 10 percent now, 10 percent
Universal Service fee on consumers' use of communications. Do
you think that there is an upper limit to what you ought to be
allowed to impose? Are you willing to go to 20 percent, to 30
percent, under the current structure?
Mr. Martin. No. And I think that there is an upper limit as
to what we would be able to do, practically, before there was
political pressure. But I would point out that, when I became
chairman, actually, the assessment rate was over 11 percent.
And the most recent assessment rate, that we released this
quarter, is actually down to 9 percent. During my tenure as
chairman, because of the actions we've taken on both trying to
control both the distribution side and of beginning to broaden
the base, we've actually been able to bring that down from 11
to 9 percent since I became chairman.
Senator Sununu. Explain to me what the logic is behind
voicemail qualifying for E-Rate money. They qualify, but it's
my understanding that IP voice service does not. Why would
voicemail qualify?
Mr. Martin. I think that what we've said in the past, as
far as for E-Rate money, is that telecommunications services
qualified for it, but that not all information services
qualified for it. We were actually trying to be more
restrictive in what we allow schools to be able to receive
money for. And most of the focus on information services was
actually on infrastructure for the schools to be able to try to
connect to the Internet, rather than for the services and
applications that would ride over it. We haven't paid--for
example, for any of the software for schools, but we do pay for
some of the hardware, which means that we pay for their
Internet connections and for wiring of the schools.
Senator Sununu. You also subsidize their service, though.
Mr. Martin. We do, for their access. We subsidize their
Internet access services and items that have been
telecommunications services or regulated directly as
telecommunication.
Senator Sununu. I just want to make the point that it's not
all hardware, it's not all----
Mr. Martin. No.
Senator Sununu.--infrastructure.
Mr. Martin. It's not.
Senator Sununu. And, in fact, the access portion is growing
very, very rapidly----
Mr. Martin. That's right.
Senator Sununu.--and is provided to all parts of the
country, suburban as well as rural and high-cost areas.
Mr. Martin. That's right.
Senator Sununu. And I would simply make a point I've made
before, is that you suggest you want to be restrictive so that
the objectives of this fund are directed--or the money in the
funds are directed--toward the key objectives of high-cost
areas and rural areas. There's a tremendous amount of money
that remains in the hands of districts that don't necessarily
fit that description.
A final question about IP voice service. And I know there
are a lot of technical factors that go into determining how you
assess contribution requirements for Universal Service, but the
contribution factor for IP voice providers is approximately 65
percent, and the contribution factor for wireless providers is
37 percent. I'll stipulate both of these are very arbitrary
numbers, but it seems extremely disproportionate, and even
punitive, to assign a contribution factor of 65 percent to one,
and 37 percent to another, when I think it's fair to argue that
the overall mix of the kinds of communications that are taking
place are quite similar.
Mr. Martin. There's some confusion; that's actually not
correct. The contribution factor for both wireless and for IP
services is the same.
Senator Sununu. I'm talking about----
Mr. Martin. It's 9 percent.
Senator Sununu. I'm talking about the percentage of
revenues.
Mr. Martin. No, no----
Senator Sununu. You assess----
Mr. Martin. What----
Senator Sununu.--65 percent of the revenues on IP
providers, 37 percent of the revenues----
Mr. Martin. We----
Senator Sununu.--are the basis for the----
Mr. Martin. We----
Senator Sununu.--wireless providers.
Mr. Martin. We assess a 9-percent surcharge on all of their
interstate revenues. We did studies, and we had people submit
studies to us that said what percentage of these services are
interstate in nature versus local in nature. And in the
wireless side, the best estimates we had were that it was
around 37 percent. On the Voice over IP side, the only study
that we had in the record said that in the last few years, it
had been over 66 percent in each instance. So, we selected 65
percent as a safe harbor. But, in both instances, both Voice
over IP providers and wireless providers are allowed to come in
and demonstrate that their revenues are significantly more
local in nature, and then they don't have to pay that safe
harbor.
Senator Sununu. I respect the fact that you're trying to
make a decision based on data, but it is spurious to make such
an important and significant financial decision based on one
datapoint. And I think it runs against common sense to assume
that the percentage of interstate communication taking place
under IP services is twice that taking place under wireless
services. I will agree they might not be equal, but a factor of
two to one, I think, really does defy common sense.
I appreciate your responses, though; they're very direct.
And I appreciate the indulgence of the Chairman.
Senator Burns. Mr. Rockefeller?
Senator Rockefeller. Thank you, Mr. Chairman.
Chairman Martin and Mr. Kneuer, I don't have questions for
you, and I apologize, but I'm going to vote for you.
[Laughter.]
Senator Rockefeller. The--first of all, I want to thank
you. It's my understanding you're going to be issuing an order,
before too long, with regard to a West Virginia company----
Mr. Martin. Yes.
Senator Rockefeller.--on a particular spectrum problem. And
that's very important, and I thank you for that.
As you know, we've talked about this before. We've been
working--you've been working with OMB, we've been working
together, to try and craft a letter on the Antideficiency Act--
and that's a very perilous Act--in which case the result of the
Act is the opposite of what is intended in the case of the
Universal Service Fund. I know you've been working to resolve
that, very hard. But I think it has to be said that the OMB
appears to be reasonably openly hostile to the Universal
Service Fund, and, as is, unfortunate, to the E-Rate program.
So, do you--what is your sense of how this is coming along? Can
we resolve this?
Mr. Martin. Well, I do think that we'll be able to provide
you with some of the details of that soon, I hope. I think
that, in general, as we've discussed, the Commission's
conclusions are that the Antideficiency Act would otherwise
apply to the Universal Service programs, that the high-cost
program currently has enough in reserves that it would not be
in violation of the ADA, and that if the ADA directly applied
to the Schools and Libraries Program today, it would require us
to raise the assessment rate slightly. So, that would be our
best estimate today.
Senator Rockefeller. And I thank you.
As you know--and Senator Stevens has left--and he's been
very helpful to us on this question of the appropriation's 1-
year exemption for the Universal Service Program from the
Antideficiency Act. And my question to you is, would it be
helpful to have another year's extension?
Mr. Martin. Well, I think that whether or not Congress
decides to extend it any further is really a decision for
Congress. I will pledge that, no matter whether it's extended
or not, we will make sure it doesn't have a programmatic impact
on the program. We will make sure that we have sufficient funds
raised and that we are able to continue to have letters go out
to the schools and libraries without being delayed. One of the
fortunate benefits of some of the steps we've taken to lower
the assessment rate is that I do think we have a little bit
more cushion if the result is that a slight increase is
needed--I think it would be able to be absorbed, at this time,
if needed.
Senator Rockefeller. Good.
I have been trying for, I don't know, 10, 12 years, through
a crude mechanism called a tax credit--I, along with a whole
lot of other people; in fact, I think 75 Members of the
Senate--to get broadband deployment done through a tax credit.
And I'm unhappy to report to you that it hasn't worked in any
single one of those 10 or 12 years. We've gotten absolutely
nowhere.
So, do you think that the Universal Service Fund has, in
its range, the possibility of support for broadband
infrastructure? Do you have the authority to make it a
supported service, or is that something that has to come from
the Congress?
Mr. Martin. I think we have the authority to take some
additional steps on the universal service side, but I think
that, practically, the fund wouldn't be large enough to absorb
that. So, I do think we have the authority. Our authority is
pretty broad in Section 254 of the Act, that says that the
Universal Service Program needs to ensure that people that live
in rural areas have have access to reasonably the same services
at reasonably the same prices as those who live in urban areas.
I think that language is broad enough that we could do
something else, but I also think that the Universal Service
mechanism today wouldn't be able to support that financially.
So, I think that we wouldn't be able to do that, but I think we
have the authority.
Senator Rockefeller. Thank you.
Thank you very much.
Senator Burns. Mr. Dorgan?
Senator Dorgan. Chairman, thank you very much.
Is it Kneuer?
Senator Burns. Kneuer.
Senator Dorgan. Mr. Kneuer, thank you.
Mr. Kneuer, I intend to support your nomination.
Mr. Kneuer. Thank you.
Senator Dorgan. I think you have substantial
qualifications, and I'm pleased that you offer yourself for
service.
I do want to mention that, this morning, the trade numbers
came out. Today's monthly trade deficit announcement was $68
billion in a month, highest in history. We are engaged in a
trade strategy that is fundamentally faulty and is going to be
very damaging to this country. Most of the trade debt is owned
by--a bulk of it's owned by the Chinese and the Japanese. And I
know that being involved in the Commerce Department, you will
hear people in the Commerce Department marching around and
talking about how wonderful this trade strategy is. It's a
disaster. It's been a disaster under Democrats and Republicans.
It's grown much, much worse under this Administration, I might
say. But I just wanted to make the point that we've had a
pretty devastating announcement this morning about a $68-
billion monthly trade deficit. That--at some point, somebody
needs to say, ``Whoa, this isn't working.''
But, Chairman Martin, you were part of a troika in the FCC
that said it was OK to create new ownership rules so that in
one major city one company--one company--could own eight radio
stations, three television stations, the newspaper, and the
local cable company, and that would be just fine, no problem at
all. The Federal courts found a problem with that. Do you still
feel that way? I mean, you're now beginning a new ownership
rulemaking process, but do you still feel comfortable
suggesting that in one major American city it's fine for one
company to own eight radio stations, three television stations,
the cable company, the dominant newspaper? Does that give you
pause?
Mr. Martin. Yes, it gives me pause. I'm not so sure I would
even concede that I was comfortable with the decision when we
made the decision previously.
Senator Dorgan. But you voted for it.
Mr. Martin. I did. I did. Because I thought that the record
indicated, in certain of the largest markets, you should be
able to purchase more, under the record that we had in front of
us. But were we all concerned about the impact of changes in
media ownership requirements? Yes. Did it make me comfortable
then? I wouldn't say so. And does it give me pause now? Sure. I
think that the Commission is diligently trying to go back and
reinitiate the media ownership process, to do so with an open
mind regarding what we should end up doing. We start that
process by not only receiving comments, but doing public
hearings and listening to what the public has to say about
where we should go on media ownership.
Senator Dorgan. Chairman Martin, do you think there's been
substantial increased concentration in virtually every area of
the media?
Mr. Martin. I think that it would depend. When you say
``increased,'' I think it depends upon what you're measuring
that against. In general, I would say that yes, there has been
increase, but I think that there have been some areas where
there obviously has been a decrease. The availability of news
and information, for example, by the Internet, is significant,
and wasn't available previously, depending upon the timeframe
you're looking at. Obviously, in the television area, there's a
significant number of sources of news and information because
of cable that were not available prior to cable, when some of
these rules were put in place. So, it depends upon the
timeframe you're measuring, but, yes, there has been some, if
you're looking at the most recent time.
Senator Dorgan. Would you agree or disagree with this?
Right now, the media conglomerates--about six of them,
essentially: Viacom, Disney, Time Warner, News Corp, CBS, and
NBC/General Electric--control the big-four networks, 70 percent
of the prime-time television market share, most cable channels,
as well as vast holdings in radio, publishing, movie studios,
music, Internet, other sectors. And whenever somebody talks to
me about the--all of the Internet opportunities and so on--I've
talked before about many voices, one ventriloquist; you can
cite many voices, one ventriloquist. Would you agree with me
that we have seen very substantial concentration in almost
every area of the media in recent years?
Mr. Martin. In the recent years, we've seen more
concentration. Since the 1996 Act passed, after which the
Commission changed some of those rules, there's been
significant increase since then.
Senator Dorgan. Do you believe that increased
concentration, in most cases, will likely be moving against the
issue of localism, and that localism--with respect to
broadcasting and the use of the airwaves that belong to all of
the American people--localism is essential and central to the
notion of what broadcasting is about?
Mr. Martin. I think that localism and competition and
diversity are the three central tenets of what broadcasting is
about, but I think localism is certainly one of the most
important.
Senator Dorgan. And you have a localism proceeding
underway. It's--in fact, Chairman Powell started it, and then
just dropped it, it just sat there, and nothing happened. You
have resurrected it. I believe you've resurrected it, or at
least have talked about it. When do you expect it to be
concluded?
Mr. Martin. What we first need to do is compile the record
that Chairman Powell started gathering, and put all of the
information that we had gathered in that record into the media
ownership proceeding to make sure that people have an idea of
what information has been gathered. And we have one outstanding
hearing on localism, separate from media ownership, that
Chairman Powell had committed to do, that's outstanding, that
we had never done, either.
Senator Dorgan. It would make much more sense to complete
the proceedings on owner--on localism, rather, before you
decide on ownership, wouldn't it?
Mr. Martin. We will make sure we complete the last hearing
on----
Senator Dorgan. And then--I know my time is expiring--one
point. Since the Chairman started talking about net neutrality
in his first question to you, I want to--when the FCC decided
that broadband should be removed from Title II of the
Telecommunications Act, and said it is no longer a telephone
service, but an information service, that took from it, then,
the attachment to nondiscrimination. Nondiscrimination rules
applied, up until that point, to all that was described as a
telephone service; nondiscrimination rules no longer applied
once it was taken out of that definition. Is that correct?
Mr. Martin. They did apply to all that was described as a
telephone service.
Senator Dorgan. Right.
Mr. Martin. It wasn't necessarily all broadband. Cable
modem services weren't described as a telephone service. So, it
applied to some telephone companies offering it, but not to the
cable companies.
Senator Dorgan. And when the FCC made its decision, then
the nondiscrimination rules that did attach at that point did
not continue to attach.
Mr. Martin. Those, and all the rules that applied to
telephone services, do not attach.
Senator Dorgan. And you've, instead, developed a set of
principles. Do those principles include the principle of
nondiscrimination?
Mr. Martin. No, they don't include the principle of
nondiscrimination.
Senator Dorgan. They do not.
Mr. Martin. No.
Senator Dorgan. Any reason for that?
Mr. Martin. In terms of access, there is discrimination
that has to occur by necessity to deliver different kinds of
services. Bits that are being used to deliver voice services or
real-time video services are currently prioritized in order to
allow those services to be delivered. I think that, when we
talk about nondiscrimination among third parties, there has
been discussion about whether the Commission should look at
that issue. But just saying you can't discriminate among any
bits actually isn't the way that current Internet access
services are provided. That's what allows different services to
be able to be provided.
Senator Dorgan. But you understand the issue of
nondiscrimination--or discrimination, I should say. Would you
agree that the television advertisements that ran during our
markup, this committee's markup, on the issue of net
neutrality--the television commercials that ran, that indicated
that the principles that you have established included
nondiscrimination principles--that those television commercials
were inaccurate?
Mr. Martin. I'm not familiar with the ones that said that
we included nondiscrimination in our four principles. But, if
it did, nondiscrimination was not one of the four principles
that we included.
Senator Dorgan. Mr. Chairman, you've been generous with the
time.
Chairman Martin, you and the Commission will make some of
the most important decisions that will be made, in terms of the
development of information in this country. And this democracy
thrives on information, the free flow of information. And it
seems to me, further concentration in the media, having fewer
and fewer people determine what we see, hear, and read in this
country, is antithetical to everything we should believe in
that fosters and nurtures democracy. And I hope as you and the
other commissioners sift through these, you will keep that in
mind. And I hope as you have six hearings around the country,
the first of which will be in Los Angeles, you will hold one in
a rural state, a rural area, as well, to allow us to weigh in
on these things.
And let me finish with at least one bone here, and that is,
your predecessor held only one hearing and then moved ahead. I
appreciate the fact that you're holding six hearings. Some of
us will want to hold you up even more, to the extent we can, to
slow you down and hope you reach the right conclusion. But
thanks, again, for serving in public office. You'll hear, of
course, much more from me as we proceed to work together on
these issues.
Mr. Kneuer, thank you, again, for offering yourself today
to public service.
Senator Burns. Mr. DeMint?
Senator DeMint. Thank you, Senator Burns.
Mr. Martin, your son has proved, once again, that Senators
can put anyone to sleep.
[Laughter.]
Senator DeMint. I mentioned the WARN Act in my statement,
the emergency alert system that we've been working on here in
Congress, and obviously the FCC has an interest in that and has
begun the rulemaking process. Our request is that you--as you
stated in your statement, as you mentioned, the will of
Congress should be expressed sometime in November. Apparently
the bill is having hearings on the House side. We will pass it
at 12 today. And, we believe, before the end of this year, we
will have expressed the will of Congress. Are you willing to
wait?
Mr. Martin. Yes. The Commission, obviously, thinks it's
important to make sure we have an emergency alert system that
takes advantage of new technologies, but it's always preferable
if Congress can tell us exactly how we should try to implement
it.
Senator DeMint. Yes. Thank you.
Just a couple of questions about net neutrality. And I know
we can't get into detail, but these are diagnostic questions.
On the content side, do you believe a content provider,
such as Google, should have the right to charge its customers
more for prime placement on its pages than those who don't have
prime placement?
Mr. Martin. Yes. I'm not sure I see any reason why Google
shouldn't be able to charge people however----
Senator DeMint. But----
Mr. Martin.--whatever it wants to charge.
Senator DeMint. OK. Do you think a network provider, such
as Verizon, should have the freedom to charge more for higher
requirements, such as video, from its customers?
Mr. Martin. I do. And I think the Commission has stated
that in its principles, as well.
Senator DeMint. OK. So, you think network providers, if
they are offering higher-speed options and different types of
products, that they can price those differently.
Mr. Martin. I think so. And if we didn't allow them to,
then they would not be willing to offer those different kinds
of products.
Senator DeMint. Exactly. And I think, as you know, what you
just said is opposed to the concept of network neutrality. So,
just wanted to make sure we were on the same page there.
Just a quick question about multicast. And I was happy to
see that you had pulled from the agenda the vote on additional
must-carry privileges. As we move toward creating more cable
competition, more video options in the marketplace, obviously
we think it--at least a number of us do--think this is not the
time to go in and mandate that our retailers of video services
are required to carry different options by their customers,
when we think that's going to happen naturally. But is it fair
to say--do you intend to bring multicast must-carry up for a
vote again at the Commission?
Mr. Martin. Well, I don't have any current intentions to,
because I don't think there's a majority of the commissioners
who support that.
Senator DeMint. Good. Thank you. That's all my questions.
Thank you, Senator Burns.
Senator Burns. Mrs. Boxer?
Senator Boxer. Thank you, Mr. Burns.
I want to follow up on the idea of localism that Senator
Dorgan started, Mr. Martin. And, by the way, I have questions
for both of you, so I'm going to stay a second round if my time
runs out.
When the FCC released its media ownership decision in 2003,
Congress and the courts criticized the Commission for serious
problems. In then-Chairman Powell's words, quote, ``In the
months that followed, we heard the voice of public concern
about the media loud and clear. Localism is at the core of
these concerns, and we're going to tackle it head-on.''
You said, Mr. Martin, ``What local broadcasters provide in
terms of local news and information to the community is really
important.'' And you were quoted in USA Today, in October 2005.
So, I appreciated that, because I certainly agree with that.
You still feel that way about the importance of localism?
Mr. Martin. Yes. I do.
Senator Boxer. OK. Now, in August 2003, the FCC established
a Localism Task Force to study issues like the impact of media
consolidation on local news programming. It is now 3 years
later, and we haven't seen a release of any report or any
policy recommendations from the staff. What has happened to
that?
Mr. Martin. When the Localism Task Force was started, under
the previous chairman, they had committed to having a series of
hearings. I think the final hearing was supposed to be in
Maine. At the end of that hearing, they were to release a
report that summarized all of the hearings that had occurred up
until then. That process was never completed by Chairman
Powell; when I took over as chairman, it was already supposed
to have been completed. I think Chairman Powell had originally
promised to do that by the end of 2004. But it wasn't
completed. And so, at this point, we do need to do another
localism hearing, which I've committed that the Commission will
go do. And----
Senator Boxer. I appreciate that.
Mr. Martin.--and I've asked the--and I asked the staff to
go back--they had not done the summary they had promised, and I
asked them to go back and draft a summary of that, so we'll be
able to make that publicly available.
Senator Boxer. OK. Well, let me tell you why I have a
problem with your answer. I mean, I'm very happy with what
you're going to do, but I think there's work that's been done,
and it's been stifled. And I don't know who stifled it. But I
have a copy of a draft report, dated June 17, 2004, ``Do Local
Owners Deliver More Localism? Some Evidence From Local
Broadcast News.''
And I ask that a copy of this be placed in the record. *
---------------------------------------------------------------------------
* The information referred to has been retained in Committee files.
---------------------------------------------------------------------------
Senator Burns. Without objection.
Senator Boxer. Now, according to this report--have you seen
this report?
Mr. Martin. I haven't. And I wasn't chairman in June 2004.
Senator Boxer. You haven't.
Mr. Martin. No, I have not seen that.
Senator Boxer. So, you don't think any of the commissioners
saw this report.
Mr. Martin. I think that the previous chairman may have,
but I don't know if the other commissioners saw it.
Senator Boxer. OK. Well, I'm going to ask you to please go
back, after you look at it again--I'm going to ask the--all the
other commissioners to tell me if they ever saw this report,
because, according to it, ``Local ownership''--this is a
quote--``adds almost 5 and one-half minutes of local news and
over 3 minutes of local on-location news. That's over 5 minutes
for each 30-minute local news broadcast. In the course of a
year, this means locally owned stations provide over 33 more
hours of regional news, news that's directly relevant and
important to viewers.''
Now, this isn't national security, for God's sakes. I mean,
this is important information about issues that are key to the
people--I would suspect, your own mom, who lives in rural
America. So, I don't understand who deep-sixed this thing. I
want to get to the bottom of it and find out if any
commissioners saw this.
And now, we're starting all over again. Well, bless your
heart, and I'm glad you did it, but I don't have great
confidence. You know, it seems to me--and maybe I'm just a
cynic; I've been here a long time--that, you know, this comes
out with a very clear response to the question of consolidation
versus localism. And we have a pro-localism bit of information,
nonbiased, compiled, clear, defended. And it never sees the
light of day? Thank you, whoever sent this to me; I don't have
a clue. But I'm sure glad somebody out there sent this to me,
because I think this is news, that this kind of work has never
seen the light of day.
Do you have any clue who may have stopped the release
here----
Mr. Martin. As I----
Senator Boxer.--of this report.
Mr. Martin. As I said, if it was dated in June 2004, I
became chairman in March 2005.
Senator Boxer. Were you a commissioner then?
Mr. Martin. I was a commissioner then.
Senator Boxer. OK. And will you promise that you will read
this report?
Mr. Martin. I will. And I don't mean to imply that the
staff hasn't pulled that back out in trying to resummarize
where we were. I was just saying that the staff didn't have
anything that was ongoing in finalizing the evidence that we
had gathered. So, I'll make sure that that should be one of the
things that they are----
Senator Boxer. OK.
Mr. Martin.--looking at trying to----
Senator Boxer. Well----
Mr. Martin.--summarize, and would be released. I will go
back and make sure.
Senator Boxer. Good. Because I have to tell you, this is--
this is a--this is a piece of work. This isn't some lightly
pulled-together, you know, deal. They went out, and they did a
real good study of this, and they found out that there's more
local news. Despite all of the other talk from the big guys,
there's more news. There's more local news. And that's what
people want.
Let me tell you, all you have to do is ask any of us. When
we run for office, we have to take our advertising budget
pretty seriously. We go to the local news. That's what the
people want. That's what they watch. They want it. And this
says you get more news when you have the luxury of having local
news stations.
And withhold my other questions until----
Senator Burns. Mr. Pryor?
Senator Boxer.--the next round.
Senator Burns. Our team seems to be falling apart, so, you
know, our batting order's going to pick up here a little bit.
[Laughter.]
STATEMENT OF HON. MARK PRYOR,
U.S. SENATOR FROM ARKANSAS
Senator Pryor. Thank you, Mr. Chairman.
Chairman Martin, thank you--thank both of you for being
here. And Chairman Martin, thank you for your interest in
always trying to reach out and work with me in various
capacities. I appreciate that.
Let me follow up on one of Senator Sununu's questions of a
few moments ago on the Internet. He asked about whether the
Internet should be regulated like, I guess, other media. Let me
get to a more specific question about the Internet, and that's
decency on the Internet.
Does the FCC have any authority over the Internet right
now?
Mr. Martin. On the content and decency, no, we don't have
any on the Internet.
Senator Pryor. OK. Should it?
Mr. Martin. You know, I think that, unlike the broadcast
medium, or even some of the other mediums that are putting
forth the same communications to everyone, the Internet is
inherently a ``pull'' media, where you're going to a site and
pulling it down. And so, I think that is different than having
the same kind of standard that applies to broadcast that's
``pushed out,'' so to speak, to everyone.
Senator Pryor. OK. Do you think that we, as in the Congress
or the FCC or the folks that are--the Internet industry, so to
speak--do you think we should try to make the Internet a more
decent place?
Mr. Martin. Yes. I think that all the policymakers should
be trying to make sure that the Internet is a more decent
place.
Senator Pryor. What's the best approach on trying to
accomplish that?
Mr. Martin. You know, I'm not sure. I think it's quite a
challenge. We're facing current challenges in the media
environment that we do have more direct authority over. So, I'm
not sure.
Senator Pryor. I know that there's--if I can change gears--
I know there's been a media campaign through the Ad Council, et
cetera, about parental controls on televisions, and using cable
and satellite, et cetera. And I know that you've been involved
in watching that, trying to help structure that. What's your
assessment of that public relations campaign and the
effectiveness of it, as it stands today?
Mr. Martin. I think that the public relations campaigns are
always a good thing when you're making parents aware of the
tools that they have, but I've consistently said that I don't
think that's enough in the current environment. I think that we
need to have more direct action to empower parents to take more
control over the media that's coming into their homes. So,
while I think it's helpful, I don't think parental controls are
enough.
Senator Pryor. Would you----
Mr. Martin. I mean, I don't think the media campaign about
parental controls is enough----
Senator Pryor. OK, that's fair enough. Would you assess it
as being effective or ineffective, or somewhere in between?
What--how do you assess it right now?
Mr. Martin. I think that the ads themselves may be
effective, but I think it's important to remember that the
parental control mechanisms that they are promoting are not
available to a significant number of homes today. Those are
only available if you're a digital cable subscriber, and
digital cable subscribers are still, on average across the
country, only 40 to 45 percent of the homes----
Senator Pryor. Yes.
Mr. Martin.--and that, even then, they are reliant upon
accurate ratings, and many of the programs are not rated, or,
if it's live or sports, something could still end up happening,
like it did during the Super Bowl. So, I think the ads may be
effective at their message, but I'm not sure I agree that that
alone is enough.
Senator Pryor. OK. Now, let me ask you about a state-
specific issue that's on another topic, and that is video
franchising. The Committee's heard a lot of discussion about
the Texas video franchising law, and I'd like to get--as a
Federal regulator, I'd like to get your impressions of the
Texas video franchising, about--has it increased consumer
choice? Has it lowered the costs of programming? How's it
working?
Mr. Martin. It does seem that, in Texas, it has increased
the consumer choice for video services. We went down and had a
field hearing in Keller, Texas, where we were able to see
Verizon offering their video service alternative, saw a
demonstration of what AT&T plans to roll out in San Antonio
this year after that franchise reform. So, it does seem to be
increasing the ability of new entrants to be able to come in
and offer a video alternative.
Senator Pryor. Is it getting to middle-income and lower-
income households at the same rate it's getting to higher-
income households?
Mr. Martin. You know, we haven't seen any evidence of that
yet. I do think that many of the services were more high-end,
they were more geared toward users who were purchasing a lot of
media. But I haven't seen any evidence yet to see what's going
on.
Senator Pryor. One last question on net neutrality.
Chairman Stevens, a few moments ago, mentioned that net
neutrality has been a very sticky wicket for this Committee and
for the telecommunications bill. There's really not a consensus
on it. Actually, I was outvoted, in my position on it, in the
Committee. And I think it's one of the major holdups on getting
telecommunications done this year on the Senate floor.
Personally, I like the FCC's approach, where you define two
or three--I guess, three different items. And I'm willing to
add a fourth, if that makes sense. Given your experience on the
FCC in net neutrality, how has--from your perspective, how has
the FCC approach worked, so far?
Mr. Martin. I think, thus far, it has worked effectively. I
mean, we identified the principles that we thought would guide
us as we try to evaluate the issue. And we've acted where there
were complaints that were raised in front of us. And we've been
able to do that, thus far. And so, I think, so far, waiting to
adopt widespread rules has been more prudent when we might not
completely appreciate the implications of those rules. Absent a
significant number of complaints that we've identified in the
marketplace, or a significant number of problems, I think
showing your strength through enforcement is the better method,
at this point.
Senator Pryor. Mr. Chairman, I'm out of time. Thank you.
Senator Burns. Thank you, a lot, Mr. Pryor.
I've got some questions. Mr. Kneuer, we know you're here.
[Laughter.]
Senator Burns. Even though you're not making any noise. And
I've--I got to watch those babies go back and forth, and I
said, ``Welcome to the Senate Daycare Center.''
[Laughter.]
Senator Burns. And--but I think it's very refreshing. I'm
like Mr. Stevens; I think it's very--well, I'm just a new
grandpa, though.
I'm going to go to--Mrs. Boxer's got a couple of questions.
I've got an important press conference--has to do with
agriculture; and so, I take my agriculture pretty serious--and
I'm going to submit my questions, but I want Mrs. Boxer to ask
her--she's got a couple of more questions. Is that fair to say?
Senator Boxer. Correct, Mr. Burns.
Senator Burns. Well, if you could do that, and then I can--
I will close this thing up a little bit. But I want to give you
an idea of what I'll be asking, and I want you to respond both
to the Committee and to me. So, thank you.
Senator Burns. You may proceed, Mrs. Boxer.
Senator Boxer. Thank you, sir.
Mr. Martin, I was very disappointed with your answer on net
neutrality. You didn't even hesitate. You know, ``We're just
going to allow these ISPs to set up their toll roads.'' Not
your words; mine. But, you know, I have to say that your answer
was so clear, I appreciate your honesty on the point, but it's
only going to make a mess up here, because those of us who
really believe in nondiscrimination, who believe that--the
reason the Internet is so great is, we've stopped taxes, we've
stopped toll roads, we've stopped fees. All of us. Or most of
us. And, therefore, we've had this incredible growth. And now,
all of a sudden we're going to have the ISPs setting up toll
roads, charging different websites different rates. And your
answer is, ``Well, if we interfere with it, they won't do--they
won't make any progress.'' Well, that is not the history of the
net. We've had, you know, nondiscrimination since the
beginning, and there are many of us who are just going to fall
on that sword.
So, I'm just a little disappointed, because, as you know,
the bill that passed out of here really gives you a lot of
discretion. And I don't feel real comfortable with that, at
this point, given what you have said.
So, I hope you'll take a look again at the way you answered
the question. Maybe I misheard it. But I've never heard someone
just come straight out, ``Yup, we're going to let these folks
do what they have to do,'' to the detriment, in my view, of the
people of this country.
I have a question on the NSA warrants, because I think it's
an interesting situation here. You wrote a letter to
Representative Markey that the Government had asserted--which
is correct--the military- and state-secrets privilege in a
Federal lawsuit; and, therefore, you said, you know, ``We can't
get involved in this.'' Well, you probably know that the court,
a U.S. District Court, refused to dismiss the case on state-
secret grounds, is allowing the plaintiffs to seek information,
and discovery is going on. I mean, basically, what the court
said, ``Hey, if there are some of--some of these records that
were needed, please tell us, and we will absolutely go forward,
but don't do a fishing expedition.''
So, in light of this ruling, what plans does the FCC have
to launch an investigation into the reported turning over of
customer phone records to the NSA that had absolutely no
involvement in any nefarious, or even suspected, acts?
Mr. Martin. As I understand it, there are multiple cases in
many different district courts. You're talking about the
district court that allowed that case to proceed. There have
been other district courts that have actually dismissed the
cases because of the state-secret privilege that's been
asserted. And I think that issue was on appeal before the
appellate courts. And once there's a consistent ruling, the
Commission will follow that consistent ruling. But I think that
you have multiple courts coming out with different rulings, at
this point.
Senator Boxer. Well, we'll get back to you on that, because
the decisions I know basically say that, you know, you could
proceed. But I--you know, I'm disappointed in that, too.
Mr. Martin. And could I respond to the earlier net-
neutrality question?
Senator Boxer. Yes, but I want to make sure I get a
question in to Mr. Kneuer. So, we may have to have that between
us, which is just fine, if you don't mind. But I feel like Mr.
Kneuer has been left out of this, and he has a very important
job, because he will be establishing a $1-billion public-safety
interoperability grant program, and a lot of us, in a
bipartisan way, are concerned that our first responders can't
talk to each other.
So, how soon after October 1st will the NTIA be prepared to
distribute grants to public-safety entities, Mr. Kneuer?
Mr. Kneuer. Thank you, Senator.
We've--since the day the legislation was passed, we've been
working to be prepared to execute our responsibilities and
authorities under the statute. As you mentioned, October 1 we
have--borrowing authority becomes available. We have executed
agreements with the Treasury Department to have access to those
monies. We're working closely with our colleagues at the
Department of Homeland Security. I've got strong support from
the leadership inside the Department of Commerce to make sure
that we have all the resources that we need.
Senator Boxer. So, how soon--I hate to cut you off, but I'm
running out of time--how soon can we see these grants being
distributed to public-safety entities? Give me the date.
Mr. Kneuer. I don't have a date on when grants would be
made available. As I've said, we've been working to be prepared
to have the monies available----
Senator Boxer. OK. Well, let me just say----
Mr. Kneuer.--working with DHS.
Senator Boxer.--because I've got 8 seconds left, and I--I'm
glad that you've planned it. But I have to say, we don't have
time here. You know, everybody knows that we have to prepare--
that we have to prepare for an attack, that our law enforcement
has to talk to each other. And you have the authority to start,
October 1. And you can't tell me the date. So, will you please
write to me within the next week or so and give me the
projected date that you will be ready to hand out these grants?
Mr. Kneuer. Absolutely.
Senator Boxer. Because it's important. I thank you. And I
will submit all my other questions for the record.
I understand, Mr. Chairman, you're off to a press
conference, so----
Senator Burns. I have. And I thank the Senator from
California.
I--this is my question. Mr. Kneuer, I'm going to--I have a
couple of questions for Chairman Martin, and it has to do with
the VoIP 911 order and subsequent filings and this type thing.
I want to know the status of those, and we will get those from
you.
Mr. Kneuer, on the Enhanced 911 Act. We still have--50
percent of the counties of the United States still do not have
a locator service, and some of them don't even have 911 and the
PSAPs. And I think we've got to work on that, because we worked
very hard to pass that, to make sure those monies, as a pass-
through to the--many states were using that money to balance
their own budgets rather than passing it through to the
countries or the entities that establish those call-in centers.
So, my questions will go along with that.
Also, can you bring me up to date, Mr. Kneuer, on ICANN and
the--negotiating between them and VeriSign? I think that's very
important right now for the Internet and also the routers and
this type of thing. And most of my questions have been asked.
You have--you responded to them, Mr.--Chairman Martin, and I
appreciate that, and your candid responses to us. And--but
those are the areas, I think, right now.
911 is particularly important to me, because I think
probably the passage of that legislation was the best public-
safety legislation that we've passed. In other words, locator
service for a cell phone just makes good sense to me,
especially in a time when we have more cell numbers now than we
have wired numbers. And we need locator services when that 911
call comes in to the nearest first responder.
And so, my questions will be along that line, and if you
could respond to me, and to the Committee, I would appreciate
that very much. We're moving--and yet, we've still got some
ground--very important ground to cover for both of you. I plan
to support both of you for these positions and move ahead. But
I would have--well, I would like to have responses to those
questions. If you'd agree to that, why--I'm going to leave this
record open for two weeks for other members to ask their
questions and for you to get a response from this hearing.
Without further ado, I'm going to recess this Committee.
[Whereupon, at 11:25 a.m., the hearing was adjourned.]
A P P E N D I X
Prepared Statement of Hon. Daniel K. Inouye, U.S. Senator from Hawaii
I am pleased to welcome Chairman Martin and Mr. Kneuer before our
Committee today.
Chairman Martin has an impressive resume and an accomplished record
as a public servant both as Commissioner and as Chairman of the Federal
Communications Commission. I look forward to hearing his plans on how
he will address the challenges in overseeing the ever-changing
communications industry.
I am especially interested in how he will ensure that consumers are
protected and competition is promoted as technology changes and
industries consolidate. I have a number of specific questions that I
will ask the Chairman to address after we hear from the nominees.
Thank you.
______
National Religious Broadcasters (NRB)
Manassas, VA, September 11, 2006
Hon. Ted Stevens,
Chairman,
Senate Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Mr. Chairman:
I write today to express the strong support of the National
Religious Broadcasters (NRB) for the re-nomination and confirmation of
the Honorable Kevin Martin as Commissioner and Chairman of the Federal
Communications Commission.
During my tenure as president of NRB, I have developed enormous
respect for the intellect, character, integrity and clear-headed
thinking of Chairman Martin, His understanding of the multi-faceted
issues facing a rapidly-changing media world is impressive; his
carefully reasoned and well-balanced approach to these complex matters
is even more so.
I have found Chairman Martin firm in his commitment to public
policy values shared by the overwhelming majority of the American
people. Unafraid to challenge media professionals to their highest and
best, he is also firm in his readiness to seek correction when they
stoop to their lowest and least.
While NRB members have not seen every issue before the FCC go their
way, we have always found an open door to make our thoughts and
concerns known. This is due, in no small part, to Chairman Martin's
leadership.
I respectfully urge your quick and favorable action on the re-
nomination of Chairman Martin.
Sincerely,
Frank Wright, Ph.D.,
President/CEO
______
National Religious Broadcasters (NRB)
Manassas, VA, September 11, 2006
Hon. Daniel K. Inouye,
Ranking Member,
Senate Committee on Commerce, Science, and Transportation,
Washington, DC.
Dear Senator Inouye:
I write today to express the strong support of the National
Religious Broadcasters (NRB) for the re-nomination and confirmation of
the Honorable Kevin Martin as Commissioner and Chairman of the Federal
Communications Commission.
During my tenure as president of NRB, I have developed enormous
respect for the intellect, character, integrity and clear-headed
thinking of Chairman Martin. His understanding of the multi-faceted
issues facing a rapidly-changing media world is impressive; his
carefully reasoned and well-balanced approach to these complex matters
is even more so.
We have been particularly encouraged by Chairman Martin's active
support for Multi-Cast Must-Carry. This important public policy
question has, in our view, not received the full and fair consideration
it deserves by the Congress. We commend Chairman Martin for his efforts
to advance the Multi-Cast Must-Carry debate in the regulatory arena.
While NRB members have not seen every issue before the FCC go their
way, we have always found an open door to make our thoughts and
concerns known. This is due, in no small part, to Chairman Martin's
even-handed leadership.
I respectfully urge your quick and favorable action on the re-
nomination of Chairman Martin.
Sincerely,
Frank Wright, Ph.D.,
President/CEO.
______
Response to Written Questions Submitted by Hon. Ted Stevens to
John M.R. Kneuer
Question 1. Last December this Committee reported out a bill to
provide $1.5 billion for the converter box program necessary for the
DTV conversion, which will in turn make new spectrum available for
first responders. Can you update us on your implementation of the
program?
Answer. Since the enactment of the Deficit Reduction Act of 2005, I
have devoted significant time and effort to implement plans in
accordance with the Act. The Department of Commerce and the Office of
Management and Budget (OMB) have given this program high priority and
have expedited clearance and procurement schedules to allow us to
develop the program consistent with the schedule established in the
Act.
Because this program will affect every community, we have attempted
to solicit a wide range of public comment on how to design and operate
the program. Since enactment of the bill, NTIA has met with a full
range of interested parties representing consumers, television
stations, equipment manufacturers and retailers, potential vendors of
coupon systems, and consumer education services. We have also
collaborated with other Federal agencies including the Federal
Communications Commission, the Government Accountability Office, and
the Department's Office of the Inspector General, to insure the full
range of government expertise is brought to bear on creating a program
that is effective, efficient, and minimizes waste, fraud and abuse.
On July 25, 2006, NTIA issued a Notice of Proposed Rule Making
(NPRM) that seeks public comment on all aspects of the coupon program
including eligibility, coupon distribution and redemption, retailer
certification, and consumer education. The NPRM also addresses the
technical specifications for converter boxes that may be purchased with
the coupon. The deadline for public comment in the NPRM is September
25, 2006. NTIA's intention is to publish final rules in early 2007.
Because this is a one-time program and NTIA does not have coupon
facilities, the agency intends to obtain services needed for the
program through time-limited contracts. NTIA will retain oversight and
approval of all work done under contract. Contemporaneously with the
NPRM, NTIA has begun the government acquisition process to obtain the
services necessary to educate consumers, certify retailers as well as
distribute and redeem the coupons. The Request for Information (RFI)
published on July 31, 2006, is the first step in the Federal
procurement process. The information obtained in the RFI will be used
to create cost estimates, performance requirements and other
information required in the procurement process. Responses to the RFI
were due on September 15, 2006. This information will allow NTIA to
begin formal procurement as soon as the Rules are adopted. NTIA intends
to award contracts by June 2007, so that vendors will have at least 6
months to have coupon systems operational by January 2008.
In both the NPRM and the RFI, NTIA has sought to design a coupon
program that is efficient; minimizes the opportunity for waste, fraud
and abuse; and, furthers the objective of a timely transition to
digital television.
Question 2. You are considering a proposal that would grant
VeriSign the exclusive right to distribute dot.com addresses to
registrars who in turn make names available to the public for a fee. We
have heard complaints about the perpetual nature of that contract and
the price increases it provides for dot.com names. Can you give us an
update on where your review stands on that issue and your views on the
contract terms?
Answer. Under its Memorandum of Understanding with the Department,
the Internet Corporation for Assigned Names and Numbers (ICANN) is
required to obtain the Department's approval for any proposed new .com
Registry Agreement before it can take effect. On March 3, 2006, ICANN
submitted a proposed new agreement as part of a litigation settlement
with VeriSign. Since that time, the Department has been reviewing the
proposed new agreement in light of its longstanding goals of ensuring
the continued stability and security of the Internet domain name system
and of promoting the consumer benefits of a competitive marketplace. To
that end, the Department has been in consultation with the Department
of Justice's Antitrust Division regarding the competition issues raised
by the proposed new agreement. In addition, Department officials have
met with a number of interested stakeholders, including registrars,
Internet service providers, and search engine companies, who have
concerns about the agreement. The Department has also heard from a
number of stakeholders advocating the benefits of the new agreement for
the security and stability of the Internet domain name system. The
Department of Commerce has heard from Members of Congress on both sides
of the issue. The Department will consider all of these views and
concerns as it concludes its review of the new .com registry agreement.
______
Response to Written Questions Submitted by Hon. Conrad Burns to
John M.R. Kneuer
Question 1. At the end of the 108th Congress, we passed the ENHANCE
911 Act. Among other things, that bill created a joint 911 Program
Office between NTIA and NHTSA. Can you describe any progress your
agency and NHTSA have made in setting up that office? What are the
status and current plans and what is your overall commitment to
ensuring that office has the internal resources necessary to be
effective?
Answer. I believe that enhanced 911 and wireless E-911 services are
very important to the security and safety of the American people. NTIA
and NHTSA will continue to work toward greater coordination and
communications among Federal, State and local emergency communications
systems and organizations involved in this effort. NHTSA and NTIA look
forward to working with Congress to develop solutions for the
deployment of both wireless and wireline E-911 nationwide.
As of September 14, 2006, NHTSA and NTIA completed the following
activities:
Management Plan for the E-911 Joint Program. NHTSA and NTIA
completed and submitted to Congress on March 23, 2005, a
management plan for the 5-year duration of the joint program to
facilitate coordination and communication among Federal, state,
and local emergency communications systems, emergency
personnel, public safety organizations, telecommunications
carriers, and telecommunications equipment manufacturers and
vendors involved in the implementation of E-911 services.
Memorandum of Understanding. On April 13, 2006, NHTSA and NTIA
completed a Memorandum of Understanding to formalize the joint
program mandated by the ENHANCE 911 Act of 2004 (the Act), Pub.
L. No. 108-494.
National E-911 Implementation Coordination Office (ICO). NHTSA
and NTIA established basic office functions, including
telephone, mailing address, office email address, website, and
logo. The ICO is housed at NHTSA.
Wireless E-911 Deployment Status. NHTSA, in conjunction with
the National Emergency Number Association (NENA), completed
tasks to expand the wireless deployment profile to include
Public Safety Answering Point (PSAP) FCC Phase II readiness
information.
ICO Website. NTIA, in coordination with NHTSA, designed,
developed, registered and obtained a URL (http://www.e-
911ico.gov/) for an ICO website to be fully operational in
early FY07. This website will primarily be used for
coordination and distribution of information on E-911 issues.
Relative to the status and current plans, NHTSA and NTIA also
initiated the following E-911 activities:
Strategic Plan. NHTSA and NTIA developed the initial draft
version of a strategic plan for the activities for the ICO.
This plan will be completed in early FY07.
Planned Meeting. The ICO is planning to convene a meeting early
in Fiscal Year 2007 (FY07) of all Federal agencies involved in
911 activities. During this meeting, the responsibilities of
the ICO will be discussed as well as methods for ongoing
coordination among involved Federal agencies.
Stakeholder Listening Sessions. To elicit further input of
stakeholders on ICO activities and priorities, NHTSA and NTIA
are planning a series of formal listening sessions that will be
open to all interested parties.
Next Generation 911 Initiative. NHTSA is continuing its Next
Generation 911 Initiative by issuing a Request for Proposals
(RFP) for a design team to complete a high-level system
architecture and a migration plan for the Next Generation of
the 911 system, enabling the use of technologies such as Voice-
Over-Internet Protocol (VoIP) within the 911 network.
Federal 911 Coordination. Under the Next Generation 911
Initiative, NHTSA will convene a meeting of all Federal
agencies involved in 911 activities. During this meeting, the
responsibilities of the ICO will be discussed as well as
methods for ongoing coordination among Federal agencies.
Outreach. NTIA, in conjunction with NHTSA, initiated outreach
with stakeholders on the forefront of E-911 implementation
efforts, including state and local public safety experts,
experienced emergency personnel, leading equipment
manufacturers, PSAP operators, national public safety
organizations, and expert Federal agencies. Additionally, the
ICO already is working with the National Association of State
911 Administrators (NASNA) to provide leadership and management
to ensure that all areas of this country are E-911 enabled for
all technologies and moving toward the next generation of
technology. One of the main vehicles for doing this will be to
facilitate state planning efforts and distribute state's best
practices and lessons learned.
Implementation Plan for the National Strategy for Pandemic
Influenza. The Department of Transportation, in cooperation
with Health and Human Services, the Department of Homeland
Security, and the Department of Commerce, is leading an effort
to develop model protocols for 911 Call Centers (Public Safety
Answering Points) that address the provision of information to
the public, facilitate caller screening, and assist with
priority dispatch of limited emergency medical services.
Meeting of NHTSA Administrator and NTIA Acting Assistant
Secretary. NHTSA and NTIA are planning a meeting between the
NHTSA Administrator and the Acting Assistant Secretary, in
accordance with the Memorandum of Understanding signed by both
agencies.
The ICO is housed at NHTSA. NTIA and NHTSA are continuing to
support ICO activities in Fiscal Year 2007 from within existing staff
resources. NTIA and NHTSA are fully committed to doing everything
possible within the limitations of existing resources to ensure the ICO
is effective in providing the necessary leadership to facilitate
further deployment of E-911 capabilities where they are lacking today.
Question 2. According to the National Emergency Number Association,
today nearly 50 percent of counties in this country do not contain a
Public Safety Answering Point (PSAP) that can accept Phase II wireless
E-911 calls, meaning the call taker does not know the location of the
call. Additionally, 25 percent of counties can not accept Phase I E-911
calls, meaning they have no location or callback number if the call
gets disconnected. There are still 300 counties that do not have E-911
for wireline service, over 100 of which lack even basic 911. And of
course the VoIP deployment is still ongoing. Progress is being made but
these numbers are troubling. Beyond issuing mandates that directly
affect communications providers, what do you see as the proper role for
the FCC, NTIA and the Federal Government generally in providing
leadership and management to ensure that all areas of this country are
E-911 enabled for all technologies and moving toward the next
generation of technology?
Answer. I believe the proper role for NTIA, NHTSA, the FCC, and the
Federal Government is providing leadership and management.
One of the major functions of the new ICO and particularly the ICO
website is to provide the industry with examples of ``Best Practices''
from around the country. NTIA, in particular, has formed a close
working relationship with the E-911 Best Practices Working Group
jointly led by the Association of Public Safety Communications
Officials, International (APCO), the National Emergency Number
Association (NENA), and National Association of State 911
Administrators (NASNA). This group, established as an off-shoot of the
Network Reliability and Interoperability Council (NRIC) in December
2005, is made up of emergency communications experts from around the
country. It will act as a clearinghouse for the collection and
distribution of creative efforts to address E-911 financing,
enhancement and deployment questions.
Another function of the ICO is working with the National
Association of State 911 Administrators (NASNA) to provide leadership
and management to ensure that all areas of this country are E-911
enabled for all technologies and moving toward the next generation of
technology. One of the main vehicles for doing this will be to
facilitate state planning efforts and distribute state's best practices
and lessons learned.
______
Response to Written Question Submitted by Hon. Jim DeMint to
John M.R. Kneuer
Question. In 2002 Congress enacted the ``Dot Kids Implementation
and Efficiency Act.'' This requires the NTIA to ensure that any manager
of the .US country code provides a safe set of sites for children. What
do you intend to do to promote this virtual playground for children on
the Internet?
Answer. I will continue to work to promote the kids.us domain name
space, as enacted as part of the Dot Kids Act, to protect children from
inadvertently accessing inappropriate content or the threat of online
predators while they are exploring the Internet.
Currently, twenty-three organizations--including the Smithsonian,
the Library of Congress, Disney, PBS, and Nickelodeon--provide
educational and entertaining content on the kids.us website.
If confirmed, I am committed to promoting the kids.us domain by
encouraging providers of children's content to build kids.us websites.
I will continue to promote the domain as an attractive addition to
companies that currently host children's content on their existing
websites.
If confirmed, I would work with Congress on creative ideas to build
the kids.us domain into a safe, robust and exciting place for children
to play and learn online.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
John M.R. Kneuer
Question 1. Many critics of the ICANN-VeriSign settlement agreement
argue that the presumptive renewal clause would allow VeriSign to hold
on to the dot-com registry in perpetuity. How do you see ICANN holding
the registry operator accountable without the strong leverage of being
able to award the contract to a competing operator?
Answer. Over the course of the past 6 months, I and other Commerce
Department officials have met with a number of interested stakeholders
including registrars, Internet service providers, and search engine
companies with interests in or concerns about the agreement. The
concerns have largely focused on the impact on competition of the
proposed price increase for registrations permitted by the new
agreement and the terms for future renewals of the revised new .com
Registry Agreement. The Commerce Department has sought the advice of
the Antitrust Division of the Justice Department on the competition
concerns raised.
On the other hand, other interested stakeholders have advocated
that the renewal terms of the proposed agreement benefit the security
and stability of the Internet domain name system. We have also
consulted with those Federal agencies with expertise in the areas of
security and stability on this matter.
Based on the information that we have gathered, I am confident that
any decision made by the Department will appropriately balance all of
the interests to ensure the continued stability and security of the
Internet domain name system and of promoting the consumer benefits of a
competitive marketplace.
Question 2. One of ICANN's primary missions is to promote
competition. How does a presumptive renewal clause promote competition?
Answer. As noted above, the Department is reviewing the proposed
new agreement in its entirety to ensure both the continued stability
and security of the Internet domain name system and of promoting the
consumer benefits of a competitive marketplace.
Question 3. Cyber security is a critical mission that all
organizations struggle with. How can ICANN ensure that the registry
operators are making the necessary security enhancements to guarantee
the stability of the domain name system? How can ICANN hold a registry
operator accountable?
Answer. Cyber security standards are developed by the various
industry organizations, such as the Internet Engineering Task Force
(IETF), ISO, and IEEE, and adherence to the various standards is
voluntary for the most part. While ICANN is not a standards
organization, it promotes the adoption of industry standards through
its agreements with registry operators to comply with these standards.
Registry agreements address the technical obligations, including
compliance with the various industry developed standards, security
requirements and outage reporting that all registry operators must
meet. In addition each registry agreement contains a Service Level
Agreement which identifies the terms should the registry operator fall
below the performance specifications.
Question 4. Do you believe that a registry operator should be
required to publicly justify any price increases? If no, why not and
how is such an arrangement not anti-competitive? If yes, why is
Verisign allowed to increase their prices four out of 6 years without
justification?
Answer. The domain name marketplace is not a regulated one. Prices
are set based on negotiations between private sector parties. The price
cap for .com registrations and price adjustments permitted under the
proposed new .com Registry Agreement were negotiated by ICANN and
VeriSign.
Nevertheless, the Commerce Department is aware of the concerns
raised primarily by the registrar community about the impact of a price
increase on their industry. We have been in consultation with the
Antitrust Division on this issue and will be guided by its advice in
any final decision the Department makes.
Question 5. Would greater competition in the registry space promote
price competition and better service?
Answer. I firmly believe that increased competition promotes lower
prices and better services for consumers. Accordingly, one of the
Department's core objectives during the transition to private sector
management of the Internet domain name system has been the promotion of
competition in this marketplace to bring the benefits to consumers of
betters prices and services. The Department has strongly supported
ICANN's efforts to introduce new top-level domains and to develop
processes for the future introduction of more names.
Question 6. Commerce asked the Department of Justice's Antitrust
Division to review the settlement agreement. Please share with us the
agency's concerns. How are these concerns being addressed? Were there
recommendations or suggestions made that are not being implemented or
considered?
Answer. During its review of the proposed new .com Registry
Agreement, the Commerce Department has sought the advice of the
Antitrust Division of the Justice Department regarding the impact on
competition of the proposed price increase for registrations permitted
by the new agreement and the terms for future renewals of the revised
new .com Registry Agreement. Like the Commerce Department, the
Antitrust Division has been gathering information from the parties,
interested stakeholders, and others on these issues, to provide its
analysis and advice to the Department on any competition issues that
may be raised by the proposed agreement. We expect to rely on this
advice to evaluate the potential impact on competition of this
agreement.
Question 7. Are you open to bringing together the different
stakeholders in order to arrive at a solution that will satisfy the
different parties and still ensure the promotion of competition?
Answer. In addition to its consultation with the Department of
Justice's Antitrust Division regarding the competition issues raised by
the proposed new .com registry agreement, I and other Commerce
Department and Antitrust Division officials have met with a number of
interested stakeholders, including registrars, Internet service
providers, search engine companies, among others, with interests in or
concerns about the agreement. The Commerce Department has also heard
from a number of stakeholders advocating the benefits of the new
agreement for the security and stability of the Internet domain name
system. We have also heard from Members of Congress on both sides of
the issue. Commerce Department and Antitrust Division officials have
been gathering information from proponents and opponents of the
agreement and I am confident that this information will be taken into
consideration in any final decision that is made.
Question 8. Can you comment on ICANN's transparency issues? How has
this improved over the years and how can the organization continue to
improve?
Answer. The Department has long considered transparency to be a
fundamental principle to ICANN's overall mission and function. The
current Memorandum of Understanding (MOU) was structured to ensure that
ICANN becomes a sufficiently stable, transparent, representative, and
sustainable management organization capable of handling the important
tasks associated with the technical management of the Internet domain
name system into the future. This MOU also contains specific provisions
intended to improve transparency, efficiency, and timeliness in the
consideration and adoption of policies. While ICANN has made several
improvements in its decision-making and policy development processes,
as well as in internal reviews and evaluations of these processes, I
believe ICANN is mindful of the need for continual improvement. The
Department's recent public consultation process has revealed strong
support from a majority of interested stakeholders for a more specific
focus on transparency and accountability in ICANN's internal procedures
and decision-making processes.
Question 9. In recent years, the NTIA, working with the Census
Bureau, has conducted a survey of Americans that explores their use of
the Internet, computers, and other information tools. The last report,
``A Nation Online'' (the 6th in a series that dates to the 1990s), was
released in 2004 and interviewed approximately 57,000 households. This
survey has been extremely useful to policymakers at all levels of
government and the general public. It may be the only publicly
available source of state-level data on the use of information
technology and it is widely used by researchers in the academic,
private, and public sectors. Does NTIA plan to field another survey in
this series? If so, when?
Additionally, this survey has sometimes (but not in 2004) asked
respondents about their monthly bill for Internet service. As one of
the sole public sources for this information, this consumer price data
has been valuable to policymakers and researchers. Will NTIA include a
question in the survey asking consumers what they pay, on a monthly
basis, for Internet and other information services?
Answer. Although ``A Nation Online'' has been useful to
policymakers, the process of compilations renders it to be untimely in
a rapidly changing marketplace. As market penetration stabilizes and is
less subject to rapid change, we may consider future studies.
Question 10. A ``next generation'' measurement question for
policymakers is the quality of the Nation's communications
infrastructure. Policy debate in the broadband arena will increasingly
focus on network quality--the upload and download speeds available to
home consumers, the reliability of service, and where advanced high-
speed infrastructure is deployed. Network speed is increasingly a
benchmark used in international comparisons of broadband deployment, as
well as part of regional economic development strategies in the United
States. Network speed is also important to economists measuring the
``information economy'' and for public understanding of the societal
impacts of information and communications technology.
However, traditional measurement tools, such as surveys of
consumers or reporting requirements for companies, have limitations in
addressing this issue. How does the NTIA plan to address this
measurement challenge?
Answer. I agree with your thoughts on the challenge of gathering
systematic and up-to-date information on the availability and quality
of broadband services. As noted in response to the previous question,
the communications market is both rapidly expanding and rapidly
changing. New service providers are entering the market every month,
using a wide variety of different technologies. The services that those
providers offer to customers in terms of price, speed, and quality are
changing even more rapidly. Today we see various broadband platforms:
fiber, cable, satellite, cellular, broadband over power line, and
municipal Wi-Fi, just to name a few.
In this competitive marketplace, consumers will demand and carriers
will have an incentive to provide accurate information or speed, price
and terms of service.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
John M.R. Kneuer
Question 1. NTIA will soon begin distributing one billion dollars
in interoperability funds as mandated in legislation we passed last
year on the transition to digital television. The conference report
states that a portion of these funds should be distributed based on
threat and risk of natural disasters and terrorism. Can you describe
the factors NTIA will use to determine threat and risk, and how you
plan to disburse this money? Will it all be risk-based? If not, what
portion?
Answer. We are working to begin this grant program as soon as
possible so funds may be applied to the challenges of establishing
interoperable communications among first responders across the country.
NTIA and the Office of Grants and Training at the Department of
Homeland Security (DHS) are working closely together on an agreement
that will allow the use of DHS' existing grants infrastructure,
technical assistance and outreach mechanisms. The agreement will speed
program initiation, avoid duplication, and minimize the paperwork and
administrative burden for public safety agencies applying for funds
from multiple programs.
Distribution of funds will be determined consistent with the
guidance found in the legislative history accompanying the Act.
Accordingly, NTIA intends:
to distribute a limited portion of grant funds under this
section in a manner that gives priority to those public safety
agencies in areas designated as at high risk for natural
disasters and threats of terrorism to the agriculture, food,
banking, and chemical industries; the defense industrial base;
emergency services; energy; government facilities; postal,
shipping, public health, health care, information technology,
telecommunications, and transportation systems; water; dams;
commercial facilities; and national monuments and icons.
Program priorities and allocation of funds have not been
determined. We anticipate that the level of risk and need will vary
from state to state. Funding decisions, therefore, are expected to be
made based on current DHS and SAFECOM guidance as well as documentation
provided by first responders in their state interoperable
communications plans and information collected during the application
process. We also expect the program to provide technical assistance to
first responders in each state to assist them in identifying needs and
how funds from this program might be best used to address
interoperability gaps and weaknesses across the country.
Question 2. We must make sure that we have a robust consumer
education campaign so the American people know about the DTV transition
and how to prepare for it. What is your plan to best use the $5 million
available for this task? Given its local presence in communities and
educational mission, will public broadcasting be utilized in this
consumer education campaign?
Answer. I agree with you about the importance of consumer education
in the digital-to-analog converter box coupon program. NTIA's Notice of
Proposed Rule Making (NPRM) emphasizes the importance of carefully
leveraging the $5 million allocation by collaborating with and
complementing the consumer education efforts of broadcasters, equipment
manufacturers, consumer electronics retailers, and consumer groups as
well as the ongoing efforts of the FCC. Based on our discussions with
these stakeholders, we understand that they are planning to widely
publicize the digital television transition with their customer groups.
The NPRM seeks additional information on the role and future activities
of the stakeholders in providing consumer information about the coupon
program.
Any public information campaign undertaken by NTIA will only be
successful if other stakeholders in the digital transition and the
digital-to-analog converter box coupon program contribute significant
effort to the production and distribution of this information. NTIA
fully expects that broadcasters--both public and commercial--will play
primary roles in alerting their viewers to the availability of Federal
assistance to purchase digital-to-analog converter boxes.
In addition, NTIA's Request for Information (RFI), entitled
``Market Research for Implementation of Digital to Analog Converter Box
Coupon Program,'' seeks information about the capability of
organizations to facilitate the participation of interested partners
and to create a consistent and effective message about the coupon
program. The RFI also will provide NTIA with information about
organizations with the capability to assist in all aspects of the
coupon program including consumer information.
Question 3. The Department of Commerce has reportedly consulted
with the Department of Justice on the proposed .com registry renewal
agreement. Has DOJ provided your agency with any suggestions or
comments?
Answer. During its review of the proposed new .com Registry
Agreement, the Commerce Department has sought the advice of the
Antitrust Division of the Justice Department regarding the impact on
competition of the proposed price increase for registrations permitted
by the new agreement and the terms for future renewals of the revised
new .com Registry Agreement. Like the Commerce Department, the
Antitrust Division has been gathering information from the parties,
interested stakeholders, and others on these issues, to provide its
analysis and advice to the Department on any competition issues that
may be raised by the proposed agreement. We expect to rely on this
advice to evaluate the potential impact on competition of this
agreement. While we have engaged in extensive discussions with the
Antitrust Division throughout this review process, the Department has
not yet received the Antitrust Division's formal advice.
Question 4. The proposed .com registry renewal agreement would
permit the registry operator to raise prices by 7 percent in four out
of 6 years of the contract. Must these increases be justified annually?
Can you compare and contrast this contract, and the aforementioned
pricing, with the .net domain registry operation?
Answer. The domain name marketplace is not a regulated one. Prices
are set based on negotiations between private sector parties. The price
cap for .com registrations and price adjustments permitted under the
proposed new .com Registry Agreement, for example, were negotiated by
ICANN and VeriSign, Inc.
Nevertheless, the Commerce Department is aware of the concerns
raised primarily by the registrar community about the impact of the
potential price increase on their industry. We are also aware of the
differences in the pricing provisions of the current .net Registry
Agreement and the proposed new .com Registry Agreement. We have been in
consultation with the Antitrust Division on this issue and understand
that this has been taken into account in its competition analysis of
the proposed new agreement. The Commerce Department will be guided by
the Antitrust Divisions's analysis of this issue and its advice in any
final decision the Department makes on whether to approve the proposed
agreement.
______
Response to Written Questions Submitted by Hon. Bill Nelson to
John M.R. Kneuer
Question 1. I share concerns with others that the NTIA and the FCC
don't partner closely enough on setting Federal spectrum policy. What
steps do you think you could take to more effectively coordinate
spectrum policy with the FCC?
Answer. The relationship between the FCC and NTIA is extremely
important in setting Federal spectrum policy and over the past few
years, our two agencies have worked closely together. In partnership
with other government agencies, we've significantly increased the
amount of radio spectrum available to commercial licensees, much of
which has or will be used to provide broadband services, and we have
facilitated the resolution of complicated problems that have enabled
Federal users to better complete their missions.
In accordance with President Bush's Spectrum Policy Initiative,
NTIA will collaborate even more closely with the FCC in the coming
years to craft policies that promote efficient use of radio spectrum by
government and commercial users. We are already working together, and
with other Federal executive agencies, to develop national strategic
plans that address spectrum requirements and the impact of new
technologies. In June, NTIA, in collaboration with the FCC, solicited
public comment on a proposed spectrum sharing test bed that will enable
Federal and non-Federal users of spectrum to test new ways to share the
radio spectrum. NTIA and the FCC will also explore the use of advanced
information technology capabilities to replace existing manual
processes and procedures. Finally, NTIA and the FCC are committed to
improving existing processes for assessing the impact of new
technologies on incumbent licenses, thereby expediting the introduction
of new spectrum uses.
If confirmed, I am committed to work with my colleagues at the FCC
and across government.
Question 2. I have heard from a number of my Florida constituents
about the proposed settlement between ICANN and Verisign that is under
review at your agency. What assurances can you give me that the
concerns of Internet users and small business owners are being
considered at NTIA? How will you address their concerns?
Answer. Under its Memorandum of Understanding with the Department,
ICANN is required to obtain the Department's approval for the proposed
new .com Registry Agreement before it can take effect. ICANN submitted
the proposed new .com Registry Agreement to the Department of Commerce
on March 3, 2006. The Department has been reviewing the proposed
agreement in light of its longstanding goals of ensuring the continued
stability and security of the Internet domain name system and of
promoting the consumer benefits of a competitive marketplace.
To that end, the Commerce Department has been in consultation with
the Department of Justice's Antitrust Division regarding the
competition issues raised by the proposed agreement. In addition, I and
other Commerce Department officials have met with a number of
interested stakeholders, including registrars, Internet service
providers, search engine companies, representatives of small businesses
and the user community, with concerns about the agreement. Based on the
information that we have gathered, I am confident that any decision
made by the Department will appropriately balance all of the interests
to ensure the continued stability and security of the Internet domain
name system and of promoting the consumer benefits of a competitive
marketplace.
Question 3. At the end of the 108th Congress, we passed the ENHANCE
911 Act. Among other things, that bill created a joint 911 Program
Office between NTIA and NHTSA. Can you describe any progress your
agency and NHTSA have made in setting up that office? What are the
status and current plans and what is your overall commitment to
ensuring that office has the internal resources necessary to be
effective?
Answer. I believe that enhanced 911 and wireless E-911 services are
very important to the security and safety of the American people. NTIA
and NHTSA will continue to work toward greater coordination and
communications among Federal, State and local emergency communications
systems and organizations involved in this effort. NHTSA and NTIA look
forward to working with Congress to develop solutions for the
deployment of both wireless and wireline E-911 nationwide.
As of September 14, 2006, NHTSA and NTIA completed the following
activities:
Management Plan for the E-911 Joint Program. NHTSA and NTIA
completed and submitted to Congress on March 23, 2005, a
management plan for the 5-year duration of the joint program to
facilitate coordination and communication among Federal, state,
and local emergency communications systems, emergency
personnel, public safety organizations, telecommunications
carriers, and telecommunications equipment manufacturers and
vendors involved in the implementation of E-911 services.
Memorandum of Understanding. On April 13, 2006, NHTSA and NTIA
completed a Memorandum of Understanding to formalize the joint
program mandated by the ENHANCE 911 Act of 2004 (the Act), Pub.
L. No. 108-494.
National E-911 Implementation Coordination Office (ICO). NHTSA
and NTIA established basic office functions, including
telephone, mailing address, office email address, website, and
logo. The ICO is housed at NHTSA.
Wireless E-911 Deployment Status. NHTSA, in conjunction with
the National Emergency Number Association (NENA), completed
tasks to expand the wireless deployment profile to include
Public Safety Answering Point (PSAP) FCC Phase II readiness
information.
ICO Website. NTIA, in coordination with NHTSA, designed,
developed, registered and obtained a URL (http://www.e-
911ico.gov/) for an ICO website to be fully operational in
early FY07. This website will primarily be used for
coordination and distribution of information on E-911 issues.
Relative to the status and current plans, NHTSA and NTIA also
initiated the following E-911 activities:
Strategic Plan. NHTSA and NTIA developed the initial draft
version of a strategic plan for the activities for the ICO.
This plan will be completed in early FY07.
Planned Meeting. The ICO is planning to convene a meeting early
in Fiscal Year 2007 (FY07) of all Federal agencies involved in
911 activities. During this meeting, the responsibilities of
the ICO will be discussed as well as methods for ongoing
coordination among involved Federal agencies.
Stakeholder Listening Sessions. To elicit further input of
stakeholders on ICO activities and priorities, NHTSA and NTIA
are planning a series of formal listening sessions that will be
open to all interested parties.
Next Generation 911 Initiative. NHTSA is continuing its Next
Generation 911 Initiative by issuing a Request for Proposals
(RFP) for a design team to complete a high-level system
architecture and a migration plan for the Next Generation of
the 911 system, enabling the use of technologies such as Voice-
Over-Internet Protocol (VoIP) within the 911 network.
Federal 911 Coordination. Under the Next Generation 911
Initiative, NHTSA will convene a meeting of all Federal
agencies involved in 911 activities. During this meeting, the
responsibilities of the ICO will be discussed as well as
methods for ongoing coordination among Federal agencies.
Outreach. NTIA, in conjunction with NHTSA, initiated outreach
with stakeholders on the forefront of E-911 implementation
efforts, including state and local public safety experts,
experienced emergency personnel, leading equipment
manufacturers, PSAP operators, national public safety
organizations, and expert Federal agencies. Additionally, the
ICO already is working with the National Association of State
911 Administrators (NASNA) to provide leadership and management
to ensure that all areas of this country are E-911 enabled for
all technologies and moving toward the next generation of
technology. One of the main vehicles for doing this will be to
facilitate state planning efforts and distribute state's best
practices and lessons learned.
Implementation Plan for the National Strategy for Pandemic
Influenza. The Department of Transportation, in cooperation
with Health and Human Services, the Department of Homeland
Security, and the Department of Commerce, is leading an effort
to develop model protocols for 911 Call Centers (Public Safety
Answering Points) that address the provision of information to
the public, facilitate caller screening, and assist with
priority dispatch of limited emergency medical services.
Meeting of NHTSA Administrator and NTIA Acting Assistant
Secretary. NHTSA and NTIA are planning a meeting between the
NHTSA Administrator and the Acting Assistant Secretary, in
accordance with the Memorandum of Understanding signed by both
agencies.
The ICO is housed at NHTSA. NTIA and NHTSA are continuing to
support ICO activities in Fiscal Year 2007 from within existing staff
resources. NTIA and NHTSA are fully committed to doing everything
possible within the limitations of existing resources to ensure the ICO
is effective in providing the necessary leadership to facilitate
further deployment of E-911 capabilities where they are lacking today.
Question 4. According to the National Emergency Number Association,
today nearly 50 percent of counties in this country do not contain a
Public Safety Answering Point (PSAP) that can accept Phase II wireless
E-911 calls, meaning the call taker does not know the location of the
call. Additionally, 25 percent of counties can not accept Phase I E-911
calls, meaning they have no location or callback number if the call
gets disconnected. There are still 300 counties that do not have E-911
for wireline service, over 100 of which lack even basic 911. And of
course the VoIP deployment is still ongoing. Progress is being made but
these numbers are troubling. Beyond issuing mandates that directly
affect communications providers, what do you see as the proper role for
the FCC, NTIA and the Federal Government generally in providing
leadership and management to ensure that all areas of this country are
E-911 enabled for all technologies and moving toward the next
generation of technology?
Answer. I believe the proper role for NTIA, NHTSA, the FCC, and the
Federal Government is providing leadership and management.
One of the major functions of the new ICO and particularly the ICO
website is to provide the industry with examples of ``Best Practices''
from around the country. NTIA, in particular, has formed a close
working relationship with the E-911 Best Practices Working Group
jointly led by the Association of Public Safety Communications
Officials, International (APCO), the National Emergency Number
Association (NENA), and National Association of State 911
Administrators (NASNA). This group, established as an off-shoot of the
Network Reliability and Interoperability Council (NRIC) in December
2005, is made up of emergency communications experts from around the
country. It will act as a clearinghouse for the collection and
distribution of creative efforts to address E-911 financing,
enhancement and deployment questions.
Another function of the ICO is working with the National
Association of State 911 Administrators (NASNA) to provide leadership
and management to ensure that all areas of this country are E-911
enabled for all technologies and moving toward the next generation of
technology. One of the main vehicles for doing this will be to
facilitate state planning efforts and distribute state's best practices
and lessons learned.
Question 5. Related to the 2009 digital TV transition, Congress
only authorized $5 million for a consumer education effort that many
contend is the most important element of ensuring that Americans are
prepared for the day that free, over-the-air television becomes an
exclusively digital service. Is that sum sufficient or should Congress
appropriate additional monies for this purpose? Given the success of
public outreach campaigns that public television has successfully
conducted in the past, if you are confirmed by the Senate, will the
NTIA--under your leadership--consider giving public television a
primary role in the comprehensive consumer education effort that will
be necessary to ensure a successful DTV transition for all Americans?
Answer. I agree with you about the importance of consumer education
in the digital-to-analog converter box coupon program.
NTIA's Notice of Proposed Rule Making (NPRM) emphasizes the
importance of carefully leveraging the $5 million allocation by
collaborating with and complementing the consumer education efforts of
broadcasters, equipment manufacturers, consumer electronics retailers,
consumer groups, as well as the ongoing efforts of the Federal
Communications Commission. Based on our discussions with these
stakeholders, we understand that they are planning to widely publicize
the digital television transition with their customer groups. The NPRM
seeks additional information on the role and future activities of the
stakeholders in providing consumer information about the coupon
program.
Any public information campaign undertaken by NTIA will only be
successful if other stakeholders in the digital transition and the
digital-to-analog converter box coupon program contribute significant
effort to the production and distribution of this information. NTIA
fully expects that broadcasters--both public and commercial--will play
primary roles in alerting their viewers to the availability of Federal
assistance to purchase digital-to-analog converter boxes.
In addition, NTIA's Request for Information, entitled ``Market
Research for Implementation of Digital to Analog Converter Box Coupon
Program,'' seeks additional information about the capability of
organizations to facilitate the participation of interested partners
and to create a consistent and effective message about the coupon
program. The RFI also will provide NTIA with information about
organizations with the capability to assist in all aspects of the
coupon program including consumer information.
Based on the public record developed through these proceedings,
NTIA intends to design a coupon program within the budget allocation
established by Congress. I greatly appreciate your concern about the
sufficiency of funding for this program and fully intend to keep you
apprised of activities, progress, budget, and all aspects of coupon
program implementation and administration.
______
Response to Written Questions Submitted by Hon. Daniel K. Inouye to
Kevin J. Martin
Question 1. One of the conditions adopted by the FCC and agreed to
by the parties in the AT&T-SBC/Verizon-MCI mergers was a requirement
that the combined entities provide stand-alone ADSL service to `ADSL-
capable customers' within its territory. It is my understanding that
under FCC precedent, this obligation to provide stand-alone ADSL
applies to both retail and commercial customers. How does the FCC
monitor compliance with this condition, and have there been any
allegations to date that either party is failing to abide by this
obligation to offer stand-alone service to residential consumers or
commercial ISPs? Is the Commission aware of concerns regarding de facto
noncompliance in situations where stand-alone service may be offered,
but where the price for stand-alone ADSL service is set well in excess
of the price for a bundled package of voice and ADSL service from the
carrier? What tools are available to the Commission to address such
concerns where a carrier's pricing of stand-alone service makes it
economically unreasonable for a consumer to purchase it?
Answer. In last year's merger review process, AT&T and SBC and
Verizon and MCI made certain voluntary commitments, including the
commitment to offer ADSL service without telephone service for a period
of 2 years. Specifically, the condition states that ``[w]ithin twelve
months of the Merger Closing Date,
[the merging parties] will deploy and offer within its in-region
territory ADSL service to ADSL-capable customers without requiring such
customers to also purchase circuit switched voice grade telephone
service.'' See, e.g., SBC/AT&T, Appendix F. The Commission, in
approving the mergers made these commitments express conditions of the
merger approvals. Accordingly, each company is required to file
annually a declaration by an officer of the corporation attesting that
the merged company has substantially complied with the terms of the
conditions in all material respects. Although the deadline to file its
annual declaration of compliance has not been reached, AT&T informed
the Commission on June 30, 2006 that it fully implemented the condition
offering ADSL service without telephone service under the terms of this
condition in each of its states as of June 13, 2006.
I am not aware of any allegations to date that either party is
failing to abide by this obligation. Nevertheless, the Commission will
vigilantly monitor all consumer-related problems concerning this
service, including reviewing consumer complaints and other information.
As noted in the merger, we expect that the terms and conditions of this
service will reflect the underlying competitiveness of the market. The
Commission retains its historical discretion to monitor the market and
take corrective action if the public interest requires. Specifically,
the Commission is prepared to use all of its enforcement tools to
ensure compliance with this condition.
Question 2. In response to concerns about indecent programming on
cable television, many cable operators announced plans in recent months
to create so-called ``tiers'' of family friendly programming. In your
view, are these ``tiers'' working? If not, is any further action by the
Commission contemplated to assist parents in choosing appropriate
programming? If so, what are you considering? In your view, is the new,
inter-industry initiative recently announced by former head of the
Motion Picture Association of America, Jack Valenti, which is designed
to promote greater awareness among parents of channel blocking
technology, sufficient to help parents and protect children from
objectionable material?
Answer. The family tiers proposed by the cable industry are an
important step, but it is too soon to know if consumers will view these
tiers as a viable alternative. For example, several Members of Congress
have expressed their concern that the family tiers as proposed would
have no sports programming. Moreover, of those cable operators who have
announced plans to introduce a family tier, only some have introduced
them and, of those, many have not rolled them out in all of their
service areas. We will have to see how these tiers evolve.
The industry initiative to educate parents how to block channels
should be helpful. Parents, of course, are the first line of defense,
but industry also has a responsibility to empower parents by offering
them more effective tools with which to supervise their children's TV
watching. Consumer education efforts are always welcome but I do not
believe it alone is sufficient to help parents and protect children
from objectionable material. First, not all television viewers have
access to blocking technologies. Only those consumers who own
televisions that have a V-chip or subscribe to digital cable have this
blocking capability. Second, blocking technologies are dependent upon
programs being rated and being rated accurately. Sporting events like
the Super Bowl, for instance, are not rated.
Question 3. In November 2005, the FCC initiated a proceeding asking
whether the existing franchising process unreasonably impedes the
development of cable competition and broadband deployment in
contravention of the directive in section 621 and, if so, how the FCC
should address this issue. In your opinion, does the FCC have the
authority under existing law to preempt or invalidate state or local
redlining prohibitions and build-out requirements imposed on video
service providers?
Answer. In the Notice of Proposed Rulemaking that the Commission
adopted in November 2005, we sought comment on our authority to preempt
and our authority to address build-out requirements. The Commission has
not yet made a final determination on this issue.
In the Notice, we sought comment on the tentative conclusion that,
``pursuant to the authority granted under Sections 621(a) and 636(c) of
the Act, and under the Supremacy Clause, the Commission may deem to be
preempted and superseded by any law or regulation of a state or LFA
that causes an unreasonable refusal to award a competitive franchise in
contravention of section 621(a).'' The Commission also sought comment
on ``whether build-out requirements are creating unreasonable barriers
to entry for facilities-based providers of telephone and/or broadband
services'' and on the FCC's authority in this area. In so doing, the
Commission took note of Section 621(a)(4)(A) of the Act. That provision
provides that, ``[i]n awarding a franchise, the franchising authority
shall allow the applicant's cable system a reasonable period of time to
become capable of providing cable service to all households in the
franchise area.''
The Commission explicitly recognized the separate prohibition on
redlining contained in the statute. The Commission explicitly stated:
``For purposes of this discussion, we distinguish between (1)
requirements that may function as barriers to competitive entry for
providers of telephone and/or broadband services with existing
facilities, and (2) prohibitions against discriminatory deployment of
cable services based upon economic considerations.'' (See Section
621(a)(3) which states: ``In awarding a franchise or franchises, a
franchising authority shall assure that access to cable service is not
denied to any group of potential residential cable subscribers because
of the income of the residents of the local area in which such group
resides.'') I would note that, in their comments, the U.S. Department
of Justice stated: ``In light of the significant entry-deterring
effects of mandated build-out requirements, the Department believes
that LFAs should not be allowed to impose any such requirements except
where necessary to prevent income discrimination, which the statute
prohibits.''
Question 4. In 2004, SBC (now AT&T) petitioned the FCC to rule that
Internet Protocol (IP) platform services, including video services, do
not fit any of the service-specific legacy regulatory regimes in the
Communications Act, and thus the IP video service offerings that AT&T
plans to offer would not be subject to the franchising regime of Title
VI. In your opinion, is AT&T's proposed IP video service subject to the
requirements of Title VI of the Communications Act? Please explain the
legal justification for your answer.
Answer. Section 621(b)(1) of the Communications Act provides that
``a cable operator may not provide cable service without a franchise.''
The Communications Act defines a ``cable operator'' as ``any person or
group of persons (A) who provides cable service over a cable system and
directly or through one or more affiliates owns a significant interest
in such cable system, or (B) who otherwise controls or is responsible
for, through any arrangement, the management and operation of such a
cable system.'' The Act excludes from the definition of a ``cable
system'' ``a facility of a common carrier which is subject, in whole or
in part, to the provisions of Title II of this Act, except that such
facility shall be considered a cable system (other than for purposes of
section 621(c)) to the extent such facility is used in the transmission
of video programming directly to subscribers, unless the extent of such
use is solely to provide interactive on-demand services.''
AT&T is a common carrier which is subject, in whole or in part, to
the provisions of Title II of the Communications Act. Thus, whether
AT&T's video services are subject to the requirements of Title VI
depends upon the characteristics of AT&T's video offering. To the
extent that the offering involves solely ``interactive on-demand
services,'' the franchising requirements of the Act would not apply.
The Commission has not yet made a final determination on this issue.
Question 5. To ensure that the media ownership rules are properly
drawn, a full understanding of the public interest requirements of
localism and diversity is necessary. Do you plan to complete the FCC's
pending localism and diversity proceedings before moving forward with a
decision in the media ownership proceeding?
Answer. In June 2004, the Commission initiated a diversity
proceeding, issuing a Public Notice seeking comment on
``constitutionally permissible ways to further the mandates of section
257 of the Telecommunications Act of 1996, 47 U.S.C. Sec. 257, which
directs the FCC to identify and eliminate market entry barriers for
small telecommunications businesses, and Section 309(j) of the
Communications Act of 1934, 47 U.S.C. Sec. 309(j), which requires the
FCC to further opportunities in the allocation of spectrum-based
services for small businesses and businesses owned by women and
minorities.''
In July 2004, the Commission initiated a localism proceeding,
issuing a Notice of Inquiry ``to receive direct input from the public
on how broadcasters are serving the interests and needs of their
communities; whether we need to adopt new policies, practices, or rules
designed to promote localism in broadcast television and radio; and
what those policies, practices, or rules should be.''
We received numerous comments in both of these proceedings, which
will help inform our decisions in the review of our media ownership
rules we commenced this past summer. The Media Bureau is preparing a
summary of the comments submitted in our localism proceeding that will
be released to the public. The Media Bureau also is preparing a summary
of the testimony taken at the localism hearings. All of this
information will be fully incorporated into the media ownership
proceeding. I also have proposed to consolidate the diversity
proceeding with our review of the media ownership rules in order to
ensure full consideration of the diversity issue with the media
ownership proceeding. In addition, localism and diversity will be the
focus of several independent studies and among the topics covered at
our public hearings as we move forward with the media ownership
proceeding.
Question 6. In August 2005, the FCC initiated a rulemaking to
consider what consumer protection requirements should be applied to all
providers of broadband service. What is the status of this proceeding?
In recent decisions, the D.C. Circuit has indicated that there are
limits to the scope of the FCC's ancillary authority under Title I of
the Communications Act. In your opinion, does the FCC have the
authority to implement consumer protections on broadband service
providers pursuant to Title I and how would the rationale differ from
the failed efforts in the broadcast flag and video description
decisions?
Answer. As you note, the Commission initiated a rulemaking to
consider what consumer protection requirements should be applied to all
providers of broadband service in August of 2005. That proceeding is
still pending. While the Commission is still considering what new
rules--if any--are needed, the Commission has remained vigilant in
protecting the consumer's interest. Moreover, even while the proceeding
is pending, the Commission remains able to take appropriate enforcement
actions where needed. For example, we recently opened an investigation
and issued letters of inquiry to Verizon based on new charges it levied
on broadband Internet access services. In response, Verizon abandoned
the use of the charges.
The Commission has authority to adopt broadband consumer protection
requirements pursuant to Title I of the Communications Act. The Supreme
Court reaffirmed last year that the Commission ``has jurisdiction to
impose additional regulatory obligations under its Title I ancillary
jurisdiction to regulate interstate and foreign communications.''
National Cable & Telecomm. Ass'n v. Brand X Internet Services, 125 S.
Ct. 2688, 2696 (2005) (Brand X). Indeed, the Supreme Court specifically
recognized the Commission's ancillary jurisdiction to impose regulatory
obligations on broadband Internet access providers. Brand X, 125 S. Ct.
at 2708 (``[T]he Commission remains free to impose special regulatory
duties on facilities-based ISPs under its Title I ancillary
jurisdiction. In fact, it has invited comment on whether it can and
should do so.'').
The Commission may exercise ancillary jurisdiction under Title I
when: (1) Title I confers subject matter jurisdiction over the service
to be regulated; and (2) the assertion of jurisdiction is reasonably
ancillary to the effective performance of the Commission's
responsibilities. United States v. Southwestern Cable Co., 392 U.S.
157, 177-78 (1968). The Commission has found that both of these
conditions are met for consumer protection requirements on broadband
service. Wireless Broadband Internet Access Order, 20 FCC Rcd 14853,
14914, para. 110 (2005). See also, id. At n. 342 (noting that the
Commission was concurrently adopting ``a Notice of Proposed Rulemaking
to determine what specific duties are necessary for broadband Internet
access service providers, regardless of the technology they employ, to
ensure the Commission's ability to fulfill its statutory obligations in
the important area of consumer protection'').
First, as the Commission stated, broadband services are ``wire
communications'' or ``radio communications,'' as defined in sections
3(52) and 3(33) of the Act, and section 2(a) of the Communications Act
gives the Commission subject matter jurisdiction over ``all interstate
and foreign communications by wire or radio.''
Second, as the Commission has concluded, consumer protection
regulations would be ``reasonably ancillary'' to effective performance
of the Commission's responsibilities. Such rules would facilitate the
Commission's responsibility to implement sections 222 (customer
privacy), 255 (disability access), and 258 (slamming and truth-in-
billing), among other provisions, of the Act.
In the broadcast flag decision, the court found that the Commission
lacked subject matter jurisdiction over the electronic equipment it
sought to regulate and thus failed to satisfy the basic prerequisite to
the exercise of ancillary jurisdiction. See American Library Ass'n v.
FCC, 406 F.3d 689 (D.C. Cir. 2005). In the video description case, the
D.C. Circuit held that, because of First Amendment concerns, the
Commission's ancillary jurisdiction did not extend to direct regulation
of video program content. See Motion Picture Ass'n of America, Inc. v.
FCC, 309 F.3d 796 (D.C. Cir. 2002). As discussed above, at issue here
are broadband services that are ``wire communications'' or ``radio
communications'' within the Commission's subject matter jurisdiction
over ``all interstate and foreign communications by wire or radio.''
Question 7. In August 2005, the FCC adopted a Policy Statement
laying out four principles ``to encourage broadband deployment and
preserve and promote the open and interconnected nature of the public
Internet.'' While the Supreme Court indicated in dicta in the Brand X
decision that the FCC could attempt to draft rules under its Title I
ancillary authority, the D.C. Circuit has indicated that there are
limits to the scope of the FCC's ancillary authority. In your opinion,
does the FCC have authority to promulgate and enforce these principles
under Title I, and if so, what limiting legal principles apply to the
FCC's ancillary authority to address discrimination by broadband
service providers? Please explain the legal justification for your
answer.
Answer. The Commission, under Title I of the Communications Act,
has the ability to adopt and enforce the net neutrality principles it
announced in the Internet Policy Statement. The Supreme Court
reaffirmed last year that the Commission ``has jurisdiction to impose
additional regulatory obligations under its Title I ancillary
jurisdiction to regulate interstate and foreign communications.''
National Cable & Telecomm. Ass'n v. Brand X Internet Services, 125 S.
Ct. 2688, 2696 (2005) (Brand X). Indeed, the Supreme Court specifically
recognized the Commission's ancillary jurisdiction to impose regulatory
obligations on broadband Internet access providers. Brand X, 125 S. Ct.
at 2708 (``[T]he Commission remains free to impose special regulatory
duties on facilities-based ISPs under its Title I ancillary
jurisdiction. In fact, it has invited comment on whether it can and
should do so.'').
The Commission may exercise ancillary jurisdiction under Title I
when: (1) Title I confers subject matter jurisdiction over the service
to be regulated: and (2) the assertion of jurisdiction is reasonably
ancillary to the effective performance of the Commission's
responsibilities. United States v. Southwestern Cable Co., 392 U.S.
157, 177-78 (1968). Both of these conditions are met with respect to
the four principles of the Commission's 2005 Policy Statement. Indeed,
the Commission found ``that both of the predicates for ancillary
jurisdiction are likely satisfied for any consumer protection, network
reliability, or national security obligation that we may subsequently
decide to impose on wireline broadband Internet access service
providers.'' Wireless Broadband Internet Access Order, 20 FCC Rcd
14853, 14914, para. 109.
First, as the Commission stated, broadband services are ``wire
communications'' or ``radio communications,'' as defined in sections
3(52) and 3(33) of the Act, and section 2(a) of the Communications Act
gives the Commission subject matter jurisdiction over ``all interstate
and foreign communications by wire or radio.''
Second, section 1 of the Communications Act confers responsibility
on the Commission ``to make available . . . a rapid, efficient, Nation-
wide, and world-wide wire and radio communication service with adequate
facilities at reasonable charges.'' This responsibility is guided by
the ``policy of the United States . . . (1) to promote the continued
development of the Internet''; ``(2) to preserve the vibrant and
competitive free market that presently exists for the Internet''; and
``(3) to encourage the deployment of technologies which maximize user
control over what information is received by . . . [users of] the
Internet.'' 47 U.S.C. Sec. 230. See also 47 U.S.C. Sec. 157 nt
(Advanced Telecommunications Incentives). The Commission's net
neutrality principles facilitate these responsibilities.
Question 8. Over the last year the FCC has taken action to
eliminate contributions to the Universal Service Fund by DSL providers,
increase contributions by wireless providers, and for the first time
require VoIP providers to pay into the Fund. In your view, are these
changes sufficient to ensure the longterm stability of the Fund or are
they only a short-term fix? If they are not sufficient in the long
term, what actions should the FCC take? Is Congressional action
necessary to ensure the FCC has the authority it needs to ensure the
long-term stability of the fund? If so, what is required?
Answer. Preserving the stability of the Universal Service
contribution system is one of the Commission's most important
responsibilities. In June, the Commission took an interim step to
ensure the stability of the fund by raising the wireless safe harbor
and broadening the contribution base to include interconnected VoIP
providers. We took these actions because we recognized the changes that
were occurring in the telecommunications marketplace.
Specifically, with respect to wireless, we found that the former
safe harbor no longer accurately reflected the increasing extent to
which wireless consumers utilize their wireless phones for interstate
calls. Thus, it was necessary to update our Universal Service rules to
account for this increased use by raising the safe harbor.
The Commission also required interconnected VoIP providers--those
providers that use the public switched telephone network (PSTN) to
originate and terminate phone calls--to pay into the fund that supports
the PSTN, the Universal Service Fund. We recognized that these services
are increasingly being used as a substitute for traditional wireline
telephone service and rely upon the PSTN to originate and terminate
their calls. VoIP providers who do not utilize the PSTN are not
required to contribute.
When I became Chairman in March of 2005, the universal service
contribution factor was 11.1 percent. Currently the contribute factor
is 9.1 percent.
Changes in technology and increases in the number of carriers who
are receiving universal service support have placed significant
pressure on the stability of the fund. The Commission is also actively
considering other changes to the contribution system that may be
necessary. We will be vigilant in taking any necessary steps, such as
adopting a new contribution mechanism to ensure the stability of the
fund.
You also ask whether Congressional action is necessary. In the
first instance, we intend to be vigilant in doing all we can to ensure
the stability and sustainability of the Universal Service Fund. I note
that several years ago the Federal and state members of the Universal
Service Joint Board urged Congress to expand the Commission's authority
to assess intrastate as well as interstate revenues. Specifically, they
explained that ``[g]ranting the FCC explicit authority to assess
contributions based on interstate and intrastate revenues would yield
substantial benefits.'' (Letter to the Honorable Conrad Burns, May 19,
2003.)
Question 9. Despite the introduction and adoption of new
technologies by many population segments, Native American households
still lag woefully behind in access even to basic telephone service.
This Committee recently considered legislation that would establish an
Office of Indian Affairs within the FCC. Do you believe such an office
would help spotlight the issues uniquely affecting Native Americans?
What action is being taken by the FCC to fulfill its responsibility to
Indian tribes.
Answer. The Commission takes very seriously the issue of access to
telecommunications by Native Americans. To this end, we are actively
engaged in continuing our wide-ranging, comprehensive efforts to
fulfill the mandate that all Americans, including those living in
American Indian and Alaska Native communities, have access to
affordable, quality telecom services.
As part of this effort, the Commission has launched an ``Indian
Telecommunications Initiative'' (ITI). The ITI is a comprehensive
program that seeks to promote understanding and cooperation and trust
among tribes and tribal organizations, the FCC and other governmental
agencies, and the telecommunications industry. The ITI program seeks to
build partnerships, identify potential solutions, and bring affordable,
quality telecommunications services to Indian Country. The ITI
program's goals--to increase the telephone penetration rate; facilitate
the deployment of telecommunications infrastructure on tribal lands;
and inform tribes about Federal Government programs, including
Universal Service Fund programs--are undertaken in Indian Country by
the FCC through targeted and effective tribal outreach, coordination
and consultation. The Commission's Consumer and Governmental Affairs
Bureau has a Tribal Liaison who is dedicated specifically to
coordinating FCC work on issues uniquely affecting Native Americans,
such as the ITI sponsored events and other outreach activities.
Significantly, the ITI includes interactive regional workshops,
staff participation at conferences sponsored by Tribal organizations,
meetings with representatives of individual Tribal Nations regarding
their unique telecom issues, and dissemination of educational materials
to Tribal Nations and organizations. For example, in the past 18
months, we have sponsored two major interactive regional workshops, and
have announced a third such event that will take place next month:
In July 2005 we held such a workshop in Albuquerque, NM, in
cooperation with the National Congress of American Indians
(NCAI).
In July 2006, we hosted a Tribal Broadband Workshop and
Roundtable with the Southern California Tribal Chairman's
Association's Tribal Digital Village and the National Congress
of American Indians. The program, which was held in San Diego,
CA, featured multiple sessions on Broadband deployment in
Indian Country and site visits.
On September 11th, we released a Public Notice announcing
that we will be hosting a Tribal Public Safety/Homeland
Security Workshop in Polson, MT on the Flathead Indian
reservation on October 24th and 25th. This event, the first to
focus on this particular subject matter, is designed as a
workshop and intergovernmental consultative meeting between FCC
senior staff and the tribal leaders and representatives who
have responsibility for homeland security, public safety, and
Information Technology security, and will focus on such topics
as emergency preparedness and critical infrastructure
protection in the communications sector and public safety
communications, interoperability and preparedness.
If Congress decides to create an Office of Indian Affairs within
the FCC, it could help further highlight the unique issues associated
with access to telecommunications by Native Americans. To the extent,
however, that just one office in the Commission is assigned these
issues, it may reduce the effectiveness of existing tribal outreach
activities that are currently integrated and supported by the
Commission's multi-disciplinary outreach resources and functions.
Question 10. In recent months new proposals have surfaced striving
to help public safety attain robust and reliable interoperable
communications systems. Specifically, in April, Cyren Call
Communications filed its proposal to reallocate 30 MHz of the returned
analog spectrum to create a nationwide broadband network for better
public safety communications. Verizon Wireless also is now reportedly
proposing a plan to build a nationwide broadband public-safety network
in the 700 MHz band. Does the FCC plan to initiate a proceeding in a
timely manner in order to establish a record to evaluate the merits of
these proposals?
Answer. The Commission has received a petition for rulemaking from
Cyren Call Communications regarding its proposal. The Commission's
Reference Information Center periodically releases a public notice
listing such petitions recently received by the Commission, providing
the public the opportunity to comment. Cyren Call's petition should
appear on the next comment public notice, which will provide the public
with an opportunity to establish a record on Cyren Call's petition. I
would note, however, that Congress has directed the Commission to
auction some of the spectrum at issue in the proposal. So--absent
further Congressional action--the Commission may be unable to take any
further action on the petition.
Verizon Wireless has not filed a petition or other type of request
with the Commission regarding a plan to build a nationwide broadband
public-safety network in the 700 MHz band. We will review any request
made by Verizon Wireless once it is filed and take appropriate action.
______
Response to Written Questions Submitted by Hon. John D. Rockefeller IV
to Kevin J. Martin
Question 1. Chairman Martin, I know that the FCC has two open
proceedings where it seeks to understand what barriers the existing
local franchising process impose on telephone companies who wish to
enter the market.
As you know, Senator Smith and I were the lead sponsors of
legislation to streamline the video franchising process, but our bill
was incorporated into the larger stalled telecommunications bill.
Can you tell us what authority the FCC has to streamline this
process? Do you anticipate the FCC issuing an Order on this issue
before the end of the year?
Answer. Section 621(a)(1) states that ``a franchising authority may
not grant an exclusive franchise and may not unreasonably refuse to
award an additional competitive franchise.'' Last November, the
Commission opened a proceeding designed to solicit comment on
implementation of Section 621(a)(1)'s directive that LFAs not
unreasonably refuse to award competitive franchises, and whether the
franchising process unreasonably impedes the achievement of the
interrelated Federal goals of enhanced cable competition and
accelerated broadband deployment and, if so, how the Commission should
act to address the problem. Thus, Section 621 empowers the Commission
to ensure that the local franchising process does not unreasonably
interfere with the ability of any potential new entrant to provide
video programming to consumers. If Congress does not act, we are
working to move from this notice of proposed rulemaking to an order by
the end of the year.
Question 2. Mr. Chairman, I want to congratulate you for all of
your hard work on emergency communications. I know that you are deeply
committed to improving the emergency communications response
infrastructure and capabilities of our Nation.
I know that the FCC is considering requiring emergency alerts over
our Nation's wireless telephones. I believe that this is good policy
given the fact that so many people now rely on the wireless telephones
for their primary communications needs.
I know that the wireless industry is resisting your initiative
arguing they do not have the resources or technical ability to be part
of the Emergency Alert System. Can you comment on their objections?
Answer. There is a great need to improve the Nation's emergency
warning system. Our country needs a more robust warning system that
takes advantage of advances in technology and recognizes how people
receive communications today. For that reason, I believe wireless
participation is critical. Most current wireless networks, however, are
not designed to deliver messages to all devices in a specific
geographic area. Based on this concern, the wireless industry has told
the Commission that it ``would like to deliver a short-term SMS-based
solution that will benefit Americans,'' and ``while that solution is
operational, CTIA and the industry will work closely with the
Commission and the other key government agencies to develop a longer
term solution'' [CTIA ex parte, 08/11/06]. The Commission also
recognizes that Congress is actively considering this issue. The
Commission will continue to work with Congress, the wireless industry,
and other government agencies to develop both short-term options and
longer term solutions to develop a more robust and comprehensive
warning system.
Question 3. Chairman Martin, you recently sent an inquiry to
Verizon and BellSouth over recently announced line items that they were
adding to their DSL broadband offerings. In light of your public
inquiry, they abandoned their plans for charging consumers these fees.
As you know, wireless carriers are also charging consumers similar
fees to the ones you were able to encourage Verizon and BellSouth from
imposing.
As you may know, the Commerce Committee adopted an amendment I
offered that would prevent wireless companies from imposing these junk
fees. Since it is unlikely that this legislation will be enacted this
year, would you be willing to launch an FCC investigation into the
wireless industry's imposition of these line items? I think you could
get the industry to abandon these fees.
Answer. The Commission agrees ``[i]t is critical for consumers to
receive accurate billing information from their carriers to take full
advantage of the benefits of a competitive marketplace'' [Second Report
and Order on Truth in Billing, March 18, 2005]. For this reason, the
Commission adopted truth in billing rules to ensure that consumers'
bills are brief, clear, non-misleading, and in plain language. The
Commission's truth in billing rules do not prohibit carriers from using
line items. They do, however, prohibit the use of misleading line item
charges. The Commission has indicated that it is ``misleading for
carriers to include administrative and other costs as part of
``regulatory fees or universal service charges'' or similar line item
labels that imply government mandated charges'' [Second Report and
Order on Truth in Billing, March 18, 2005]. The Commission concluded
that this prohibition applies to all regulatory compliance charges, and
that the ``burden rests upon the carrier to demonstrate that the charge
imposed on the customer accurately reflects the specific governmental
program fee it purports to recover'' [Second Report and Order on Truth
in Billing, March 18, 2005]. In 2005, the Commission issued an order
applying all of its truth in billing rules to wireless carriers and
subjecting wireless carriers to the Commission's rules prohibiting
misleading line items.
Question 4. The 11th Circuit Court of Appeals recently overturned
the FCC's most recent Truth-in-Billing order that preempted the states
on wireless regulation.
Does the FCC plan to appeal the 11th Circuit Court of Appeals'
decision?
Answer. The Commission has not appealed the 11th Circuit Court of
Appeals decision to the Supreme Court. The Commission filed a petition
for rehearing with the same panel of the Eleventh Circuit in this case
on September 14, 2006.
Question 5. Could you elaborate for me what your principles for any
preemption of state telecommunications laws should entail? What is the
proper role of state regulators vis-a-vis the FCC when it comes to
regulating the Internet, the wireless industry, or new technologies
like Voice Over Internet Protocol?
Answer. In many areas, the FCC and state commissions work together
in a Federal-state partnership to bring consumers more choice, better
services, and lower prices. State commissions, however, have a special
role because they are on the front lines dealing with consumers.
Because states are closer to consumers than the FCC, they are
particularly well-equipped to handle a variety of matters, such as
consumer complaints. Indeed, the Federal-State Board on Universal
Service acknowledged that ``states are in a better position than the
Federal Government to target the needs of their own consumers.''
Recommended Decision, FCC 03J-02, para. 25 (re. Apr. 2, 2003). On the
other hand, it is also critical that, in keeping with the Commission's
charge under section 706 of the Act, there is a uniform national
communications policy that fosters the development of new technologies.
Last summer, the Commission initiated a notice of proposed
rulemaking to examine how to develop a framework for consumer
protection in the ``broadband age.'' This proceeding recognizes that we
must work together with our state partners to ensure that consumer
protection needs are met by all providers of new technologies. Notably,
in the Commission's Vonage Order, which preempted Minnesota's entry
regulation of Vonage's VoIP service, the Commission expressly noted
that its order does not affect Minnesota's general laws governing
entities that conduct business within the state, such as laws
concerning taxation fraud, marketing, advertising, or general
commercial dealings. Similarly, in the Commission's VoIP 911
proceeding, we recognized the historic and important role of states and
localities in public safety matters and sought comment on the role that
states should play in implementing our VoIP 911 rules. We specifically
asked how the Commission and the states can work together to ensure the
public's safety.
There are, of course, numerous areas in which we are already
working closely with our state counterparts. For instance, we have
delegated significant authority to them to administer phone numbers.
Another area where we work closely with our state counterparts is in
the area of slamming, where the Commission has concluded that the
states have primary responsibility for administering the rules.
Moreover, we recently created joint Federal/state task forces and
working groups in the areas of Lifeline/Linkup and VoIP, and we are
actively working with our state colleagues in these very important
areas.
Question 6. Many times in my office, we have talked about E-Rate
and how much this program means for schools and libraries in West
Virginia, and across the country. I want to publicly thank you for your
efforts, and the work of your staff to provide outreach to the
education community on this important issue. I know that you have
issued new orders to allow schools and libraries to correct technical
clerical errors to improve the application process--thank you.
I hope to work with you on future improvements to streamline the
applications, especially for basic telecommunication and Internet
services. I know you and your staff have worked to crack down on real
fraud with DOJ, and work to get repayments. This is important and it
highlights that the program is working. What are your next steps in
these initiatives?
Answer. I fully support the universal service program and the
critical function it serves to ensure access for consumers in rural and
high-cost areas, and to promote access to advanced services for
schools, libraries, and health care service providers in rural areas.
As you note, the Commission adopted two orders earlier this year
that start to improve the application process for the E-Rate program.
More work remains to be done, and so the Commission is continuing to
work with schools and libraries to further improve and streamline the
application process for the E-Rate program. In addition, the
Commission's Enforcement Bureau has suspended or debarred four bad
actors from participating in the E-Rate program this year and we
continue to assess fines and forfeitures on parties that try to take
advantage of the program. We are also exploring what measures could be
taken to prevent and detect potential waste, fraud, and abuse so that
we can all be certain that E-Rate money is going to the schools and
libraries that need it the most. These efforts are part of the
Commission's comprehensive review of the entire Universal Service Fund
started late in 2005, which is actively being worked on by staff.
Question 7. The Department of Energy, the North American Electric
Reliability Council, and others have acknowledged that the electric
power system is an integral component of our Nation's critical
infrastructure. Virtually all other networks, including
telecommunications, depend on electric reliability to a considerable
degree. Hurricane Katrina and other disasters have demonstrated this
dependence vividly.
Do you think telecommunications reliability is somehow more
important than electric reliability, or do you agree that electric
reliability is also essential? I ask these questions because I have
some concerns about pole attachment policy. I think it's a good thing
to encourage the deployment of broadband and other communications
technologies, but I think we also need to make sure that the safety and
reliability of our critical electric infrastructure is not jeopardized
in the process. My understanding is that there has been a chronic
problem of having literally tens of thousands of unauthorized cable TV
and other communications attachments on utility poles in many places
across the country, and many of these attachments do not always meet
basic industry safety, reliability, and engineering standards. I am
aware that current law addresses these issues in a very general way,
but I think the process needs to be reformed to prevent harm to our
critical infrastructure. Don't you think that the safety and
reliability of critical electric infrastructure should be a paramount
concern?
Answer. I agree that the safety and reliability of critical
electric infrastructure is a paramount concern. Issues of public safety
and homeland security are one of the highest priorities at the
Commission. Our work on telecommunications reliability should not come
at the expense of other public safety systems. Your concern of
unauthorized cable television and other attachments to utility poles
across the country is an important one.
Question 8. Do you think it is reasonable to require communications
companies that attach their wires and equipment to utility poles ensure
that their attachments comply with applicable safety, reliability, and
engineering standards before making an attachment to critical electric
infrastructure?
Answer. Section 224(f)(2) of the Act expressly authorizes utilities
to deny access to their poles on a nondiscriminatory basis for reasons
of safety, reliability and generally applicable engineering purposes.
Question 9. Under current law (Sec. 224 of the Communications Act)
cable TV companies benefit from a regulated (i.e., subsidized) rate for
pole attachments. I am not convinced that the cable industry needs to
continue to receive a subsidized pole attachment rate at the expense of
electric consumers. The subsidized rates were established in 1978 when
the cable industry was considered a ``fledgling'' industry that needed
help to compete. Today the cable industry is a multi-billion dollar
industry. Do you think electric consumers--some of whom may have low
incomes and not even subscribe to cable--should still be subsidizing
multi-billion dollar cable companies?
Answer. In general, I do not think electric companies should be
subsidizing cable companies. Section 224 of the Communications Act
directed the Commission to adopt regulations consistent with the Act to
govern the charges for attaching to poles. The Act specifies the
formula that the Commission should apply for attachments by cable
companies and for attachments by telecommunications carriers. The
Commission adopted those formulas in section 1.1409 of the Commission's
rules (47 C.F.R. Sec. 1.1409).
Question 10. My understanding is that FCC staff is actively
considering a rulemaking petition submitted by the major incumbent
telecommunications companies (i.e., ILECs) that would give them a
subsidized pole attachment rates under the Pole Attachment Act for
their attachments on electric utility poles. I find this odd because,
if I remember correctly, the Pole Attachment Act (as it was amended by
the 1996 Telecom Act) expressly excludes ILECs from FCC jurisdiction
under that provision of the Act. Since this exclusion is a matter of
statute, don't you think Congress should decide whether the exclusion
should remain?
Answer. The Commission has a petition before it asking for a
declaratory ruling that pole attachment rates are just and reasonable
for all attaching providers, including incumbent LECs. The scope of the
statutory exclusion to which you refer, 47 U.S.C. Sec. 224(a)(5), is at
the heart of the issue that the incumbent LECs raise. The Petitioner,
the United States Telecom Association, contends that the statute's term
``provider of telecommunications service,'' 47 U.S.C. Sec. 224(a)(4),
includes incumbent LECs and indicates that Congress expressly decided
not to exclude incumbent LECs from a right to just and reasonable rates
for attachments, only from a right to nondiscriminatory access. This
proceeding is pending before us, and staff is continuing to review the
record and evaluate the arguments on both sides.
Question 11. Congress and the FCC both are seeking to promote
competition in telecommunications and video markets. However, under the
Pole Attachment Act (Sec. 224 of the Communications Act) cable
companies and some telecom providers have the advantage of only having
to pay a regulated (i.e. subsidized) rate for attachments to utility
poles. This subsidy is ultimately borne by utility customers in their
electric rates. Do you agree that all users of critical electric
infrastructure, regardless of the technology they use, including
telecom and cable companies that attach their wires to electric utility
poles, should be required to pay a similar pole attachment rate that
reflects a fair share of the actual costs of building and maintaining
critical electric infrastructure? Is it right for electric utilities
and their customers to be required to pay a disproportionately greater
share than the telecom and cable TV companies?
Answer. In general, I agree that all users of critical electric
infrastructure, regardless of the technology they use, including
telecom and cable companies that attach their wires to electric utility
poles, should be required to pay a similar pole attachment rate that
reflects a fair share of the actual costs of building and maintaining
critical electric infrastructure.
Section 224 of the Communications Act directed the Commission to
adopt regulations consistent with the Act to govern the charges for
attaching to poles. The Act specifies the formula that the Commission
should apply for attachments by cable companies and for attachments by
telecommunications carriers. The Commission adopted those formulas in
section 1.1409 of the Commission's rules (47 C.F.R. Sec. 1.1409).
Question 12. Under the existing Pole Attachment Act (Sec. 224 of
the Communications Act), an electric utility may deny a cable TV system
or a telecommunications carrier access to its poles for reasons of
safety, reliability and generally applicable engineering purposes.
Despite this requirement, electric utilities tell me that thousands of
attachments are being made to their infrastructure without any prior
notice to the utility and, therefore, without giving the utility a
reasonable opportunity to evaluate the safety and reliability impacts
of the attachment. I'm worried about the potential impact of this fact
on electric reliability. What is the FCC doing to ensure that cable and
telecom companies provide notice to utilities before attaching new
wires and equipment on utility poles and that these attachments meet
all relevant electric industry safety and engineering standards?
Answer. Our rules require that requests for access to a utility's
poles by a telecommunications carrier or cable operator must be in
writing. To the extent that companies are not complying with our rules,
they are subject to enforcement action.
______
Response to Written Questions Submitted by Hon. Bill Nelson to
Kevin J. Martin
Question 1. In 2003, the FCC formed the Federal Advisory Committee
on Diversity in the Digital Age. In 2004, the Committee, led by Ms.
Julia Johnson, presented the Commission with a series of
recommendations designed to further enhance the ability of minorities
and women to participate in the communications industries. But despite
the efforts of this Diversity Committee, for 2 years the FCC has been
silent on these efforts. What has happened to the Diversity Committee's
recommendations?
Answer. We have implemented several of these recommendations. For
example, at the Diversity Committee's recommendation, the Commission
has established band plans that include a mixture of license sizes and
geographic areas in order to accommodate the needs of wireless
providers of various sizes serving a range of different geographic
areas. We are actively considering other recommendations. For example,
the Commission is considering allowing additional time for construction
of broadcast facilities licensed to certain designated entities,
lengthening the terms for experimental licenses, and conducting a
comprehensive channel search for new FM allotments.
We are also putting particular emphasis on the issue of minority
ownership in our media ownership proceeding. In the Further Notice of
Proposed Rulemaking the Commission released in July, the Commission
sought comment on the recommendations of the Diversity Committee. At
the request of the Advisory Committee, the Commission has included
their recommendations and filings in the media ownership docket and
solicited public comment specifically on their recommendations.
Minority ownership also will be the focus of independent studies and
among the topics covered at the public hearings as we move forward with
our review of the media ownership rules.
Finally, several recommendations called for broader reform, beyond
the Commission's authority. For instance, the Diversity Committee
adopted a recommendation ``urg[ing] the adoption of a Federal program
that would use the deferral of Federal capital gains tax liability as
an incentive to make available to socially and economically
disadvantaged persons and businesses the opportunity to acquire assets
necessary to enter the broadcasting and telecommunications
marketplace.''
Question 2. While minorities now represent more than 30 percent of
the population in this country, FCC data show that minority-owned media
outlets account for only 3.41 percent of all broadcast entities.
Despite improvements in other areas of the economy, little ground has
been gained in ownership of these key media licenses. In 2000, an FCC-
commissioned study by the Ivy Group documented that minorities and
women have always faced discrimination in this Nation's communications
industries and these obstacles still persist. Also in 2000, the U.S.
Commerce Department found that broadcast industry consolidation has
exacerbated these barriers, including equitable access to capital,
advertising, and employment opportunities. When does the FCC plan to
study this problem and update the findings in these studies? And how
does the FCC plan to address this issue before considering broader
changes to its media ownership rules?
Answer. In June 2004, the Commission issued a Public Notice seeking
comment on ``constitutionally permissible ways to further the mandates
of section 257 of the Telecommunications Act of 1996, 47 U.S.C.
Sec. 257, which directs the FCC to identify and eliminate market entry
barriers for small telecommunications businesses, and Section 309(j) of
the Communications Act of 1934, 47 U.S.C. Sec. 309(j), which requires
the FCC to further opportunities in the allocation of spectrum-based
services for small businesses and businesses owned by women and
minorities.'' The Commission also requested that commenters ``discuss
and proffer specific recommendations for building on a series of market
barrier entry studies,'' including the Ivy Planning Group study. I have
proposed to consolidate these comments with our review of the media
ownership rules. Moreover, we sought comment on the issue of minority
ownership in the Further Notice of Proposed Rulemaking the Commission
released in July. At the request of petitioners, I have also proposed
that the Commission request further comment more specifically on
minority ownership issues. In addition, minority ownership will be the
focus of independent studies and among the topics covered at the public
hearings as we move forward with our review of the media ownership
rules.
Question 2a. Please provide more specific details.
Answer. We are studying and evaluating this problem now, and we are
updating our findings now. We have just recently requested comment
specifically on the recommendations of MMTC and the diversity FACA in
the context of our media ownership proceeding.
Question 2b. When does the FCC plan to study this problem and
update the findings in these studies?
Answer. To ensure that we are able to address this issue before
considering broader changes to our media ownership rules, we are
currently commissioning independent studies, some of which will focus
expressly on minority ownership. One in particular will focus solely on
minority ownership, studying the levels of minority ownership of media.
The study also will investigate potential barriers to entry for
minority owners. It also will consider possible reform measures to
promote ownership diversity in the public airwaves. We also are
planning to hold six hearings around the country to seek public comment
on media ownership, and minority ownership will be a topic of
discussion. At MMTC's request, we will soon circulate a FNPRM that
discusses their recommendations in more detail and requests further
comment.
Question 2c. And how does the FCC plan to address this issue before
considering broader changes to its media ownership rules?
Answer. I cannot say right now how substantively we plan to address
the issue, as we have not yet received public comment on the FNPRM or
the results of our independent studies, and have not yet had any of our
public hearings. I would be happy to keep you informed as we receive
data and recommendations, and I welcome any suggestions you have. I
have also proposed to consolidate these comments with our review of the
media ownership rules to ensure that we are able to address this issue
before considering broader changes to our media ownership rules.
Question 3. Recently, a group known as the ``Diversity and
Competition Supporters'' petitioned the FCC requesting that the agency
withdraw its Notice of Proposed Rulemaking in the media ownership
proceeding and correct a series of errors relating to minority
ownership. Among other things, the petitioners noted that the Notice of
Proposed Rulemaking fails to identify and address the minority
ownership proposals remanded by the Third Circuit Court of Appeals in
Prometheus Radio Project v. FCC. As you know, further remands from the
Court will just enhance uncertainty. In light of this, are you planning
on at least one comprehensive, independent study on minority ownership
and possible reform measures to promote ownership diversity in the
public airwaves?
Answer. Yes, we are planning to have a comprehensive, independent
study conducted on the levels of minority ownership of media. The study
also will investigate potential barriers to entry for minority owners.
Question 4. Minority and female ownership of broadcast licenses is
extremely low when compared to the strides these groups have made in
business ownership in other areas of the economy (e.g., health care and
finance). Why do you think that is? Do you think that is problematic,
given the objectives outlined in the Communications Act? What does the
FCC plan to do about it?
Answer. Diversity in broadcast and media is an important concern.
The Commission has taken steps to further minority and female ownership
of broadcast licensees such as the creation of a new entrant bidding
credit. These credits are intended to facilitate the ability of
minority-owned companies to enter the broadcast business. The
Commission has used these credits in every broadcast auction conducted
since 1999. Since 1999, we have held 11 broadcast auctions in which
applicants successfully bid on 651 construction permits. A total of 197
bidders eligible for a new entrant bidding credit in at least one
market won 358, or 55 percent, of the construction permits.
We are seeking to identify ways in which to further promote
minority ownership. The Commission also is actively considering the
proposals for advancing minority and disadvantaged businesses and for
promoting diversity in broadcasting submitted by the Minority Media and
Telecommunications Council and the recommendations on these issues
developed by the Federal Advisory Committee on Diversity in the Digital
Age.
Question 4a. What are your personal views?
Answer. I think that minority and female ownership is low because
most broadcast licenses were given away decades ago, when minorities
and women had even less access to capital and opportunities than they
do today. As the Commission's Advisory Committee on Diversity for
Communications in the Digital Age has stated: ``From the birth of
broadcast radio in 1909 through 1978, minorities had almost no
opportunities to acquire broadcast facilities. Thus, non-minorities
enjoyed a 70-year head start.'' See FM Radio White Paper, available on
the Diversity Committee's website at p://www.fcc.gov/DiversityFAC/docs/
FMRadioWhitePaper.doc.
I do believe the fact that Minority and female ownership of
broadcast licenses is extremely low is problematic. Diversity in
broadcasting and the media generally is very important. That is why we
are in the process of seeking comment on recommendations to improve the
situation, are commissioning independent studies on the issue, and are
making sure this issue is discussed at our public hearings around the
country.
Specifically, with respect to broadcasting, the Commission has
taken steps to further minority and female ownership of broadcast
licensees with the creation of a new entrant bidding credit. These
credits are intended to facilitate the ability of minority-owned
companies to enter the broadcast business. The Commission has used
these credits in every broadcast auction conducted since 1999. Since
1999, we have held 11 broadcast auctions in which applicants
successfully bid on 651 construction permits. A total of 197 bidders
eligible for a new entrant bidding credit in at least one market won
358, or 55 percent, of the construction permits.
In addition, in 2000, the Commission established the Low Power FM
service in order to create a class of radio stations designed to serve
very localized communities or underrepresented groups within
communities. To date, the Commission has issued construction permits
for well over 1000 LPFM stations. The Commission continues to work to
ensure the success of the LPFM service.
Question 5. How does the FCC use the data it collects in its Form
323 to inform its policies regarding minority media ownership?
Answer. The ownership reports filed on FCC Form 323 ask for only
voluntary information on the gender, ethnicity, and race of parties
holding an attributable interest in a station licensee.
Question 6. Name one barrier to entry that you believe the FCC
could eliminate to improve minority broadcast ownership?
Answer. The Commission could allow additional time for construction
of broadcast facilities licensed to certain designated entities.
Question 6a. Why just ``certain'' designated entities?
Answer. There is no need for the ``certain'' qualifier.
``Designated Entity'' is a defined term. All DEs could be allowed
additional time.
Question 7. It is my understanding that currently the FCC does not
give a ``pioneer preference'' when granting broadcast licenses. I am
familiar with small radio broadcasters that have gone through the time
and expense of locating unused broadcast radio spectrum and that
petition the FCC for a license for such spectrum. Unfortunately, when
the license is auctioned, the small radio broadcaster often cannot
compete monetarily with larger broadcasters, who bid successfully on
the licensed frequency. This acts as a disincentive for small and
minority-owned broadcasters to enter the broadcasting market. Do you
believe that awarding ``pioneer preferences'' (or some sort of
appropriate bidding credit under these circumstances) could improve
representation of small and minority-owned businesses in the broadcast
arena?
Answer. Between 1991 and 1997, the Commission did have a pioneer's
preference program designed to give preferential treatment in the
licensing process to parties that demonstrated their responsibility for
developing new spectrum-using communications services and technologies.
In the Balanced Budget Act of 1997, Congress terminated the
Commission's authority to provide pioneer's preferences.
The Commission has taken steps to further minority and female
ownership of broadcast licensees such as the creation of a new entrant
bidding credit. These credits are intended to facilitate the ability of
minority-owned companies to enter the broadcast business. The
Commission has used these credits in every broadcast auction conducted
since 1999. Since 1999, we have held 11 broadcast auctions in which
applicants successfully bid on 651 construction permits. A total of 197
bidders eligible for a new entrant bidding credit in at least one
market won 358, or 55 percent, of the construction permits.
Question 8. Like you, I want to stimulate broadband deployment and
competition. For the last several years, you have reported to us that
the residential broadband market is increasingly competitive. We have
heard from you that wireless, broadband-over-powerline, and satellite
technologies were capturing a large customer base and bringing vigorous
competition to American communities. Yet, by my reading, the FCC's own
studies indicate that is not the case. Over the last few years, the
market share of every technology aside from DSL and cable modem has
declined. Cable modem and DSL now have a 98 percent market share. How
do you explain this seeming inconsistency between what you have told us
and the agency's own statistics? How has the FCC acted to encourage
competition beyond DSL and cable modem?
Answer. Encouraging the deployment of broadband infrastructure is
one of my top priorities. High-speed connections to the Internet have
grown over 400 percent since I became a Commissioner in July 2001.
Specifically, in the first half of 2001, there were less than 10
million high-speed connections to the Internet and, as of the end of
2005, there were more than 50 million.
The residential broadband market has become increasingly
competitive. According to a Pew study, in March 2003, 67 percent of
home broadband users logged onto the Internet using cable modems and
only 28 percent used DSL. As of March 2006, DSL connections constitute
half (50 percent) of all home broadband connections and cable modems
have a 41 percent share.
As you state, the FCC recently reported that 98 percent of
residential broadband connections at the end of 2005 were ADSL or cable
modem, and that 90 percent of all broadband connections reported to the
FCC were ADSL or cable modem. Significantly, however, during 2005, the
total number of satellite and terrestrial wireless connections
increased by 3.3 million.
With respect to how the Commission has sought to encourage
competition by platforms other than DSL and cable modem, the Commission
has taken a number of actions. For example, in the wireless arena, the
Commission has increased the availability of spectrum that can be used
in the provision of broadband services while allowing maximum technical
and regulatory flexibility for entities seeking to provide wireless
broadband Internet access service.
In the satellite arena, the Commission has granted a number of
applications that propose to provide satellite-delivered, high-speed
Internet service offerings to consumers using frequencies in both the
Ka-band and Ku-band. We have also initiated rulemakings to consider
other alternatives that could increase the ability of satellite
operators to provide competitive broadband Internet access services.
The Commission also has adopted rules to facilitate deployment of
broadband over power line (BPL) technology while protecting existing
spectrum users from harmful interference. Indeed, last month, the
Commission built upon its prior efforts to promote BPL deployment by
finalizing its technical rules governing operation of BPL systems,
including those providing Internet access services.
Question 8a. What does the Chairman think about the combined 98
percent market share between cable modem and DSL service providers?
Answer. Competition has increased between cable and DSL in the
broadband market and that is positive for consumers. As you state,
however, the FCC recently reported that 98 percent of residential
broadband connections at the end of 2005 were ADSL or cable modem, and
that 90 percent of all broadband connections reported to the FCC were
ADSL or cable modem. It would be better if there were more competitors
in the broadband market and if those competitors had a greater share of
the market. Cable modem and DSL currently have the greatest combined
market share given their historical presence in the market. More
specifically, cable companies were the first to aggressively enter the
residential broadband market as they deployed and began to offer cable
modem service, beginning in the late 1990s. Incumbent LECs soon
followed by offering competing DSL service. Because these entrants had
the advantage of already having networks with lines reaching the vast
majority of households within their service territories, they had a
head start in building a customer base and had more time to expand the
geographic reach of their service offerings. Newer technologies, such
as BPL and broadband wireless entered later and, accordingly, have not
built out their networks as extensively as cable companies and
incumbent LECs. Consequently, they can reach fewer households than the
first two entrants, and their nationwide market share accordingly will
be smaller relative to the earlier entrants. Nevertheless, these new
technologies are currently expanding the geographic reach of their
networks and are increasingly competing against cable modem and DSL
providers. And, as these new technologies reach a greater proportion of
total, nationwide households, we would expect that their nationwide
percentage share of residential high-speed customers will also start
increasing.
Question 9. In May 2006, the Government Accountability Office (GAO)
released a report that criticized the way that the FCC measures
broadband penetration in the United States. The GAO wrote, ``For its
zip-code level data, FCC collects data based on where subscribers are
served, not where providers have deployed broadband infrastructure.''
The GAO study points out that FCC officials never intended the zip code
reports to be treated as a measure of broadband penetration. The GAO
noted that according to the FCC, the median number of providers of
broadband enjoyed by American households is eight. However, the GAO
found that the real number was two providers. That is a startling
difference. How do you address the GAO's concerns, and what, if
anything, has the FCC done to correct any problems?
Answer. The Commission is committed to obtaining the best
information possible about the availability and deployment of broadband
services nationwide, particularly in rural and other hard-to-serve
areas. GAO is correct that the zip code information alone (i.e., how
many broadband providers serve at least some homes or businesses in a
particular zip code) does not indicate how extensively those providers
have deployed broadband infrastructure within any particular zip code.
In order to gain an even better picture of the extent of broadband
deployment, I have circulated a NPRM to the Commission that asks
questions about how we can obtain more specific information about the
availability of broadband in specific geographic areas and how we can
combine our data with those collected at the state level or by other
public sources. Significantly, as a result of a prior revision to our
data collection form, just this year, we began reporting information
regarding different speeds of broadband connections (e.g., about
services offered at speeds in excess of 200 kps). I have also
circulated our fifth inquiry under section 706 of the
Telecommunications Act of 1996 into ``whether advanced
telecommunications capability is being deployed to all Americans in a
reasonable and timely fashion.'' In this Notice, we seek comment on all
aspects of broadband availability, including price and bandwidth
speeds. Between these two proceedings, it is my hope that the
Commission will solicit the information necessary to better assess the
competitive progress in the broadband market.
Question 10. As you may be aware, I introduced an amendment (with
Senator DeMint) that was unanimously adopted into the Senate Commerce
Committee's telecommunications reform bill (H.R. 5252) a few months
ago. This amendment would require the FCC to collect the kinds of data
that are needed to adequately assess competitive progress in the
broadband market. The Senate Commerce Committee would like to see
information on a much more narrowly focused geographic area, including
information on price and speed, so that we can assess not just
availability, but quality of service. How would you carry out such a
mandate?
Answer. As I stated above, the Commission is committed to obtaining
the best information possible about the availability and deployment of
broadband services nationwide, particularly in rural and other hard-to-
serve areas. Accordingly, in order to gain an even better picture of
the extent of broadband deployment, I have circulated a NPRM to the
Commission that asks questions about how we can obtain more specific
information about the availability of broadband in specific geographic
areas and how we can combine our data with those collected at the state
level or by other public sources. Significantly, as a result of a prior
revision to our data collection form, just this year, we began
reporting information regarding different speeds of broadband
connections (e.g., about services offered at speeds in excess of 200
kps). I have also circulated our fifth inquiry under section 706 of the
Telecommunications Act of 1996 into ``whether advanced
telecommunications capability is being deployed to all Americans in a
reasonable and timely fashion.'' 47 U.S.C. Sec. 157 nt. In this Notice,
we seek comment on all aspects of broadband availability, including
price and bandwidth speeds. Between these two proceedings, it is my
hope that the Commission will solicit the information necessary to
better assess the competitive progress in the broadband market.
Question 11. At what stage do you believe that the broadband
communications market is ``competitive'' within a given geographic
area? In other words, how many broadband competitors must offer retail
services in a market area before you would deem that area to be
``competitive,'' both for residential customers and for business
customers?
Answer. The Commission recognizes that increasing the number of
competitors should benefit consumers, and, for this reason, the
Commission has supported policies that encourage multiple broadband
competitors, including the current AWS auction. Because telephone
companies and cable companies are trying to acquire new customers, they
are actively competing in the broadband market today. These providers
are competing aggressively against each other to win customers by
offering price promotions, improved customer service, and new services.
The increase in broadband speeds is just one reflection of this intense
competition. According to a recent Pew study, the price of broadband
service has also dropped in the past 2 years.
With respect to broadband services offered to business customers,
the Commission observed in the recent SBC/AT&T and Verizon/MCI merger
orders, that there are generally a greater number of providers
competing to serve these customers. It further noted that many of these
business customers are sophisticated, high-volume customers that can
negotiate aggressively with providers.
Question 11a. What is the Chairman's view on the appropriate number
of competitors that are needed in a competitive market?
Answer. There is no simple answer to the question of what is the
minimum number of firms necessary for a market to be deemed
competitive. In fact, economists have debated what it means for a
market to be ``competitive'' or ``workably competitive'' or
``effectively competitive.'' In addition, economists have recognized
that the competitiveness of a market depends not only on the number of
firms in the market, but also on a number of other factors or
characteristics of the market, such as whether demand is stable or
growing or whether products are differentiated.
The answer to the question of what is the minimum number of firms
necessary for a market to be deemed competitive, depends heavily on the
characteristics of the market. These characteristics can include, but
are not limited to, the degree of substitutability between products,
cost of entry for new firms, and costs borne by consumers of switching
from one product to another.
The degree of substitutability between products offered by
different firms is one of the most important market characteristics.
The more consumers view products offered by different firms as
identical, the fewer the number of firms are required to achieve
competitive pricing. For example, if two firms are offering goods that
consumers see as perfect substitutes for one another, then a perfectly
competitive equilibrium can, under certain conditions, theoretically
arise with only two firms in the market. Tirole (1988)
Bork (1979) and DeHoog (1984) give theoretical examples where two
competitors may be enough for ``adequate competition.'' Further,
empirical studies looking at different industries suggest that
competitive behavior can at times be achieved with entry of a second
firm. For example, Bresnahan and Reiss (1991) show empirically that
within the five retail and professional industries that they study,
``In markets with five or fewer incumbents, almost all variation in
competitive conduct occurs with the entry of the second or third
firm.'' Further, ``. . . once the market has between three and five
firms, the next entrant has little effect on competitive conduct.''
Depending on the circumstances, even in markets with only two
competitors, those competitors may compete aggressively against each
other. For example, in the case of broadband access services offered to
residential customers, a number of factors suggest that, even where
only DSL and cable modem service are currently available, the DSL and
cable modem service providers are behaving competitively against each
other. Numerous DSL providers are offering reduced prices and steep
promotional discounts. Cable modem service provider are responding with
their own promotional discounts, particularly through the use of
discounted bundles. Moreover, the ratio of price to maximum download
speed has been dropping rapidly. In addition, both DSL and cable
providers are competing in non-price terms. They are offering faster
speeds, improved security and better customer service. At the same
time, the Commission has made efforts to encourage the development and
deployment of new broadband technologies, such as wireless and BPL
technologies to facilitate multiple competitors in each market.
Question 12. In March 2006, the FCC allowed a petition for
forbearance to go into effect that resulted in a sweeping revision of
the way the Communications Act applies to key services provided by a
large incumbent carrier. By allowing this petition to take effect, the
FCC erased decades of communications policy in a single stroke.
Policies that may have been un-done have implications from homeland
security to universal service contributions to the privacy protections
guaranteed under Section 222 of the Act. By allowing this petition to
take effect, the FCC's inaction also raises questions about continued
carrier obligations to ensure disability access and interconnection in
rural America. By dismissing all of these policies that were enacted by
Congress, the FCC's inaction effectively rewrites existing laws. Do you
believe such a large revision of the laws through agency inaction is a
proper exercise of the FCC's duties?
Answer. Section 10 of the Act sets forth a robust standard by which
the Commission must evaluate petitions for forbearance. Section 10 also
establishes a process by which petitions under this section ``shall be
deemed granted if the Commission does not deny the petition'' within a
maximum of 15 months. More than 3 weeks prior to the March 19th
deadline, I shared with my fellow Commissioners a draft order
addressing the merits of the Verizon Forbearance Petition, measured
against the statutory criteria set forth in section 10 of the Act. The
Commission was engaged on this issue and, by a recorded 2-2 vote,
neither granted nor denied Verizon's Forbearance Petition. Without a
majority of the Commission supporting either a grant or denial of
Verizon's petition, the petition was ``deemed granted'' on March 19th.
On March 20th, the Commission issued a news release memorializing the
effect of its decision. At that time, all of the Commissioners took the
opportunity to issue a statement explaining their reasoning. There is
still no majority view on the appropriate outcome of Verizon's
petition. And, the grant of Verizon's petition by operation of law is
currently on appeal before the United States Court of Appeals for the
District of Columbia Circuit, which will decide the legality of the
grant.
I believe that it would have been preferable for the Commission to
have reached a majority view on Verizon's petition and issued a
decision affirmatively granting or denying it. It is better for such
official action to follow from a written decision issued by a majority
of Commissioners. It is only because there was not (and is not today) a
majority view here at the Commission that we were unable to take the
preferred course of issuing an official written decision.
Question 13. As you are aware, this Congress has been busy for some
time on the issue of video choice. In Florida and nationally, new
entrants are trying hard to enter the video market and provide
consumers with another choice for cable services. We have heard
considerable testimony in this Committee that such competition almost
always leads to lower prices for consumers. We have also heard that one
of the barriers to speeding such competition is the need to obtain
agreements with each local franchise authority. This is not a criticism
on the local franchising authorities, which have been doing a good job
for many years in protecting consumers and making sure that local needs
are met. At the same time, there are just so many local franchises in
Florida and nationally that, even in the best of circumstances, that is
a big order for new entrants. That is why I have been a staunch
advocate of Congress taking action to streamline the local franchise
process. Unfortunately, it appears that video choice may not become law
during this Congress. If that's the case, what plans do you have for
the FCC to act as a ``backstop''--to take actions, consistent with the
Federal statute, to speed up competition in the video market?
Answer. Section 621(a)(1) states that ``a franchising authority may
not grant an exclusive franchise and may not unreasonably refuse to
award an additional competitive franchise.'' Last November, the
Commission opened a proceeding designed to solicit comment on
implementation of Section 621(a)(1)'s directive that LFAs not
unreasonably refuse to award competitive franchises, and whether the
franchising process unreasonably impedes the achievement of the
interrelated Federal goals of enhanced cable competition and
accelerated broadband deployment and, if so, how the Commission should
act to address the problem. Thus, Section 621 empowers the Commission
to ensure that the local franchising process does not unreasonably
interfere with the ability of any potential new entrant to provide
video programming to consumers. If Congress does not act, we are
working to move from this notice of proposed rulemaking to an order by
the end of the year.
Question 14. As part of the FCC's recent DSL Order, the regional
Bell companies were relieved of their requirement to pay into the
Universal Service Fund for revenues generated from their DSL service.
However, smaller carriers were not relieved of this requirement under
the FCC Order. Please explain why two telecommunications carriers
offering identical DSL service are treated differently for the purposes
of USF contributions?
Answer. Last August, in the Wireline Broadband Internet Access
Order, the Commission leveled the regulatory playing field between
different broadband platform providers. Specifically, the Commission
removed outdated tariffing regulations that applied to wireline
providers of Internet access services but not to other broadband
providers. The Commission found that facilities-based wireline
broadband Internet access services, like cable modem services, were
information services. At the same time, it permitted all wireline
carriers, large and small incumbent LECs, to offer the underlying
transmission input for these services on a common carrier or non-common
carrier basis.
We actually adopted this approach in response to the specific
requests from some smaller incumbent LECs who stated that they wanted
the option to continue providing the transmission portion of this
service on a common carrier basis to preserve their ability to continue
to receive the benefits of participating in the NECA pooling system. To
the extent that any incumbent LEC voluntarily chooses to provide this
underlying transmission component on a common carrier basis then it is
providing a telecommunications service and is subject to the Title II
obligations under the Communications Act, including the obligation in
section 254(d) to pay into universal service on the interstate portion
of their revenues derived from these services. If, on the other hand,
an incumbent LEC chooses to provide the underlying transmission
component on a non-common carrier basis, section 254(d) would not
require contributions into the universal service fund.
As the Commission stated in the order, ``neither the statute nor
relevant precedent mandates that the broadband transmission be a
telecommunications service when provided to an ISP, but the provider
may choose to offer it as such.'' In the Matter of the Appropriate
Framework for Broadband Internet Access to the Internet over Wireline
Facilities, 20 FCC Rcd, 14853 at para. 103 (2005).
Question 15. The issue of ``phantom traffic'' has been pending at
the FCC for almost 1 year. Most stakeholders agree that any
intercarrier compensation plan must have rules to ensure that all
communications traffic is properly labeled so that all carriers can
accurately identify network traffic. It is assumed that the
comprehensive intercarrier compensation plan--referred to as the
``Missoula Plan''--would take a considerable amount of time to approve
and implement. Do you favor adopting an interim solution to address
phantom traffic?
Answer. The growing problem of ``phantom traffic''--that is,
traffic containing insufficient data to permit proper identification
and billing--is an important one. As you mention, the NARUC Task Force
on Intercarrier Compensation has been working to find a comprehensive
solution to intercarrier compensation issues. As part of their
``Missoula Plan'' proposal, they suggest dealing with phantom traffic
prior to adopting general reform. I understand that this group will be
filing a specific proposal for handling phantom traffic later this
month. This proposal will be given careful consideration as the
Commission works toward resolution of these issues.
Question 16. Since 2002, the FCC has been considering a proposal to
change the contribution methodology for funding the Universal Service
Fund (USF) and to impose a fee of $1.00 or more per month on each
telephone number or connection. Apparently, under this proposal, a
residential consumer who makes few, if any, long distance calls during
the month would pay the same fee per line as a large business customer
that may make thousands of dollars in interstate calls per month. Has
the FCC considered the potential impact of the fee on low-volume and
low-income consumers, and if so, what steps are being taken to ensure
that these customers do not end up paying a disproportionate share of
the USF funding burden?
Answer. Preserving the stability of the universal service
contribution system is one of the Commission's most important
responsibilities. Changes in technology and increases in the number of
carriers who are receiving universal service support have placed
significant pressure on the stability of the fund. I have suggested a
numbers-based approach as a possible solution because it is technology
and competitively neutral. Specifically, such an approach would help
maintain the stability of the fund by assessing all technologies used
to make a phone call on a similar basis. Nevertheless, as the
Commission reviews the various proposals to reform the current
assessment system, it will carefully weigh the record and examine the
potential impact of any course of action on all consumers, including
low-volume and low-income consumers. The Commission recognizes the
importance of ensuring that whatever contribution method is used does
not disproportionately increase the costs of telecommunications
services to low-volume and low-income users.
Question 17. There has been a decline in the last few years in the
percentage of households that have local landline telephone service. At
the same time, USF spending has increased significantly. What are the
FCC's plans to control USF spending and make sure that more Americans
have access to affordable service?
Answer. In the ongoing Rural Review Proceeding, the Federal-State
Joint Board on Universal Service (Joint Board) is considering proposals
to reduce excessive growth in the fund and distribute funds more
efficiently, ensuring that more Americans have access to affordable
service. For example, the Joint Board has sought comment on the
methodology for calculating support for Eligible Telecommunications
Carriers (ETCs) in competitive study areas. Specifically, it asked
whether, if multiple carriers are supported, the competitive ETC should
receive support based on its own costs, the incumbent's costs, the less
of its own or the incumbent's costs, or some other estimate of costs.
The Joint Board also sought comment on how costs should be determined
to the extent that support is based on a competitive ETCs own costs.
More recently, the Joint Board sought comment on the merits of
using reverse auctions to distribute universal service support. Such an
approach is designed to promote efficient investment by encouraging the
carriers with the most cost effective networks to enter high-cost
areas. Once the Joint Board makes a recommendation in that proceeding,
the Commission will carefully consider the record and weigh any
alternatives to the current methodology. In addition, the Commission
will be mindful that any changes in universal service high-cost support
should be implemented over time to minimize impact on consumers and
carriers alike.
Question 18. Almost 1 year ago, just days before Hurricane Katrina
made landfall, several Senators sent you a letter asking you not to
order that service be cutoff to VoIP subscribers (many of which already
had E-911 service) because the subscriber had not acknowledged that a
power failure or network failure could limit his communication in an
emergency. I want to thank you for agreeing with us. It turns out that
while network and power failures had widespread impacts on
communications, nomadic VoIP turned out to be a life saver, connecting
President Bush, FEMA, the Red Cross, and those relocated to relief
centers. Now as hurricane season is once again upon us, many small
businesses in Florida are subscribing to VoIP because they can maintain
continuity of service in the event of a network failure--using the
phone from any working broadband connection. But there are many
locations in Florida where consumers and business cannot take advantage
of these benefits because those areas may have 911 capabilities but
still lack full E-911--much like wireless.
What have you done since January 2006 to clear away the roadblocks
and accelerate E-911 solutions for VoIP?
Answer. Public safety obligations like 911 are critical to
consumers and public safety alike. The 911 system is quite literally
one of life or death. It is critical to our Nation's ability to respond
to a host of crises and the Commission has been working hard to
minimize the situations where users are unable to access it. The
Commission is committed to making sure that, during an emergency, a
person can always pick up the phone, dial 911, and access local
emergency officials.
Since January 2006, Commission staff have conducted numerous
meetings and attended conferences with public safety officials,
interconnected VoIP providers, carriers, and third-party vendors in
order to answer questions, promote coordination and encourage
cooperation. Although VoIP providers reported specific difficulties in
accessing the 911 network of two incumbents LECs, the Commission
contacted the parties and these two instances were resolved quickly.
Currently, we are unaware of any other ongoing difficulties accessing
the 911 network of an incumbent LEC, and no complaints have been filed.
Question 19. Have you ordered that network owners give VoIP
providers direct access to the 911 network.
Answer. The VoIP 911 Order specifically states that incumbent LECs
are required to provide access to their E-911 networks to any
requesting telecommunications carrier, including trunks, selective
routers and E-911 databases. Interconnected VoIP providers may try to
negotiate interconnection directly with the incumbent LEC's E-911
network or purchase guaranteed access to this network from competitive
carriers and other third-party providers.
When VoIP providers reported specific difficulties in accessing the
911 network of two incumbents LECs, the Commission contacted the
parties and these two instances were resolved quickly. Currently, we
are unaware of any other ongoing difficulties assessing the 911 network
of an incumbent LEC, and no complaints have been filed.
Question 20. Have you provided equivalent liability relief for
public safety answering points (PSAPs) and others?
Answer. Congress, via the 911 Act, granted wireless carriers
providing 911 service liability protection equal to that available to
wireline carriers for 911 calls. To date, there is no equivalent
Federal requirement for providers of interconnected VoIP service or for
the PSAPs receiving 911 calls from them.
Question 21. 38 PSAPs failed during Hurricane Katrina. Have you
done anything to accelerate the transition to an IP-enabled emergency
network for PSAPs to strengthen the 911 system and prevent this from
happening again?
Answer. In January 2006, the Commission established an Independent
Panel Reviewing the Impact of Hurricane Katrina on Communications
Networks (Independent Panel). The Independent Panel, composed of public
safety and communications industry representatives, was tasked with
making recommendations to the Commission regarding ways to improve
disaster preparedness, network reliability, and communications among
first responders. The Independent Panel's recommendations, released in
June 2006, included recommendations intended to ensure a more robust
911 and E-911 service. The Commission currently is seeking public
comment on these recommendations via a June 2006 Notice of Proposed
Rulemaking, and will take such action as is necessary to strengthen the
911 system.
Question 22. Have you provided necessary tools so VoIP services can
reach all Americans--even in the most rural and remote regions of
America?
Answer. Spurring broadband deployment is perhaps the most important
way to ensure that VoIP services can reach all Americans. I have made
broadband deployment one of my highest priorities at the Commission.
During my tenure as Chairman, the Commission has worked hard to create
a regulatory environment that promotes broadband deployment in all
areas of the United States. The Commission has removed legacy
regulations, like tariffs and price controls, that discourage carriers
from investing in their broadband networks, and has worked to create a
regulatory level playing-field among broadband platforms. As a recent
Pew study found, there is evidence of significant and widespread
increases in broadband adoption across the nation.
Question 22a. What else can be done to spur the spread of VoIP
services?
Answer. The other way to ensure that all consumers have their
choice of competitive provider, including VoIP provider, is to make
sure that new technologies, such as VoIP, are subject to a uniform
national policy. To this end, I supported the Commission's two key
orders promoting VoIP deployment. First, I supported the Commission's
pulver.com Order, which declared that pulver.com's peer-to-peer VoIP
service was an information service and could operate free from legacy
telephone regulation by the states consistent with our longstanding
policies for other information services. Second, I supported the Vonage
Order, in which the Commission preempted a state's attempt to impose
legacy telephone regulation on Vonage. The Vonage Order makes clear
that the same preemption would apply to any state's attempt to impose
similar regulations on providers of service comparable to Vonage's
service, including VoIP services provided by cable operators. These two
orders have kept VoIP providers largely free of unnecessary state
economic regulation, including pricing regulation, and have thus
accelerated their deployment dramatically.
Moreover, the Commission has sufficient authority to take, and has
taken, action against entities that attempt to discriminate against
VoIP providers. Specifically, the Commission, through its Enforcement
Bureau, entered into a consent decree with Madison River after it had
attempted to block VoIP traffic.
Finally, during my Chairmanship the Commission adopted an Internet
Policy Statement, the principles of which all benefit VoIP providers.
We stated that consumers are entitled to access the lawful Internet
content of their choice; to run applications and use services of their
choice, subject to the needs of law enforcement; to connect their
choice of legal devices that do not harm the network; and to
competition among network providers, application and service providers,
and content providers. The Commission is committed to monitoring these
issues and is prepared to step in as necessary to ensure that new
technologies, such as VoIP, are capable of being deployed to all
Americans.
Question 23. Have you appointed a ``p-ANI'' administrator, as many
stakeholders and Members of Congress have requested?
Answer. Yes. Recently, I appointed a new Chairman of the NANC. Upon
the appointment of the new chair, Neustar (a neutral third-party
numbering administrator) was instructed to act as the Interim p-ANI
administrator, as requested by the NANC. We have also asked the NANC to
report back to the Commission, by October 10, 2006, with a timeline for
resolving the p-ANI issue on a permanent basis.
Question 24. There are currently numerous issues and open
proceedings related to 911 at the FCC. These include: (1) the VoIP E-
911 Order and subsequent filings, petitions, and waiver requests; (2)
major wireless carrier handset deadlines and waiver requests; and (3)
requests from the deaf and hard of hearing community to complete open
proceedings affecting their access to 911. Where do these issues stand
at the FCC?
Answer. When I became Chairman, I identified public safety and
emergency preparedness as critical issues. We have been working hard to
make sure that all consumers have access to 911 emergency services.
Public safety obligations like 911 are critical to consumers and public
safety alike. The 911 system is quite literally one of life or death.
It is critical to our Nation's ability to respond to a host of crises
and the Commission has been working hard to minimize the situations
where users are unable to access it. The Commission is committed to
making sure that, during an emergency, a person can always pick up the
phone, dial 911, and access local emergency officials.
With respect to VoIP, we are working with the VoIP community to
implement our 911 rules. The Commission staff have conducted numerous
meetings and attended conferences with public safety officials,
interconnected VoIP providers, carriers, and third-party vendors in
order to answer questions, promote coordination and encourage
cooperation to accelerate 911 solutions.
With respect to wireless, the Commission has been working to ensure
that all major wireless carriers have reached 95 percent penetration
among their subscribers for a handset-based 911 solution. The
Commission has received several waiver requests and we expect that they
will be resolved soon. And, the Commission has adopted 22 orders,
pursuant to the ENHANCE 911 Act, addressing petitions for relief filed
by 52 Tier III carriers of the 95 percent handset penetration
requirement.
Finally, with respect to Internet-based forms of Telecommunications
Relay Services, such as Video Relay Service and Internet Protocol Relay
Service, the Commission opened a proceeding late last year seeking
comment on how it could reform its rules to ensure that the deaf and
hard of hearing community has equivalent access to emergency services
as all other consumers. As part of this proceeding, this November we
will hold a Disabilities E-911 Summit where we intend to bring together
leaders from the disabilities community, the E-911 community, partner
agencies, and industry to identify the access that people with hearing
or speech disabilities need; the technologies, services, and
applications through which access should be offered; and the
technological, policy, and commercial issues involved in providing the
needed access to persons with hearing and speech disabilities.
Question 24a. What is the current status of the VoIP waiver
petitions?
Answer. In regard to the pending VoIP waiver petitions
specifically, thirty interconnected VoIP providers and one VoIP 911
service provider (Telefinity Corporation--Dash 911) filed petitions for
waiver of the Commission's VoIP 911 rules.
Of the twenty eight currently pending petitions for waiver filed by
interconnected VoIP providers, half of these are now moot in that the
petitioners requested waivers for time periods that expired on or
before September 16, 2006. Specifically, these petitions were filed by:
ACN Digital Phone Service LLC; Constant Touch Communications, LLC;
Cypress Communications, Inc.; deltathree, Inc.; Flint Telecom, Inc.;
ICG Telecom Group, Inc.; Insight Midwest Holdings, LLC; Lingo, Inc.;
Midwest Wireless Holdings L.L.C.; Primus Telecommunications; Shared
Data Networks, LLC; Voiceglo Holdings, Inc.; Vonage America, Inc.; and
Vox Communications Corporation. Similarly, the waiver filed by
Telefinity Corporation--Dash 911, a provider of VoIP 911 services, is
also moot in that it only sought a waiver through December 19, 2005.
The remaining waivers are under consideration.
Question 25. In March 2006, the FCC adopted a plan to establish a
Public Safety and Homeland Security Bureau. Six months later, what is
the status of that bureau and will that bureau be charged with
addressing all or some of the ongoing 911 issues at the FCC, or will
some 911 issues remain in existing bureaus?
Answer. In March, the Commission adopted a plan to consolidate its
public safety, homeland security, and disaster management activities
into a single Public Safety and Homeland Security Bureau. Since then,
we have been working with the Commission staff and the National
Treasury Employees Union on the implementation plan. We also submitted
to the Appropriations Committees of the U.S. Senate and U.S House of
Representatives detailed financial information. We received final
Congressional approval on September 11, 2006, and we plan to announce
the opening of the Public Safety and Homeland Security Bureau on
September 26, 2006.
The Public Safety and Homeland Security Bureau will be charged with
addressing all of the on-going 911 issues at the Commission. The Public
Safety and Homeland Security Bureau will coordinate closely with the
existing bureaus that have traditionally worked on 911 issues,
including the Wireline Competition Bureau and the Wireless
Telecommunications Bureau.
Question 26. What is your view on the role that states should play
in protecting consumers?
Answer. In many areas, the FCC and state commissions work together
in a Federal-state partnership to bring consumers more choice, better
services, and lower prices. State commissions, however, have a special
role because they are on the front lines dealing with consumers.
Because states are closer to consumers than the FCC, they are
particularly well-equipped to handle a variety of matters, such as
consumer complaints. Indeed, the Federal-State Board on Universal
Service acknowledged that ``states are in a better position than the
Federal Government to target the needs of their own consumers.''
Recommended Decision, FCC 03J-02, para. 25 (re. Apr. 2, 2003). On the
other hand, it is also critical that, in keeping with the Commission's
charge under section 706 of the Act, there is a uniform national
communications policy that fosters the development of new technologies.
Last summer, the Commission initiated a notice of proposed
rulemaking to examine how to develop a framework for consumer
protection in the ``broadband age.'' This proceeding recognizes that we
must work together with our state partners to ensure that consumer
protection needs are met by all providers of new technologies. Notably,
in the Commission's Vonage Order, which preempted Minnesota's entry
regulation of Vonage's VoIP service, the Commission expressly noted
that its order does not affect Minnesota's general laws governing
entities that conduct business within the state, such as laws
concerning taxation fraud, marketing, advertising, or general
commercial dealings. Similarly, in the Commission's VoIP 911
proceeding, we recognized the historic and important role of states and
localities in public safety matters and sought comment on the role that
states should play in implementing our VoIP 911 rules. We specifically
asked how the Commission and the states can work together to ensure the
public's safety.
There are, of course, numerous areas in which we are already
working closely with our state counterparts. For instance, we have
delegated significant authority to them to administer phone numbers.
Another area where we work closely with our state counterparts is in
the area of slamming, where the Commission has concluded that the
states have primary responsibility for administering the rules.
Moreover, we recently created joint Federal/state task forces and
working groups in the areas of Lifeline/Linkup and VoIP, and we are
actively working with our state colleagues in these very important
areas.
Question 26a. Specifically, should the Commission write all the
rules and the state commissions administer and enforce those rules?
Answer. There are certain contexts where it is appropriate for the
Commission to adopt the governing regulatory framework and for the
state commissions to enforce the rules adopted in that framework. For
example, in the numbering arena, the Commission has delegated authority
to the state commissions to administer and enforce some aspects of our
numbering rules. Still another example is in the slamming context where
states have the primary responsibility for administering and enforcing
our slamming rules.
There are other contexts, however, where it is not appropriate for
the Commission to delegate authority to the state commissions. One
example of this is in the section 251 unbundling context. In this area,
the United States Court of Appeals for the D.C. Circuit, vacated our
rules delegating implementation of our unbundling rules to the states
holding that we may not ``subdelegate to outside entities--private or
sovereign--absent affirmative evidence of authority to do so.'' USTA
vs. FCC, 359 F.3d 554, 566 (D.C. Cir. 2004).
Question 27. What percentage of consumer complaints lodged with the
FCC results in enforcement actions taken against communications
companies? Does the FCC have the necessary resources to bring an
appropriate number of enforcement actions, in order to fully protect
consumers?
Answer. The Commission takes its mission to protect consumers very
seriously. The Commission has two bureaus whose core responsibilities
include addressing complaints from consumers. Specifically, the
Consumer and Governmental Affairs Bureau collects and responds to
consumer inquiries and informal complaints. The Enforcement Bureau uses
this consumer complaint information, as well as information it receives
from communications companies, to vigilantly enforce the Act and the
Commission's rules.
In its enforcement actions, the Commission seeks to protect the
public at large. Although all complaints are useful to the Commission
in taking enforcement action, the number of complaints resolved by an
investigation varies. Some investigations are triggered by a single
complaint filed by a consumer, such as certain complaints against
wireline carriers. Other investigations seek to address broader rule
violations, such as in the indecency, junk fax or spamming contexts,
and a single investigation will resolve significant numbers of
complaints. For the past two fiscal years, for example, we have
conducted over 800 investigations relating to issues raised by
consumers, carriers, and on our own motion.
Consumers can file informal complaints with the Commission in many
ways, including by phone, postal mail, fax, electronic mail and through
the Commission's website. The Commission receives approximately 120,000
informal complaints per year, which all come through the Commission's
Consumer Center. These informal complaints are each addressed in a
variety of ways, including through mediation, referrals to other
Federal or state agencies, or through coordination with other bureaus,
including the Enforcement Bureau. In 2005, as a result of Commission
involvement, $4.1 million was returned to consumers.
With regard to necessary resources, the Commission is committed to
making the best use of all resources that Congress has appropriated, or
sees fit to appropriate in the future, for the bringing of enforcement
actions to resolve consumer complaints.
Question 27a. Could you provide more detail on the number of
complaints that result in enforcement actions against communications
companies?
Answer. The Commission takes its mission to protect consumers very
seriously. The Commission has two bureaus whose core responsibilities
include addressing complaints from consumers. Specifically, the
Consumer and Governmental Affairs Bureau (CGB) collects and responds to
consumer inquiries and informal complaints. The Enforcement Bureau (EB)
uses this consumer complaint information, as well as information it
receives from communications companies, to vigilantly enforce the Act
and the Commission's rules.
Consumers can file informal complaints with the Commission by any
reasonable means, including by phone, postal mail, fax, electronic mail
and through the Commission's website. The Commission receives
approximately 120,000 informal complaints per year, which all come
through the CGB's Consumer Center. CGB addresses each of these
complaints in a variety of ways depending on its subject matter and
content. For example, complaints alleging wrongdoing by common carrier
entities are routinely forwarded to the named carrier or carriers with
instructions to the carrier(s) to satisfy or respond to the complaint
within a time prescribed by the Commission, generally 30 days. The time
for responding to a complaint may be shortened in certain instances,
for example, if a public safety or health issue is indicated. In 2005,
approximately $4.1 million dollars was returned to consumers by common
carrier entities in response to informal complaints filed with the
Commission.
In all cases, informal complaints are processed with the goal of
facilitating a satisfactory resolution or response for the consumer.
For example, the Commission receives many complaints that are more
properly filed with another state or Federal agency in the first
instance. In these cases, CGB works cooperatively with the relevant
state or Federal agency to ensure that the consumer has accurate
information about where and how to file the complaint. In many
instances, CGB will forward the complaint to the appropriate state or
Federal agency on behalf of the consumer.
CGB works in close coordination with EB to ensure that matters
raised by consumers that warrant possible enforcement action receive
the appropriate attention by the two Bureaus. For example, even in
cases where the common carrier has issued a credit or refund to a
consumer, the facts underlying the complaint may indicate an underlying
compliance problem requiring additional scrutiny or enforcement action.
EB largely handles major investigations aimed at protecting the
public at large from prohibited practices or rule violations. The
investigations often seek to address wide-spread practices that have
the potential to impact thousands of consumers simultaneously, and may
well go beyond the scope of consumer complaints filed with the
Commission. Thus, for example, the Enforcement Bureau's investigation
into whether carriers are adequately protecting their subscribers'
personal phone records was triggered by a handful of consumer
complaints, yet impacts virtually all consumers of telecommunications
services.
The Commission does not currently separately track enforcement
actions taken solely against regulated communications companies versus
non-communications companies. The parameters of an EB investigation as
well as its ultimate targets are often defined by the aggregated
complaints of consumers on a particular issue. As such, the enforcement
actions taken by EB in a typical year will address untold thousands of
complaints.
For example, in 2005 an investigation begun in EB based on problems
described in over 200 consumer complaints resulted in a $4,000,000
consent decree with Sprint.
In addition, since July of 2005, EB has issued 95 citations against
entities involved in sending junk faxes as described in 6,336 consumer
complaints.
In yet another example, based on approximately 1,064 do-not-call
complaints filed both at the Commission and the Federal Trade
Commission, EB launched an investigation of T-Mobile's do-not-call
policies resulting in a recent consent decree with T-Mobile.
And, in the indecency context, over 500,000 complaints were
resolved by the Commission's enforcement action against various
television licensees concerning their broadcast of the Super Bowl
XXXVIII Halftime Show.
Finally, in the slamming context, in the first quarter of 2006,
approximately 50 percent of consumer complaints related to slamming
were resolved through orders issued by CGB. The remainder of these
complaints were either re-categorized as a non-slamming complaint,
closed pending further information from the complainant, or forwarded
to the appropriate state agency which had ``opted-in'' to administer
our slamming rules.
Finally, with respect to public safety, interference, and field-
related cases, in Fiscal Year 2005, the Commission resolved all 3,866
such public safety, interference and field-related complaints that it
received.
Question 28. In recent months, the media helped expose the
pernicious practice of pretexting, whereby thieves pose as legitimate
actors in order to obtain consumers' private telephone records. Several
of my colleagues and I have introduced bills to make pretexting a
criminal offense, and I expect that Congress will pass these bills very
soon. I know that under your leadership, the FCC has taken actions to
crack down on this pretexting. Can you please update me on what steps
you have taken and plan to take to protect consumers from pretexting?
Answer. The Commission is concerned about the disclosure and sale
of consumers' personal telephone records and seeks to protect consumers
against pretexting. We are investigating data brokers to determine how
they are obtaining consumers' confidential calling records. The
Commission's Enforcement Bureau (EB) has issued over 30 subpoenas to
data brokers ordering the production of documents and evidence
regarding these entities' sales of call records. We have also issued
citations to those companies that failed to respond adequately,
referred a case to the DOJ for enforcement, and issued a notice of
apparent liability (NAL) for the maximum monetary forfeiture against a
data broker--LocateCell.com--for its continued failure to respond to
our subpoena.
Further, in support of these investigations, we have made
undercover purchases of phone records from various data brokers. This
information has assisted us in targeting additional requests for
information and in determining the exact method by which consumer phone
record data is being disclosed. As a result of our investigations and
those of other law enforcement agencies, most of the online operators
that we originally identified no longer state that they can provide
calling records.
We are also investigating the telecommunications carriers to
determine whether they have implemented appropriate safeguards to
secure the privacy of consumers' confidential calling records. We must
ensure that the telecommunications carriers are fully meeting their
obligations under the Act and our rules to protect customer phone
records. To this end, we have issued letters of inquiry to
approximately 20 of the largest wireline and wireless carriers. These
letters required the carriers to document their customer data security
procedures and practices, identify security and disclosure problems,
and address any changes they have made in response to the data broker
issue.
In addition, under the Commission's rules, a telecommunications
carrier ``must have an officer, as an agent of the carrier, sign a
compliance certificate on an annual basis stating that the officer has
personal knowledge that the company has established operating
procedures that are adequate to ensure compliance'' with the
Commission's rules. In January, we issued a public notice requiring all
telecommunications carriers to submit their most recent certification
with us. As a result of our investigation into this issue, we issued
three NAL to carriers for their failure to certify compliance with
these very important rules. We have reached consent decrees, on this
and other CPNI-related issues, with two of these carriers totaling
$650,000.
During the course of the Commission's investigations, several
carriers have taken a number of steps to further protect the privacy of
consumer account information. These steps include, among other things:
using better security and authentication measures with respect to
setting up online accounts; notifying customers of password or account
changes (i.e., wireless carriers will send a text message); and greater
monitoring of employee activities to detect breaches in internal
corporate policies.
Finally, in February, the Commission initiated a proceeding to
determine what additional rules the Commission should adopt to further
protect consumers' sensitive telephone record data from unauthorized
disclosure. Specifically, in a Notice of Proposed Rulemaking (NPRM),
the Commission sought comment on five specific proposals to address the
unlawful and fraudulent release of CPNI: (1) consumer-set passwords;
(2) audit trails; (3) encryption; (4) limiting data retention; and (5)
notice procedures to the customer on release of CPNI data. In addition
to these proposals, the NPRM also seeks comment on whether carriers
should be required to report the release of CPNI. The NPRM tentatively
concludes that the Commission should require all telecommunications
carriers to certify on a date certain each year that they have
established operating procedures adequate to ensure compliance with the
Commission's rules and file these certifications with the Commission.
The record closed in June and I have directed the staff to prepare an
order for the Commission to consider this Fall.
Question 29. In recent months, the media has helped expose the
practice of ``caller ID spoofing,'' whereby a calling party alters the
way that his telephone number appears on a recipient's caller
identification system. Caller ID spoofing leads to identity theft,
threats to public safety, and other undesirable outcomes. Senator Snowe
and I introduced a bipartisan bill several months ago to help stamp out
this fraudulent activity. Can you please update me on what steps you
have taken and plan to take to protect consumers from caller ID
spoofing?
Answer. It is important that services like caller ID, which are so
useful to consumers, not be used as tools to perpetuate fraud or
deception to consumers. Specifically, the Commission's Enforcement
Bureau has initiated several investigations against alleged spoofers by
issuing letters of inquiry and/or subpoenas to entities apparently
engaged in marketing and selling caller ID spoofing services to
customers. These inquiries are aimed at learning how these companies
operate and determining whether there are any violations of the
Communications Act or the Commission's rules or orders. In addition,
the Enforcement Bureau is coordinating with the Federal Trade
Commission in addressing this important issue.
Section 64.1601 of the Commission's rules establishes the delivery
requirements for a calling party's caller ID information for two
specific categories of users--common carriers and telemarketers. It
requires common carriers to transmit the caller ID associated with an
interstate call to all interconnecting carriers. It also requires
telemarketers and any person or entity engaged in telemarketing to
transmit accurate caller ID information.
Although we are continuing to investigate these matters, this
practice may present challenges to the Commission's enforcement
authority. On April 5, 2006, I responded to a question from Speaker
Hastert in which I indicated that the Commission may not have
sufficient authority to fully address this issue. Thus, the passage of
legislation that clarified the Commission's authority in this area
would be helpful.
Question 30. With the transition date for the digital TV transition
rapidly approaching, what are the areas in which the FCC should play a
major role (e.g., consumer education)?
Answer. Our most important role is to finalize the rules that will
govern broadcasters and cable operators in a digital-only age. This
process includes finalizing the DTV Table of Allotments, completing the
remaining technical and operation rules, and finalizing the technical
carriage requirements. The Commission also will continue its work to
educate consumers about DTV. The Commission has pursued several avenues
for providing DTV information to consumers: publications, the Internet,
participation at public exhibits and community and consumer-oriented
events, and the media. We will work cooperatively with the National
Telecommunications and Information Administration on consumer education
efforts and to assist in implementation and administration of the
coupon program for digital-to-analog converter boxes.
Question 31. Recently published articles have cited sources that
claim that the FCC's performance has suffered under your leadership.
Among various criticisms, these sources have claimed that your office
demands outcome-determinative results from FCC staff, instead of
allowing objective facts to guide decision-making; that your office
does not value the expert opinions of senior staff, which has caused
large-scale senior staff turnover; that you have failed to fill several
permanent positions, including bureau chief positions; and that staff
morale is the worst that has been seen in years. I wanted to give you
an opportunity to respond to these criticisms. How would you respond?
Answer. I am proud of the fact that during my tenure as Chairman,
the Commission had been able to achieve a balanced approach to policy--
eliminating economic regulations while protecting consumers and
preserving broader social goals--in a bi-partisan, collegial manner.
The Commission has successfully met significant management
challenges including responding to Hurricane Katrina. The Commission
stayed open late every day, 7 days a week, for 3 weeks following that
storm in order to assist in the restoration of service for the
residents in the affected areas. For example, we granted more than 90
requests for Special Temporary Authority and more than 100 temporary
frequency authorizations for emergency workers, organizations, and
companies to provide wireless and broadcast services in the affected
areas and shelters around the country. In most cases, these requests
were granted within 4 hours, with all requests approved within 24
hours.
Additionally, the Commission will soon complete the first auction
of Advanced Wireless Services (AWS). It is expected to be the biggest
most successful auction in Commission history--licensing the largest
amount of the spectrum capable of being used for wireless broadband
services and raising nearly $14 billion for the U.S. Treasury. The AWS-
1 auction was the result of the hard work done by the Commission to
improve our auctions processes so that spectrum, an invaluable public
resource, is efficiently managed and distributed.
Finally, I would note that numerous vacancies existed for Bureau
and Office Chief positions when I took over as Chairman. In addition,
several senior staff had already announced that they had planned to
leave the Commission before I had become Chairman. In all there were at
least six Bureau and Office Chief vacancies that I needed to fill in my
first few weeks as Chairman. This shift in agency leadership is not
uncommon when there is a change in administration. I placed long-time
agency experts and veterans in many key positions. I am extremely proud
of the individuals I have asked to become Bureau and Office Chiefs;
these dedicated public servants have worked hard and are doing an
excellent job in serving the Commission and the American public.
______
Response to Written Questions Submitted by Hon. Maria Cantwell to
Kevin J. Martin
Question 1. As you know, state and local public safety agencies,
private, and commercial enterprises operating radio systems in the 800
MHz band in the U.S. are in the process of re-banding. In June 2005,
the re-banding process began in regions that do not have common borders
with Canada and Mexico.
Is the 36-month timetable to complete the re-banding in any danger
of slippage?
What delays in the implementation schedule or other missed
milestones would raise concerns in your mind that there is a problem
with the re-banding process that rises to the level requiring the
Chairman's office to take a more hands-on role to ensure that the
process is on track?
Successfully completing the 800 MHz re-banding in Border States in
a timely manner will require modification of existing band plans and
spectrum sharing treaties with Canada and Mexico. Under the current re-
banding plan, Washington State-Canadian border issues affect the vast
majority of my state's public safety 800 MHz radio communications
systems. Currently, is the Commission working with National Public
Safety Planning Advisory Committee (NPSPAC) Regional 43 (covering
Washington State), the State Department, Sprint Nextel, and the
Commission's Canadian counterparts, to address this critical public
safety issue?
Answer. In 2004, the Commission adopted technical and procedural
measures designed to address the ongoing and growing problem of
interference to public safety communications in the 800 MHz band.
Specifically, the Commission adopted a new band plan for the 800 MHz
band and established a transition mechanism for licensees in the band
to relocate to their new spectrum assignments (i.e., rebanding).
The first phase of the band reconfiguration process, which entails
relocation of licensees on Channels 1-120 in the 800 MHz band, has
generally proceeded in accordance with the timetable established by the
800 MHz Transition Administrator (TA). In particular, the negotiation
and mediation process established by the Commission and administered by
the TA appears to have been largely successful in resolving disputes
between Channel 1-120 licensees and Sprint Nextel. Hundreds of
frequency relocation agreements have now been negotiated, and disputed
issues have been referred to the Commission in only a handful of cases.
In addition, 800 MHz stakeholders (including Sprint Nextel, the public
safety community, other 800 MHz licensees, and equipment vendors) have
worked with the TA and with one another to establish and refine
procedures to expedite negotiations and the provision of relocation
funding.
While there has been good progress in rebanding to date,
significant work still lies ahead over the next 22 months. The second
phase of the timetable has now begun, which concerns relocation of
licensees in the NPSPAC band from their current spectrum to the
spectrum vacated by Channel 1-120 licensees. Timely completion of this
phase will require diligence, commitment, and cooperation among all
licensees, and will require sufficient resources to ensure that systems
are successfully rebanded once negotiations are complete. We have
directed the TA to take an active role in monitoring the progress of
individual negotiations and establishing milestones for the rebanding
process as a whole, and to report to us on a regular basis. In
addition, the Commission has stated that it will not hesitate to take
any additional steps that may prove necessary to prevent delays in
negotiations or other aspects of the rebanding process.
I am committed to ensuring that the Commission does everything
possible to see that the process is completed as soon as possible. My
staff and I are already involved. We have met and coordinated with the
relevant stakeholders about the importance of meeting the schedule.
Moreover, we have specifically asked all stakeholders for
recommendations concerning any Commission actions that may be necessary
to facilitate meeting this deadline.
The Commission's orders require Sprint Nextel to meet an 18-month
benchmark on December 27, 2006 by completing relocation of Channels 1-
120 licensees in the first 20 regions on the TA's schedule. In
addition, the TA's phased negotiation timetable provides for the
remaining waves of licensee negotiations to occur at specified
intervals between October 2006 and July 2007. The Commission, and
particularly my staff, will monitor the parties' progress against these
milestones to determine whether additional Commission involvement in
the rebanding process is needed.
As you have noted, completing 800 MHz rebanding in the border areas
in a timely manner will require amendments to existing agreements with
Canada and Mexico. We have been working with all relevant parties to
facilitate a timely and seamless transition along the Canadian border.
To this end, in conjunction with the State Department, we have had
discussions with Canada over the last 2 years to facilitate the
transition.
While Canada has not expressed any need to reconfigure its 800 MHz
services, the channel allocations under our current agreements with
Canada provide the United States with some flexibility to reband
licensees on our side of the border without significant impact on
Canadian allocations. However, a provision may be needed to facilitate
cross-border mutual aid channels. FCC staff, along with the State
Department, will continue to negotiate an arrangement with Canada to
cover this critical public safety issue next month during bilateral
discussions with Canada. We are optimistic that we can reach an
arrangement with Canada that will allow the transition of stations
along the Canadian border in a timely manner.
Question 2. KMIH is a Class D station operated for over 35 years by
the Mercer Island School District on Mercer Island, WA. It has a
pending minor change application at the Commission to change its
frequency of operation to the NCE band. During the summer, the
Commission issued an Order to Show Cause (Reference 1800B3-RDH)
regarding KMIH's application. Neither of the two affected stations
objected to the proposed application, but requested the Commission
place non-interference conditions on KMIH's application. If KMIH and
KASB, a second station changing its frequency as an accommodation to
KMIH, accepts these conditions, what steps remain prior to the
Commission granting approval to KMIH's petition?
KYRS is a low power FM (LPFM) station operating in Spokane, WA. Out
of necessity, the station has filed a minor change application to
change its frequency of operation to the NCE band. The application
requires waiver of Commission rules regarding second adjacent channel
and TV Channel 6 protections. The application includes letters from the
affected parties (the NCE FM station and TV Channel 6), each stating
that it does not object to KYRS's proposed change in frequency. The
application has been accepted for filing on August 10th. In the
intervening month, there is no record of any party filing an objection
to the application. My staff has been informed by Commission staff,
though, that the application violates statute. Which part of what
statute does the KYRS application to change its frequency of operation
to the NCE band violate?
Answer. If KMIH and KASB accept those conditions, the Commission
could issue a decision immediately.
The KYRS application does not comply with the mandatory distance
separation requirements for LPFM stations that Congress enacted in
2000.
Question 3. In speeches and in testimony before Congress, you have
stated that fundamental priorities of the Commission include
encouraging broadband deployment and enhancing spectral efficiency. One
pending NPRM that has the potential of advancing these two priorities
is the so-called ``white space'' NPRM (ET Docket No. 04-186). As you
know, Title VI of the H.R. 5252 Senate substitute instructs the FCC to
adopt technical and device rules to facilitate use of certified
unlicensed devices within 270 days after enactment. If the Title VI
provisions do not become law, there still remains a need for the
Commission to complete the ``white space'' proceeding expeditiously.
In your 2003 statement regarding the earlier related ET Docket No.
02-380, you said, ``I strongly support making more spectrum available
for unlicensed devices . . . I am concerned that opening this inquiry
into the TV broadcast bands at this time may create additional
uncertainty and potentially delay the digital transition''.
Much has changed between the time when you made your initial
statement and today. The Nation is already on a path to complete the
transition to digital television. Congress has set the ``hard date''
for February 18, 2009. The vast majority of television broadcasters are
transmitting digital over-the-air digital signals. The Commission has
made considerable progress in finalizing the table of allotments for
all broadcasters' digital channel selection. As a result of the
Commission's digital tuner mandate, the U.S. installed base of digital
televisions is going to increase rapidly. And advances have been made
in cognitive radio and complementary technologies such as smart
antennas.
With these positive developments, have your views on the use of
``white spaces'' evolved since your 2003 statement?
When should Congress expect the Commission to complete ET Docket
No. 04-186?
Answer. I continue to support making more spectrum available for
unlicensed devices and recognize that the DTV white spaces could
provide an efficient and effective use of the TV spectrum. The
Commission must also do all it can to speed the digital television
transition while promoting innovative types of broadband products and
services.
In the past, I have expressed concern that allowing the use of
these devices immediately could impede the progress of the DTV
transition. The TV bands have been generally congested during the
transition with TV stations operating on two channels each--an analog
and a digital channel. Moreover, the final DTV channel election and
assignment process was still ongoing, which made it difficult to assess
the amount of white space that might ultimately be available.
I agree that broadcasters' progress in transitioning to digital
signals and the establishment of a hard date by Congress have been
positive developments since I expressed my previous concerns. Given
these developments, the Commission's Office of Engineering and
Technology recently released a projected timeline for resolving the DTV
white spaces proceeding. The projected schedule proposes that the
Commission consider a report and order and further notice of proposed
rulemaking in October 2006, report the results of testing by the
Commission's laboratory in spring and summer of 2007, and consider
final technical rules in October 2007. I believe this proposed schedule
provides sufficient time to develop appropriate technical standards to
prevent interference to TV broadcasting and other services, as well as
sufficient lead time for industry to design, test, and produce new
unlicensed products that would be available for sale to the public at
the completion of the DTV transition.
Question 4. As you are aware, a number of colleagues on the
Commerce Committee and I are extremely interested in the Commission's
Further Notice of Proposed Rule Making on media ownership and intend to
follow its progress closely. I was pleased to learn the Commission
intends to hold public hearings on media ownership around the country
and I once again extend an invitation for the Commission to conduct a
public hearing in Washington State.
Do you intend for the Commission to conduct its quadrennial review
of each of its media ownership rules sequentially and release
individual rulemakings, or do you intend to review all of the
Commission's existing rules in concert and release a single rulemaking?
Will the Commission commit to issuing a Further Notice of Proposed
Rulemaking that specifically describes to the public the proposed
changes to its media ownership rules and allows them to comment on the
proposed rules prior to the Commission voting to make any changes?
The Commission has a long-standing policy to promote localism,
diversity, and competition in its media ownership rules--in order to
protect the public interest. The Telecom Act requires the Commission to
conduct a quadrennial review of its media ownership rules, and allows
repeal or modification of rules if the Commission determines they are
no longer in the public interest. How does the Commission plan to
consider changes to its media ownership rules without first completing
its still-open proceeding on localism?
I have serious concerns about lifting the Commission's existing ban
on newspaper-broadcast cross-ownership in the same market. In 2003, you
supported lifting this ban. At the time the new rules were released,
you stated that ``. . . we recognize that newspaper/broadcast
combinations may result in the significant increase in the production
of local news and current affairs, as well as an improvement the
quality of programming provided to their communities.'' What in the
record collected by the Commission on media ownership prompted that
statement? Do you still hold those views today?
Answer. The Commission just started its review of the Commission's
media ownership rules. We have not yet received comments, conducted the
full series of public hearings or received the results of independent
studies. We intend to consider all the rules in concert as we conduct
hearings and independent studies. It is too early to determine whether
the record will support one order or separate orders. It is also too
soon to determine what actions--if any--we will take with respect to
any particular rule. We are committed to ensuring that the public is
fully informed and has the opportunity to comment and actively
participate in this proceeding.
The Commission is incorporating into its media ownership proceeding
the comments submitted in our open localism proceeding. The Media
Bureau is preparing a summary of the comments submitted in the localism
proceeding that will be released to the public. The Media Bureau also
is preparing a summary of the testimony taken at the localism hearings.
All of this information will be fully incorporated into the media
ownership proceeding. Localism will be the focus of independent studies
and among the topics covered at public hearings as the Commission moves
forward with its review of the media ownership rules.
During the Commission's last review of its media ownership rules,
the Commission conducted a number of studies, including one entitled
``The Measurement of Local Television News and Public Affairs
Programs.'' That study found that newspaper-owned affiliated stations
provide almost 50 percent more news and public affairs programming than
other network-affiliated stations. In addition, the study found that
the average number of hours of local news and public affairs
programming provided by the same-market cross-owned television-
newspaper combinations was 25.6 hours per week, compared to 16.3 hours
per week for the sample of television stations owned by a newspaper
that is not in the same market as the station.
The Commission explicitly found that, ``[n]ot only do newspaper-
owned stations provide more news and public affairs programming, they
also appear to provide higher-quality programming, on average, at least
as measured by ratings and industry awards.'' The study also found that
the ratings for newspaper-owned stations' 5:30 and 6 pm newscasts
during the November 2000 sweeps period averaged 8 compared to an
average rating of 6.2 for non-newspaper-affiliated stations. Further,
newspaper-owned stations received 319 percent of the national average
per station Radio and Television News Directors Association (RTNDA)
awards, and 200 percent of the national average A.I. DuPont Awards in
2000-2001. During that same period, non-newspaper-owned stations
received RTNDA Awards at a rate of only 22 percent of the national
average. They received DuPont Awards at a rate of 39 percent of the
national average per station.
The Commission also found that a second study, performed by the
Project for Excellence in Journalism (PEJ), supported the findings of
the study discussed above. In its study, PEJ analyzed 5 years of data
on ownership and news quality. PEJ concluded that cross-owned stations
in the same Nielsen Designated Market Area were more than twice as
likely to receive an ``A'' grade as were other stations.
Finally, I would note that even the Third Circuit concluded that
reform of the newspaper/broadcast cross-ownership rule was needed. The
Third Circuit agreed with the Commission, finding that ``[t]he
Commission's decision not to retain a ban on newspaper/broadcast cross-
ownership [was] justified under Sec. 202(h) and [was] supported by
record evidence.'' However, we are just beginning this process and the
Commission will be looking to the record developed in our review of the
media ownership rules to determine what action is now appropriate.
Question 5. VoIP is an application that has the potential to drive
consumer uptake of broadband and provide significant savings. While the
percentage growth in VoIP use has been phenomenal over the past few
years, the 4.2 million VoIP subscribers at the end of 2005 remains a
small number when compared to the over 100 million landlines and over
200 million wireless phones in use. VoIP has been a case where the
technology is outpacing regulation. There remains uncertainty and
inconsistency in the regulatory treatment of VoIP.
Do you believe that interconnected VoIP service is
telecommunications service or an information service?
When should Congress, industry, and the public expect the
Commission to determine the statutory classification of interconnected
VoIP under the definition of the Telecom Act?
Do you expect the deployment rate of interconnected VoIP to slow as
a result of the recent Commission decision to establish the 64.9
percent (safe harbor) universal service obligations (on an interim
basis) for interconnected VoIP services? Why or why not?
What regulatory obligations should one-way VoIP communications such
as ``click-to-call'' have?
Answer. The Commission has not yet classified interconnected VoIP
services as ``telecommunications services'' or ``information services''
as those terms are defined in the Communications Act. While this issue
is being considered, it is important to note that no economic or entry
regulation has been imposed on VoIP services. For example, the
Commission, in the Vonage Order, preempted Minnesota's entry regulation
of Vonage's VoIP service. At the same time, however, the Commission has
required interconnected VoIP providers to comply with various social
and public safety obligations such as 911 emergency access, CALEA, and
universal service. These apply irrespective of whether VoIP services
are ultimately classified as information or telecommunications
services.
These issues are presently under consideration. In the meantime,
the Commission has removed economic regulation and clarified what
social and public safety obligations apply to interconnected VoIP
services.
When the Commission made interim modifications to the assessment
methodology for contributions to the Federal Universal Service Fund, it
recognized that VoIP service was increasingly being used as a
substitute for traditional telephone service--in particular, as a
substitute for traditional long-distance calling. While stand-alone
interstate long-distance revenues have been declining, interconnected
VoIP revenues, which typically include bundled long distance service,
have been growing dramatically. Although the Commission established a
safe harbor for interconnected VoIP services, it also pointed out that
``to the extent that this safe harbor is higher than some providers'
actual interstate use, providers may instead contribute to the fund
based on actual revenue allocations or by conducting a traffic study.''
In the Matter of Universal Service Contribution Methodology, at para.
54. Moreover, under the Commission's rules, a provider of interstate
and international telecommunications whose annual universal service
contribution is expected to be less than $10,000 is not required to
contribute to the Universal Service Fund. Interconnected VoIP providers
that satisfy this de minimis exemption need not contribute to the Fund,
thus limiting the contribution obligation to those interconnected VoIP
service providers that should be able to afford to make such
contributions.
The number of VoIP subscribers has grown dramatically from
approximately 150,000 subscribers in 2003 to 1.2 million subscribers in
2004, and to 4.2 million subscribers at the end of 2005. The Commission
has stated that it expects this trend to continue.
To date, the Commission has only imposed obligations on providers
of ``interconnected VoIP'' services. Our rules define these services as
those that ``(1) enable[s] real-time, two-way voice communications; (2)
require[s] a broadband connection from the user's location; (3)
require[s] Internet protocol-compatible customer premises equipment
(CPE); and (4) permit[s] users generally to receive calls that
originate on the public switched telephone network and to terminate
calls to the public switched telephone network.'' 47 C.F.R. Sec. 9.3.
Thus, one-way VoIP communications are not covered under this
definition.
The Commission has a pending rulemaking proceeding in which it is
considering the extent to which certain regulatory obligations should
apply to VoIP services that could be characterized as ``one-way VoIP
communications.'' In that proceeding, the Commission tentatively
concluded that ``a provider of a VoIP service offering that permits
users generally to receive calls that originate on the PSTN and
separately makes available a different offering that permits users
generally to terminate calls to the PSTN should be subject to the rules
we adopt in today's Order if a user can combine those separate
offerings or can use them simultaneously or in immediate succession.''
In the Matter of IP-Enabled Services, at para. 58.
Question 6. Last year, to ensure that broadband networks are widely
deployed, open, affordable, and accessible to all consumers, the
Commission adopted four, so-called ``net neutrality'' principles. Are
these net neutrality principles broadly enforceable by the Commission?
If so, under what authority will the Commission enforce these
principles?
As you know, in 2005, the Commission approved the transfer of
control of MCI to Verizon Communications Inc. and that of AT&T to SBC
with certain conditions. As conditions of both mergers, effective on
the merger closing date and continuing for 2 years thereafter, the
merged companies will ``conduct business in a manner that comports with
the principles set forth in the FCC's Policy Statement, issued
September 23, 2005 (FCC 05-151),'' which describes the Commission's net
neutrality principles. Do these companies have any legal obligation to
abide by the Commission's net neutrality principles beyond 2 years
after their respective merger closing dates?
Do you believe that Internet end-users should be entitled to
receive service from each broadband access provider in a manner that
does not discriminate in the carriage and treatment of Internet traffic
based on the source, destination, or ownership of such traffic?
Answer. The Commission, under Title I of the Communications Act,
has the ability to adopt and enforce the net neutrality principles it
announced in the Internet Policy Statement. The Supreme Court
reaffirmed last year that the Commission ``has jurisdiction to impose
additional regulatory obligations under its Title I ancillary
jurisdiction to regulate interstate and foreign communications.''
National Cable & Telecomm. Ass'n v. Brand X Internet Services, 125 S.
Ct. 2688, 2696 (2005) (Brand X). Indeed, the Supreme Court specifically
recognized the Commission's ancillary jurisdiction to impose regulatory
obligations on broadband Internet access providers. Brand X, 125 S. Ct.
at 2708 (``[T]he Commission remains free to impose special regulatory
duties on facilities-based ISPs under its Title I ancillary
jurisdiction. In fact, it has invited comment on whether it can and
should do so.'').
The Commission may exercise ancillary jurisdiction under Title I
when: (1) Title I confers subject matter jurisdiction over the service
to be regulated: and (2) the assertion of jurisdiction is reasonably
ancillary to the effective performance of the Commission's
responsibilities. United States v. Southwestern Cable Co., 392 U.S.
157, 177-78 (1968). Both of these conditions are met with respect to
the four principles of the Commission's 2005 Policy Statement. Indeed,
the Commision found ``that both of the predicates for ancillary
jurisdiction are likely satisfied for any consumer protection, network
reliability, or national security obligation that we may subsequently
decide to impose on wireline broadband Internet access service
providers.'' Wireless Broadband Internet Access Order, 20 FCC Rcd
14853, 14914, para. 109.
First, as the Commission stated, broadband services are ``wire
communications'' or ``radio communications,'' as defined in sections
3(52) and 3(33) of the Act, and section 2(a) of the Communications Act
gives the Commission subject matter jurisdiction over ``all interstate
and foreign communications by wire or radio.''
Second, section 1 of the Communications Act confers responsibility
on the Commission ``to make available . . . a rapid, efficient, Nation-
wide, and world-wide wire and radio communication service with adequate
facilities at reasonable charges.'' This responsibility is guided by
the ``policy of the United States . . . (1) to promote the continued
development of the Internet''; ``(2) to preserve the vibrant and
competitive free market that presently exists for the Internet''; and
``(3) to encourage the deployment of technologies which maximize user
control over what information is received by . . . [users of] the
Internet.'' 47 U.S.C. Sec. 230. See also 47 U.S.C. Sec. 157 nt
(Advanced Telecommunications Incentives). The Commission's net
neutrality principles facilitate these responsibilities.
The merger conditions adopted by the Commission only apply for 2
years. Specifically, they read, ``[e]ffective on the Merger Closing
Date, and continuing for 2 years thereafter, [the merged entities] will
conduct business in a manner that comports with the principles set
forth in the FCC's Policy Statement, issued September 23, 2005 (FCC 05-
151).'' See, e.g., SBC/AT&T Merger Order, Appendix F.
Although the Commission did not adopt net neutrality rules, the
Commission has the ability to take appropriate steps where needed. For
example, when we learned that a particular phone company was blocking
access to a competing VoIP provider, we opened an investigation and
negotiated a consent decree that made the company cease discriminating
and pay a fine.
As I have said in the past, network providers should have the
ability to offer consumers different speeds of service and plans with
different quality of service guarantees. Some consumers are willing to
pay more for a faster speed or higher quality of service. I should also
note that traffic prioritization already occurs today. For example,
voice is prioritized over data traffic, and video is prioritized over
other data traffic.
Question 7. During the 1990s, an unintended consequence of the
introduction and adoption of new technologies (wireless phones pagers,
fax lines, dial up Internet, etc.) was a dramatic increase in the
number of area codes splits and overlays. In the past, you have spoken
of the importance of number conservation and how some of your
predecessors and colleagues may have initially underestimated the
impact that area code changes have on local businesses and consumers.
The projected growth in VoIP subscribers, who can select area codes
different than that of where they reside, will likely present a new
challenge to state regulators. In order to prevent the premature
depletion of numbering resources, what steps should the Commission take
specifically with respect to VoIP service providers?
In the event that Part 52 rules were to not apply to VoIP carriers,
would it be appropriate for such carriers to continue to go through
CLECs for numbers so that numbering request, utilization and forecast
data and other important information would continue to be filed with
regulators?
Answer. The Commission's rules require that carriers provide, as
part of their applications for initial numbering resources, evidence
that they are licensed and/or certified to provide service in the area
in which they seek numbering resources as well as evidence that their
facilities are in place or will be in place to provide service within
60 days of the numbering resources activation date. These requirements
apply equally to carriers requesting an initial NXX code and those
requesting an initial thousands-block pursuant to the pooling
requirements the Commission has established. The Commission works
closely with the numbering administrators to enforce these
requirements. In addition, we have granted authority for several states
to implement mandatory thousands-block number pooling as a conservation
measure in certain area codes and are examining extending that
authority to more states.
Under the Commission's rules, only telecommunications carriers may
access telephone numbers. Accordingly, our current Part 52 rules apply
only to telecommunications carriers. Today, VoIP providers secure
numbering resources via partnering relationships with CLECs. The
Commission receives numbering request, utilization, and forecast data
through the CLECs.
______
Response to Written Questions Submitted by Hon. Frank R. Lautenberg to
Kevin J. Martin
Question 1. New Jersey has just one commercial VHF station--WWOR
Channel 9. The FCC has stated in the past that this New Jersey licensee
has special obligations to serve New Jersey. To me, this means a
majority of resources, staff, and coverage for New Jersey news and
events. However, the FCC needs to clarify WWOR's obligation. Will the
FCC further clarify WWOR's special obligations to New Jersey as part of
the station's 2007 license renewal?
Answer. The Commission is aware of the unique circumstances
relating to the provision of broadcast television service to residents
of New Jersey. As you may know, in 1976, the Commission imposed a
special service requirement on commercial VHF television stations
licensed to New York and Philadelphia, including WOR which is now WWOR.
Pursuant to this requirement, VHF stations licensed to New York and
Philadelphia were required to establish and maintain a physical
presence in New Jersey in order to facilitate the coverage of issues of
interest to the residents of New Jersey. To assist the Commission's
review of their performance for New Jersey, the stations also were
required to supplement their license renewal applications with reports
concerning the service provided to New Jersey.
In 1982, Congress amended the Communications Act to require the
Commission to issue a license to any existing VHF commercial television
station licensee that volunteered to move to an unserved state.
Pursuant to this legislative direction and at the request of WWOR's
licensee, the Commission reallocated Channel 9 from New York City to
Secaucus, New Jersey and issued a license to WWOR reflecting that
change. At that time, the Commission informed the station's licensee
that its service to Northern New Jersey, which the Commission viewed as
broader than the community of Secaucus, would be reviewed during
proceedings to renew WWOR's license.
WWOR and other New Jersey television stations must file their
renewal applications with the Commission by February 1, 2007. As we
review WWOR's renewal application, we will review its service
obligations to Northern New Jersey.
Question 2. Both WWOR Channel 9, a commercial station and WNET
Channel 13, a public station, are licensed in New Jersey cities. Yet
they advertise and market themselves as New York stations. I think this
is deceptive and not true to their licenses. Are licensees permitted to
advertise and market their stations with no mention of the city or even
the state of license?
Answer. Pursuant to the Commission's rules, commercial and
noncommercial educational radio and television stations are required to
identify themselves at the start and finish of each broadcast day and
hourly throughout the day. That identification must include broadcast
of their call signs, followed by the station's community of license. No
Commission rule regulates how stations advertise and market themselves
with respect to mentioning the city or even the state of license.
Question 3. Must a licensee maintain facilities in the state in
which it is licensed?
Answer. The Commission is aware of the unique circumstances
relating to the provision of broadcast television service to residents
of New Jersey. As you may know, in 1976, the Commission imposed a
special service requirement on commercial VHF television stations
licensed to New York and Philadelphia, including WOR which is now WWOR.
Pursuant to this requirement, VHF stations licensed to New York and
Philadelphia were required to establish and maintain a physical
presence in New Jersey in order to facilitate the coverage of issues of
interest to the residents of New Jersey. To assist the Commission's
review of their performance for New Jersey, the stations also were
required to supplement their license renewal applications with reports
concerning the service provided to New Jersey.
Commission rules do not explicitly require that either a station's
technical facilities or its main studio be located in the same state as
the station's community of license. However, facility location is
limited by the requirement that a station put a principal community
contour over the community of license. In certain special circumstances
such as with respect to WWOR-TV, the Commission expected the station to
move its former New York City studios and offices to an unserved state,
in this case New Jersey.
Question 4. In January 2005, FCC Chairman Powell announced that the
FCC was investigating the Armstrong Williams scandal. More than a year
and a half has gone by, yet I'm only told that the matter is
``pending'' with no known timeline and no assurance that the FCC will
even issue a final report. What is the status of this investigation,
and does this kind of journalism-for-hire concern you as much as it
concerns me?
Answer. These issues do concern me and the entire Commission. Last
year, less than 1 month after I became Chairman, the Commission issued
a public notice reminding broadcasters of their obligations under
sections 317 and 507 of the Communications Act of 1934, and sections
73.1212 and 76.1615 of the Commission's rules. These provisions
generally require that, when payment has been received or promised to a
broadcast licensee or cable operator for the airing of program
material, at the time of the airing, the station or cable system must
disclose that fact and identify who paid or promised to provide the
consideration. The Commission also sought comment on video news
releases and their use by broadcast licensees and cable operators. We
have several investigations that are ongoing that relate to potential
violations of these rules.
In addition, subsequent to our release of this public notice, the
Commission received a complaint from Free Press and the Center for
Media and Democracy, which alleged that a number of broadcasters had
violated the Commission's sponsorship identification rules. We sent
letters of inquiry to all of the stations identified in that complaint,
asking them to respond to allegations that they have violated the
sponsorship identification rules.
The sponsorship identification rules serve an important purpose.
They ensure that the listening public knows when someone is seeking to
influence them.
Question 5. New Jersey has passed a statewide video franchise law
to allow phone companies to offer television through one contract as
opposed to going town by town. But it also has ``buildout''
requirements so a new entrant will serve the 60 most densely populated
towns within 3 years. Is it good policy for Federal legislation to take
away those buildout requirements already agreed to in states?
Answer. It is important to have both policies that encourage new
entry and competition in the video marketplace and policies that ensure
everyone receives the benefits of such competition and that prohibit
discrimination. In achieving such a balanced approach, it is important
that such requirements not create such a high threshold that they deter
competitive entry.
______
Response to Written Questions Submitted by Hon. Conrad Burns to
Kevin J. Martin
Question 1. There are currently numerous issues and open
proceedings related to 9-1-1 at the Commission. The VoIP E-911 Order
and subsequent filings, petitions and waiver requests; major wireless
carrier handset deadlines and waiver requests; and requests from the
deaf and hard of hearing community to complete open proceedings
affecting their access to 9-1-1; to name a few. Where do these issues
stand at the FCC?
Answer. When I became Chairman, I identified public safety and
emergency preparedness as critical issues. We have been working hard to
make sure that all consumers have access to 911 emergency services.
Public safety obligations like 911 are critical to consumers and public
safety alike. The 911 system is quite literally one of life or death.
It is critical to our Nation's ability to respond to a host of crises
and the Commission has been working hard to minimize the situations
where users are unable to access it. The Commission is committed to
making sure that, during an emergency, a person can always pick up the
phone, dial 911, and access local emergency officials.
With respect to VoIP, we are working with the VoIP community to
implement our 911 rules. The Commission staff have conducted numerous
meetings and attended conferences with public safety officials,
interconnected VoIP providers, carriers, and third-party vendors in
order to answer questions, promote coordination and encourage
cooperation to accelerate 911 solutions.
With respect to wireless, the Commission has been working to ensure
that all major wireless carriers have reached 95 percent penetration
among their subscribers for a handset-based 911 solution. The
Commission has received several waiver requests and we expect that they
will be resolved soon. The Commission has also adopted 22 orders,
pursuant to the ENHANCE 911 Act, addressing petitions for relief filed
by 52 Tier III carriers of the 95 percent handset penetration
requirement.
Finally, with respect to Internet-based forms of Telecommunications
Relay Services, such as Video Relay Service and Internet Protocol Relay
Service, the Commission opened a proceeding late last year seeking
comment on how it could reform its rules to ensure that the deaf and
hard-of-hearing community has equivalent access to emergency services
as all other consumers. As part of this proceeding, this November we
will hold a Disabilities E-911 Summit where we intend to bring together
leaders from the disabilities community, the E-911 community, partner
agencies, and industry to identify the access that people with hearing
or speech disabilities need; the technologies, services, and
applications through which access should be offered; and the
technological, policy, and commercial issues involved in providing the
needed access to persons with hearing and speech disabilities.
Question 2. In March of this year the FCC adopted a plan to
establish a Public Safety and Homeland Security Bureau. Six months
later, what is the status of that bureau and will that bureau be
charged with addressing all or some of the ongoing 9-1-1 issues at the
Commission or will some 9-1-1 issues remain in existing bureaus?
Answer. In March, the Commission adopted a plan to consolidate its
public safety, homeland security, and disaster management activities
into a single Public Safety and Homeland Security Bureau. Since then,
we have been working with the Commission staff and the National
Treasury Employees Union on the implementation plan. We also submitted
to the Appropriations Committees of the U.S. Senate and U.S. House of
Representatives detailed financial information. We received final
Congressional approval on September 11, 2006, and we plan to announce
the opening of the Public Safety and Homeland Security Bureau on
September 26, 2006.
The Public Safety and Homeland Security Bureau will be charged with
addressing all of the on-going 911 issues at the Commission. The Public
Safety and Homeland Security Bureau will coordinate closely with the
existing bureaus that have traditionally worked on 911 issues,
including the Wireline Competition Bureau and the Wireless
Telecommunications Bureau.
Question 3. In the FCC's proceeding examining local franchising
requests by would-be competitive cable service providers, the
Commission solicited public comment on whether build-out requirements
create unreasonable barriers to entry.
The U.S. Department of Justice responded, stating:
``In light of the significant entry-deterring effects of
mandated build-out requirements, the Department believes that
LFAs should not be allowed to impose any such requirements
except where necessary to prevent income discrimination, which
the statute prohibits.''
The Department supported this conclusion by pointing out that:
``Build-out requirements that impose on an entrant the
obligation to serve a geographic area that the entrant had
concluded would be uneconomical to reach can lead to the
entrant abandoning its plans for the entire area or, if the
entrant agrees to the condition, result in competition being
less vibrant or efficient. When the entrant agrees to such a
build-out requirement, prices may be higher than they would be
otherwise, due in part to the entrant's increased construction
costs or inability to make optimal technology choices, or
because the area actually cannot economically support another
competitor.''
In other words, buildout mandates stifle competition. When faced
with a build-out requirement as a condition for receiving a franchise,
a competitor may not enter the market. Or, if the new entrant agrees to
the build-out requirement, it may have to charge higher rates.
Chairman Martin, do you find the Department's comments about the
counter-productive impacts of a new entrant build-out requirement
credible?
Answer. I agree that unreasonable build-out requirements and
timeframes could discourage new entrants and stifle competition. The
points that the Department of Justice makes are echoed in the comments
of a wide range of commenters, including new entrants to the video
marketplace like incumbent local exchange carriers and broadband
service providers, equipment manufacturers, and advocacy groups. Some
provided specific examples of this. For instance, one telephone company
indicated that it has withdrawn more than 25 percent of the requests it
has made for cable franchises due to build-out requirements. In each
case, the company withdrew its request after determining that
compliance with the build out requirement would not be economically
feasible.
Question 4. Further, isn't it true that competitive local exchange
carriers (CLECs), who in some places are cable companies, have been
allowed to enter local telephone markets without the economic burden of
a build-out requirement?
Answer. Yes, CLECs, including cable companies, do not have to
comply with any build-out requirements when they seek to provide local
telephone service.
Question 5. According to the National Emergency Number Association,
today nearly 50 percent of counties in this country do not contain a
Public Safety Answering Point (PSAP) that can accept Phase II wireless
E-911 calls, meaning the call taker does not know the location of the
call. Additionally, 25 percent of counties can not accept Phase I E-911
calls, meaning they have no location or callback number if the call
gets disconnected. There are still 300 counties that do not have E-911
for wireline service, over 100 of which lack even basic 9-1-1. And of
course the VoIP deployment is still ongoing. Progress is being made but
these numbers are troubling. Beyond issuing mandates that directly
affect communications providers, what do you see as the proper role for
the FCC, NTIA and the Federal Government generally in providing
leadership and management to ensure that all areas of this country are
E-911 enabled for all technologies and moving toward the next
generation of technology?
Answer. Although the FCC plays a significant role in establishing
911 rules for telecommunications providers, the funding of PSAPs has
traditionally fallen under state or local jurisdiction. The Federal
Government does, however, play a role in encouraging and supporting
state efforts to upgrade their PSAPs. The ENHANCE 911 Act of 2004
required NTIA/DOT to establish a joint program to facilitate
coordination and communication between Federal, state, and local
emergency communications systems, emergency personnel, public safety
organizations, telecommunications carriers, and telecommunications
equipment manufacturers and vendors involved in the implementation of
E-911 services and create an E-911 Implementation Coordination Office.
Aside from ensuring that telecommunications providers within its
jurisdiction are E-911 capable, the FCC's primary role has been to
serve as a resource for PSAPs in their efforts to become E-911 enabled.
In this capacity, the Commission has provided technical assistance and
objective evaluation concerning available E-911 technologies, and
information on the regulatory requirements imposed on service
providers. The Commission has also engaged in outreach efforts with all
stakeholders, including individual PSAPs, state PSAP coordinators,
related public safety organizations (such as NENA), consumers, and
technology vendors to increase awareness of the resources available at
the FCC and facilitate to the maximum extent possible further E-911
deployment. For example, in November, we will hold a Disabilities E-911
Summit where we intend to bring together leaders from the disabilities
community, the E-911 community, partner agencies, and industry to
identify the access that people with hearing or speech disabilities
need; the technologies, services, and applications through which access
should be offered; and the technological, policy, and commercial issues
involved in providing the needed access to persons with hearing and
speech disabilities.
______
Response to Written Questions Submitted by Hon. Jim DeMint to
Kevin J. Martin
Question. Chairman Martin, Spectrum is a valuable, scarce public
resource and spectrum auctions benefit American taxpayers. Over the
past 13 years, auctions have deposited $20 billion into the U.S.
Treasury. In fact, we have an auction occurring over at the FCC where
the current gross is $13.8 billion and companies are still bidding.
Fiscally responsible programs like auctions are critical to ensure the
best possible management of taxpayer resources.
Auctions are the fastest way to bring technology to market.
According to the FCC, the period of time from application to license
grant is now less than 1 year. Assurance that spectrum will be
available quickly increases bidder certainty and presents the licensee
with a strong incentive to deploy innovative systems to consumers as
quickly as possible. Faster deployment means keeping the U.S.
competitive with other countries and benefiting consumers who want
access to more technology at lower prices.
Chairman Martin, the FCC is successfully utilizing a market
allocation model right now in the Advanced Wireless Service spectrum
and later when it auctions the DTV spectrum in 2009. Can you give a
compelling reason that the ``beachfront'' spectrum--the TV broadcast
spectrum ``white space''--should be allocated any differently?
Answer. I agree that auctions and the licensed market allocation
model have been extraordinarily successful in most instances. In
general, the auctioning of licensed spectrum efficiently distributes a
scarce resource to those who will put it to its highest and best use.
The Commission has tried to strike a balance between the licensed model
and the unlicensed model, determining which model to use based on all
of the relevant circumstances. The licensed model is more efficient in
many cases, and tends to work best when spectrum rights are (1) clearly
defined, (2) exclusive, (3) flexible, and (4) transferable. When
spectrum rights lack these attributes, potential licensees face
uncertainty and may lack incentive to invest in a license or offer
service. In those circumstances, the unlicensed model may better
optimize spectrum access and utilization.
The Advanced Wireless Service spectrum currently being auctioned
and the recovered analog television broadcast spectrum both fit well
within the licensed model. Licensees of this spectrum will have clearly
defined, flexible rights to use the spectrum on an exclusive basis, and
will be able to transfer those rights to third parties. Both bands
allow licensees to operate wide-area, wideband systems at relatively
high power and will protect licensees from interference from other
spectrum users. And these services allow for flexible use--a licensee
will be able to provide fixed or commercial mobile radio services.
Spectrum with this combination of rights is relatively scarce, which
tends to make it particularly valuable.
The Commission has not determined whether spectrum in the digital
television white spaces is better suited for use on a licensed or
unlicensed basis. Any user, whether licensed or unlicensed, would need
to protect the rights of incumbent licensees and therefore would not be
allowed to cause harmful radiofrequency interference to existing
licensees. As a result, white space users will have secondary rights
only and likely will be limited in the power levels at which their
devices are able to operate. Some have argued that such encumbered
spectrum would be made available most efficiently on an unlicensed
basis. However, the limitations that would need to be placed on this
spectrum could be written into the licenses and therefore would not
prevent the spectrum being made available on a licensed basis.
Licensing the spectrum has the benefit of enabling policymakers and
those in the affected industry to determine the source of any harmful
interference.
______
Response to Written Question Submitted by Hon. John E. Sununu to
Kevin J. Martin
Question. A long-term problem facing law enforcement agencies, fire
departments, and other members of the first responder community in the
northern parts of New Hampshire--those above Line A--is the ability to
obtain new radio frequencies and channels. The current approval process
averages one to 3 years, and many applications are simply rejected due
to objections by the Canadian government. The affected agencies make a
compelling case that this is unintentionally putting personnel and
American citizens in harms way.
Please outline the current process for considering and approving
applications for public safety licenses for use above Line A.
Historically, has the Canadian government raised objections been within
the bounds of reasonable spectrum management? When was the last time
this process was reviewed or revised? What steps can the FCC take to
revise the application and appeals process for new radio frequencies
for those communities above Line A, and how soon could these steps be
implemented?
Answer. I agree that it is critical that first responders above
Line A have the ability to obtain new radio frequencies and channels
when needed.
The United States' relationship with Canada on public safety radio
systems is currently governed by a series of binding bilateral legal
agreements and protocols that were negotiated by the Department of
State. The existing agreements specify the process for coordination of
public safety license applications for use above Line A. Pursuant to
these agreements, the U.S. sends Canada public safety license
applications for review. Canada approves those applications that, based
on their interference analysis, will not cause harmful radiofrequency
interference to their existing facilities and denies those that will
cause interference. If Canada denies an application, the U.S. may
submit its own supplemental interference analysis or the U.S. licensee
may amend its application to change its frequency, move its location,
or lower its power so as to avoid interference to Canadian operations.
The same process takes place in reverse--with Canada submitting its
public safety license applications to the United States for review, and
the United States having an opportunity to reject Canadian
applications.
When Canada rejects an application, the Commission works with the
applicant and Canada to find an alternative frequency or uses other
mechanisms for resolving the interference concern. This process has not
been revised in several years. I share your concern that these
applications be processed on a more timely basis, and will work with
the Department of State and our Canadian counterparts to examine
whether there are possible improvements that could be made to the
existing bilateral agreements.