[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]

REFORMING FCC PROCESS

=======================================================================

HEARING

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

OF THE

COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

FIRST SESSION

__________

JUNE 22, 2011

__________

Serial No. 112-66

Printed for the use of the Committee on Energy and Commerce

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COMMITTEE ON ENERGY AND COMMERCE

FRED UPTON, Michigan HENRY A. WAXMAN, California
Chairman Ranking Member
JOE BARTON, Texas JOHN D. DINGELL, Michigan
Chairman Emeritus EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida EDOLPHUS TOWNS, New York
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania ANNA G. ESHOO, California
MARY BONO MACK, California ELIOT L. ENGEL, New York
GREG WALDEN, Oregon GENE GREEN, Texas
LEE TERRY, Nebraska DIANA DeGETTE, Colorado
MIKE ROGERS, Michigan LOIS CAPPS, California
SUE WILKINS MYRICK, North Carolina MICHAEL F. DOYLE, Pennsylvania
Vice Chairman JANICE D. SCHAKOWSKY, Illinois
JOHN SULLIVAN, Oklahoma CHARLES A. GONZALEZ, Texas
TIM MURPHY, Pennsylvania JAY INSLEE, Washington
MICHAEL C. BURGESS, Texas TAMMY BALDWIN, Wisconsin
MARSHA BLACKBURN, Tennessee MIKE ROSS, Arkansas
BRIAN P. BILBRAY, California ANTHONY D. WEINER, New York
CHARLES F. BASS, New Hampshire JIM MATHESON, Utah
PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington DONNA M. CHRISTENSEN, Virgin
GREGG HARPER, Mississippi Islands
LEONARD LANCE, New Jersey
BILL CASSIDY, Louisiana
BRETT GUTHRIE, Kentucky
PETE OLSON, Texas
DAVID B. McKINLEY, West Virginia
CORY GARDNER, Colorado
MIKE POMPEO, Kansas
ADAM KINZINGER, Illinois
H. MORGAN GRIFFITH, Virginia

(ii)
Subcommittee on Communications and Technology

GREG WALDEN, Oregon
Chairman
LEE TERRY, ANNA G. ESHOO, California
Vice Chairman EDWARD J. MARKEY, Massachusetts
CLIFF STEARNS, Florida MICHAEL F. DOYLE, Pennsylvania
JOHN SHIMKUS, Illinois DORIS O. MATSUI, California
MARY BONO MACK, California JOHN BARROW, Georgia
MIKE ROGERS, Michigan DONNA M. CHRISTENSEN, Virgin
BRIAN P. BILBRAY, California Islands
CHARLES F. BASS, New Hampshire EDOLPHUS TOWNS, New York
MARSHA BLACKBURN, Tennessee FRANK PALLONE, Jr., New Jersey
PHIL GINGREY, Georgia BOBBY L. RUSH, Illinois
STEVE SCALISE, Louisiana DIANA DeGETTE, Colorado
ROBERT E. LATTA, Ohio JOHN D. DINGELL, Michigan
BRETT GUTHRIE, Kentucky HENRY A. WAXMAN, California, ex
ADAM KINZINGER, Illinois officio
JOE BARTON, Texas
FRED UPTON, Michigan, ex officio

C O N T E N T S

----------
Page
Hon. Greg Walden, a Representative in Congress from the State of
Oregon, opening statement...................................... 1
Prepared statement........................................... 3
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, prepared statement......................... 5
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 5
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 7
Prepared statement........................................... 7
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 8
Hon. Cliff Stearns, a Representative in Congress from the State
of Florida, prepared statement................................. 96

Witnesses

John Sununu, Honorary Co-chair, Broadband for America............ 10
Prepared statement........................................... 13
Answers to submitted questions............................... 130
Kathleen Abernathy, Chief Legal Officer and Executive Vice
President, Frontier Communications............................. 19
Prepared statement........................................... 21
Answers to submitted questions............................... 132
Brad Ramsay, National Association of Regulatory Utility
Commissioners.................................................. 24
Prepared statement........................................... 26
Answers to submitted questions............................... 138
Mark Cooper, Research Director, Consumer Federation of America... 40
Prepared statement........................................... 42
Answers to submitted questions............................... 153
Ronald M. Levin, William R. Orthwein Distinguished Professor of
Law, Washington University School of Law....................... 48
Prepared statement........................................... 50
Answers to submitted questions............................... 154
Randolph J. May, President, Free State Foundation................ 67
Prepared statement........................................... 69
Answers to submitted questions............................... 163

Submitted Material

Article entitled, ``FCC Reform and the Future of
Telecommunications Policy,'' Philip J. Weiser, University of
Colorado at Boulder............................................ 98

REFORMING FCC PROCESS

----------

WEDNESDAY, JUNE 22, 2011

House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:32 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Greg
Walden (chairman of the subcommittee) presiding.
Members present: Representatives Walden, Terry, Shimkus,
Bono Mack, Bilbray, Bass, Blackburn, Scalise, Latta, Guthrie,
Kinzinger, Barton, Upton (ex officio), Eshoo, Doyle, Barrow,
Christensen, Dingell, and Waxman (ex officio).
Staff present: Gary Andres, Staff Director; Ray Baum,
Senior Policy Advisor/Director of Coalitions; Michael
Beckerman, Deputy Staff Director; Paul Cancienne, Policy
Coordinator, CMT; Nicholas Degani, Detailee, FCC; Andy
Duberstein, Special Assistant to Chairman Upton; Neil Fried,
Chief Counsel, C&T; Debbee Keller, Press Secretary; Carly
McWilliams, Legislative Clerk; Jeff Mortier, Professional Staff
Member; David Redl, Counsel, Telecom; Shawn Chang, Democratic
Counsel; Jeff Cohen, FCC Detailee; Sarah Fisher, Democratic
Policy Analyst; and Roger Sherman, Democratic Chief Counsel,
Communications and Technology.

OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON

Mr. Walden. Good morning and welcome. Before I begin my
opening statement regarding FCC process reform that brings us
together here today, I just wanted to update our members of the
committee on the ongoing efforts on our top issue, which is
related to spectrum auctions and public safety networks. Key
staff on both sides of the aisle, along with Ms. Eshoo and
myself, have been meeting regularly for several weeks to see if
we can come together on a bipartisan agreement on spectrum
legislation. These talks continue to make progress, and I
appreciate the good faith effort on both sides and especially
where the real work gets done--at the staff level.
And I think we all know and are keenly aware that time is
of the essence and we need to move to a conclusion at an
appropriate time given the needs of public safety and the
anniversary of 9/11. Meanwhile, though, our subcommittee can
walk and chew gum at the same time so we have many other issues
before us, including FCC process reform, which is the subject
of today's hearing.
We have before us a diverse panel of experts representing
industry, think tanks, consumer groups, academia, and the
States to testify on ways to improve the transparency and
accountability of the FCC. To keep our discussion grounded, I
have also circulated to my colleagues on the subcommittee and
these experts a discussion draft of legislation. Again, I point
out it is a discussion draft. That is what we are going to have
today.
I view that legislative language as a starting point for
today's conversation, and I thank all of you for your
thoughtful analysis of the draft legislation and your
testimony. I have heard from many who track these issues that
they appreciate actually having a ``draft'' document to review
from which to make more informed comments, perhaps a process we
could institute in certain independent agencies. This is the
kind of process I would like to see used more often at the FCC.
I look forward to you sharing your thoughts and ideas about
best practices for this Agency.
Now, at our last hearing, we heard from the FCC Chairman
and his fellow commissioners. They testified on what was
working at the FCC, recent improvements in the FCC's processes,
and what could still be improved. The hearing has made me an
optimist. Chairman Genachowski explained the Agency has already
improved the transparency of the Commission in several
regards--by publishing the specific text of proposed rules, by
releasing orders shortly after adoption, and by proposing to
eliminate unnecessary and outdated regulations. But all of this
is discretionary.
Congress has the authority and I believe the responsibility
to ensure that the Agency--which is conducting the public's
business--does so with transparency and accountability,
regardless of who is currently the chairman. It is not asking
too much to have the FCC actually codify a set of best
practices and then operate by them.
One idea in this mold is to ask the FCC to establish shot
clocks so that parties know how quickly they can expect action
in certain proceedings. Another is to ask the FCC to establish
a means for the public to know the status of the rulemakings
and other proceedings pending before the Commission. And
another is to ask the FCC to establish procedures for a
bipartisan majority of commissioners to actually be able to
initiate a proceeding. By asking the FCC to regulate itself, we
can give the Agency the flexibility it needs to act while
guarding against a lapse in the Commission's practices. It is
not my intent to micromanage every decision and this
legislation does not do that.
In considering other reforms, we must balance the need for
congressional and public oversight of the Commission with the
flexibility the Commission needs to promote competition in the
marketplace. For example, the Administrative Conference of the
United States recently recommended 60-day comment periods for
``significant regulatory actions,'' as well as reply comment
periods ``where appropriate.'' One idea is to strike a middle
ground, requiring comment and reply comment periods of 30 days
apiece but only when the APA already requires the Commission to
issue a NPRM.
Another idea is to extend to the FCC the cost-benefit
analyses currently required of executive agencies and endorsed
just this year in President Obama's Executive Order on
regulatory reform. Cost-benefit analyses are valuable because
they require an agency to squarely address the cost of
regulation, determine whether other methods may be less costly,
and make a reasoned determination that the benefits outweigh
the costs. If the President's requirement is good enough for
the Department of Education and the Environmental Protection
Agency, why not the FCC?
And trust me, the old argument that such a requirement will
bog down the agency just doesn't cut it. I have never met an
agency that didn't use this argument, yet they always seem to
find money to buy new vehicles and buildings.
Finally, it may be possible to tighten the FCC's
transaction review standards to harms that directly arise from
the transaction before it. Such a requirement is not meant to
displace the standard of review but to focus the Commission's
enquiry. If the Commissions Act empowers the FCC to review a
transfer of broadcast licenses but not other aspects of a
transaction, the FCC should review that transfer of broadcast
licenses and not other aspects of the transaction. That is what
their underlying statute says.
These ideas are not the end of the discussion but the
beginning, and I look forward to the thoughts of my colleagues
and the panelists on moving forward.
As I said at the outset, this is a discussion draft, and I
am open to the input of our panelists--that is why you are
here--and to the input of the public and my colleagues. When it
comes to improving the transparency, accountability, and
efficiency of the FCC, I am convinced we can find common
ground.
With that, I would yield to Ms. Blackburn for the remainder
of time she may consume.
[The prepared statement of Mr. Walden follows:]

Prepared statement of Hon. Greg Walden

(Good morning. Before I begin my opening statement
regarding FCC process reform, I wanted to update members of the
committee on the ongoing efforts on our top issue: spectrum
auctions and public safety networks. Key staff on both sides of
the aisle, along with Ms. Eshoo and I, have been meeting
regularly for several weeks to see if we can come to a
bipartisan agreement on spectrum legislation. These talks
continue to make progress, and I appreciate the good faith
commitment of the staffs to this work and know that all
involved are keenly aware of the need to move toward a
conclusion soon, given the needs of our public safety community
and the anniversary of 9/11. Meanwhile, our subcommittee has
other work it can and must also undertake, including our
continuing efforts to modernize and standardize the processes
of the FCC, which is the focus of today's hearing.)
We have before us a diverse panel of experts-representing
industry, think tanks, consumer groups, academia, and the
states-to testify on ways to improve the transparency and
accountability of the FCC. To keep our discussion grounded, I
have also circulated to my colleagues on the Subcommittee and
these experts a Discussion Draft of legislation; I view that
legislative language as a starting point for today's
conversation, I thank all of you for your thoughtful analysis
of the draft legislation and your testimony. I've heard from
many who track these issues that they appreciate actually
having a ``draft'' document to review and from which to make
more informed comments. This is the kind of process I'd like to
see used more often at the FCC. I look forward to you sharing
your thoughts and ideas about best practices for the agency.
At our last hearing, we heard the FCC Chairman and his
fellow Commissioners testify on what was working at the FCC,
recent improvements in the FCC's processes, and what could
still be improved. That hearing has made me an optimist.
Chairman Genachowski explained that the agency has already
improved the transparency of the Commission in several regards-
by publishing the specific text of proposed rules, by releasing
orders shortly after adoption, and by proposing to eliminate
unnecessary and outdated regulations. But all of this is
discretionary. Congress has the authority and the
responsibility to ensure that the agency--conducting the
public's business--does so with transparency and
accountability. It's not asking too much to have the FCC
actually codify a set of best practices and operate by them.
One idea in this mold is to ask the FCC to establish shot
clocks so that parties know how quickly they can expect action
in certain proceedings. Another is to ask the FCC to establish
a means for the public to know the status of rule makings and
other proceedings pending before the Commission. And another is
to ask the FCC to establish procedures for a bipartisan
majority of commissioners to initiate action in a proceeding.
By asking the FCC to regulate itself, we can give the agency
the flexibility it needs to act while guarding against a lapse
in the Commission's practices. It's not my intent to micro-
manage every decision and this legislation does not do that.
In considering other reforms, we must balance the need for
congressional and public oversight of the Commission with the
flexibility the Commission needs to promote competition in the
marketplace. For example, the Administrative Conference of the
United States recently recommended 60-day comment periods for
``significant regulatory actions'' as well as reply comment
periods ``where appropriate.'' One idea is to strike a middle
ground, requiring comment and reply comment periods of 30-days
apiece, but only when the Administrative Procedures Act already
requires the Commission to issue an NPRM.
Another idea is to extend to the FCC the cost-benefit
analyses currently required of executive agencies, and endorsed
just this year in President Obama's Executive Order on
regulatory reform. Cost-benefit analyses are valuable because
they require an agency to squarely address the cost of
regulation, determine whether other methods may be less costly,
and make a reasoned determination that the benefits outweigh
the costs. If the President's requirement is good enough for
the Department of Education and the Environmental Protection
Agency, why not the FCC?
And trust me, the old argument that such a requirement will
bog down the agency just doesn't cut it. I've never met an
agency that didn't use this argument, yet they always seem to
find money to buy new vehicles and buildings.
Finally, it may be possible to tighten the FCC's
transaction review standards to harms that directly arise from
the transaction before it. Such a requirement is not meant to
displace the standard of review but to focus the Commission's
enquiry: If the Communications Act empowers the FCC to review a
transfer of broadcast licenses but not other aspects of a
transaction, the FCC should review that transfer of broadcast
licenses and not other aspects of the transaction.
These ideas are not the end of the discussion but the
beginning. I look forward to the thoughts of my colleagues and
the panelists on moving forward.
As I said at the outset, this is a discussion draft and I
am open to the input of our panelists-that's why you're
here.and to the input of the public and my colleagues. When it
comes to improving the transparency, accountability and
efficiency of the FCC, I'm convinced we can find common ground.
On that note, I yield my remaining time to Mrs. Blackburn.

Mrs. Blackburn. Thank you, Mr. Chairman. I appreciate the
legislation that you are bringing forward. I do believe it is a
starting point for us to address the crisis of confidence that
many now have with the FCC. But we need to move the Agency away
from being an institution driven by activists pursuing social
outcomes to one grounded in regulatory humility and statutory
obedience.
Congress should slam the FCC's regulatory backdoor shut,
lock it, and return the keys to the free market. And any new
regulations must require concrete examples of market failure
and true consumer harm, because there is no room for additional
burdens on American industries and consumers without showing
just cause.
We need stronger accountability and transparency of the
Agency to ensure that it operates within its legal boundaries.
I thank you for the time, and I yield back.
[The prepared statement of Mrs. Blackburn follows:]

Prepared statement of Hon. Marsha Blackburn

Thank you Mr. Chairman. I appreciate the legislation you
are bringing forward. I do believe it is a starting point for
us to address the crisis of confidence that many now have in
the FCC.
But, we need to move the agency away from an institution
driven by activists pursuing social outcomes to one grounded in
regulatory humility and statutory obedience. Congress should
slam the FCC's regulatory back-door shut, lock it, and return
the keys to the free market.
Any new regulations must require concrete examples of
market failure and true consumer harm because there is no room
for additional burdens on American industries and consumers
without showing just cause.
We need stronger accountability and transparency of the
agency to ensure it operates within its legal boundaries.

Mr. Shimkus. Will the gentleman yield for just one second?
Mr. Walden. Yes.
Mr. Shimkus. I would like the time to welcome my former
classmate, former Senator John Sununu. He is at the panel and
it is good to see him on that side.
Mr. Sununu. Thank you very much, Congressman Shimkus. It is
very nice to be here. You know, I could never get on a Commerce
Committee when I was in the House. That is part of the reason I
ran for the Senate. But I did notice that I am at the kids'
table here, a little sweet, but I am grateful to be here
nonetheless.
Mr. Shimkus. Thank you, Mr. Chairman.
Mr. Walden. That is fine. And we have always wanted to have
you before us and John has a lot of questions for you, Senator.
I now turn to the ranking member of the subcommittee, my
friend and colleague from California who is nursed back to
health after her surgery, Ms. Eshoo.

OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE FROM
THE STATE OF CALIFORNIA

Ms. Eshoo. Thank you, Mr. Chairman. And good morning to
you, to all of the members and thank you to all the witnesses
that are here today.
Today's hearing continues our discussion of FCC process
reform, and I think that it is important for us to keep
pressing ahead on this, examine the suggestions that have been
made, and hear from a variety of witnesses about their ideas
and their comments on what we are considering.
Last month's subcommittee hearing highlighted that the
Commission has really taken some proactive steps to increase
openness, transparency, and accountability. And these efforts
should be applauded as we examine legislative measures that
might help to enhance the FCC's effectiveness.
I want to thank Chairman Walden for incorporating the FCC
Collaboration Act into the draft legislation under discussion
today. This is bipartisan reform which was introduced with
Representative Shimkus and Doyle earlier this year and it would
promote greater collaboration by allowing three or more
commissioners to talk to each other outside of an official
public meeting.
As part of this Sunshine reform, I am very pleased that the
discussion draft also incorporates federal/state joint boards.
During last month's hearing, Commissioner Clyburn described how
commissioners have to rotate in and out of these meetings and
how a modification of the Sunshine Act would enhance joint
board recommended decisions. Allowing FCC commissioners to
collaborate more freely as part of their participation on
federal/state joint boards makes sense. And I think it serves
to strengthen our original legislation.
As I noted in last month's hearing, though, I think that we
need to be cautious of legislative proposals which might or
could diminish the Commission's ability to protect the public
interest and preserve competition. I think those are two very,
very important values that need to be retained. I fully support
reforms that will better serve the public good, but they
shouldn't be done at the expense of overly prescriptive rules
that limit the FCC's flexibility and decision-making process.
Our witnesses today come from many backgrounds, including
industry, the public interest, and academia. You bring years of
experience working with the FCC both inside and outside the
Agency. And so I especially look forward to hearing your
thoughts on the draft legislation. So we have a lot of work to
do. We have the spectrum legislation that really needs to move
forward that will usher in a new era of telecommunications, its
applications in the 21st century, and we have reforms to make.
And I look forward to hearing from our witnesses today. And
thank you, Mr. Chairman, for holding this.
I would like to yield the remainder of my time to
Congressman Doyle.
Mr. Doyle. Thank you very much.
Mr. Chairman, thank you for holding this hearing. And we
want to thank the distinguished panel of witnesses and our
former colleague, John Sununu, for being here this morning to
educate us about the important issue of FCC process reform. Mr.
Chairman, while I appreciate your hard work to examine ways to
update FCC process, I am somewhat concerned about certain
aspects of the draft bill before us and look forward to working
with you on that.
The most troubling part is two things that concern me is
one that we would limit the power of the Commission to impose
conditions or voluntary commitments on the transactions it
reviews. While conditions shouldn't serve as excuses for the
FCC to permit a transaction if it fails to serve the public
interest, if a merger is approved, the FCC should impose
conditions it deems necessary to meet its public interest
standard.
It also concerns me that we would require a Notice of
Inquiry before every single NPRM. I think that this can be
burdensome and I think this is something that is better left to
the FCC.
I do want to thank you for including the language of the
Sunshine Reform bill that Congressman Shimkus and Congresswoman
Eshoo and I have put forward. We think that would increase
transparency and improve communication within the Agency. I
look forward to hearing the testimony of all the witnesses
today. Mr. Chairman, I look forward to working with you.
And I yield back.
Mr. Walden. The gentleman yields back his time. I now
recognize the chairman of the full committee, the gentleman
from Michigan, Mr. Upton, for 5 minutes.

OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN

Mr. Upton. Well, thank you, Mr. Chairman. And I certainly
want to welcome our great friend Mr. Sununu as well.
The communications and tech sector is one of the largest
drivers of our economy. And at a time when overall job creation
remains weak and burdensome rules and red tape are keeping job
creators on the sidelines, we should be doing everything that
we can to unleash the creativity and innovative potential of
this sector. Eliminating outmoded rules, removing regulatory
barriers, and refraining from imposing new ones on this segment
of our economy could do a lot to help spur jobs and help pull
us out of our fiscal doldrums.
Chairman Genachowski appears to recognize this. While the
proof will be in the pudding, he is at least saying he plans to
abide by the President's Executive Order on regulatory reform
even though independent agencies are not required to do so. And
my hope is that he will submit to us and the administration the
formal plan requesting OIRA to implement the Executive Order.
If we want to improve the regulatory environment, process
reform is an obvious place to start. The FCC's decisions can
only be as good as its process. And while the FCC has taken
steps to improve the way that it conducts its business, more
can be done. Today, we will examine a draft proposal, a good
one, to set statutory baselines to ensure this and all future
commissions address all the issues with the same minimum sound
practices.
Consistency and transparency not only produce better
decisions, they help create confidence and certainty that will
promote investment, innovation, and jobs. An expert,
independent agency should also be engaging in objective
analyses. And if it looks like the FCC is prejudging an issue
and justifying predetermined outcomes after the fact, the
Agency looks political and the public loses faith in its
objectivity and expertise.
It is important to recognize that this staff draft
preserves much of the Agency's flexibility. Indeed, in most
cases, it simply directs the FCC to set its own rules on these
matters. My sense is that it does strike the right balance, but
I of course welcome input from my colleagues and witnesses. Our
hope is that we can produce strong bipartisan legislation.
And I yield the balance of my time to Mr. Terry.
[The prepared statement of Mr. Upton follows:]

Prepared statement of Hon. Fred Upton

The communications and technology sector is one of the
largest drivers of our economy. At a time when overall job
creation remains weak and burdensome rules and red tape are
keeping job creators on the sidelines, we should be doing
everything we can to unleash the creativity and innovative
potential of this sector. Eliminating outmoded rules, removing
regulatory barriers, and refraining from imposing new ones on
this segment of our economy could do a lot to help spur jobs
and help pull us out of our fiscal doldrums.
Chairman Genachowski appears to recognize this. While the
proof will be in the pudding, he is at least saying he plans to
abide by the president's Executive order on regulatory reform,
even though independent agencies are not required to do so. My
hope is that he will submit to us and the administration the
formal plan requested by the Office of Information and
Regulatory Affairs to implement the Executive order.
If we want to improve the regulatory environment, process
reform is an obvious place to start. The FCC's decisions can
only be as good as its process. While the FCC has taken steps
to improve the way it conducts its business, more can be done.
Today, we will examine a draft proposal to set statutory
baselines to ensure this and all future commissions address all
issues with the same minimum sound practices.
Consistency and transparency not only produce better
decisions, they help create confidence and certainty that will
promote investment, innovation, and jobs. An expert,
independent agency should also be engaging in objective
analyses. If it looks like the FCC is prejudging an issue and
justifying predetermined outcomes after the fact, the agency
looks political and the public loses faith in its objectivity
and expertise.
It is important to recognize that this staff draft
preserves much of the agency's flexibility. Indeed, in most
cases, it simply directs the FCC to set its own rules on these
matters. My sense is it strikes the right balance, but I of
course welcome input from my colleagues and the witnesses. My
hope is that we can produce strong legislation that enjoys
bipartisan support.
I thank the witnesses and look forward to their testimony.
I yield the balance of my time to Mr. Terry.

Mr. Terry. Thank you, Mr. Chairman.
And during our last hearing on this subject on May 25, we
heard from the current FCC chairman and commissioners
themselves, many of whom spoke in favor of the concepts
contained in our draft before us today. Chairman Genachowski
recognized that shot clocks could be an ``effective tool''
going forward. Commissioners Copps and McDowell agreed there
should be a mechanism for a bipartisan majority of
commissioners to put items on the agenda meetings. And
Commissioners Copps and Clyburn spoke of the need to reform the
Sunshine rules to allow the commissioners to deliberate more
efficiently.
Now, as we work through here today, we are going to get our
witnesses' input to see how we can improve, continue working
with our friends on the other side to make this bipartisan.
Frankly, these are issues that the commissioners, past and
present, have brought forward needing change. Some they can do
on their own; some need our assistance. And we want to continue
to work with everybody.
So I welcome the testimony from our witnesses and look
forward to moving this legislation.
Do any other members on the Republican side seek time?
There is a minute and a half left.
Then I yield back.
Mr. Walden. The gentleman yields back his time. I now
recognize the ranking member of the full committee, Mr. Waxman,
for 5 minutes.

OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Waxman. Thank you, Mr. Chairman.
Today, the subcommittee will return to the topic of FCC
reform and I commend Chairman Walden for working with us to put
together a balanced panel of expert witnesses. We need to hear
from diverse voices, and Chairman Walden has worked with us
Democrats and Republicans together to assemble balanced witness
panels.
I also wish to commend the chairman for the draft
legislation we will be considering today. Unfortunately, it has
serious defects. It would make the FCC less efficient and more
bureaucratic in my opinion, the exact opposite of what we
should be doing.
I am a proponent of strong congressional oversight over the
agencies within our jurisdiction. An engaged Congress can help
agencies perform at a higher level and serve the American
public better. In some instances, it is appropriate for
Congress to legislatively modify the authority or practices of
an agency to enhance agency operations and the public interest.
At our first hearing on this topic, I asked basic questions
that will guide me in determining whether we are promoting
smart regulation and this bill does not provide reassuring
answers.
The first problem is that this legislation will create an
undue burden on the FCC. It requires that the Commission
perform a cost-benefit analysis for every rule that might
impose a burden on industry. This will be costly and time
consuming. Cost-benefit analyses might be appropriate for a
limited set of major rules, but in no circumstances should they
become a basis for years of litigation in court.
Second, the legislation undermines the flexibility of the
Agency to act quickly and efficiently in the public interest.
If we put new prescriptive process requirements in statute, we
can end up promoting slower, not faster, decision-making. For
example, the requirement that the FCC conduct a Notice of
Inquiry prior to moving to rulemaking could restrict the
Agency's ability to move more expeditiously in the public
interest.
Third, some of the requirements in the draft legislation
appear to be about process for the sake of process. Provisions
in the rulemaking reform section and the transparency reform
section impose practices that the Commission already follows.
Chairman Genachowski's tenure has been marked by greater
transparency, expanded opportunities for public input, and
improved information-sharing with other commissioners and the
public. He has shown that the FCC can reform itself without the
need for action by Congress.
And finally, I am concerned that we are making procedural
changes in an attempt to address outcomes with which we don't
agree. Chairman Walden and others have criticized the voluntary
commitments Comcast agreed to during review of its combination
with NBC Universal. That appears to be why the current draft
legislation radically alters the FCC's authority under the
Communications Act and could eviscerate the public interest
standard. Before we take steps that could prevent combinations
like Comcast/NBC, we need to examine whether they are in the
interest of promoting public benefits or even in the interest
of the companies they are intended to protect.
There are some promising aspects of the legislation in
particular I want to join my colleagues in support of the
provisions that allow commissioners to collaborate more
directly, but overall, I cannot support the draft in its
current form. The chairman has said he wants to work together
in a bipartisan way to improve this bill. I hope we do that and
produce a bill that earns broad bipartisan support.
I look forward to hearing from our panel to address these
issues into receiving their advice about how to improve the
FCC. Thank you, Mr. Chairman, and yield back the balance of my
time, unless, Ms. Christensen, would you like any of my time? I
yield back.
Mr. Walden. Thank you. The gentleman yields back his time,
and now we will proceed with the hearing. And we would like to
welcome all of our witnesses. And we will start with the
Honorable John E. Sununu, Honorary Co-Chair, Broadband for
America. And I would just advise the witnesses, these
microphones, you have to get pretty close to and the button
turns them on and off. And then we have the red light buttons
there that control the time.
And with that we welcome our friend and colleague, Mr.
Sununu.

STATEMENTS OF JOHN SUNUNU, HONORARY CO-CHAIR, BROADBAND FOR
AMERICA; KATHLEEN ABERNATHY, CHIEF LEGAL OFFICER AND EXECUTIVE
VICE PRESIDENT, FRONTIER COMMUNICATIONS; BRAD RAMSAY, NATIONAL
ASSOCIATION OF REGULATORY UTILITY COMMISSIONERS; MARK COOPER,
RESEARCH DIRECTOR, CONSUMER FEDERATION OF AMERICA; RONALD M.
LEVIN, WILLIAM R. ORTHWEIN DISTINGUISHED PROFESSOR OF LAW,
WASHINGTON UNIVERSITY SCHOOL OF LAW; AND RANDOLPH J. MAY,
PRESIDENT, FREE STATE FOUNDATION

STATEMENT OF JOHN SUNUNU

Mr. Sununu. Thank you very much, Chairman Walden, Ranking
Member Eshoo. It really is a pleasure to be here.
As you indicated, I am, along with Harold Ford, a co-chair
of Broadband for America, an organization of 300 members,
equipment manufacturers, broadband providers, applications
providers, consumer advocate groups, economic development
groups. And the focus is really on deployment and investment in
the broadband industry and identifying public policy that can
really ensure that it continues to be a driver of growth and
prosperity in America.
I certainly commend you for looking at the topic and your
pursuit of improving the way the FCC operates. Without
question, the focus of the discussion draft is on process and
process matters. Process is the mechanism by which we ensure
better transparency, fairness, certainty, clearer timelines,
and all of those help to allow investors to make investments
with a greater certainty of return and that is what promotes
economic development and job creation.
I do also, however, want to take the opportunity to talk in
a little bit more broad terms about changes that we would like
to see the committee look at within the statutory framework
because in many regards, the obsolete premises of the existing
statutory framework doesn't match the structure and the
competition that we see in the marketplace today. And that is,
I think, a view that is shared on a bipartisan basis. Chairman
Genachowski recently acknowledged that the statute isn't
perfect and said ``it would make sense to update it.'' The
President's State of the Union address talked about the fact
that, you know, we live in a business and information age, but
the last major reorganization of government happened in the age
of black-and-white TV. So these issues--and I think the
comments of the committee recognize--aren't directed at any
commission, any chair, or any administration. It is a matter of
making sure that the policies reflect the modern age in which
we live.
We do have a very vibrant, competitive communications base
that is more vibrant and competitive than ever. There are
always going to be aspects that we want to see operate better
or even more competitive that would bring down prices even
faster, but it is more vibrant and competitive than ever
before, across the entire spectrum of voice, video, data, and
other emerging internet-based services.
Over the last 3 years within the broadband industry, we
have seen $250 billion in capital investment. This is during a
period of a very sharp and significant economic downturn. I
don't think we can find many areas of the economy that have
made that level of capital investment. And again, there are
always going to be areas where we want to see access improved
or accelerated even more, but $250 billion is real money even
to the United States Congress.
The Communications Act of 1934 is built on the assumption
of a natural monopoly. And I think if there is one point that I
want to make it is that that is the default presumption. And
unfortunately, that is not the world in which we live right
now. I think legislative reform should dispense with antiquated
presumptions about natural monopolies in the communications
marketplace, and we should move away from industry-specific
anticipatory regulation and instead treat communications
companies like other businesses throughout the economy that are
disciplined in the first instance by competition, not
regulation.
Second, Congress should affirmatively require that the FCC
account for actual competition among emergent substitutable
offerings in a consistent way. The statute can't work properly
without acknowledging that all the constituent parts of the
broadband space, including web-based services and their
implications for competition and consumers.
Third, Congress should consider structural inefficiencies
that sometimes bring an already sluggish regulatory process to
a screeching halt. In particular, we need to recognize that the
multi-commissioner structure itself can breed interagency
conflict and belabor decision-making.
Second, the FCC rarely produces timely decisions when
measured against the pressing decisional demands of the
internet era.
Third, the FCC asserts authorities that duplicate the work
of other agencies, most notable in the context of reviewing
mergers. Given the role played by expert antitrust agencies,
there is no legitimate reason for the FCC to also assume
responsibility for reviewing the competitive effects of a
merger because the transaction happens to require a license
transfer.
And finally, the well-intended Sunshine laws have the
perverse effect of slowing the deliberative process by
requiring things like open meetings any time more than two
commissioners wish to discuss official business. Some of these
are addressed in the discussion draft, and I think that is
important.
But again, I come back to the premise that we need to
reconsider the presumption of a monopoly that is written into
both the '34 act and even the 1996 amendments that carried the
same premise. Again, this isn't about any one commissioner or
any one administration. I think we really do need to reconsider
the FCC's purpose and their role in a competitive, 21st Century
environment so that we can be mindful and accomplish reform.
I certainly appreciate the opportunity to testify and look
forward to answering your questions.
[The prepared statement of Mr. Sununu follows:]

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Mr. Walden. Thank you, Senator. We appreciate your being
here as well. We thank you for your testimony. We will now turn
to Ms. Kathleen Q. Abernathy, former Federal Communications
Commissioner and now with Frontier Communications as chief
legal officer and executive vice president for governmental
affairs. You have worn many hats. We look forward to your
testimony here, and thank you for participating.

STATEMENT OF KATHLEEN ABERNATHY

Ms. Abernathy. Thank you very much. Good morning Chairman
Walden, Ranking Member Eshoo, and members of the subcommittee.
It is truly a privilege and an honor to appear before you this
morning to talk about what is very, very important--process
reform at the FCC.
I am chief legal officer and executive VP of regulatory and
government affairs for Frontier. We are the largest provider of
broadband, voice, and video services to rural America. And as a
wireline provider, Frontier is subject to regulatory oversight
by the FCC and, just over this past year, we have engaged in a
number of proceedings in front of the FCC, so we have current
experience working with the current regulatory processes.
I am pleased to be here today to discuss your proposed
reforms and some of the ways it might impact the FCC. My
testimony is informed by my career in the telecommunications
industry, and as you mentioned, that has included stints at the
FCC, both as a commissioners, as well as legal advisor, as well
as working in the general counsel's office. And with every
position, I gained further insight into the processes that go
on there.
In addition to this work in the public sector and, of
course, my current position at Frontier, I have worked at law
firms and in-house wireless, wireline, CLECs. This collective
experience provides me with a unique perspective on how the FCC
serves the public. I have experienced both the privilege and
challenge of serving as a regulator, as well as the opportunity
to work in the private sector. And the draft legislation
proposes many reform actions that I think could make a major
and significant improvement on the processes and I am pleased
to talk about them today.
I made public statements during my tenure as an FCC
commissioner and thereafter that relate to some of the
proposed. For example, I have stated and I continue to believe
that the Sunshine Act is overly restrictive in prohibiting
communication among three or more commissioners outside of a
public meeting. It is perverse, but it actually works contrary
to the notion of an improved collaborative spirit, it
discourages creative problem-solving, and it creates hurdles to
timely and effective decision-making process. And I think if
you do nothing else, if you reform that one rule, then these
other concerns that you have would be immediately addressed
because you would have an actual dialogue between the parties
who are running the agency.
When it comes to transaction review and approval, Congress
has conferred on the FCC a statutory obligation to review
license transfers and to either reject, approve, or if
necessary approve it with conditions. And these conditions
should be designed to ensure that the transaction at issue
complies with the Commission's rules, as well as being
consistent with the public interest. As a commissioner, I
always believed that the Commission owed it to the parties to
act promptly on license transfers--there is a lot of cost
associated with the delays in transfers--and to impose
conditions when necessary to address merger-specific harm that
impact the public interest.
Merger reviews shouldn't be seen by third parties as an
opportunity to impose obligations unrelated to the mergers,
especially if it has the unintended consequence of advantaging
or disadvantaging a company as compared to its competitors. My
belief is that general obligations not designed to address
merger-specific harm, there is a vehicle for that. You should
consider and review them in the context of rulemaking process,
and that is subject to notice and comment.
I have also noted before that I think there is a time and
place for timelines and shot clocks. It is difficult to
implement a uniform timeline for all proceedings. For example,
with a particularly complex process, the FCC has to do a
complex balancing between moving expeditiously to adopt a
timely decision, as well as gathering the data necessary. But
shot clocks are very, very beneficial because it is an action-
forcing event. And the challenge with the numerous issues in
front of the FCC and with the statute that many would agree is
somewhat outdated is that these issues are very, very
difficult. There is many times no good answer. And when there
is no good answer, you sometimes don't work ahead to a
resolution. You kind of kick the can down the road because you
are very frustrated. A shot clock would force you to just sort
of address that issue and try and resolve it.
I applaud Chairman Walden and the subcommittee for focusing
on FCC process reform. Process and procedure--just as much as
substance itself--have a direct impact on industry participants
and consumers. And given the critical role of
telecommunications in our daily lives and our global
competitiveness, it is appropriate for Congress to consider
updating and improving the framework for the FCC's deliberative
process.
Thank you for having this important discussion and I look
forward to your comments and questions.
[The prepared statement of Ms. Abernathy follows:]

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Mr. Walden. Ms. Abernathy, thank you. We appreciate your
counsel.
Now, we are going to hear from Brad Ramsey, who is the
general counsel for the National Association of Regulatory
Utility Commissioners. And thank you for being here. We look
forward to your testimony as well.

STATEMENT OF BRAD RAMSAY

Mr. Ramsay. Thank you, sir. And Chairman Walden and Ranking
Member Eshoo and other members of the panel, I really
appreciate the opportunity to testify today, and I commend Mr.
Walden and the rest of you for holding this hearing.
I represent NARUC, as Mr. Walden pointed out. I have been
there 20 years. NARUC, for those of you that don't know, is the
group that represents all of the stake public service
commissions that oversee telecommunications, energy, and other
utilities in your jurisdictions. If you want to know what the
potential impact of these process reforms are for state
commissions, you know, protecting your constituents in state-
specific preemption, pleadings that get filed at the FCC, and
in the broader universal service and inter-compensation reform
items that they consider from year to year, you want to talk to
your state commission. They will tell you what the impact is in
terms of their opportunity to protect the citizens of your
individual States. And I am happy for those of you--and I don't
see very many in this room that I don't think I already know
their state commissioners. But if you don't know your state
commissioners, I am happy to provide a gateway for you.
What is the hearing about today from my perspective? Well,
I don't think there is any question that reform is needed, and
I also don't think that there is any question that a number of
the proposals included in this discussion draft will
definitively improve transparency at the FCC and will
definitely improve the ability to create a better record for
decision-making at the FCC.
NARUC has a technical position on every section, but we
have been pushing some of these reforms for over 10 years. The
draft that came out, I think it is an excellent starting point
for a bipartisan bill that could pass in this Congress. So for
me, this hearing, this draft is all about opportunity. You have
an opportunity to finally correct the stilted application of
Sunshine laws that does nothing but shed additional light on
agency procedures. And all it does--and I know this from
personal experience--is muck things up and slow things down.
You have an opportunity. There are actually two or three
provisions that make sure that everybody gets a realistic
opportunity to comment on what the Agency is actually going to
do, not just the people that have the most money, not just the
people that have the most staff resources.
You have an opportunity here to formally adopt some of the
highly lauded--Ms. Eshoo mentioned the fact that the Commission
deserves a lot of credit for a lot of the transparency measures
that they have put into place. There were a couple measures
that came in the last administration. I agree. You have an
opportunity here to lock those into law and make sure that
future commissions do not discard them.
You also have an opportunity to normalize expectations.
This is a shot clock idea that is in the bill. I actually think
that that is wonderful idea. The Agency gets to set the
approximate time frame that they want to shoot for. And this is
much better than an item languishing there for 10 years, or, in
my case, and I end up languishing there for 5 or 6 years, and
the next time I hear about it from the Agency is they are
putting a notice out that says, you know, we would like to
terminate your proceeding because the record is stale. A shot
clock gives them something to shoot at. It is a good idea.
But perhaps the most important opportunity that is
presented in this item are the pieces that help the Agency
build a better record upon which to base its decision. The
decision can only be as good as the record that they are basing
their decision upon. If you shortchange the decision, if you
shortchange the process, you are shortchanging the American
people. It is one of the reasons why when we are talking about,
great, we are finally going to have some definitive deadlines
or a minimum deadline that allows the state commissions who
have this complicated process of perusing comments to actually
file comments. But another good part of this bill is it says
you are going to put the text of the dadgum rule out so that I
actually know what to write my comments about. NARUC has
endorsed that for some time. I commend the current chairman for
doing it 85 percent of the time. I don't understand why it
can't be done 100 percent of the time.
You have ensured an opportunity here to make a real
difference in the FCC decision-making process. It is long
overdue. It is an opportunity that can only make better
decisions come out of the--it is not going to make the process
perfect, but it is going to make the decisions better, which
can only benefit your constituents. The consumers across the
country and the industry as a whole, it is an opportunity I
hope you take.
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Ramsay follows:]

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Mr. Walden. Thank you, Mr. Ramsay. We appreciate your
testimony and we look forward to offering up some questions.
We go now to Dr. Mark Cooper, Research Director at Consumer
Federation of America. Dr. Cooper, we are delighted you are
with us today and we look forward to your comments.

STATEMENT OF MARK COOPER

Mr. Cooper. Thank you, Mr. Chairman, members of the
committee.
In the past 30 years, I have seen the good and bad of
regulation up close and personal. In 300 appearances as an
expert witness on behalf of public interest groups in 50
jurisdictions in the United States and Canada, Brad represents
NARUC. I have testified before 95 percent of the NARUC members.
In my testimony, I outline areas where the regulatory
process at the Federal Communications Commission should be
improved. We need reform of the ex parte communications. We
need greater reliance on independent and peer reviewed
research. We need to provide notice on the specific details of
rules to afford the public the opportunity to comment on those
rules. We should enhance public participation in rulemaking
process by use of multi-stakeholder groups, regulatory
negotiations, and participatory enforcement. Other agencies do
it. The FCC should get with that kind of program to expand
input from the public and the industry in a formal way rather
than the backdoor way of the current ex parte process.
The discussion draft, however, causes me great concern. I
look at the center of the Communications Act as the public
interest standard, which is a principle on which it stands. And
the language that imposes a harm-based standard I believe will
undermine the ability of the FCC to protect the consumer and
promote the public interest.
The word ``harm'' occurs exactly twice in the statute, both
times in a section that worries about incumbent local exchange
carriers who could abuse information service providers. The
words ``public interest'' occur 103 times. That is the standard
at the center of the act.
Now, others will tell you why the Agency does not have to
adhere to the executive branch order on cost-benefit analysis.
Let me explain to you why it should not. A harm-based standard
is inadequate to protect the public interest in the
communications sector for several reasons. First, a substantial
part of the Communication Act involves noneconomic democratic
values of access to communication and freedom of speech, which
are virtually impossible to evaluate in now-economic terms. The
antitrust laws do not do democracy.
Second, universal service is a critical goal of the
Communications Act that is non-amenable to a narrow cost-
benefit analysis. The value of connecting households to a
network is an externality that is difficult to measure but
extremely important as a political, social, and economic
accomplishment. No other agency does universal service.
Third, consumer privacy, over which the FCC has a
significant authority in proprietary network information, is
not readily amenable to a harms standard.
Fourth, in a dynamic network industry, a public interest
approach is much more appropriate for interconnection and
nondiscriminatory carriage. Under a harms standard, it would
have been impossible to value the Carterphone decision, the
Computer Inquiries, or the 802.11 WiFi rules, which were
forward-looking and are key elements of creating the rich
communication environment we have today. This is an industry
with massive positive externalities.
I believe this criticism also applies with equal force to
the merger review. Mergers create unique challenges to the
public interest that are best dealt with during the merger
review process. The problem in contemporary markets like
telecommunications is not too much regulation but too little
competition. However, the lack of competition is not the result
of nefarious business practices or lacks antitrust enforcement.
These industries, so strong economies of scale and scope,
which mean that very few competitors can achieve minimum
efficient scale, they show strong economies of demand side
known at network effects, which make them winner-take-most
industries. The challenge in these industries is small numbers
providing critical infrastructure and platforms that support
massive amounts of other activity. The challenge is to make
sure that they are profitable and innovative but check their
tendency to use vertical leverage or market power to undermine
competition. That is a very, very difficult proposition to
evaluate with a narrow harm-based standard. That is a
proposition that is easy to address in a merger, which creates
the very problem of vertical leverage. That is what we have
suffered in this industry.
As always, I look forward to working with the committee to
develop any legislation that is needed. I urge you to take the
attack on the public interest standard out and focus on those
areas where the Commission does not have the ability to act on
its own. Most of the changes that we need in process can be
done internally. Establish the norms for transparent, swift-
enforced regulation, and once those norms are established, it
will be difficult for future commissions to abandon them. The
Commission should do what it can. This committee should help it
where it can.
[The prepared statement of Mr. Cooper follows:]

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Mr. Walden. Dr. Cooper, thank you for your testimony.
We will now go to Professor Ronald M. Levin with the
William R. Orthwein Distinguished Professor of Law, Washington
University School of Law. We welcome you today and look forward
to your testimony, sir.

STATEMENT OF RONALD M. LEVIN

Mr. Levin. Thank you, Mr. Chairman and members of the
committee.
I hope to provide a little different perspective on this
bill from those of the other panelists because my
specialization is not in communications law. It is in
administrative law--in other words, the manner in which the
legal system deals with regulatory cases in general, regardless
of the agency. Now, I don't think that perspective gives you
all the answers you need for this bill, but I think it will
provide some helpful insights on some of its provisions.
For example, as the Sunshine Act reform, I think that
perspective will tend to support the thrust of what you are
doing. I know you have heard from the FCC veterans that the
Sunshine Act often interferes with collaborative decision-
making, forces agency heads to rely on staff intermediaries
rather than talk to each other. But I think it is worth
pointing out here that that critique is shared by numerous
agency officials and practitioners and scholars who specialize
in other fields of regulation. So I think if you go forward
with the experiment in this bill, you would get strong support
from much of the administrative law community.
On the other hand, I want to raise some warning flags about
parts of the bill that would reshape FCC rulemaking procedures.
Many students of the administrative process will tell you that
agency rulemaking has become progressively more complicated
over the past few decades, and this happens largely because
Congress and presidents keep adding refinements to the process.
Each of those refinements, they look appealing when considered
in isolation, but in the aggregate, they make it progressively
more difficult for agencies to carry out the tasks that
Congress has told them to perform. So you really ought to think
twice about provisions in the bill that would make it even
harder for the FCC to complete a rulemaking proceeding. My
statement goes into this in some depth, but I will just focus
on three areas of concern in these remarks.
First, some of the new duties are ones you probably
shouldn't impose at all. I really doubt that in every
rulemaking proceeding that might be perceived as putting
forward a burdensome rule, you should require the Commission to
speculate about what performance measures to use to evaluate
that rule sometime in the future. And I don't think the FCC
should routinely have to specify what market failure, a new
rule would resolve because market failure is not the only valid
reason the FCC may have for issuing a rule.
Secondly, the bill provides some practices that the
Commission should want to do much of the time but not
necessarily all the time. And so you need to build in some
flexibility. For instance, should the FCC have to solicit
public comments twice during every rulemaking proceeding? Well,
often that is very useful, especially when they didn't exactly
tell you what they were planning to do the first time. But at
other times, a single round satisfies all the purposes of
notice and comment and it should be enough.

Likewise, should they always provide a reply comment period
after the traditional comment period? Well, sometimes they
should, especially when some group that dumps these lengthy and
controversial comments on the last day of the comment period,
there should be a chance to reply. But that is not always the
situation, and so you need to build in some room for the
Commission to say, here, we don't need a reply and we should
avoid the delay and move forward.
Finally, I think the committee should take another look at
and rewrite the section that provides for the Commission to
prepare a cost-benefit analysis to accompany any rule that
would be burdensome. The intent here, as I understand it, is to
put the FCC on par with executive agencies which now prepare
cost-benefit analyses under the President Executive order, and
the FCC isn't subject to that order. But the problem is that
the scope of the Executive order is much more limited than your
provision because that order provides for cost-benefit analysis
in only a small fraction of law rulemaking and it provides the
agency compliance with that order is not judicially reviewable.
If you were to allow broad judicial review under this bill,
you would be inviting strenuous opposition to the bill. That
was one of the main worries that led to the demise of APA
reform in the mid-'90s. So if you want the bill to remain
relatively noncontroversial, you need to avoid or limit
judicial review and also narrow the scope of the cost-benefit
requirement.
And with that, I will conclude my oral presentation. I hope
it is helpful and I will be happy to respond to any questions.
[The prepared statement of Mr. Levin follows:]

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Mr. Walden. Professor, it is very helpful and we thank you
for your testimony and your counsel.
We will go now to our final witness on the panel, Mr.
Randolph J. May, President of the Free State Foundation. Mr.
May, we are delighted to have you with us and we look forward
to your testimony.

STATEMENT OF RANDOLPH J. MAY

Mr. May. Thank you, Mr. Chairman and members of the
committee. Thank you for inviting me to testify. I am president
of the Free State Foundation, a nonpartisan research and
educational foundation. The Free State Foundation is a free
market-oriented think tank that focuses its research in the
communications law and policy area. By way of background, I
should note that I am a past chair of the ABA's Section of
Administrative Law, and I am currently a member of the
Administrative Conference of the United States and a Fellow at
the National Academy of Public Administration. So today's
hearing on FCC process reform is at the core of my expertise in
communications law and policy, as well as administrative law.
As a frame of reference for my testimony, I want to recite
statements made over a decade ago by two different FCC
commissioners, one Democrat and one Republican. FCC Chairman
William Kennard in August 1999 released a strategic plan
entitled, ``A New FCC for the 21st Century.'' The plan begins,
``In 5 years, we expect communications markets to be
characterized predominately by vigorous competition that will
greatly reduce the need for direct regulation. As a result,
over the next 5 years, the FCC must wisely manage the
transition from an industry regulator to a market facilitator.
The FCC as we know it today will be very different in both
structure and mission.'' That was in 1999.
In December 2000, then-FCC Commissioner--soon-to-be
Chairman--Michael Powell said, ``Our bureaucratic process is
too slow to respond to the challenges of internet time. One way
to do so is to clear away the regulatory underbrush to bring
greater certainty and greater simplicity to the market.'' These
statements provide a useful frame of reference for considering
FCC reform.
I support many of the reforms proposed in the draft bill,
and I do discuss them at greater length in the testimony. Right
now I just want to highlight a few of the provisions and then
talk briefly about one additional provision.
I endorse the provision that would require the Agency with
respect to the adoption of any new rule that may impose
additional burdens, to analyze the market failure and actual
consumer harm the rule addresses, to perform cost-benefit
analysis, and to include measures for evaluating the
effectiveness of the rules.
The FCC has had a pronounced tendency over the years--and
certainly this tendency was evident with respect to the
adoption late last year of new net neutrality regulations--to
adopt rules without engaging in meaningful analysis that would
be required by the proposal. The requirement to analyze any
claimed market failure and consumer harm before adopting new
rules should force the FCC to engage in more rigorous economic
analysis than it often does when it relies on the indeterminate
public interest standard for authority.
I am not going to probably agree with much that Mark Cooper
said here today possibly, but he is correct that the public
interest standard that is found in over 100 provisions in the
Communications Act. I wholeheartedly endorse the proposed
changes to the Sunshine Act. They have been noted and I won't
dwell on those here, but I support those.
The provision reforming the Commission's transaction review
process is as important as any other provision in the draft
bill. In light of the continued abuses--and I think they have
increased over the past decade--in the merger review process.
The Agency often imposes extraneous conditions after they are
``volunteered at the last minute by transaction applicants
anxious to get their deal done.'' And this is after the
transactions have been subject to reviews already lasting a
year or more.
The requirement that any condition imposed be narrowly
tailored to remedy a transaction-specific harm coupled with the
provision that the Commission may not consider a voluntary
commitment offered by a transaction applicant unless the Agency
can adopt a rule to the same effect will go a long way to
reforming the review process.
My own preference would be to go even further and reduce
the substantial overlap that now occurs between the Department
of Justice and the FCC and have the Department of Justice
primarily responsible for assessing the competitive impact of a
transaction.
As I said early in my testimony, the reality is that most
segments of the communications marketplace are not effectively
competitive. When Congress passed the Telecom Act of 1996, it
anticipated the development of a competitive marketplace
stating in the statute's preamble that it intended for the FCC
to ``promote competition and reduce regulation.'' The FCC has
not done nearly enough in the 15 years since the passage of the
'96 act to reduce regulation.
Whatever the reason, the point is that a fix is needed and
the draft bill, while commendable in many respects, does not
directly address the problem of reducing existing regulations.
I don't have time to address it at any length now, but I hope
you will consider adopting a proposal that I have made that
would amend the forbearance provision of the act and the
regulatory review provision in the act that were both included
in the 1996 act to be used as clearly the regulatory tools that
have been used only sparingly. And they could be amended very
simply to allow those provisions to be much more effective in
achieving less regulation and getting rid of unnecessary
regulations that are on the books now.
Thank you very much for inviting me here today, and I look
forward to your questions. Thank you.
[The prepared statement of Mr. May follows:]

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Mr. Walden. Thank you very much, Mr. May, and thank you to
all of our panelists who have given us great counsel here
today. We appreciate it. Some I appreciate more than others.
No, I am just kidding. That is why we had you here. We needed
the honest assessment of what works and what doesn't work in
this bill.
Mr. May, I think when we get into this discussion of what
is in the public interest, it really is what any three
commissioners decide at the time as they are reaching some
agreement. It is pretty broadly determined, is that not
correct?
Mr. May. It is about as indeterminate, I think, as any
other phrase could be. And I have to confess I have used that,
whatever three commissioners say it is on any given day many
times myself. But it absolutely is and, in fact, I wrote a law
review article about 10 years ago in which I counted up those
provisions. That is why I know Mr. Cooper is correct. But the
point is that it provides no guidance to the Commission and it
does need changing.
Mr. Walden. I seek unanimous consent to enter into the
record an article by Phil Weiser, who just left the White House
as National Economic Council to return to the University of
Boulder. Without objection, we will put this in the record.
[The information appears at the conclusion of the hearing.]
Mr. Walden. In the article, he notes that frequently the
FCC seeks to leverage its authority to approve mergers, to
obtain concessions that often have little or nothing to do with
the competitive issues raised in the transaction. And I think
that is at the heart of the matter of what I, at least, and I
think many members on this committee are trying to get at. It
is not that you ignore or eviscerate the public interest
standard; it is when it is used as an excuse to go do something
you don't have the authority to do through your own organic
statute.
Commissioner Abernathy, do you agree the Commission should
not leverage merger reviews to obtain concessions that have
little or nothing to do with the transaction's specific harms?
Ms. Abernathy. I have said that previously in speeches and
I do agree. Now, just to be clear, in transactions where I was
involved with other commissioners, you do have disagreements
about a public interest issue associated with the transaction,
so I may think a particular condition isn't required. But this
still leaves, I think, a tremendous amount of ability for the
commissioners to address the issues that are raised by the
transaction. You may have disagreements about whether it is
really a problem or not, but I think it does leave a tremendous
amount of discretion to the commissioners.
Mr. Walden. As I listened to your testimony and read it in
advance, it seems like there is concurrence, that having the
text proposed rules available to the public and to other
commissioners is something you all agree on. Does anybody
disagree with that?
Mr. May. Could I just respond?
No, I don't disagree. You know, in theory----
Mr. Walden. Let me get an answer. Does anybody disagree
with having the text made available prior to the votes in the
Commission? Mr. Levin?
Mr. Levin. Only to the extent that as a non-specialist in
this area, it occurred to me there might be a wide range of
situations where that wouldn't work because it is urgent,
because it is a very minor matter where you are just talking
about a factual dispute and in an adjudication, the public has
nothing to say about it. There might be feasibility
limitations. I do agree with it as a general proposition.
Mr. Cooper. I would go one step further and I would like
that kind of provision to apply to merger reviews as well so
that at the end of the process when--so we have that under the
antitrust laws. The public should be allowed to comment on the
conditions that were adopted. Now, that may or may not address
some of the concern about extraneous issues----
Mr. Walden. Right.
Mr. Cooper [continuing]. But in that further review, if
things were truly extraneous, people would have a chance to
comment on that and the Agency could, in fact, be informed by
that process. But full comment on an actual rule is the essence
of democracy.
Mr. Walden. Mr. May?
Mr. May. I think the provision you are referring to here is
the one that would require that the text that the Commission is
considering at a meeting be made available to the public, and
in response to Professor Levin's concern, I don't think your
draft specifies the time before the meeting that it has to be
available, so my understanding is it could be very shortly
before.
But in other agencies, this might not be deemed perhaps as
necessary, but as I point out in my testimony, what happens at
the FCC in a public meeting, as you may know, is that at the
presentation of an item, the staff before every item says,
``Mr. Chairman, we request editorial privileges.'' And the
chairman says ``granted.'' And then no one has the text and
sometimes it is weeks before the item is ultimately released to
the public. And you really don't know what is going on. Because
of the delay in the release of the item, you don't know whether
that was----
Mr. Walden. Right.
Mr. May [continuing]. Editorial or not. And that is why it
is useful.
Mr. Walden. And my time has run out.
Ms. Abernathy, did you want to make a quick comment?
Ms. Abernathy. Well, the way the actual process works is
that you have the text of the item that you are voting on that
day and then you are writing separate statements. Many of the
commissioners are writing separate statements. And so I had
never seen a situation where editorial privilege changed
anything of significance in the item. But there are procedures
that still need to be recognized, and I think that is part of
the reasons for today's hearing is to understand that it is not
as simple as just kicking the order out the door. You still
need to review it one last time, get separate statements from
the commissioners. It shouldn't take a long time but there is
that process.
Mr. Walden. Thank you. I now recognize the gentlewoman from
California, Ms. Eshoo, for 5 minutes.
Ms. Eshoo. Thank you, Mr. Chairman, and thank you again to
all the witnesses. I think that you have been highly
instructive to us.
First off, I don't think I heard anyone say that they were
opposed to the FCC Collaboration Act, is that correct? Anyone
opposed? No. I think there was a consensus on that, which
pleases me.
To Commissioner Abernathy, thank you again for your
testimony. As you know as part of the Verizon/Frontier
transaction, Frontier offered voluntary commitments to build
out broadband deployment and meeting broadband needs of anchor
institutions which I salute you for. I wish Congresswoman
Matsui were here because she has worked very hard on the whole
issue of serving anchor institutions.
At any rate, those anchor institutions are within the areas
to be served by Frontier. Now, none of these voluntary
conditions directly address merger-specific harms, yet they
confer, I think, important public interest benefits. So first,
would you comment on whether Frontier would be able to offer
these voluntary commitments if this draft legislation were in
place as law?
Ms. Abernathy. I think if you spoke with Commissioner
Copps, for example, with regard to these commitments, he would
argue they were merger-specific. I might say maybe not but the
way the analysis would go is that the whole reason for the
acquisition from a Frontier perspective was for greater scale
and scope. The public interest benefit was for greater
broadband deployment throughout rural America.
Ms. Eshoo. Yes.
Ms. Abernathy. And so some of the commissioners, even
though we said that is what we are going to do, they wanted
more specific commitments associated with that broadband
deployment, which we had said from day one was part of our
reason for engaging in the acquisition.
Ms. Eshoo. Well, I support what you did. I think it is
terrific. I just was trying to compare and contrast what you
did with what is being proposed. Did what is being proposed get
in the way of what you did or was it----
Ms. Abernathy. I am sorry to interrupt, but I don't think
in the context of our specific merger that it would have
changed any of the conditions.
Ms. Eshoo. Do you believe in that instance that the public
interest standard is preferable to a harms standard?
Ms. Abernathy. As opposed to does not create harm to the
public?
Ms. Eshoo. Yes.
Ms. Abernathy. Versus benefits the public?
Ms. Eshoo. Yes.
Ms. Abernathy. I think it is not a huge difference.
Ms. Eshoo. OK. For all of the witnesses, I generally agree
that publishing the specific language of proposed rules is a
good idea, and as you know, Chairman Genachowski is making this
a best practice at the FCC. This now occurs in 83 percent of
rulemakings, which is a very significant increase over a
previous chairman.
But I am concerned that requiring this in all instances
could inadvertently undermine the goals of transparency and
efficiency underlying the draft bill. So to all of the
witnesses, does this requirement make sense when the Commission
places a proposal from outside parties out for comment in a
Notice of Proposed Rulemaking?
Mr. Sununu. I really think it would depend on the
circumstance and the scope of the proposal. Any time you, you
know, require a publication or even establish a shot clock, by
definition you are requiring another step, you are extending
the time frame, and someone is always going to be able to argue
that that is making the process more cumbersome.
Ms. Eshoo. Yes.
Mr. Sununu. But you have got to balance the need and the
desire for transparency with the need or the desire for
expediency.
I would also make the observation that any process burden
that you establish, whether it is in the name of transparency
or fairness or certainty, which are all good things, is going
to be as much of a burden for a deregulatory effort as it is
for a regulatory effort, at least as far as it is constructed
here.
Ms. Eshoo. Thank you. Ms. Abernathy? I don't have very much
time left so I do have to speed through the witnesses. Yes, Dr.
Cooper?
Mr. Cooper. Well, I want to offer an observation about this
question of the opportunity to comment on the actual rules,
because I believe that is--in fact, one of the really good
definitions of democracy is the opportunity to write the rules
under which you live. And in a representative democracy,
participation in the process is really important.
The thing that strikes me--and I have said this before in
public--is that the problem here is not with the Communications
Act or the FCC. It is with the Administrative Procedure Act.
This is such a fundamental part of democracy that the
implementation of the Administrative Procedure Act has
deteriorated to the point where we let agencies deny people the
right to speak. And so I would like this problem to be solved.
And I said this in my testimony in two ways. One, I think we
ought to look at the Administrative Procedures Act and figure
out how to make sure that the citizenry gets a chance to
participate in the rulemaking.
Second of all, if we want more participation, if we want
more flexible and quicker rules--I believe as a veteran of some
reg-negs and other multi-stakeholder groups--that the agency
needs to reach out and create formal transparent processes
where industry and public interest come together to help it.
Other people do it. EPA does it, DOE does it, OSHA does it.
There is no reason why the FCC can't do it.
Ms. Eshoo. Thank you. Thank you very much.
Mr. Terry [presiding]. Mr. Shimkus, you are recognized for
5 minutes.
Mr. Shimkus. Thank you, Mr. Chairman. My mic is really loud
so I apologize. I don't usually need it this loud.
For Mr. Sununu, just aside, you mentioned that Congressman
Harold Ford was with you. Is that senior or junior? It may
dictate how we feel about your testimony. Junior.
Mr. Sununu. Junior, another classmate.
Mr. Shimkus. Send him our regards, will you?
Mr. Sununu. Will do.
Mr. Shimkus. I pulled up the organizational chart of the
FCC because I always believe that a lot of times structure
dictates process. And that even though the structure is
determined by the commissioner--in a lot of your opening
statements, I don't think you were asked to look at structure--
but I would ask you after this hearing if you have comments on
structure to get back to us because I do believe that some of
these bureaus are established as the Senator said, you know,
when there was a quasi-monopoly, 1934, and then we have kind
of--like building a home you take out walls, you put a
different roof on, you extend. And I have always been amazed at
how, with the convergence of technology, that we don't have a
convergence of regulation.
And I will give you an example, I think, hopefully. We have
no internet bureau. There is no internet bureau so if you are
overseas and you are going to call on Skype on a WiFi system,
you have no Universal Service Fund, you have no inter-carrier
compensation, you have no local taxes, you have last mile
issues that aren't compensated for. It just seems to me that if
someone doesn't talk about structure, then the policy
applications of the regulations--and I don't want to get into
big detail because a lot of you didn't talk about structure,
and I want to lay that out if you would be some structure--but
Mr. May, you have signaled?
Mr. May. Well, I would just say briefly I appreciate your
concerns. I actually recommended several years ago that the
Commission create a broadband bureau, even if it would have
subdivisions that still dealt as it would with wireline and so
forth. Now, that might be useful. But I just would take the
opportunity to say quickly that ultimately to address the issue
that you are talking about, Senator Sununu----
Mr. Shimkus. Quickly. I am running out of time.
Mr. May [continuing]. You need to actually change the act
to get rid of the silos that are presently----
Mr. Shimkus. I have always been concerned about the silos.
Let me go to Dr. Cooper. I want to confirm that when my
colleague, Ms. Eshoo, asked about on the Sunshine applications
that you agree that the Sunshine applications in the draft you
would support?
Mr. Cooper. I am OK with the Sunshine application as a
general proposition. I have two caveats. One, the reporting of
those partial meetings, I want transcripts, not summaries. And
I want transcripts of ex parte communications, too, because
those ought to be fully part of that----
Mr. Shimkus. OK. I read your written statement----
Mr. Cooper. Yes.
Mr. Shimkus [continuing]. And so when she asked that and
you didn't object, I wanted to get----
Mr. Cooper. And I also----
Mr. Shimkus. That is fine. I need to go to the next--I have
a lot of my friends in--I have been really involved in the
presidential Executive order on jobs, which he did in January
2011 and I really would focus this on the EPA, that there
should be a cost-benefit analysis and a job on new rules and
regulations. The Blue Dog Coalition sent a letter to Chairman
Genachowski asking him to at least voluntarily comply with the
President's Executive order.
Mr. May, what are your comments on the Blue Dog letter?
Have you seen this and do you think that the FCC should do a
cost-benefit analysis and a projection of possible job creation
activities in the rules and regs?
Mr. May. I think it is useful that it does those things,
and I think the recent Executive order and President Obama's
op-ed suggested as much generally. But I appreciate there may
be some exceptions for minor rules and so forth, but in
general, it is a useful thing. And here is why just in sum.
Because the FCC for most of its history has been oriented
around this public interest standard, which is, as we discussed
earlier, completely indeterminate, means whatever three
commissioners say on any given day. This type of requirement,
Congressman, would get the FCC oriented in today's competitive
environment to doing the type of more rigorous economic
analysis it just hasn't had a history to do or the inclination
to do. So it is a useful thing.
Mr. Shimkus. Mr. Chairman, my time has expired.
Mr. Terry. The gentleman from California, Ranking Member
Waxman, you are recognized for 5 minutes.
Mr. Waxman. Thank you, Mr. Chairman.
Mr. Levin, I wanted to ask you some questions. I think it
was very helpful to have you hear because you are in a unique
position looking at these issues from an administrative
procedures point of view. You don't come here with any biases
about how the FCC has performed and you don't have an agenda
before the FCC, so your position is unique and it is, I think,
very helpful.
You raise a number of concerns and caution about the
potential inflexibility, burdens, and unintended consequences
of this bill, and I want to ask you to elaborate a bit on those
concerns. What are the risks of moving forward with the
approach outlined in the bill?
Mr. Levin. With what?
Mr. Waxman. The risks. What are the risks of moving forward
with the approach outlined in the bill itself?
Mr. Levin. Well, I think on particular provisions, it could
be too confining to say you have to have an advanced Notice of
Inquiry before every proposed rule or Notice of Proposed Rule.
You need two of something because sometimes the agency has a
pretty good idea of what it is going to do. Rather than have
two rounds of discussion with the delay that that would cause,
you give the public at least one shot to comment on what the
Commission wants to do and that may well be enough. You don't
need to build in an automatic second round.
Likewise, you don't necessarily need a reply period if
there was no real opposition in the first period or if all the
comments came in early in the period. People will have had
plenty of chances to reply during the regular comment period.
To have a mandatory second period means you are building in a
delay for no practical benefit.
Mr. Waxman. Let me ask you about the cost-benefit analysis
that is required under this proposal.
Mr. Levin. Right.
Mr. Waxman. You concluded that this kind of scrutiny prior
to issuance of highly expensive or consequential regulations
may be appropriate, but for routine regulations, such a
requirement would not be cost-justified. Expand on that.
Mr. Levin. Sure. So compare this with the presidential
Executive order, which is the model I think for what the
committee intends to do. They say that for all rules you should
make a reasoned assessment of the benefits and the costs. Now,
in that sense it is just saying think about the plusses and the
minuses and I think that is simple. But a true cost-benefit
analysis, as we usually use that term, is a rigorous,
sophisticated, and expensive analysis with a qualified policy
analyst, and the Executive orders limit that to situations
where you have a very consequential rule. For a minor rule, it
is an overinvestment of resources that agencies can ill afford
to squander. And so to that extent I think you have a
disproportion between the Executive order model and what the
bill contemplates.
Mr. Waxman. What do you think about the ability of the
Administrative Procedure Act to allow the FCC or any other
agency to evaluate the plusses and the minuses, the cost and
the benefits?
Mr. Levin. Well, one thing to keep in mind--and I think
this gets to the thrust of your question--is that an agency
will have to analyze the plusses and minuses of the bill anyway
because it has to survive a pretty hard look on judicial
review. There is also oversight such as this committee
provides. They will have to answer the questions. And as far as
the APA itself is concerned, they have to write a statement of
basis and purpose to explain what they are doing. So to that
extent, there is an expectation that they have to address the
merits seriously. I don't think you necessarily need to add on
to that with an FCC process provision.
Mr. Waxman. Yes. What are your thoughts about the idea of
this legislation is just focused on one agency? Should we be
taking a broader approach with reform proposals where they are
needed?
Mr. Levin. Well, I have endorsed an experiment with respect
to the Sunshine Act, so I don't want to rule out categorically
that you might do something agency-specific and see how it
works. However, I think if you are going to think about issues
of that kind, you should not do something just to improvise. At
least you should be very attentive to developed understandings
in the administrative law field. And if you are about to do
something that departs from it, you should be very cautious and
rethink what you contemplate.
Mr. Waxman. And then lastly, how does this legislation
compare with related recommendations adopted by the
Administrative Conference just last week?
Mr. Levin. I think in some ways it is parallel but it also,
I think, probably is a little stricter. And the final text
hasn't been released, but my general understanding of what ACUS
will say is that reply comments are good where appropriate,
that at least 30 days or 60 days of comments should usually be
available but doesn't provide that it should be 100 percent of
the time.
Mr. Waxman. Thank you.
Thank you, Mr. Chairman.
Mr. Walden. Thank you. And I am going to exercise the
prerogative of the chair with unanimous consent so we could all
recognize one of our staff people, David Rettle, whose wife
last week gave birth to their first child, Benjamin David
Rettle. We have asked David to submit a photo for the record
for this hearing.
Mr. Waxman. Reserving the right to object.
Mr. Walden. We would hope on at least this matter we could
have--no. With that, thank you, and congratulations to David
and his wife and the arrival of Benjamin David. There will be
other announcements later in the year.
Mr. Barton, we recognize you now for 5 minutes.
Mr. Barton. Thank you, Mr. Chairman. We hope that was not
an open and transparent process.
Mr. Walden. No, it was streamed on video.
Mr. Barton. Right. Right. Anyway, we want to welcome former
Congressman and Senator Sununu, good colleague, good friend,
and I also think an engineer before this committee.
I have long been a proponent of FCC reform. I had a bill
with several other members of the committee in the last
Congress, I have a bill in this Congress, and I plan to be a
cosponsor of the draft that Chairman Walden has circulated for
comments, so I think this is a good thing, a good day. And I
think it is high time. I have a few questions I am going to ask
for specific witnesses, but if anybody has a specific comment,
feel free to chip in.
The Section 5A, Subparagraph (b), transparency reform that
would require the Commission to establish internal procedures
to provide adequate deliberation over and review of pending
orders, publication of draft orders before open meetings,
minimum public comment periods, Mr. Sununu, are you supportive
of that?
Mr. Sununu. I am.
Mr. Barton. Is there anybody on the witness dais that is
not supportive of that, the transparency issues? Let the record
show that everybody seems to be supportive.
What about 5A, Subsection (c), Sunshine reform that would
allow three commissioners to meet for collaborative discussions
if they do so in a bipartisan manner, which means that it has
to be at least one member of each political party in
consultations? And they also have to have the Office of the
General Counsel to do oversight. Is anybody opposed to that?
Mr. Cooper?
Mr. Cooper. I would like a full transcript of any of those
meetings as opposed to summary.
Mr. Barton. OK. I don't have a problem with that. And by
the way, Mr. Cooper, it is good to have you back. You probably
have enough standing to get a pension from this committee as
many times as you have testified, so we are glad that you are
back.
Let us see. Let us look at the Section 5A, Subsection (g)
refers to shot clocks, which would require the Commission to
establish shot clocks for each type of proceeding. Is that
generally approved by everybody? OK. It looks like you are
doing good, Mr. Chairman.
Mr. Cooper. By shot clocks I have one concern. I want the
shot clock to run when the record is complete.
Mr. Barton. When the record is----
Mr. Cooper. We have had a problem in merger review in which
the companies aren't forthcoming into providing the data, and
months and months after the shot clock starts we all of a
sudden get a big data dump and we get them screaming about how
it is taking too long. So I think the Commission should be
allowed to build the record first and be comfortable that it
has the complete record and then this shot clock should start.
Mr. Barton. My last question, last minute is Section 5A,
Subparagraph (j), the transaction review reform. This would
preserve the Commission's ability to review transaction but
would require conditions for those transaction reviews to be
narrowly tailored to remedy harms that arise as a direct result
of the transaction. What is the general review of that?
Mr. Cooper. Well, my testimony I criticized that as
unnecessarily undermining the ability of the agency to deal
with this dynamic market where mergers change the structure----
Mr. Barton. So you want to tweak it, you want to eliminate
it, you----
Mr. Cooper. I don't believe the standard needs to be
changed.
Mr. Barton. You don't think it needs to be changed?
Mr. Cooper. I don't think it needs to be changed.
Mr. Barton. This gentleman next to you, Mr. Ramsay, what is
your view on that?
Mr. Ramsay. I just wanted to pipe in here and say I am a
government lawyer. I am not allowed to take positions that
disagree with my clients, and in this particular case, my
clients haven't come to any consensus on that provision, so I
haven't either.
Mr. Barton. Your clients are the----
Mr. Ramsay. State Public Utility Commissioners, yes, sir.
Mr. Barton. OK. Mr. Sununu? I mean Senator Sununu?
Mr. Sununu. I answer to just about everything.
I think the real issue is the one with regard to the
voluntary considerations. And people are frustrated by the fact
that at times the Commission seems to have sought out and
imposed voluntary considerations--we all know what that means--
that are outside their jurisdiction. So this is really as much
a question of how to ensure that the Commission stays within
its jurisdiction as it is to determine whether or not there
should ever be a voluntary consideration or whether the public
interest standard is or isn't being misused. It is a question
of finding language and finding a process that is consistent
and that ensures that the Commission stays within its
jurisdictional boundaries. And I think that is what the
intention is of this section.
Mr. Barton. Mr. Cooper, before----
Mr. Cooper. I have proposed a way to deal with that, which
is that those conditions should be subject to comment and
review, which would expose abuses. And I think that is the way
to get at the abuses but also preserve the authority to really
deal with the issues that the merger proposes.
Mr. Barton. OK. Mr. Chairman, I think you have got a winner
here. It obviously needs to be tweaked some, but you have
worked hard on this and you have listened to a lot of people. I
only have a few minor technical changes I wish to suggest, but
I hope we can introduce a new bill and move expeditiously to
move it through subcommittee into full committee. This is
something whose time has come. And I yield back.
Mr. Walden. Thank you, Mr. Chairman. I appreciate the good
work you and others in this committee have done for many years
in this area, and I think we are on the cusp of having good
legislation here that does need some tweaks. And we intend to
work as best we can in a bipartisan way to get that done.
So with that, now, I would like to recognize the gentleman
from Michigan, my friend and esteemed colleague Mr. Dingell,
for 5 minutes.
Mr. Dingell. I thank my dear friend the chairman for this
recognition, and I also express my thanks to my dear friend Mr.
Doyle who is always kind and generous in his dealings with me.
And I would like to welcome back Senator Sununu. Welcome back.
Mr. Sununu. Thank you.
Mr. Dingell. It is good to see you again.
These questions to Professor Levin and Ms. Abernathy. They
will require yes or no.
The draft bill requirement says that the Commission will
complete an identification and analysis of the market failure
that prompted a given rulemaking seems to be a little much.
Does the Commission engage in rulemakings that are not prompted
by market failures? Yes or no?
Ms. Abernathy. Yes.
Mr. Dingell. Professor?
Mr. Levin. Well, I am not an FCC specialist, but I would
expect the answer is no----
Mr. Dingell. Thank you.
Mr. Levin [continuing]. That some of them should not relate
to market----
Mr. Dingell. The next question indicates to me that the
draft bill's failure analysis requirement has been at least
superfluous, or worse, unnecessary in many cases. Am I correct
in that feeling?
Mr. Levin. The cost-benefit analysis? You are correct.
Mr. Dingell. Ma'am?
Ms. Abernathy. It would be necessary in some situations.
Mr. Dingell. All right. Now, again, to Professor Levin and
Ms. Abernathy, the draft bill seems to require that the
Commission perform a cost-benefit analysis on every rule that
may impose additional burdens on industry or consumers, is that
correct?
Mr. Levin. I think that is what it says, yes.
Ms. Abernathy. I believe that is what the bill says.
Mr. Dingell. Now, again, to Professor Levin and Ms.
Abernathy, I believe the requirements are, again, overbroad and
would require the Commission to devote many of its finite
resources to performing such analysis. Do you agree? Yes or no?
Mr. Levin. I agree.
Ms. Abernathy. I agree. It is overbroad.
Mr. Dingell. Now, again, to Professor Levin and Ms.
Abernathy, further, is it reasonable to assume that the
Commission has neither adequate staff nor funding with which to
complete the cost-benefit analysis of every rule that imposes
additional burdens on industry or consumers? Yes or no?
Mr. Levin. It is reasonable to assume the answer is yes.
Ms. Abernathy. I don't know.
Mr. Dingell. OK. Now, if this be the case, it would appear,
then, that the Commission would require additional funds in
order to comply with the draft bill's requirements, is that
correct?
Mr. Levin. Presumably.
Mr. Dingell. OK. Or we might assume that the FCC will be
doing more to accomplish less at greater cost, is that an
unfair assumption?
Mr. Levin. So I would assume.
Mr. Dingell. OK. Now, this again to the last two witnesses.
Finally, I come to the matter of personal interest. In the
Congress in the past I have introduced legislation to amend
Section 10 of the Federal Communications Act to require the
Commission act on a forbearance petition within a year's time.
Forbearance as a result of Commission inaction and action that
takes place as a result of Commission inaction appears to me to
be very bad policy. Now, to all of our witnesses here starting
with Senator Sununu, would you support amending Section 10 of
the Communications Act as I have just described to eliminate
the forbearance that is practiced by the Commission leading to
decisions being made by a simple inaction on the part of the
Commission?
Mr. Sununu. To eliminate the forbearance or to set a time
limit of 1 year?
Mr. Dingell. Well, tell me what you feel. Should we do it
where we have to act on it within a year's time?
Mr. Sununu. I think any time you can set a clear time frame
for action, it is going to add certainty to the regulatory
process. I don't know if 1 year is the right amount of time,
but certainty in the regulatory process is likely to be a good
thing.
Mr. Dingell. Thank you. Ms. Abernathy, yes or no?
Ms. Abernathy. I agree with the additional clarity around
the forbearance process.
Mr. Dingell. Mr. Ramsay?
Mr. Ramsay. We are on record with agreeing with the concept
of shot clock, so I guess the answer is yes.
Mr. Dingell. Mr. Cooper?
Mr. Cooper. Justice delayed is justice denied but it needs
to be worked both ways. So when complaints are pending at the
Commission, they languish for years. If you are going to have a
shot clock, it ought to be both to the favor of the public and
the----
Mr. Dingell. Well, maybe we ought to fire the damned
Commission if they can't come to a decision on these matters or
give them more money.
Let us see. Mr. Levin?
Mr. Levin. Well, I don't do FCC law but administrative law
authorities generally are skeptical about Congress imposing too
many statutory deadlines because the upshot may be that those
deadlines will drive the process more fully than----
Mr. Dingell. Well, let us not debate that but it seems like
poor sense to have the Commission just simply saying we haven't
acted so it is going to become the rule or it is going to
become law or it is going to become the regulation. That
appears to me to be very bad. Do you agree?
Mr. Levin. I am sorry. Could you repeat that?
Mr. Dingell. Well, the Commission just sits around and
twiddles its thumbs, nothing happens, and then all of a sudden,
we have a new rule. It doesn't seem like good sense to me. Does
it make sense to you?
Mr. Levin. I think they should proceed expeditiously. I
think the idea of establishing deadlines for themselves is
good, but if we are talking about legally enforceable
deadlines, you often have too much control by outsiders.
Mr. Dingell. Thank you. My time is limited. Next witness?
Mr. May. I disagree with your proposal because it shifts
the whole forbearance thing around. It was included in the act
to be deregulatory and that is why the provision says if----
Mr. Dingell. Thank you very much.
So Mr. Chairman, I say this with respect. If our intention
here is to focus on process reform, I would urge you to be done
deliberately, transparently, and with adequate participation of
all affected parties. And after all, we should avoid the
mistakes of the agency that we seek to reform. Mr. Chairman,
your courtesy is appreciated and I thank you.
Mr. Walden. I thank the gentleman from Michigan and now I
turn to the gentleman from Ohio, Mr. Latta, for questions. I
made a mistake. Ms. Blackburn.
Mrs. Blackburn. That is quite all right. I know I am hard
to see over here.
I want to stay on this issue of forbearance. And Mr. May, I
want to come to you because you have talked about the reforms
that are needed in Section 10 and then regulatory review, the
periodic reviews that are needed in Section 11. And I
appreciated your comments. And so why don't you elaborate a
little bit on how including evidentiary presumption to
forbearance, how it would enhance the likelihood of the
Commission in reaching a deregulatory decision? Because I think
that as we look at reform, this is going to be a key nugget for
us.
Mr. May. Thank you, Representative Blackburn. Here is the
deal in a nub. These two provisions--forbearance and regulatory
review, if you look at them--were clearly put into the '96 Act
to be used as deregulatory tools. That is evident on the face
of those provisions. The fact is they have only been used very
sparingly by the Commission. They haven't accomplished much
deregulation, even as the market has become much more
competitive. So I think the Congress through a pretty modest
fix could address that situation in this way, not by changing
the substantive criteria that are in the forbearance and
regulatory review provisions. But again, when you look at them,
they are addressed to the development of a competitive market.
It doesn't change the substantive criteria.
But I would add a sentence that essentially says that
enacting on a petition or in doing the regulatory review
proceeding, unless the Commission can find by clear and
convincing evidence that the criteria have not been met, that
it shall presume that the rules should go away. So again you
are not changing the criteria but you are adding an evidentiary
presumption.
Because you ought to wonder why these two provisions, which
are unique--I think even Professor Levin, who has looked at
other agency statutes, for many years I have challenged anyone
to find another forbearance provision like this in another
statute and no one has done that like this. It seems me if the
provision is there, you ought to make it useful. And you could
do it by just that shifting an evidentiary burden.
And to me this is the most important thing the committee
could do. And it does fall in the realm--it is sort on the line
between substance and process in a way, but it should be done,
I think, if the committee wants to address the situation of
existing regulations because your draft principally addresses
regulations going forward.
Thank you.
Mrs. Blackburn. Thank you. Let me reclaim my time. And I
have got a couple of yes or no questions that I want to give to
each of you.
Commissioner McDowell gave quite a hefty statement calling
for a ``full and public operation financial and ethics audit''
of everything connected to the FCC. Mr. Sununu, starting with
you, yes or no, do you support having that full audit, all the
way down the line?
Mr. Sununu. I think as a matter of fact it is good policy.
Mrs. Blackburn. OK.
Ms. Abernathy. I agree. It is good policy.
Mrs. Blackburn. OK.
Mr. Ramsay. NARUC has no position.
Mrs. Blackburn. Pardon me?
Mr. Ramsay. My association has not taken a position on
that.
Mrs. Blackburn. No position, OK.
Mr. Cooper. As far as I can tell, the FCC is no better or
worse than any other agency. The inspector general and the laws
of the United States cover the problems, so I say no.
Mrs. Blackburn. So you would say two wrongs make a right?
OK. Professor?
Mr. Levin. I am not an FCC authority. If I had to stake out
a guess I would probably give an answer like Mr. Cooper's.
Mrs. Blackburn. OK. Mr. May?
Mr. May. I think it is a good thing to do. Not every year
necessarily but it wouldn't be a bad thing to do.
Mrs. Blackburn. OK. One ``no'' position, two waffled and
three ``yes,'' so I will take that. But remember, these are
yes-and-no questions. All right. One more, yes or no. OK.
Do you think that Congress should be in the position of
defining the role for the FCC and telling the FCC what to do or
should the FCC continue doing what they are doing right now,
which is trying to tell Congress what to do? Mr. Sununu, yes or
no?
Mr. Sununu. Well, it is absolutely a congressional
prerogative----
Mrs. Blackburn. OK.
Mr. Sununu [continuing]. And again, in my opening
statement, I think that in addition to this draft legislation,
we need to look more broadly about the underlying premise of
the '34 Act, the '96 amendments, and view this as a competitive
world first and not as a natural monopoly.
Mrs. Blackburn. OK.
Ms. Abernathy. Yes, Congress defines the scope of the FCC's
authority.
Mrs. Blackburn. Thank you.
Mr. Ramsay. Yes, Congress defines the scope of the FCC's
authority and can tell it to a justice----
Mrs. Blackburn. Thank you.
Mr. Cooper. Congress did that in the '96 Act.
Mrs. Blackburn. OK.
Mr. Levin. Yes, Congress should set the bounds of the
Commission's actions but it should give discretion to the
Commission for things that require more flexibility than
Congress can get around to addressing in specific terms.
Mrs. Blackburn. OK. Mr. May?
Mr. May. Yes.
Mrs. Blackburn. OK. So we have got four that say ``yes,''
one that gives a little bit more--one I think is uncertain. So
I thank you all. Remember, yes or no, you did fairly well for
being here in Washington and limiting your words even though
you couldn't give me a yes or a no.
And I yield back.
Mr. Walden. I thank the gentlelady for her questions. And I
turn now to the gentleman from Pennsylvania, Mr. Doyle.
Mr. Doyle. Thank you, Mr. Chairman.
I am very concerned about this section of the draft that
requires the Commission to issue a Notice of Inquiry for every
single proceeding. I think in some cases this could cause
serious harm to consumers and the public safety, and I would
urge my colleagues to think back, for example, to the
proceedings a few years ago when VoIP customers couldn't make
9-1-1 calls, and the FCC needed to act quickly to enact E-9-1-1
rules. This is just one example. Another might be the rules
required to implement the legislation we just passed to expand
low power FM radio, which the Commission is currently working
on.
And I know that Professor Levin has already voiced his
opinion on this, but I would just ask for the rest of the
panelists, given these concerns, is there a strong enough
reason to require NOIs for every single proposed rulemaking?
Why not just leave this up to the FCC? If we could just go down
the line.
Mr. Sununu. I have to believe there is an in between. I
think as a matter of policy, the Notice of Inquiry is a good
idea. There certainly may be examples either in the past or
hypothetical where it might not be the ideal situation, but it
is important if you are going to make exceptions to define
those circumstances and those exceptions as clearly as
possible. I mean you defeat the whole purpose if you just say,
well, the FCC can decide because you are going to have less
clarity and less definition in the process.
Mr. Doyle. Ms. Abernathy?
Ms. Abernathy. I think an NOI as written is overly broad
and so it should be circumscribed to some degree so that you
don't waste resources and create delays. But I think in concept
it is a good idea for many proceedings.
Mr. Doyle. Mr. Ramsay?
Mr. Ramsay. I agree with actually the statements of both of
the people that preceded me. I believe that, you know,
typically a rush to judgment means you ran too fast, so I like
the concept of having a Notice of Inquiry in most instances. I
would note that in emergency circumstances, the APA allows the
Commission to bypass even a Notice of Proposed Rulemaking. So
in those circumstances, there is already a mechanism. But the
question is how to set the standard as Mr. Sununu said for when
you don't have to do the NOI, which is not an easy thing to
address.
Mr. Walden. Will the gentleman yield for a second?
Mr. Doyle. Yes, sure.
Mr. Walden. On page 3 of the draft, we incorporate that APA
emergency exemption. So I would draw your attention to that.
And on the second page, if they have done an NOI, and NPRM or a
Notice or Petition for Rulemaking within the last 3 years, that
qualifies.
Mr. Ramsay. But it still requires two rounds of comment?
Mr. Walden. No, you don't require----
Mr. Cooper. There is an ``or'' in that paragraph. The first
paragraph says ``or'' as far as I can tell. And so maybe I have
misread it. And it is really important that we get this right
because I believe in the opportunity to comment. But I don't
think it is necessary for two rounds of comment. If the agency
proposes a rule and builds a record, then that meets this. And
I see that ``or.'' It says ``one or the other,'' so it doesn't
say a Notice of Inquiry and these others. It says ``or.'' Now,
maybe there is someplace else in here where we get the
impression of the ``and,'' but it is an ``or.''
Mr. Walden. Yes. Mr. Levin?
Mr. Levin. Well, the chairman is correct that the bill as
written exempts the true emergency situations where you can
proceed with no notice and comment. But that having been said,
we should also think about situations where there is some
urgency about getting just the basic notice and comment done
and having two rounds of comment is unwarranted. So you should
leave some flexibility to say we don't need advanced notice in
this particular situation. The public still gets one shot at
commenting and saying it is a bad idea, change it, et cetera.
But you don't need the extra round and sometimes that would be
imprudent.
Mr. Doyle. But I guess the trick is how do you write that
into the bill? Mr. Sununu brings this up that, you know, do we
just leave this at the discretion to the FCC or is there a way
to create some language that would allow it to happen what you
have just suggested?
Mr. Levin. I think it needs some consideration, but one
idea I suggested in my draft is that you might set up the
procedure and say the agency can, for good cause, bypass it.
And that term is usually read to me--and a very good cause, not
because you feel like it.
Mr. Doyle. Sure. Mr. May?
Mr. May. Yes, just briefly. This is a provision I am
generally not in favor of in the draft for a lot of the reasons
that Professor Levin talked about. But here is what should
happen. The reason it is here I think is because the FCC,
especially in recent years over all commissions, it started to
draft Notice of Proposed Rulemakings in a much more open-ended
way than it used to back when I was at the Commission a long
time ago. And it is, I guess, responding to that. But it is
likely to increase the time that the FCC could act on things
that it does need to act on.
Remember I talked about Chairman Powell saying that the
Commission needs to be able to act in internet time. So this is
I am not sure the right way to get at that. Maybe just if your
oversight would get the FCC focused on drafting rulemaking
proposals that actually propose specific things, if not precise
rule language.
Mr. Doyle. Sure. Thank you, Mr. Chairman.
Mr. Walden. Thank you, Mr. Doyle.
We go now to Mr. Scalise for 5 minutes.
Mr. Scalise. Thank you, Mr. Chairman.
It was brought up earlier that a lot of us have concerns. I
want to put some real structure in place for the FCC, not just
for clarity in the industry, but also to move it away from what
many of us view as an agency that is starting to implement
their own political agenda as opposed to an agency that should
be focused on regulations as it applies to existing law.
I want to ask--and I want to start with Mr. May--when we
look at some of the mergers that have come through recently,
and of course there are still mergers pending for the FCC,
there is a provision here in Section J of this draft that says,
``The Commission may not consider voluntary commitment of a
party to such transfer or transaction unless the Commission
could adopt that voluntary commitment as a condition under
Paragraph 1.'' Let me ask you, you know, in your experiences
from what you have seen with some of these conditions that have
been placed on mergers at a time where companies really are
very vulnerable to some of the pressures that would be put in
place to agree to something that they might not otherwise
support in those preconditions place as a condition of a
merger, if you can address that in general but also as it
relates to what you are seeing here in the language in the
draft?
Mr. May. Well, I think the language in the draft is good
and I am enthusiastic about this provision. I said in my
opening statement I would actually like to see the merger
review process reformed even further. But this is useful
because what it does is at least try and put some constraints
on the FCC from going too far afield by tying the FCC's
extraction of voluntary commitments to conditions that are
narrowly tailored to remedy a harm that arises as a direct
result of specific transfer or specific transaction. Now, there
can still be disputes about that, but you know, at least that
does confine it and that is a useful thing.
The problem right now--and this is why this is so
important--the only constraint right now is the public interest
standard. And the public interest standard, of course, is
completely indeterminate. And I can think of mergers where the
FCC has imposed a condition or there has been a voluntary
commitment offered not to outsource jobs overseas, for example,
in one merger. Well, that might be a nice thing to happen as a
policy but it didn't have anything at all to do with that
particular merger at all. And there had been examples like
that. And it gives the process an unseemly flavor when at the
last minute, 2 days before a merger, you see, you know,
voluntary commitments offered up like this.
Mr. Scalise. And how about as it relates to the entire
industry, too, because there are some conditions that, you
know, maybe currently or in the past that have been placed that
don't just affect the entities involved in the merger but also
could be impacted industry-wide?
Mr. May. Well, that is true and it also, of course, happens
the other way around sort of perversely that you can have a
condition imposed extracted by the FCC--and I am using the word
extracted because, again, these things generally happen at the
last minute--where a condition that ought to be industry-wide,
imposed on an industry-wide basis if at all if it is going to
be imposed--one party, the party to the merger is now subject
to it and that seems not to be really equitable.
But then what happens is often that condition sometimes is
then used going forward by the FCC as a proposal then to apply
to the whole industry so it becomes a bit of a precedent if not
a legally-binding----
Mr. Scalise. Right. And I think again that is a good
condition because it is a problem we have seen, we have heard
about, but it has actually been implemented and is probably
still being used today in some of the others.
I want to ask Ms. Abernathy a question as it relates to the
annual reports. We have heard a number of complaints that the
annual reports at the FCC has to comply with today, by the time
they are filed, they are outdated. It takes a whole lot of work
to put in and then they are filed and really not that useful.
This draft and its Section K really lays out a different
process of putting a communications marketplace report in place
that might be a little more conducive to the changing
technologies. If you can maybe address both what you are seeing
in the draft but also as it relates to the current practice of
these annual reports and whether or not they are even useful.
Ms. Abernathy. I think if you implement new reporting
obligations and eliminate some of the old ones, then that makes
a lot of sense because, again, some of the reports were built
around the old silos. And so the information, it takes a lot of
time and money to gather the information, and yet it probably
isn't providing a great deal of beneficial competitive analysis
for Congress. So I think there has got to be a better reporting
way, and this is a proposal that I think would start you in the
right direction.
Mr. Scalise. Mr. Sununu?
Mr. Sununu. I am sorry. If I could make an observation on
that point, though. The language that is here in the
Communications Marketplace section identifying challenges and
opportunities in the marketplace, the jobs, and economy,
frankly it begins to make the FCC sound like an economic
development group and that is simply not what it is. I think
perhaps what we are trying to get at here is that the
Commission should be more focused on evaluating the competitive
state of the marketplace, the number of players, price trends,
new products, innovation in the space, and taking that into
consideration in their regulatory and rulemaking process. So I
might encourage you to look a little bit more carefully at that
language in order to (a) avoid unintended consequences and
avoid creating new areas for the FCC to engage in regulation
and instead focus it on making sure that we have got a
regulatory authority focused on the current competitive state
of the marketplace.
Mr. Walden. We appreciate that.
Mr. Scalise. We appreciate your comments and yield back,
Mr. Chairman.
Mr. Walden. Thank you. We do have a vote on in the House
floor but we should have time for Mr. Latta for 5 minutes.
And as he prepares, I would really appreciate as you have
heard the discussion among yourselves and with us, if you have
specific recommendations for improving the language in the bill
that are not referenced in your own testimony, it would be most
helpful to get that to us as soon as possible. Thank you.
Mr. Latta?
Mr. Latta. Well, thank you, Chairman. I really appreciate
you holding the hearing today and all the panelists for being
here. We really appreciate your time. And I also appreciate the
chairman's discussion draft that I think is very, very
important.
We all have lots of folks coming through our office all the
time talking about what is happening out there. And you know,
the FCC is no different from what I have heard from a lot of
different folks in that we have to really go in and look what
is happening there because it could be stifling businesses out
there. And one of the things I have done--I have also got a
bill out there for cost-benefit analysis for the FCC when they
are promulgating rules and at the very beginning and also at
the final rule.
And the things that we have heard that they are looking at
across--either with those cost-benefits would be that either
would or should the FCC consider the costs--or largely the
costs of businesses of complying with the new regulatory
regime, i.e., creating new compliance regime, training
employees, changing, billing other back-office systems, the
lost revenue that businesses could be--would be lost for the
new prohibited--engaging in particular business models that
would be prohibited under the new regulation and the cost of
productivity in the businesses.
And one of the things, if I may, Ms. Abernathy, if I could
ask you first is in your unique role as a former FCC
commissioner and also at Frontier what you would see would be
able to comment on this idea from, you know, the FCC's
perspective and also from Frontier if they would have to do a
cost-benefit analysis.
Ms. Abernathy. I think it is appropriate for a number of
proceedings to engage in a cost-benefit analysis because at the
end of the day if the costs drive up our cost to consumers and
the overall incremental information that is potentially
provided to the FCC is de minimis, that makes no sense. And
sometimes what happens in the context of looking at various
rules and regs is the commissioners have the best of intentions
but they haven't really thought through the costs and the
burdens on the industry. And it is backwards. And so I think it
would make a big difference.
Mr. Latta. Let me ask you this. Looking at what has
happened in the recent past with the FCC, could you comment on
any more recent rules that would have benefitted from a cost-
benefit analysis?
Ms. Abernathy. I could get back to you in writing
afterwards just because I need to look back.
Mr. Latta. I appreciate that.
Mr. May, I know in your testimony that you have addressed
on page 2, your last paragraph there that, you know, you said
in there taking them generally in order that they appear in the
bill draft, and especially those provisions that would require
the agency--you go on to also state to perform a cost-benefit
analysis. If could just get your read on that a little bit
farther on the cost-benefit analysis.
Mr. May. I think generally this would be a good requirement
to impose on the FCC. I take Professor Levin's point that it is
worth thinking about whether it should be for every rule, and
the answer is it may not be. But there is a lot of economically
significant rules that the FCC proposes. Now, I think of Bill
Shock, Net Neutrality, you know, the Data Roaming bill it just
did. All of those are the types of rules that have cost and
benefits and I think the FCC--obviously it does some of this
now, but as I said earlier, because historically it has tended
to focus, you know, again, in 103 places it has authority to
act in the public interest. And because that is so
indeterminate, it has, in my view, a bit of--with respect to
all past commissioners--it has got a bit of a mindset, to think
of things in a way that is not economically as rigorous as it
should be in today's environment, which is at least
increasingly competitive, fast-changing marketplace
environment.
Mr. Latta. In my remaining time, Mr. Ramsay, I know on page
7 of your testimony today that you state that ``Still,
logically, an analysis of a rule's potential benefits and
costs, as well as milestones for its review, could focus
available resources and expertise on the efficacy of any
proposed rule.'' And just any other comment on cost-benefit
analysis?
Mr. Ramsay. The only thing I said on my testimony is true
is that the nature of regulation and the nature of regulatory
oversight is a balance of competing interests. The APA already
requires agencies to specify the basis and explain why they are
doing things. We haven't taken a specific position on the
application of a strict cost-benefit test, so I can't speak to
that. But I think I also noted in my testimony that it is
certainly consistent with Executive orders dating back to, I
think, Gerald Ford.
Mr. Latta. Thank you very much, Mr. Chairman. I see my time
has expired, and I yield back.
Mr. Walden. Mr. Latta, thank you for your participation in
the hearing. I want to thank all of our subcommittee members
for their participation, especially thank our panelists. You
have been most enlightening for all of us as we work to improve
this draft. And as I said, I really would appreciate any
specific recommendations on how to make this better and more
workable.
So with that, we thank you again and this hearing is
adjourned.
[Whereupon, at 12:30 p.m., the subcommittee was adjourned.]
[Material submitted for inclusion in the record follows:]

Prepared statement of Hon. Cliff Stearns

Here we are 15 years after the '96 telecom act and
technology has advanced beyond what any one of us could have
possibly imagined. Yet the laws governing these industries have
lagged way behind and many are no longer relevant to the new
services and technologies that have arisen over the past few
years. That is why I believe this draft legislation is an
important first step.
This draft is quite similar to a bill Mr. Barton and I
introduced in the previous Congress. Since then, I have
introduced H.R. 2102, the FCC Commissioners' Technical Resource
Enhancement Act, to allow each Commissioner to hire an
electrical engineer or computer scientist.
Equipping the FCC with both legal and technical advisors
should provide Commissioners with the necessary staff
experience to tackle increasingly complex technical matters. I
hope my colleagues will join me with this initiative and that
this bill can be apart of the reform discussion.

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