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

KEEPING THE NEW BROADBAND SPECTRUM LAW
ON TRACK
=======================================================================

HEARING

BEFORE THE

SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY

OF THE

COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES

ONE HUNDRED TWELFTH CONGRESS

SECOND SESSION

__________

DECEMBER 12, 2012

__________

Serial No. 112-184

[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

Printed for the use of the Committee on Energy and Commerce

energycommerce.house.gov

__________

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COMMITTEE ON ENERGY AND COMMERCE

FRED UPTON, Michigan
Chairman

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

7_____

Subcommittee on Communications and Technology

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

(ii)
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........................................... 4
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 6
Hon. Lee Terry, a Representative in Congress from the State of
Nebraska, opening statement.................................... 20
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 20
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 21
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 21
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 22
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, prepared statement................................... 138

Witnesses

Julius Genachowski, Chairman, Federal Communications Commission.. 23
Prepared statement........................................... 26
Answers to submitted questions............................... 139
Robert M. McDowell, Commissioner, Federal Communications
Commission..................................................... 31
Prepared statement........................................... 33
Answers to submitted questions............................... 151
Mignon Clyburn, Commissioner, Federal Communications Commission.. 58
Prepared statement........................................... 60
Answers to submitted questions............................... 158
Jessica Rosenworcel, Commissioner, Federal Communications
Commission..................................................... 62
Prepared statement........................................... 64
Answers to submitted questions............................... 162
Ajit Pai, Commissioner, Federal Communications Commission........ 69
Prepared statement........................................... 71
Answers to submitted questions............................... 166

Submitted Material

Letter, dated December 10, 2012, from Broadcom, et al., to Mr.
Walden and Ms. Eshoo, submitted by Ms. Eshoo................... 7
Letter, dated February 13, 2012, from 3-dB Netowrks, Inc., et
al., to Senators and Representatives, submitted by Ms. Eshoo... 13
Letter, dated December 11, 2012, from Ms. Eshoo and Hon. Darrell
Issa to Julius Genachowski, Chairman, Federal Communications
Commission, submitted by Ms. Eshoo............................. 17
Letter, dated December 12, 2012, from Preston Padden, Executive
Director, Expanding Opportunities for Broadcasters Coalition,
to Mr. Walden, submitted by Mr. Walden......................... 77
Letter, dated December 11, 2012, from Grant E. Seiffert,
President, Telecommunications Industry Association, to Mr.
Walden, submitted by Mr. Walden................................ 80
Letter, dated December 11, 2012, from High Tech Spectrum
Coalition to committee and subcommittee leadership, submitted
by Mr. Walden.................................................. 82
Slide presentation, submitted by Mr. Walden...................... 85
Letter, dated December 11, 2012, from Atlantic Tele-Network, et
al., to committee and subcommittee leadership, submitted by Mr.
Doyle.......................................................... 112
Cisco Blog entry, dated October 20, 2011, by Mary Brown,
submitted by Mr. Latta......................................... 119

KEEPING THE NEW BROADBAND SPECTRUM LAW ON TRACK

----------

WEDNESDAY, DECEMBER 12, 2012

House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to notice, at 10:05 a.m., in
room 2123, Rayburn House Office Building, Hon. Greg Walden
(chairman of the subcommittee) presiding.
Members present: Representatives Walden, Terry, Stearns,
Shimkus, Rogers, Blackburn, Bilbray, Bass, Gingrey, Scalise,
Latta, Guthrie, Kinzinger, Barton, Eshoo, Markey, Doyle,
Matsui, Barrow, Christensen, Pallone, Rush, Dingell, and Waxman
(ex officio).
Staff present: Ray Baum, Senior Policy Advisor/Director of
Coalitions; Mike Bloomquist, General Counsel; Sean Bonyun,
Communications Director; Matt Bravo, Professional Staff Member;
Andy Duberstein, Deputy Press Secretary; Neil Fried, Chief
Counsel, Communications and Technology; Debbee Keller, Press
Secretary; David Redl, Counsel, Communications and Technology;
Charlotte Savercool, Executive Assistant; Lyn Walker,
Coordinator, Admin/Human Resources; Tom Wilbur, Digital Media
Advisor; Roger Sherman, Democratic Chief Counsel; Shawn Chang,
Democratic Senior Counsel; David Strickland, Democratic FCC
Detailee; Margaret McCarthy, Democratic Professional Staff
Member; and Kara van Stralen, Democratic Special Assistant.

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

Mr. Walden. I would like to call to order the Subcommittee
on Communications and Technology for our hearing on ``Keeping
the New Broadband Spectrum Law on Track.''
I want to thank everyone for being here today.
And before I begin, I would like to start the hearing off,
this subcommittee hearing, recognizing five hardworking members
of our subcommittee who will be departing the United States
Congress, including our colleagues Cliff Stearns, Mary Bono
Mack, Brian Bilbray, Charlie Bass, and Ed Towns. We certainly
appreciate the service that they have rendered to the people of
the United States, to this full and our subcommittee, and the
work they have done. And we appreciate both their service, and
we wish them well in the next chapter of their lives.
We will also miss Phil Gingrey's presence in our
subcommittee's hearings. Now, he won't be going far.
Phil, we wish you well in your new role as vice chair of
the Environment and Economy Subcommittee.
Meanwhile, we will have some new members joining our full
committee and subcommittee, including Billy Long, a member of
the Missouri Professional Auctioneers' Hall of Fame. So,
Commissioners, as you write your rules for these auctions, I
humbly volunteer Billy to be your auctioneer.
Look, we are here today to check on the progress at the
Federal Communications Commission at following the law and
implementing the incentive auction legislation Congress passed
last year.
Not only does this new law hold the potential to unleash
new technology and create hundreds of thousands of American
jobs, but it also is the source to fund the build-out of the
interoperable broadband public safety network. That is an
important process for our police and firefighters. It is
important that we get this done. It was one of the remaining
items of the 9/11 Commission that lingered for session after
session after session until our subcommittee and our full
committee finally got this across the line.
While I am not about to micromanage how the FCC operates
your auction, I do expect the FCC will follow the law,
including maximizing the proceeds from the auction. Not only
does our leadership of the wireless world hinge on the agency's
efforts, so, too, does the fate of the public safety broadband
network. Making this a successful auction is a goal I know each
and every one of us shares.
The U.S. has long led the world in spectrum auctions, with
an auction model based on the elegant simplicity of one-course
concept. Markets, not the whims of regulators, are best-suited
to ensure that spectrum is put to productive and innovative
use. I know from some of your testimony you have pointed out, I
think, especially some of our newer Commissioners, the success
the FCC has had over the years at doing good auctions.
However, we have also learned of overly prescriptive
auction rules can lead to less than successful auction results.
The FCC so encumbered the D block auction of the lower 700 meg
band that a 10 megahertz license for the use of prime broadband
spectrum failed to garner more than a few token bids, and those
were well below the true value of that very important spectrum.
So the FCC must avoid overly prescriptive auction rules and,
instead, rely on market mechanisms that have a proven record of
success.
Remember, the revenue generated, which was used in part to
help pay for the middle-class tax cut and extension of
unemployment benefits, will also be used to help pay for the
interoperable public safety broadband network under FirstNet
and to fund the Next Gen 911 service and to invest in public
safety research and development. A broadcast incentive auction
that fails to raise the revenue needed for these projects or
that unnecessarily gives away billions in cleared spectrum will
be considered a failure.
In particular, I would like a commitment that the
Commissioners will honor the language of the act that requires
guard bands to be, and I quote, ``no larger than is technically
reasonable to prevent harmful interference between license
services outside the guard bands.'' That is a direct quote out
of the statute.
As we discussed in last month's receiver performance
hearing, guard bands, although sometimes necessary to prevent
interference between neighboring services, are a suboptimal use
of spectrum. Their size should be minimized. Yet the
Commission's NPRM contemplates two guard bands of at least 6
megahertz and contemplates expanding them to as much as 10
megahertz. I want to see the engineering analysis that
justifies such fat guard bands.
Is 6 megahertz the minimum size needed? Could the
Commission use channel 37 as a guard band between mobile
broadband and broadcasting to reduce the need for additional
dedicated guard bands? Could the FCC reduce the need for guard
bands by improving receiver performance? These are just a few
of the unanswered and, in some cases, unasked questions from
the Commission's NPRM.
Finally, let me make it clear, I support the use of
unlicensed spectrum to foster innovation and provide much-
needed offload for congested broadband networks. That is why
our bill that is now law expanded the amount of unlicensed
spectrum by identifying an additional 195 megahertz in the 5
gig band, frequencies ideal for this kind of use. It also
codifies the use of white spaces.
What I cannot support is the unnecessary expansion of
unlicensed spectrum in other bands that are actually needed for
license services, especially at the expense of funding for
public safety.
So let me be clear: Every megahertz of broadcast television
spectrum that the FCC doesn't auction means less revenue to
fund prerogatives already determined by this committee and this
Congress, including prerogatives like FirstNet, Next Gen 911,
and wireless research and development.
Thanks for joining us today. I Look forward to hearing your
remarks and that of my colleagues.
Now I would like to recognize my friend from California,
Ms. Eshoo, for an opening statement.
[The prepared statement of Mr. Walden follows:]
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OPENING STATEMENT OF HON. ANNA G. ESHOO, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA

Ms. Eshoo. Thank you, Mr. Chairman. And good morning to you
and to the Chairman of the FCC and the Commissioners. Welcome.
It is wonderful to have you here.
Mr. Chairman, I would like to begin by requesting that the
December 10th letter signed by more than 370 companies and
organizations who care about the future of unlicensed spectrum
be placed in the hearing record. This letter and a February
13th letter describe the importance of unlicensed technologies
to innovation, job creation, and public safety.
And I would also like to request that a bipartisan letter I
sent to the FCC Chairman yesterday with Chairman Darryl Issa be
included in the record. The letter demonstrates the significant
unlicensed developments that have taken place just in the last
9 months since the spectrum bill was signed into law.
So I ask for unanimous consent to place both of these in
the record.
Mr. Walden. Without objection.
[The letters follow:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Ms. Eshoo. Thank you.
Mr. Chairman, ensuring that the FCC successfully implements
the voluntary incentive auction, a mechanism that this
subcommittee established, holds great potential to produce new
jobs and to free up more spectrum at a time in which demand for
wireless broadband continues to soar. The economic importance
of this auction I don't think can be understated. Last month, a
new study from the GSMA and Deloitte concluded that the
doubling of mobile data use results in a 0.5 percentage point
increase in GDP per capita growth.
As the FCC Chairman stated in adopting the proposed
incentive auction rules, the Commission must engage in a
process that is transparent, fact-based, data-driven, and draws
on the leading experts in both engineering and economics. While
I have confidence in the Commission's ability to carry out its
process in such a manner, there are three key areas which I
think deserve additional focus.
The first is the importance of constructing a band plan
that maximizes the enormous economic benefits of both licensed
and unlicensed spectrum. The proposed rulemaking adopted on
September 28th of this year, consistent with congressional
intent, recognizes that nationwide guard bands needed for
interference protection can simultaneously provide unlicensed
access, ensuring that every megahertz of spectrum is used
efficiently. Simply put, nowhere in the act does it require the
FCC to auction guard bands.
And as the title of today's hearing reflects, this
subcommittee has a responsibility to keep the new broadband
spectrum law on track. That is the title of this hearing. Not
to go off track, but to remain on track. Attempts to rewrite
the law through the rulemaking process should be rejected by
the Commission and will only serve to delay the release of new
spectrum.
Second, Congress crafted the spectrum law to ensure that
the FCC, by rulemaking, can adopt rules enhancing competition,
consumer choice, and innovation. With the potential to free up
as much as 120 megahertz of beach-front spectrum, wireless
carriers of all sizes, both regional and national, must have an
opportunity to participate in the auction process. Promoting a
competitive landscape can be furthered through the completion
of the Commission's interoperability proceeding as well as a
revision of the Commission's spectrum screen, the process used
to determine how much spectrum anyone carrier can hold in a
given market.
Finally, the Commission must be proactive, I believe, in
its approach to educating broadcasters. Without voluntary
broadcaster participation, there will be no new spectrum to
repurpose. The FCC's Learning Everything About Reverse-Auctions
Now, the LEARN program, is an important step in this process.
And I encourage the Commission to engage in individual
outreach that ensures that broadcasters fully understand the
benefits of participation. Ultimately, this is going to have to
be a collaborative process that brings together broadcasters,
wireless carriers, and technology companies for the purpose of
revolutionizing the mobile broadband marketplace.
I thank Chairman Genachowski and every member of the
Commission for your tireless efforts to ensure a successful
auction, the first in the history of our country that is
voluntary, and to each Commissioner for being here today to
share your perspectives.
And I yield back, Mr. Chairman.
Mr. Walden. The gentlelady yields back the balance of her
time.
The chairman recognizes the gentleman from Nebraska, Mr.
Terry.

OPENING STATEMENT OF HON. LEE TERRY, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF NEBRASKA

Mr. Terry. Thank you, Mr. Chairman.
And for this Congress, this I expect to be my last official
business as your vice chair. I want to thank you for a fun and
good year. But even though I may lack that title on this
subcommittee, it won't change my enthusiasm and activity on
this committee in the 113th.
This incentive auction, if it is successful--and I expect
it will--will accomplish a number of goals that will benefit
consumers. As the Commission drills down to a set of final
rules, I have confidence that it can balance the concerns of
this stakeholders.
In doing so, I want to be sure that the intent of the
Spectrum Act is respected. And in doing so, I want to be sure
that this means that the Commission must raise the revenue
necessary to pay for the FirstNet public safety network; it
means that the guard bands must be no longer than technically
reasonable to avoid interference. It also means that all
bidders must be able to follow and participate in the forward
auction. Finally, a faithful interpretation of the Spectrum Act
requires the Commission to ensure that the auction spectrum is
not encumbered with value-sapping restrictions on use or
alienability.
I look forward to working with the Commission and my
colleagues on the subcommittee in the coming months to make
sure that this opportunity is not wasted and that we, along
with the FCC, get it right.
At this time, I will yield to the gentleman from Texas, Mr.
Barton.

OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS

Mr. Barton. Thank you, Mr. Terry.
I want to compliment the chairman, who is not here, for the
new seats up here on the dais. They are very comfortable. I
guess it is intentional that the Commissioners still are in the
uncomfortable seats. I am not sure.
I appreciate the subcommittee holding this hearing.
The Digital Television Transition and Public Safety Act of
2005 was passed when I was chairman. That created 84 megahertz
of spectrum to be auctioned. Since then, we have also had the
Middle Class Tax Relief and Jobs Creation Act of 2012, which
requires that 65 megahertz of this spectrum be auctioned by
2015.
When it is my turn to ask questions to the Commission, I
will have two issues: One is what happens to the low-power
television stations in the major metropolitan markets who don't
have Class A licenses. They are very concerned that they may
lose their license and be left out in the cold. And, secondly,
I am very puzzled about this three-way simultaneous auction. I
really don't understand how that is going to work, and I hope
one of the Commissioners can explain that to me.
With that, Mr. Chairman, I yield back.
Mr. Walden. The Chair now recognizes Mr. Latta.

OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO

Mr. Latta. Well, thank you, Mr. Chairman. And, also, I
appreciate the FCC Commissioners for being here at the
committee with us today.
The Spectrum Act was a landmark legislation by authorizing
volunteer incentive auctions. Everyone knows that the success
of the auction is critical for deployment of a public safety
network, for bringing spectrum to a competitive marketplace for
mobile broadband, and the continued vitality of our Nation's
broadcasters.
This is truly an issue of global competitiveness. In fact,
a recent study by Deloitte using Cisco data revealed a doubling
of mobile data use leads to an increase of 0.5 percentage
points in GDP per capita growth rates. And while the incentive
auction is a key component to our Nation's spectrum policy, we
must remember that it is only one component. The administration
needs to work with Congress to look at ways to clear Federal
spectrum, particularly the 1775 to 1780 megahertz band.
Once again, Mr. Chairman and Commissioners, we thank you
for being here today, and we appreciate your transparency and
openness as the incentive auction proposal is developed. We
look forward to hearing your testimony.
And, Mr. Chairman, I yield back. Thank you.
Mr. Walden. The gentlelady from Tennessee, Ms. Blackburn.

OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE

Mrs. Blackburn. Thank you.
And I want to welcome our Commissioners. We are so pleased
you are here for your Christmas visit.
And, Chairman Walden, I thank you for holding the hearing.
The spectrum auctions have been authorized, and they should
maximize the amount of spectrum that is available for licensed
commercial mobile use and maximize revenues to the Treasury.
Everywhere we go, all of our innovators to the broadband are
saying, Let's maximize this, let's get these auctions out
there. And the voluntary auctions will be easier if the
Commission is faithful to the statute that Congress passed.
Commissioner Pai, we are delighted that you recognized that
in your testimony. So we thank you for that.
We know that it is going to be necessary to get the
spectrum out there if we are going to achieve our shared goals:
mitigating our Nation's spectrum crunch; improving public
safety; generating billions in revenue to help pay down this
massive debt that we are facing in this country; creating good-
paying, sustainable, long-term jobs. And we need to maximize
participation among all interested parties.
So we welcome you. I am looking forward to the hearing.
And I yield back.
Mr. Walden. The Chair recognizes the gentleman from
California, 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 very much, Mr. Chairman, for holding
this important hearing on the FCC's implementation of spectrum
legislation that Congress passed with strong bipartisan
support. And I am grateful for the chairman and all of the
members of the Commission's work in this with regard.
The Public Safety and Spectrum Act implemented one of the
last remaining recommendations from the 9/11 Commission and
created a nationwide interoperable public safety broadband
network for first responders. It also provided new authority to
the FCC to conduct the incentive auctions, with the purpose of
alleviating the spectrum crunch fueled by the ever-growing
demands for mobile broadband services and providing a
downpayment for the public safety network. Overall, the new law
will help drive our national economic growth while keeping the
American people safe through state-of-the-art communications
infrastructure for public safety.
The act was the result of months of bicameral,bipartisan
negotiations that included many elements of compromise. The
Federal Communications Commission is now grappling with several
of these areas, and I would like to highlight two in
particular.
The first is unlicensed spectrum. Unlicensed spectrum has
been an incredible economic success story. Innovative services
like Wi-Fi and Bluetooth are now ubiquitous parts of our
communications system. They came about because of the use of
unlicensed spectrum.
The law advances unlicensed use in several ways: It allows
the FCC to use the existing white spaces in the broadcast band
for unlicensed use; it gives the FCC authority to reorganize
these existing white spaces to maximize their value; and
perhaps most important, it allows the FCC to create guard bands
in the repurposed broadcast television spectrum that may be
used for new unlicensed services like Super Wi-Fi. This is
smart spectrum policy that recognizes the increasingly
interdependent nature of licensed and unlicensed operations.
The guard bands will both enhance the value of the spectrum
to be auctioned by protecting it from interference and create a
nationwide band of prime spectrum that can be used for new
innovations in unlicensed use. That is why I am pleased that
the FCC's proposed rules are faithful to congressional intent
to promote innovation in unlicensed use.
Second, the law preserves the FCC's ability to use auction
rules to promote competition in the wireless industry, while
ensuring no single carrier is unfairly excluded from the
auction process. As the steward of the public's airwaves, the
FCC must have the authority to write auction rules that aim to
avoid the concentration of spectrum in the hands of just a
small group of companies.
The act strikes the proper balance in recognizing that
while every carrier should be eligible to participate in some
fashion in a system of competitive bidding, the FCC can
continue to promote competition through its spectrum policies.
To implement this part of the law, the FCC is appropriately
seeking comment on whether to establish spectrum aggregation
limits or other rules to achieve these aims.
The conferrees on the Public Safety and Spectrum Act spent
significant time debating and ultimately rejecting other
proposals on unlicensed and bidder eligibility. No conferree's
position was accepted outright, and our carefully crafted
compromise is what became law. So I am troubled by attempts by
some to relitigate issues that were resolved earlier this year
when the bill passed Congress with widespread support. After-
the-fact spin that unfairly twists the language of the law
deserves little weight by the Commission or the courts.
My judgment is that the FCC is off to a good start in
proposing incentive auction rules. I commended Chairman
Genachowski and his colleagues on the Commission for these
efforts. And I look forward to hearing all of your testimony
today.
And I have 30 seconds if anybody wants it. Otherwise, I
will yield it back so we can hear from our witnesses.
Mr. Walden. The gentleman yields back the balance of his
time.
And with that, we will proceed to hear the testimony of our
witness. And we will start with the Chairman of the Federal
Communications Commission, Mr. Julius Genachowski.
We welcome you back before our subcommittee, Mr. Chairman,
and we look forward to your statement and commend you on all
the work your commission is doing. Please proceed.

STATEMENTS OF JULIUS GENACHOWSKI, CHAIRMAN, FEDERAL
COMMUNICATIONS COMMISSION; ROBERT M. MCDOWELL, COMMISSIONER,
FEDERAL COMMUNICATIONS COMMISSION; MIGNON L. CLYBURN,
COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION; JESSICA
ROSENWORCEL, COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION;
AJIT PAI, COMMISSIONER, FEDERAL COMMUNICATIONS COMMISSION

STATEMENT OF JULIUS GENACHOWSKI

Mr. Genachowski. Thank you, Chairman Walden, Ranking Member
Eshoo, members of the committee.
Mr. Walden. We seem to have a spectrum problem here.
Mr. Genachowski. There we go.
Mr. Walden. There we go.
Mr. Genachowski. I think it is unlicensed.
It is a pleasure to be here, and thank you for the many
opportunities both to testify here and to work with all members
of the committee outside of the hearing process on work in this
very important area.
I do want to take a minute to thank Congressman Terry and
Congressman Doyle for coming to the FCC last week when we
adopted our Low Power FM Order, implementing a bipartisan act
of Congress. It was a very special day for the Commission, the
Commission staff, and I thank both of you for joining us.
This past week, Commissioner McDowell and I were part of
the U.S. delegation to the WCIT in Dubai, where we worked
together to defend a free and open Internet. I would note that
members of the committee staff on a bipartisan basis were
there, as well, and on a bipartisan basis were fighting for
Internet freedom and openness.
The situation in Dubai right now is fluid. People are
literally meeting right now. We have a strong American
delegation on the ground led by Ambassador Kramer and including
representatives from across government and the private sector.
As I said, the situation is fluid. The issues are important.
And I think we all understand that this will not be the last
conference at which these important issues arise. And fighting
for Internet freedom and openness globally will be something
that we will all be working on together for quite some time.
In the U.S., the broadband sector is strong, and the U.S.
has regained global leadership in mobile communications. We
have more 4G LTE subscribers than the rest of the world
combined, and we are setting the pace globally on innovation in
mobile software, apps, and devices.
This leadership means that we face a particularly acute
challenge to meet exploding mobile demand, the ``spectrum
crunch,'' and that we must use all policy levers at our
disposal to address it. That is why a few months ago at the
Commission we freed up 30 megahertz of WCS spectrum for
broadband. It is why yesterday we unanimously adopted an order
freeing up 40 megahertz of underutilized satellite spectrum for
land-based mobile broadband, and a proposal setting the stage
for an auction of an additional 10 megahertz, the H block, in
2013. It is why later today I expect my colleagues and I to
approve a proposal to make 100 megahertz of spectrum in the 3.5
gigahertz band available for broadband.
And, of course, Congress recognized the importance of
innovative policy solutions to the spectrum crunch in
authorizing the Commission to conduct incentive auctions. As a
result of this important legislation, landmark legislation, the
U.S. will be the first country in the world to conduct
incentive auctions.
Of course, our obligation is to implement the legislation
in accordance with the statute. With our vote on a notice of
proposed rulemaking in September, the Commission launched
formal implementation of the new law. Implementation is on
track.
Key goals and principles include maximizing the overall
amount of spectrum freed up, including by maximizing
broadcaster opportunities for participation in the auction;
enabling the continued role of a healthy broadcast industry;
generating very substantial revenue, including providing
funding for FirstNet; driving private investment and innovation
and ongoing U.S. leadership in mobile; focusing on the
engineering and the economics; engaging with all stakeholders
in a transparent process; and doing everything we can to make a
complex, multipart process as simple as possible.
In my written testimony, I outline the significant steps
taken since enactment of the statute to ensure success. The new
incentive auction concept poses a long list of new challenges,
but we are focused together on smart solutions.
For example, our proposed wireless band plan for 600
megahertz consists of 5-megahertz building blocks to allow for
the greatest amount of flexibility and efficient optimization
for the new mobile data world. Specifically, we are
anticipating for the first time the possibility that we might
have more spectrum for downlinks than uplinks, which in a data
world could make sense as compared to the symmetrical uplinks
and downlinks in a voice world.
In addition, the notice proposes to free up a significant
amount of unlicensed spectrum for Wi-Fi-like uses and other
innovations. Both licensed and unlicensed spectrum have
contributed to U.S. leadership in mobile. Like auctioned
licensed spectrum, unlicensed spectrum has a powerful record of
driving innovation, investment, and economic growth--hundreds
of billions of dollars of value creation for our economy and
consumers.
Our proposal sets out a balanced approach designed to drive
investment innovation for years to come and drive continued
U.S. leadership.
We are also engaging broadcasters in a constructive
dialogue to meet statutory directives concerning repacking.
We look forward to comments on all of these proposals as
well as ways to implement the post-auction transition with
minimal consumer disruption and within the timetable set by the
law.
To make clear, as we all know, the implementation is now in
the notice stage. We put out a concrete proposal designed to
generate concrete and efficient response from stakeholders. We
will be looking very carefully at the responses that we get,
deciding issues on a record and consistent with the statute.
With that, thank you again for the opportunity to testify,
and I look forward to answering your questions.
Mr. Walden. Thank you, Chairman.
[The prepared statement of Mr. Genachowski follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Walden. And just for the record, thank you for thanking
my colleagues for coming down to the FCC. As a licensee of the
FCC in the broadcast world for 22 years, I made sure to do
everything possible to make sure I never had to go before the
FCC in person, and so I am glad they went.
We will go to Commissioner McDowell now for your testimony.

STATEMENT OF ROBERT M. MCDOWELL

Mr. McDowell. Thank you, Mr. Chairman and Ranking Member
Eshoo and all members of the subcommittee. It is terrific to be
back here today. Thank you for inviting us.
I share your goals of putting more spectrum into the hands
of American consumers while raising funds for the Treasury and
a nationwide broadband public safety network.
It is important for all of us remember today that the FCC
is at the earliest stages of developing rules to implement
Congress's will regarding incentive auctions--auctions that
will literally be the most complex in world history. Initial
comments are not even due until next month. We will have to
cull through a plethora of ideas and new questions we did not
contemplate when we launched the rulemaking last September. And
so, consequently, it would be premature for me to offer a final
opinion on where the Commission should go with new auction
rules until it is time for us to vote on them.
Nonetheless, being the only Commissioner before you today
who is also a veteran of two of the largest spectrum auctions
in American history, as well as the digital television
transition--seems just like yesterday--I have learned a lot
through trial and error, sometimes more error than anything
else. In our conversation today, I hope I can help illuminate a
path forward based on past successes and failures.
My entire testimony could be boiled down to one sentence:
The FCC should approach these auctions with simplicity,
humility, and regulatory restraint. But with almost 4 minutes
left, what the heck, I will go on further.
Through intelligently designed band plans and auction and
service rules, we could provide opportunities for all
stakeholders and potential new entrants to successfully
participate in the auctions. Similarly, we should avoid
micromanaging the wireless market through unnecessary rules
that would deter bidders and reduce auction revenue. The goal
of maximizing revenue is especially important here due to the
congressional mandate that part of the auction proceeds fund
the construction of the new nationwide public safety network.
Furthermore, we should keep in mind that technology
advances constantly, and what may seem impossible to achieve
today may be routine tomorrow. So let's not underestimate
market innovation, or, worse, let's not inadvertently preempt
it.
Beyond the spectrum auctions, American policymakers should
continue their vigilance against encroachments upon Internet
freedom, especially internationally. Chairman Genachowski, as
he mentioned, and I worked together with the rest of the U.S.
delegation in Dubai last week, and members of your committee
staff, to prevent the International Telecommunication Union
from expanding its reach into the Internet's complex ecosystem.
And as the chairman mentioned, right now is a crucial time.
Literally, as we sit here, it is nighttime in Dubai. And it is
at a crucial intersection, and the next 12 to 24 hours will
determine the fate of things. But if we are lucky enough to
have Internet freedom escape the WCIT this year, we have to
remember there is a much more fundamental negotiation in the
year 2016. And there is a big meeting in May that lays the
foundation for that. So we should all keep that in mind.
But I would like to thank this committee for its unanimous
and bipartisan resolution opposing even the smallest of
international encroachments on Internet freedom.
In the meantime, I hope we could all share a New Year's
resolution to close the Title II docket at the FCC. Now, my
hopes may not be realized, I realize, but ending this
proceeding would send a strong signal around the globe that the
U.S. opposes subjecting the Internet to late-19th-century
industrial policy.
Instead of new regulation in this space, we should revive a
concept that I proposed nearly 5 years ago, and that is to use
the tried and true multi-stakeholder model to resolve alleged
anticompetitive conduct that would threaten the open Internet.
Supported by the backstop of existing antitrust and consumer
protection laws, the multi-stakeholder model could spotlight
market failures and cure them more quickly and probably more
effectively than antiquated telephone laws. If this concept is
good enough for us to preach abroad, shouldn't we also practice
it at home?
Thank you, and I look forward to your questions, with 46
seconds left on the clock.
Mr. Walden. We will make note of that. Thank you.
[The prepared statement of Mr. McDowell follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Walden. Now we will go to Honorable Commissioner
Clyburn.
Thank you for being here today. We appreciate all you do at
the Commission. Look forward to your testimony.

STATEMENT OF MIGNON L. CLYBURN

Ms. Clyburn. Thank you, Chairman Walden, Ranking Member
Eshoo, and distinguished representatives. Good morning. Thank
you for the opportunity to discuss the FCC's efforts in
implementing the historic legislation you passed earlier this
year.
I respectfully request that my full statement be admitted
in the record of this proceeding.
Mr. Walden. Without objection.
Ms. Clyburn. Over the past few years, consumer demand for
wireless services has increased by startling rates. These
realities require that the Nation put in place targeted yet
nimble legislative and regulatory policies in order to keep
pace.
It is sometimes hard to believe this, but when I first
started at the Commission in the summer of 2009, tablet devices
had not even been introduced to the U.S. consumer. And now,
according to the most recent data for this year, 22 percent of
American adults own such a device.
When you consider these statistics, together with the fact
that tablets consume 121 times more spectrum than ordinary
cellphones, then you realize that two elements of spectrum
management have become critical policy priorities: First, we
must find quicker ways to repurpose spectrum for commercial
mobile services, and, second, we must promote more efficient
uses of spectrum.
Congress understood this when it passed the JOBS Act of
2012. The plain language of the statute makes clear that
through a voluntary incentive auction we have the authority to
find a quicker tool to reallocate spectrum.
Congress directed that the incentive auction of broadcast
television spectrum consist of three major features: a reverse
auction, a repacking of the broadcast TV band, and a forward
auction. For those broadcast TV licensees who want to continue
to use their spectrum to provide services, the Commission must
make all reasonable efforts to preserve their coverage area and
populations served.
I am pleased to report that the Commission has been moving
quickly to implement these statutory directives. Just 2 months
after enactment, a unanimous three-member commission released
an order that put forth some basic ground rules for the
channel-sharing aspects of the incentive auctions.
This past September, the Commission at full complement
unanimously adopted a notice of proposed rulemaking on the full
range of procedural and technical rules that it could adopt.
That notice proposes a band plan with 6 megahertz guard bands
that meet the statutory requirement that they are no larger
than technically reasonable to prevent harmful interference
between licensed services. It seeks comment on the proposal.
I believe it was important for the notice to propose a band
plan with an appropriate balance of licensed and unlicensed
spectrum. Section 6407 of the act correctly authorizes the
Commission to permit the use of such guard bands for unlicensed
use.
Unlicensed spectrum has played a critical role in helping
the wireless industry use its valuable resource more
efficiently. Commercial wireless carriers are increasingly
using unlicensed Wi-Fi services to offload their smartphone
traffic, resulting in wireless carriers not having to construct
an estimated 130,000 cell sites at a savings of more than $25
billion each year.
The unlicensed spectrum proposals in the notice would also
encourage development of wireless services that can make
effective use of unused spectrum or white spaces in the
broadcast TV band.
It is also clear that continued innovation in the
unlicensed service industry is important to our national
economy. As Representatives Eshoo and Issa pointed out, it is
estimated that unlicensed spectrum generates between $16
billion and $37 billion each year for the U.S. economy.
The incentive auction notice also appropriately seeks
comment on ways the Commission could design the incentive
auction to accomplish all of the funding goals of the act,
including funds for a national first responder network.
Thank you all for allowing me to make these opening
remarks. I look forward to any questions you may have.
Mr. Walden. Commissioner Clyburn, thank you for your
testimony.
[The prepared statement of Ms. Clyburn follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Walden. And now we will move to Commissioner
Rosenworcel.
Thank you for being here today. We look forward to your
comments, as well.

STATEMENT OF JESSICA ROSENWORCEL

Ms. Rosenworcel. Good morning, Chairman Walden, Ranking
Member Eshoo, and members of the subcommittee. It is an honor
to appear before you with my colleagues to discuss our progress
in implementing the incentive auction provisions of the Middle
Class Tax Relief and Job Creation Act.
The Commission embarked this past September on the complex
but critical task of conducting wireless incentive auctions. We
must get them right because if we get them right, we will
facilitate the voluntary return of spectrum from commercial
licensees and promote its efficient reuse. If we get them
right, we will ease congestion on our airwaves and expedite the
development of new wireless services and applications. And if
we get them right, we will drive digital-age innovation, spur
job creation, and grow the wireless economy.
But before we get there, it is useful to consider what has
come before. For nearly 2 decades, the Commission's path-
breaking spectrum auctions have led the world. The agency has
held more than 80 auctions, it has issued more than 36,000
licenses, and it has raised more than $50 billion for the
United States Treasury. In short, the Commission's auctions
have been a model for governments and commercial wireless
providers across the globe.
We are now again poised to be the world's pioneer with
incentive auctions. For my part, I believe that there are four
principles that should guide us: simplicity, fairness, balance,
and public safety.
Simplicity is key. Incentive auctions are undeniably
complicated, but at every structural juncture, a bias toward
simplicity for participants is crucial. Simplicity will allow
the market to work and yield the most favorable participation.
Fairness is essential. Fairness demands that we consider
how to accomplish repacking by minimizing unnecessary
broadcaster disruption and maximizing the ability of the public
to continue to receive free over-the-air television. At the
same time, we ask that broadcasters make a fair assessment of
the opportunities this auction provides. By offering incentives
to share channels and incentives to relocate from the UHF to
VHF band, this auction can mean new resources for broadcasters
to develop new programming and deploy new services.
Balance is necessary. None of the three legs of the
incentive auction--the reverse action, the repacking, or the
forward auction--can stand on its own. For instance, the
interference rules we consider will not only impact broadcast
services but also how much spectrum will be available for
auction, which in turn will impact the revenues raised. We must
also pay attention to the balance between licensed and
unlicensed spectrum. The former provides reliability and
interference protection; the latter provides low barriers to
entry and promotes the efficient use of limited resources. Good
spectrum policy requires both.
Finally, public safety is fundamental. Congress designated
auction revenues to support the first nationwide interoperable
wireless broadband public safety network. The recent storms in
the Northeast have provided a stark reminder of the importance
of communications in a disaster. The success of these auctions
requires delivering on our promise to America's first
responders.
Even with incentive auctions on course, the demand for our
airwaves will continue to grow. To meet this demand, efficiency
is critical. At the FCC, efficiency means getting all of our
auctions done on a clear timeline. For industry, efficiency
means squeezing more out of the spectrum already allocated for
commercial use. Now is the time to invest in technologies--
geographic, temporal, and cognitive--that multiply the capacity
of our airwaves.
Finally, for the Federal Government, efficiency means
finding new approaches that facilitate repurposing of spectrum
better than our old three-step process of clearing, relocating,
and auctioning. To this end, I believe that it is time to
develop a series of incentives to serve as the catalyst for
freeing more Federal spectrum for commercial use. What if we
were to financially reward Federal authorities for efficient
use of their spectrum? If we want to convert more airwaves to
commercial use, I believe it is time to work with our
government partners so they can realize value from using
spectrum efficiently instead of only seeing loss from its
reallocation.
It is an exciting time in communications. Incentive
auctions present real challenges, but their smart execution can
yield great opportunities.
Thank you for your time. I would be happy to answer any
questions you might have.
Mr. Walden. Thank you, Commissioner. We appreciate your
testimony.
[The prepared statement of Ms. Rosenworcel follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Walden. We will go now to the final Commissioner,
Commissioner Pai.
Thank you for being with us today. Look forward to your
testimony, sir.

STATEMENT OF AJIT PAI

Mr. Pai. Thank you. Chairman Walden, Ranking Member Eshoo,
members of the subcommittee, it is a privilege to appear before
you today.
The Spectrum Act originated in the efforts of this
subcommittee and was the result of bipartisan leadership, hard
work, and compromise by you and many other dedicated Members of
Congress.
Given the pressing need to make more spectrum available for
mobile broadband, the FCC must act promptly to implement the
act. Accordingly, this past summer, I called for the FCC to
commence the incentive auction rulemaking process in the fall.
Chairman Genachowski launched a timely proceeding in September,
and I thank him for that.
I thank him, as well, for his recent announcement of the
formation of a Technology Transitions Policy Task Force, which
will address crucial issues that we will encounter as we
undergo the IP transition.
As the Commission moves forward in the incentive auction
rulemaking process, I believe that four principles should
animate our work:
First, we must be faithful to the statute. It is our job to
implement this legislation, not to rewrite it to conform to our
own policy preferences.
Second, we must be fair to all stakeholders. This is
especially important because the incentive auction will fail
unless both broadcasters and wireless carriers choose to
participate.
Third, we must keep our rules as simple as possible. The
auction will be complicated enough as it is.
Fourth and finally, we need to complete this proceeding
within a reasonable time frame. I believe that we should set a
deadline for concluding these auctions no later than June 30th
of 2014.
Fidelity to these four principles will result in a
successful broadcast incentive auction.
That said, I do have some concerns with the direction of
our rulemaking proceeding. Most notably, September's notice of
proposed rulemaking appears to envision an auction that will
yield no net revenues. That would mean no money for the First
Responder Network Authority to build out a nationwide
interoperable public safety broadband network. That would mean
no money for State and local first responders. That would mean
no money for public safety research. That would mean no money
for deficit reduction. And that would mean no money for Next
Generation 911 implementation, even though Spectrum Act
specifically mentions each of these items.
Most of the problem, in my view, stems from the structure
of the proposed auction. The only closing conditions set forth
in the NPRM is that the revenues from the forward auction cover
the costs of the reverse auction. This is essentially like
ending a traditional auction as soon as the reserve price is
met.
Another part of the problem derives from limits the FCC
might place on auction participation. For example, if we start
picking and choosing who may participate in the forward
auction, that won't be good for anybody. By contrast,
maximizing participation in the auction will maximize our net
revenues. And as we set up the auction, I hope we take to heart
the guidance that we receive from commenters and, importantly,
from Congress.
Aside from the broadcast incentive auction, the Spectrum
Act sets several additional targets for getting more spectrum
to market. For example, I expect in the near future that we
will commence a rulemaking proceeding on making available
almost 200 megahertz of spectrum for unlicensed use in the 5
gigahertz band.
This is a legal obligation under the Spectrum Act, to be
sure, but I am particularly excited about it because it is
smart policy. The standard for next-generation Wi-Fi, 802.11ac,
already has been developed, and it requires large, contiguous
swaths of spectrum for high-capacity, high-speed data
transfers. The 5 gigahertz spectrum identified in the Spectrum
Act is well-suited for taking advantage of this innovative
standard.
The Spectrum Act also directs the FCC to auction off the
2155 to 2180 megahertz band, which is adjacent to AWS-1. The
spectrum ideally would be paired with another 25-megahertz
block adjacent to AWS-1, the 1755 to 1780 bands. These bands
already are internationally harmonized for commercial use,
which means a deployment will be swifter and cheaper than other
options.
If we auction off the spectrum within the next 2 years, it
could raise billions of dollars. With productive collaboration
among the FCC, the NTIA, commercial users, and Federal users,
we can achieve the twin goals of efficient commercial use and
effective Federal use.
In closing, the Spectrum Act gave the FCC some very
challenging tasks, but if we accomplish them, our Nation's
commercial and public safety communications capabilities will
improve dramatically.
Chairman Walden, Ranking Member Eshoo, and members of the
subcommittee, I thank you once again for holding this important
hearing. I look forward to listening to your views, answering
your questions, and continuing to work with you in the weeks,
months, and years ahead to implement this landmark legislation.
Mr. Walden. Commissioner, thank you for your testimony.
[The prepared statement of Mr. Pai follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Walden. Thanks to all of you for coming today to
testify before our subcommittee.
I would like to put in the record three different letters:
one from the Expanding Opportunities for Broadcasters Coalition
announcing a coalition of more than 25 broadcasters at this
early date who are interested in selling this spectrum in major
markets, a letter from the Telecommunications Industry
Association supporting efforts to maximize licensed spectrum
for mobile broadband, and a letter from the High Tech Spectrum
Coalition supporting swift implementation of the spectrum law.
Without objection, they will be in the record.
[The letters follow:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Walden. Commissioners, obviously we have a lot to cover
today, and so I have, at least first up, a yes-or-no question.
I want to start with Commissioner Pai.
Do you believe the Commission should be ensuring that the
auction produces the $7 billion for the public safety network?
Mr. Pai. Mr. Chairman, I do believe that the Commission
should focus on maximizing revenue to fund the public safety
network.
Mr. Walden. Commissioner Rosenworcel?
Ms. Rosenworcel. Yes, absolutely. We need to deliver on our
promise to our Nation's first responders.
Mr. Walden. Commissioner Clyburn?
Ms. Clyburn. Absolutely, it should.
Mr. Walden. Commissioner McDowell?
Mr. McDowell. Yes.
Mr. Walden. Chairman Genachowski?
Mr. Genachowski. Yes.
Mr. Walden. Thank you.
Now I would like to put a slide up here and draw everyone's
attention to it and ask unanimous consent to include it in the
record.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Walden. As the chart they are about to put up will show
you, the FCC may be forgoing as much as $19 billion,
potentially, with its guard band and unlicensed proposal. I
believe you all have copies of this before you.
Commissioner Pai, before the FCC nets a single penny for
public safety, it has to pay broadcasters that relinquish
spectrum and reimburse stations it relocates. We can't know in
advance how much that will cost, nor do we know how much
spectrum broadcasters will relinquish or how much that spectrum
will sell for.
In light of these unknowns, are you comfortable forgoing
even a single dollar of potential revenue?
Mr. Pai. I am not, Mr. Chairman. And that is precisely one
of the reasons why, in my separate statement on September 28th
when we adopted the notice of proposed rulemaking, I expressed
my concern that the closing condition did not appear to
envision a circumstance in which the auction would yield net
revenues.
That is why I proposed asking questions; for example,
should we go beyond the contemplated structure of the auction,
which at this point, as I understand it, seems to say that the
forward auction will close once there is sufficient revenues to
pay bidders in the reverse auction, to pay for reimbursable
costs under the Spectrum Act, and to pay for the administrative
costs of administering the auction.
So I share that concern. And I believe that the closing
condition that we ultimately do adopt should be structured in
such a way to maximize net revenue, precisely for this reason
that you identify.
Mr. Walden. For those who may not be able to see the slide
up there, what it shows is the spectrum that is available for
auction in blue. That doesn't mean it is all going to be
auctioned or that there are going to be that many stations that
come forward and give up their licenses. But that, in theory,
is what could be available. And then in red is channel 37. And
then yellow is the remainder, and green is guard band.
Now, obviously, you are going to need some guard bands.
And, obviously, some of that won't be auctionable and all of
that. But I want to put in perspective that even at a
conservative dollar per megahertz pop, the FCC's plan could
forgo over $7 billion gross. And that would be enough, if it
were net, to fully fund FirstNet.
These are big numbers we are talking about. These are
programs that the Congress has already said need to be funded
through this auction. And we have also allocated--some of the
other net revenues from the proposed auction have already been
spent to extend the middle-class tax cut and to extend
unemployment benefits. Paying for all of that was part of the
big compromise that got this into law.
My concern is that if we take spectrum off the table from
auction right off the top, there won't be the revenues,
potentially, to pay for the things we have already committed
to, and it ends up going out there in the unlicensed world.
Commissioner McDowell?
Mr. McDowell. Real quick, Mr. Chairman. Actually, looking
at this chart, just for right now, the assumptions actually
could be very generous. So you have here about 55 megahertz,
the assumption that the broadcasters will actually be able to
yield. I am a little skeptical that they will actually be able
to yield that much for that auction. And I hope I am wrong. I
will be the happiest person on Earth if I am wrong about this.
But I am skeptical that it will be that much.
So this is the variable portion, the how much can be
auctioned. The fixed portion is already here. As you said,
there is a minimum amount of 12 megahertz for guard bands, and
then you have the 6 for the channel 37, and then the remainder.
So this is the fixed portion.
And so I wanted just to point that out, that that is a
guaranteed amount that wouldn't be auctioned. What will be
auctioned is not guaranteed. We don't know; there are a lot of
assumptions there.
Then, lastly, at a dollar per megahertz pop, in the 700
megahertz auction of 2008 the A and the B blocks, which were
the least encumbered, went for about $2.70 per megahertz pop,
in some cases.
Mr. Walden. So this could be worth two to three times what
we are showing.
Mr. McDowell. Exactly.
Mr. Walden. So it could be a figure of $14 billion or----
Mr. McDowell. Fourteen, 16, something like that.
Mr. Walden. Now we are talking a lot of money.
Mr. McDowell. Even in Washington.
Mr. Walden. Even in Washington. And I think that is the
issue here. And I know we are having a debate about how much
should be available for unlicensed. I know there is other
unlicensed at the 5-gig level and others that are being put
forward. And I know we have some disagreement within our
subcommittee about what the statute says or doesn't say. And we
will get to that a little later, I think.
I will recognize the gentlewoman from California, Ms.
Eshoo, for 5 minutes.
Ms. Eshoo. Thank you, Mr. Chairman. I hope that we will
have another round because there really are a lot of questions
that need to be asked.
First of all, I am troubled by some of the claims that the
Public Safety and Spectrum Act is all about revenue-raising.
The last time I checked, this is the Energy and Commerce
Committee, not the Budget Committee. Having said that, I think
that we did a good job to bring about a balance, to bring about
dollars that would fund the public safety network, that we
would produce dollars for deficit reduction.
But, again, this is the Energy and Commerce Committee. In
Section 309 of the Communications Act, it explicitly prohibits
the FCC from basing its auction rules predominantly on the
revenue that would be generated. And during the bipartisan
negotiations on this bill, a compromise was reached to allow
unlicensed services to operate in the guard bands that would be
created as a part of the band plan which would not be
auctioned. The CBO looked at the proposal that became law and
concluded that the guard band concept does not decrease the
revenue.
So I don't know where all of this is coming from. I think
it is kind of interesting. But it seems to me that, again, the
hearing today is ``Keeping the New Broadband Spectrum Law on
Track.''
Now, I want to start with the chairman.
Mr. Chairman, the Commission, I know, is currently--this is
a little off to something else, but I am still very curious
about it because I think it is so important. The Commission is
currently undergoing a review of its media ownership rules. And
while I recognize that no agreement has been reached within the
agency, I would like to know what is being done to respond to
the Third Circuit's instructions to address ownership and the
viewpoint of diversity.
If you could just be brief, because I have a whole bunch of
questions and I have got----
Mr. Genachowski. Just briefly, diversity remains a core
obligation of the Commission, something that we care about
deeply and have been focused on.
We have overhauled our data collection on broadcast
ownership so that we finally are getting accurate information
about minority ownership. We have a major study under way right
now looking at the issues that are required in this area in
order to support legal action. And we have requested funding in
2013 for additional studies to do the work that we need to do
over time.
As you know, the quadrennial reviews that we have to
undergo--the one we are looking at now is a 2010 review that
started in 2009--they continue on an ongoing basis. It is time
to get the one before us done. But, of course, we will then
move on to the next one and continue to look at diversity as a
central objective of the Commission.
Ms. Eshoo. Well, I think on this whole subject matter of
media and consolidation that there should be an underlying
principle that in a democracy that there be as many voices to
the many as possible. I mean, this goes to the heart of
democracy. This is not just something to fiddle around with,
and so I just wanted to put that out there.
Now, to the Chairman again, some have argued that the FCC's
proposal on unlicensed represents an unlawful give away. How do
you respond to that?
Mr. Genachowski. Well, one, I think as you said, the
statute clearly gives the Commission the authority to do
unlicensed in guard bands, and I would add one point to the one
you made before, which is that any economic value analysis of
spectrum methods I would think would have to look at the
hundreds of billions of economic value and related tax revenue
that have come from innovations on unlicensed platforms. So
when the FCC authorized unlicensed use for the first time, no
one predicted Wi-Fi.
Ms. Eshoo. No.
Mr. Genachowski. It was a new platform for innovation that
together with licensed spectrum has now made us the global
leader. When I talk to my counterparts overseas, they are very
focused on the opportunities of mobile, they are looking at
next generation unlicensed, and I think if we don't lean into
this we run the risk of falling behind other countries, seeing
innovations happen overseas and not here. Of course, we will
operate within the confines of the statute, which I know that
both sides of the aisle very carefully constructed.
Ms. Eshoo. Thank you. To Commissioner Clyburn, on the issue
of bidder eligibility, do you believe that consumers would be
harmed if the incentive auctions freed up the spectrum that was
only acquired by the two largest wireless companies?
Ms. Clyburn. I believe that the FCC should keep in mind as
we craft these rules what one of the core missions of this
agency is, which is competition, and I believe that we should,
again, craft these rules to ensure that the framework and the
environment would promote such, promote competition. It is good
for innovation, it is good for the investment, and so it has
got to be, we have got to look at it in a broad framework but
never forgetting our mandate to provide, to stimulate
competition.
Ms. Eshoo. Thank you. And to Commissioner Rosenworcel, it
is wonderful to see you and hear your testimony. We have heard
the suggestion today that auction rules that promote
competition could result in lower auction revenues, but isn't
it also true that allowing one or two firms to effectively shut
out other competing bids could result in less revenue?
Ms. Rosenworcel. I think that that is possibly true, but I
think fundamentally we need to hold these auctions in a way
where there are opportunities for everyone. That will include
incumbents and new entrants, and ultimately we need to make
sure that the revenues we raise are sufficient to support the
first responder network authority.
Ms. Eshoo. So two bookends, money and real competition.
Terrific.
I yield back.
Mr. Walden. The gentlelady's time has expired. The chairman
will recognize the vice chairman of the subcommittee, Mr. Terry
of Nebraska, for 5 minutes.
Mr. Terry. Thank you. We will go with the Chairman on this
one. I think we all believe the auction should happen as soon
as possible but of course getting the rules correct, but
broadcasters have expressed concern about the folks who will
lose a signal if broadcast contours change from repacking.
What is the Commission doing to address this concern,
number one? Is there a further NPR, notice of proposed
rulemaking, that will delay the process too much and is there
an alternative approach to addressing this issue?
Mr. Genachowski. Well, in the statute Congress addressed
this issue and laid out guidelines that the Commission has to
follow in repacking. Those issues were teed up in the notice of
proposed rulemaking. We expect comments on that and be in a
position to make a decision. Meanwhile, we are engaging in
direct dialogue through workshops and webinars and other ways
to engage directly with broadcasters, both broadcasters who
like the one Chairman Walden mentioned who are looking at
participating and also the ones who aren't and are therefore
focused on repacking.
Mr. Terry. Appreciate that. Now, following up on the
gentlelady from California's theme, I am going to move to
Commissioners McDowell and Clyburn on this one.
Many commenters have argued that there should be no
spectrum cap. Do you think the current spectrum screen with the
safe harbor of one-third of the total spectrum in the local
market is sufficient to protect consumers and create more
competition? McDowell first.
Mr. McDowell. I do, and I expressed my concern when we
launched our spectrum aggregation NPRM about reverting back to
the days of the hard spectrum cap. It might be under a
different name or have a different way of approaching it, but
spectrum is a lot like real estate, and so you have to look at
each transaction on its own unique case-by-case
characteristics, and what was considered, what were considered
apples and oranges in terms of different frequencies a few
years ago today is no longer the case. LTE is being built out
above two gigahertz as well as below one gigahertz, for
instance, and so the same services are being built in
frequencies that just a few years ago were thought to be very
different in their propagation characteristics, as it is called
in the business. So I think we need to be very careful about
where that proceeding could go.
Ms. Clyburn. And one of the things that I keep in mind, and
I go back to the competitive landscape which is optimal for us,
and we need to keep that in front of our mind as we craft
policies. Also in terms of the spectral aggregation currently,
we have not looked at that proceeding. There has been no reform
or no adjustments since 2003. So I think the time is right for
us to look at the policies, current policies. There have been a
lot of changes in the environment and also, again, keep in
front of mind what our goal is to have a competitive landscape
and the benefits of that, and so all of the--I have an open
mind as it relates to this, and I think that is healthy.
Mr. Terry. So you think that the screen may not be
conducive as much as you would like for competition, and so we
need to look at that again?
Ms. Clyburn. A lot has changed since 2003 since that last
review.
Mr. Terry. And then our new Commissioners, Rosenworcel,
what would you think, and then Mr. Pai.
Ms. Rosenworcel. Arguably our existing spectrum screen has
a certain lack of clarity to it, so I think it is a good thing
that the agency has opened up a proceeding to talk about that.
At the same time, technology evolves, and we are finding that
spectrum in the two gigahertz range, for instance, is now
viable for mobile broadband use, so I do have some concern that
if we put rigid requirements in place, they may not respect the
way that technology evolves.
Mr. Pai. Congressman, I agree with my colleagues. In
particular I agree with Congressman Clyburn that the time is
right to revisit this framework in light of some of the
deficiencies identified when we kicked off this notice of
proposed rulemaking, notably, number one, our current approach
understates competition in the market because it takes out of
the spectrum equation certain spectrum that, as my colleagues
McDowell and Rosenworcel pointed out, are in fact used for 4G
service, like the broadband radio service, the educational
broadband service. Number two, our current approach also
creates needless uncertainty because parties, since this is a
case-by-case basis, if they don't know ex ante how the
Commission is going to approach their particular spectrum
holdings. So for those two reasons I think the time is right to
revisit the screen, mindful of the fact that we need to
preserve what is right, and in my current view the current
screen does a good job of that.
Mr. Walden. The gentleman's time has expired. The Chair
recognizes the gentleman from California, Mr. Waxman, for 5
minutes.
Mr. Waxman. Thank you, Mr. Chairman. We had our differences
on this committee and with the Senate, and we finally reached a
compromise, and we settled by agreeing to allow the FCC to
utilize guard bands that might allow both unlicensed and
licensed uses to flourish. We understood this to be a good
compromise that showed unlicensed and licensed uses did not
have to be mutually exclusive. Unfortunately, some are now
suggesting that the FCC's proposal to create the guard bands
contemplated in the legislation is an unlawful giveaway.
Chairman Genachowski, do you think we have to decide
between the licensed or unlicensed model? Is there an
opportunity to create a band plan that includes both?
Mr. Genachowski. No, I don't think we have to make that
decision. And, yes, there is the opportunity to create a
balanced band plan that uses both licensed and unlicensed and
maximizes the economic value created for the country.
Mr. Waxman. Some have expressed concern about guard bands
that are too big or not technically reasonable. How will the
FCC determine the appropriate size for any guard bands?
Mr. Genachowski. Well, on a record, based on the
engineering and input that we get, we made a proposal that is
based on our expert staff, our engineers and the work that they
did, which we believe in the first instance is technically
reasonable, and we will consider all the comments that come in.
Mr. Waxman. Why do you think that start-ups, innovators,
technology companies, many of which populate Miss Eshoo's
district and my district, care so much about unlicensed
spectrum? I have heard from the cable industry that it is
critical spectrum located in the television bands be made
available for unlicensed use.
Mr. Genachowski. Because it is an extraordinary platform
for innovation. It has been proven to be that. When it was
first done 20, 30 years ago it was a theory. Now we know, and
we have a choice now, do we expand on this good idea or do we
let other countries do it before us? The innovation will go to
whichever country builds the most robust licensed and
unlicensed spectrum infrastructure.
Mr. Waxman. And how do you explain the cable industry
support that what you are trying to do with regard to making
sure there is an unlicensed spectrum available in the broadcast
band?
Mr. Genachowski. Well, they, too, have been innovating in
the area, taking, looking at unlicensed and using it to provide
alternative broadband access to consumers. Innovation can come
from tiny start-ups in Silicon Valley or larger companies. We
want to maximize all innovation.
Mr. Waxman. You gave a speech several months ago at Wharton
in which you suggested there is a war on Wi-Fi. What did you
mean by that?
Mr. Genachowski. Well, I think I asked why anyone would
want to launch a war on Wi-Fi, and it is really the reasons
that we are talking about. This has been such a productive,
beneficial policy innovation for the country. My view is that
we should lean into it consistent with the statute and
anticipate that American innovators will take advantage of new
platforms for innovation and invent things that we can't even
imagine now.
Mr. Waxman. Thank you for that clarification. This is an
important provision. It was very important to people on this
committee, and the compromise I thought was a good one to allow
this kind of innovation to be able to go forward.
Commissioner Rosenworcel, how will the adoption of Next
Generation 911 benefit American citizens and first responders,
and do you believe this is an important component of the FCC's
public safety mission?
Ms. Rosenworcel. Yes. I think the first----
Mr. Waxman. Your mic.
Ms. Rosenworcel. Yes. I think the first duty of the public
servant is the public safety, but that is not just my opinion,
it is the law, it is right there in the first sentence of the
Communications Act. Next Generation 911 is going to improve all
of our safety. In the future we will have a world where every
call into our 911 centers may be accompanied by videos,
photographs, and your medical records. It can make us all
safer.
But the challenge is getting from here to there, and that
is going to take three things. First, it is going to take
technical standards. The FCC is at work on that with our public
safety colleagues. Second, it is going to take a lot of
coordination. The agency will need to work with the more than
6,000 public safety answering points around this country as
well as carriers to produce that kind of outcome. And, finally,
it is going to take funding, and to that end I would note that
in the Middle Class Tax Relief and Job Creation Act as a result
of the work of this committee, there is up to $115 million in
grant funds available for Next Generation 911. That is a
terrific resource, and it is my hope that the public safety
answering points from around this country will benefit from
that.
Mr. Waxman. Thank you. And Commissioner Clyburn, if I could
squeeze in a question to you, you have been an advocate for
wireless consumers and the importance of competition. As more
Americans, especially economically vulnerable populations, rely
exclusively on wireless service, do you believe consumers will
benefit if the FCC exercises authority to promote wireless
competition in the upcoming incentive auctions?
Ms. Clyburn. Absolutely. Competition, when the markets are
healthy and robust, there are more opportunities, you know more
options, and that is good, especially for lower income
consumers. There is not a one-size-fits-all, I don't take a
one-size-fits-all from a regulatory standpoint, and I believe
that I should help promote that in the market, in the
competitive market standing in that framework.
Mr. Waxman. Thank you very much. Thank you, Mr. Chairman.
Mr. Walden. The gentleman's time has expired. The Chair
will recognize the gentleman from Illinois, Mr. Shimkus, for 5
minutes.
Mr. Shimkus. Thank you, Mr. Chairman, and welcome to the
Commissioners. First let me mention how pleased I am that we
are working collaboratively with the industry on the text 911
issue. You know, that is what kids use today. They move way
quicker than we do, and if the reports that I am reading are
true, then I like what is going on, and that is what we would
hope, that we would be working with regulators and the industry
to resolve an identifiable need, so kudos, congratulations, and
I would say keep it up.
Obviously the goal of this was to do two things. One was to
have spectrum available and also try to help fund this, and
that is kind of where this debate is going, and being part of
kind of what Anna said, you know, it is keeping the new
broadband spectrum law on track and kind of like an oversight
hearing, and a lot of us are asking questions that pertain to
that.
I was also--Chairman, I was appreciating this because when
we talk about the guard bands it just raises the historical
aspect of LightSquared, and for me I had great hopes that
LightSquared would provide Wi-Fi to rural small town America,
but--and I like GPS, we all use it, but I think they
cybersquatted on spectrum that wasn't there. There was no band,
there was nothing there to protect the spillover, and we lost
this great opportunity for rural America to really have high
speed Internet access, and so I think that is part of this
debate of how much is too much, where is the band, so we don't
have encroachment but we also get full compensation. Is that
kind of the debate that we are having you think? Chairman?
Mr. Genachowski. Well, I think the discussion about how to
get this exciting new opportunity right is the one that we are
having. The incentive auction law was a landmark piece of
legislation. It involved a lot of people, and the obligation is
now on us consistent with the statute to get the balance right
and to do something that drives U.S. leadership in mobile, that
raises very substantial revenues for the Treasury, and that
drives private investment and innovation, including through
things like unlicensed which the statute anticipated in guard
band.
Mr. Shimkus. Well, and part of the legislation was to make
sure we had the funds available also to deploy, and because
part of that debate was, you know, some people are saying,
well, if there is not enough money, we will just go back to
Congress and they will give us more, and we are just not in
that world today. We are expecting it to come through this
process.
Mr. Genachowski. There is one piece here that I look
forward to working with the committee on, which was the channel
37 piece on this chart. I think we share your interest in
freeing that up for auction, and as we looked at it in our
notice process, we saw a much higher amount of actual use than
we would like, and the congressional authorization for the
amount to clear that spectrum at 300 million we believe at this
stage won't be enough, and this is an area where I do think we
can work together on a bipartisan basis, perhaps clear channel
37, and I hope that is an area that we can follow up together
because it is a way to get more licensed spectrum up for
auction and also move forward on unlicensed. Look forward to
working with you on that.
Mr. Shimkus. Well, that would be an interesting process
because of the full deployment in that channel and what it
does. It is almost like moving military spectrum.
Mr. Genachowski. That is why we haven't proposed auctioning
it. Other things on this chart really aren't reversible
decisions if that is true.
Mr. Shimkus. Right. So let me end with a question to
Commissioner Rosenworcel and Commissioner Pai. There has always
been a large debate, we have never really moved on it, on just
restructuring, reorganizing it, you are relatively new. Having
observed the process in the short amount of time you have been
there, what are your thoughts about how we can really move the
Commission from the copper wire era to today and what would
restructuring look like?
I have a minute left, so if you could kind of split that
time, that would be helpful.
Ms. Rosenworcel. Well, I think in part you are referring to
the task force that the chairman just put in place, which I
think is a very good idea.
Mr. Shimkus. Your ideas.
Ms. Rosenworcel. All right. So I will say that years ago we
used to all exist with a wire line, copper line into our
houses. The networks we use today are far more diverse. One-
third of our households only have wireless phones. We have
probably about 30- to 40,000 VoIP lines out there.
Mr. Shimkus. So how do we reform the Commission? I mean, I
am trying--we know that. I mean, so how do we reform the
Commission?
Ms. Rosenworcel. Well, I think part of reforming the
Commission is understanding the communications networks that
are actually out there today and making sure that the
Commission's structure reflects those networks, and so we do
have concerns about how we look at this as a matter of silos
today, where we treat cable differently than we treat
traditional wire line architecture, different than we might
treat wireless or broadband, and harmonizing across those
platforms to reflect the way we use networks today would be a
good idea.
Mr. Shimkus. Chairman, 30 seconds for Mr. Pai without
objection.
Mr. Pai. Just to add to my colleague's answer, I think
there are two basic questions as we undergo the IP transition
that we need to be mindful of. Number one, what role, if any,
should the economic regulation of the copper era have in a
world of IP? In my view it should have relatively little to the
extent that those types of regulations no longer make sense in
a competitive all-IP world where we have convergence across
different platforms. Then there is the question of are there
any particular social goals that we should try to achieve in
the all-IP world that we think are important? For example, when
somebody calls 911, should it matter whether they are calling
on a land line telephone, on a wireless phone or on a VoIP
application? So those two basic questions, the economic and the
social goals of regulation in the IP world, are going to be
central challenges for the Commission, and that is part of the
reason why I am glad that the Chairman announced the task force
which I first called for in July because I think this really is
the biggest challenge that we face at the FCC, how do we
approach the all-IP world.
Mr. Walden. The gentleman's time has expired. We now
recognize the chairman emeritus of the committee, the honorable
gentleman from Michigan, Mr. Dingell, for 5 minutes.
Mr. Dingell. Thank you, Mr. Chairman. My commendations for
this hearing. We need to do what we are doing, and I commend
you for that. These questions will be yes or no. First to
Chairman Genachowski.
Mr. Chairman, section 6403(b) of the Spectrum Act requires
the Commission to coordinate with Canada and Mexico when
authorizing the reassignment and reallocation of broadcast
frequencies. Is that correct?
Mr. Genachowski. Yes.
Mr. Dingell. Mr. Chairman, I would note that similar such
coordination took place for the DTV transition and that it took
a very long time. Is that correct?
Mr. Genachowski. Yes.
Mr. Dingell. Mr. Chairman, will the Commission commit to
negotiating new arrangements with the State Department, Canada,
and Mexico as mentioned in paragraph 34 of the Commission's
notice of proposed rulemaking before repacking broadcast
frequencies? Yes or no?
Mr. Genachowski. I am not sure of that provision, but we
are committed to working with Canada and Mexico.
Mr. Dingell. Is that a yes or no?
Mr. Genachowski. I would have to look at that provision to
give an accurate answer.
Mr. Dingell. The law requires you to do it.
Mr. Genachowski. We will comply with the law.
Mr. Dingell. I hope so. Mr. Chairman, section 6403(b)(2) of
the Spectrum Act requires the Commission to, quote, make all
reasonable efforts to preserve as of the date of the enactment
of this act the coverage area and population served of each
broadcast licensee as determined using the methodology
described in OET Bulletin 69 of the Office of Engineering and
Technology. Does the Commission intend to define explicitly
what such reasonable efforts will constitute? Yes or no.
Mr. Genachowski. Yes, as part of our decision.
Mr. Dingell. Mr. Chairman, does the Commission expect to
have defined such reasonable efforts? Yes or no.
Mr. Genachowski. Yes, as part of our decision.
Mr. Dingell. Mr. Chairman, paragraph 49 of the NPRM states,
quote, the allotment optimization model may have limited or no
applicability to this proceeding. The Commission states in
paragraph 50 that, quote, it expects interested parties will
have an opportunity for meaningful comment on all specific
repacking methodologies it is considering before it makes a
decision, close quote.
Does the Commission publicly commit to sharing with the
public the repacking methodology it adopts as well as the
variables and other inputs it may use to predict repacking
results? Yes or no.
Mr. Genachowski. Yes.
Mr. Dingell. That is a big question. I had a hard time
getting it out. I am sure you added your share of difficulty to
it, Mr. Chairman.
Mr. Chairman, I note the Commission has had a proceeding
pending on its spectrum screen since September of this year.
Does the Commission intend to complete this proceeding before
releasing rules for the voluntary incentive auction authorized
by the Spectrum Act? Yes or no.
Mr. Genachowski. Yes, that is our plan.
Mr. Dingell. Mr. Chairman, on a related note, does the
Commission intend to use its authority under section 309(j) of
the Communications Act to ensure broad participation in the
voluntary incentive auction authorized by the Spectrum Act? Yes
or no.
Mr. Genachowski. Yes.
Mr. Dingell. Mr. Chairman, the Commission released a
technical paper by the staff in 2010 which concludes that an
additional 275 megahertz of licensed spectrum will need to be
cleared in order to meet rising consumer demand for mobile
broadband. Does the Commission believe that it can achieve that
goal? Yes or no.
Mr. Genachowski. Yes.
Mr. Dingell. Mr. Chairman, other than incentive auctions,
how does the committee intend to meet that goal?
Mr. Genachowski. Well, by freeing up spectrum through
removing regulatory barriers, like we did just yesterday and
also a few weeks ago with WCS, by recovering more spectrum from
the government through spectrum sharing approaches, through
clearing and reallocating government spectrum, and through
unlicensed spectrum.
Mr. Dingell. Mr. Chairman, thank you.
We in the border States are very much concerned about what
could or will happen to us in this process, losing service,
seeing stations go dark, seeing additional confusion and
conflict with our neighbors to the north and south. I hope you
will keep that in mind as you go forward.
Mr. Chairman, I ask your kindness in just one thing, and
that is to commend Commissioner Clyburn for her work on prison
calling petitions before the Commission. I appreciate the
progress the Commission has made on these petitions and
encourage the Commission to resolve these matters as
expeditiously as possible.
Mr. Chairman, members of the Commission, thank you for your
courtesy to the committee today.
Mr. Terry [presiding]. Thank you, Mr. Dingell. Mr. Barton,
you are recognized.
Mr. Barton. Thank you, Mr. Chairman. I am tempted to yield
back to Mr. Dingell just to let him continue asking his yes or
no questions. Sooner or later he will get to one that they
can't answer.
But Chairman Dingell did ask a question that I am going to
put a little bit different slant on. He referred to that part
of the H.R. 3630, the new law, that the Commission in making
these reassignment or reallocations shall make every effort,
every reasonable effort to preserve the existing population and
coverage area for each broadcast licensee.
Over on the next page, on page 72, subparagraph 5, with
regard to low power television usage, it says nothing in the
subsection shall be construed to alter the spectrum usage
rights of low power television stations, yet in the FCC
PowerPoint presentation in response to the question can low
power television participate in a reverse auction, the answer
to that is no. I understand that part of it. It says low power
television services have only secondary interference protection
and must make way for full power and class A TV stations
assigned to new channels. I understand that. But then they go
on to say that they have to promote--they may be required to go
to a different technology, MVPD systems, and/or the Internet.
I can't speak for the entire committee obviously or even
the subcommittee, but I can speak for myself, who has been a
member of the subcommittee and who supported the enactment. I
didn't envision that we would have the end result that a low
power television station would simply end up off the air, and
so I would like to ask the Chairman and the other Commissioners
if, in fact, you are willing to commit that low power
television stations that have acted in good faith, they
understand that they may have to move or be repacked, but I
personally believe it is not fair at all that the end result is
that a low power television station that has been a good
licensee ends up totally off the air.
Mr. Genachowski. Well, these are questions that we asked in
our notice. Congress did not change the status of the low power
stations, and so they remain secondary services. Many, as you
point out, provide valuable programming in their communities.
Our job is a hard one, which is how do we free--maximize the
spectrum that we free up, generate revenue for the Treasury and
for FirstNet and also address the issues you are raising, which
are the number of LPTV stations around the country that are
providing valuable programming. It is a difficult question
which we have not answered yet. We look forward to working with
you and getting very robust input from stakeholders as part of
our process.
Mr. Barton. But can we agree, and again the low power
television stations understand that they are secondary, they
understand under current law that they provide service only if
it doesn't interfere and that as the full power stations and
the class A stations operate they have to work around them.
They understand that they don't have the right to participate
in this auction. The one thing that they are not willing to
agree to is that they can be just kicked out of business,
kicked off the air, and that is that.
Can we agree as a committee and as the Commission that we
are going to take steps to make sure that if a low power
station has operated in good faith and complied with its
existing license that we will make an effort to keep them on
the air? Not necessarily on the same channel and the same, but
at least in the same market.
Mr. Genachowski. We will work with the LPTV community. We
have an obligation, as has come up a number of times, to act
within the statute. Certainly keeping LPTV stations on the air
where we can is something that makes sense, but I think at this
point we haven't made a proposal on this. We have an obligation
to listen to the record, act consistent with the statute, and
we will continue to work with you and the other members of the
committee and the LPTV community to ultimately reach the goals
of the statute, some of which, as you point out, are in tension
with each other.
Mr. Barton. Can I ask the newest Commissioner, Mr. Pai, do
you believe that the current reverse auction, forward auction
simultaneous system that has been outlined is really workable?
Mr. Pai. It is certainly a novel construction which is
necessary since the entire incentive auction process presents
questions; a first impression, as Congresswoman Eshoo pointed
out in her opening statement. I think the simultaneous auction
has the advantage, as the NPRM points out, of certainty in real
time as to what spectrum will be available, but there are
obviously some complications. Participants in the reverse
auction aren't necessarily well versed in auction processes,
and they might not know, you know, exactly what the nature of
the auction is going to hold for them. On the forward side, the
bidders might not know what spectrum they are bidding on which
inhibits, obviously, their ability to form a coherent strategy.
So there are going to be some challenges there, and I am
hopeful that in the NPRM process that commenters will give us a
wide range of perspectives that will allow us to understand
whether the simultaneous approach is the best one.
Mr. Barton. Well, I would encourage the Commission and the
staff and the members of this committee to keep an open mind on
this because we have conflicting goals. We want to maximize
revenue for deficit reduction, we want to maximize reallocation
of spectrum for new uses, and we want to preserve the rights of
the existing licensees that don't wish to participate in the
auction. When you put that all together, it is very difficult
to come up with a system that actually makes sense, and I would
hope you all keep an open mind on how to do that.
With that, Mr. Chairman, I would yield back.
Mr. Terry. Thank you, Mr. Barton. The Chair recognizes the
gentleman from Massachusetts, Mr. Markey, for his 5 minutes.
Mr. Markey. Thank you, Mr. Chairman, very much.
Mr. Chairman, could you help us to frame this tension that
exists under existing law? That is, that what we are trying to
do is to make new spectrum available for the wireless
revolution while at the same time ensuring that broadcasters
are protected, that they only have to act voluntarily, but that
there is proper protection against interference. So what is the
process that you have established that telescopes the time
frame to ensure that that issue is resolved and done so in a
way that meets all the technical requirements but forces the
parties who sometimes have a stake in just, you know, waiting
until eternity to finally just get to the point where they
accept the reality of the technology?
Mr. Genachowski. Two points briefly. One, on the time
frame, this is why we moved so quickly to start the NPRM. We
have announced that we intend to hold an auction in 2014, and
we will drive this step by step to a conclusion.
The second point, on the framing, what many people don't
realize is that in many major markets, most major markets in
the U.S. today there are many more over-the-air TV licensees
than people realize. In New York, where I am from, the number
is 28. And there were, there was a large allocation of these
licenses before cable and satellite, and what we are doing now,
and this is I think the innovation of incentive auctions, is to
say, how can we use market mechanisms to reallocate some of
that spectrum to mobile broadband in a win-win way? And that is
what we are doing. That is why there will be broadcasters who
remain in markets like New York and others that are healthy,
indeed stronger, but there is also tremendous opportunity to
free up spectrum to generate revenue and to promote innovation.
Mr. Markey. When we moved over the 200 megahertz out of
this committee in 1993, we had a two-star general sit here and
say you just can't do it, it is just absolutely technologically
impossible to do. So, again, do you have a process that is
totally fair to the broadcasters and to the wireless industry
that is in place? Have you had them in your office
simultaneously with their engineers to talk about the issues so
that you can hear and your experts can hear the differences
which they have?
Mr. Genachowski. That is exactly what we are doing. Through
the notice and comment process, also through the workshops,
also through direct engagement with our engineers, that is what
I have said to both industries, which is get your engineers
working because we will resolve these largely as engineering
issues consistent with the economic and innovation goals of the
statute.
Mr. Markey. Do you ever have a meeting yourself with the
engineers in the room, with the other, you know, from all
industries just sitting there with your engineers hearing the
disagreements?
Mr. Genachowski. I very much enjoy meeting with engineers
and business executives, and I won't express an opinion on what
is fun to meet with.
Mr. Markey. OK. No, I appreciate that. Let me just say last
year The Economist magazine predicted, this is hyperbolically I
think, The Economist predicted that the expected economic
benefits of unlicensed spectrum alongside finding a crack in
the code for curing cancer would be amongst the most
significant developments expected in 2012. Do you agree with
that?
Mr. Genachowski. Yes, I do. I don't know about the 2012
piece, so I would have to think about that, but as I said
before, the Wi-Fi was not an expected innovation from
unlicensed policy when it was first done, and I think there is
every reason now to expect that we will get unexpected
innovations in the future from a new platform for innovation.
Mr. Markey. And we had a hearing in this committee just a
couple of weeks ago where one of the FCC's top engineers
testified that advances in technology are not likely to obviate
the need for guard bands anytime soon.
Do you believe that the FCC should put licensed spectrum at
risk for interference by reducing the size of the guard bands?
Mr. Genachowski. Until we can change the law of physics and
eliminate the possibility of interference, we are going to have
to have guard bands.
Mr. Markey. And so, again, is there a process that gives
people deadlines in terms of resolving these technical issues?
Because we are congressional experts, which is an oxymoron
compared to real experts, and when you put engineers in a room,
we have to just remain silent and listen. So that is, to us, it
seems to me, the real question, how timely are the deadlines
given here to resolve these issues because I think it is almost
like a homework assignment, you know. You have got a deadline,
you have got to get that answer, and then we will find a tie
breaker to make a judgment as to who is right and who is wrong,
and I don't know what exactly the timelines are here, but it
just seems to me that the economic benefits are so
overwhelming, while the risks actually to the broadcasting
industry could be great, but to resolve it in a way that
benefits the American people and these industries.
Mr. Genachowski. So that is a fair question. If I could
answer it briefly. Comments in response to our notice are due,
I believe, in January, with replies due shortly after that. At
my level, the Commissioner level, and the staff level, we have
been encouraging all the industries to give us their best
engineering and to do the hard work to put us in a position.
From there, as we have in past proceedings, we will move
forward in exactly the direction that you are suggesting, which
is getting engineers together from the different industries and
sitting there until we get answers and we will have a
timetable, and we will drive it to conclusion. It won't be the
first time we have done that.
Mr. Markey. Yes, because just as an engineering final exam,
it is win-win for broadcasters and for wireless. That is just
one of the exams scheduled, to make sure that we just resolve
it in a timely fashion.
Thank you, Mr. Chairman.
Mr. Terry. Thank you, Mr. Markey. At this time the Chair
will recognize the gentlelady from Tennessee, Ms. Blackburn.
Mrs. Blackburn. Thank you, Mr. Chairman. Commissioner
McDowell referenced the Title II proceedings in light of the
WCIT conference in Dubai. So Chairman Genachowski, why is that
title, Title II still open?
Mr. Genachowski. Well, it is common to have notices of
inquiry stay open where there is public interest and
commenting, as there have been here. We don't see any
uncertainty being created by that proceeding. The sector is
actually quite strong, investment and innovation are going up.
To the extent there is any uncertainty, it is coming from the
Verizon litigation. As I have done before, I would call on
Verizon to withdraw its litigation. That would increase
certainty and allow us all to move forward.
Mrs. Blackburn. Well, have you had any discussions with the
other Commissioners? Chairman, Commissioner McDowell, do you
want to weigh in on that?
Mr. McDowell. Real quick, I would respectfully disagree
with what the Chairman just said. Actually when I speak with
Wall Street analysts, that is one of the first questions I get
is what is the future of that Title II docket. At the time that
it was first floated in the summer of 2010 there was an
incredible amount of anxiety expressed from the investment
community over that docket. It frequently comes up in
conversations that I have with our international counterparts
and diplomats internationally. So I think it does create
uncertainty, and the litigation against the order regarding the
regulation of Internet network management actually I don't
think is creating the uncertainty. The uncertainty was started
by the FCC in this space. There was no evidence of any market
failure for the FCC to address at all to begin with.
Mrs. Blackburn. I had an entrepreneur tell me this week
that they are distressed that so many Federal agencies are
trying to solve problems that don't exist, and I think there is
a problem with that.
Mr. Chairman, have you had discussions about a
reclassification of broadband services via Title II if the FCC
loses the DC Circuit and loses the case?
Mr. Genachowski. No. We are focused on a framework that is
in place, that is working, that is driving private investment
and innovation across the ecosystem. I think if we can preserve
what we have right now it will continue to be a win for the
country.
Mrs. Blackburn. Well, do you feel like you have the
authority to reclassify broadband services under Title II and
subject them to Title II regulations?
Mr. Genachowski. Our general counsel at the FCC has said
consistently that we do have that authority.
Mrs. Blackburn. OK. When do you plan to close that title?
Mr. Genachowski. We don't have plans to close it. It has
been a forum for public input and participation. And as I said,
we are seeing a sector that is very strong and growing and
leading the world.
Mrs. Blackburn. So you plan to just leave it open as long
as you want to?
Mr. Genachowski. It is a forum for the public to comment,
and they have done so, and I expect they will continue to do
so.
Mrs. Blackburn. Yes, sir, I think you are going to hear a
lot of public comments. I think people are going to be weighing
in readily with you on these issues, and I think the
uncertainty that is generated around some of the activity does
not serve our innovative community well, and I hope that we can
provide some certainty.
The task force and, Commissioner Pai, I appreciated that
you mentioned that, and I know that you are looking forward to
working on that task force. So, Mr. Chairman, is the task force
going to be focused on modernizing an obsolete regulatory
framework so that we can finally rationalize this new
marketplace of converged services and hasten the IP transition
to next generation networks or do you intend to use it to put
legacy regulations on new technology? So where are you planning
to head with that?
Mr. Genachowski. Our goal really since I arrived in 2009
was to focus on unleashing the opportunities of broadband and
addressing all of the policy issues associated with that. We
did that through the Universal Service Fund reform and creation
of the Connect America Fund, the Disabilities Act
implementation, et cetera. We will continue as we have been
doing to drive the rollout of digital networks, digital IP
networks. It is very exciting for the country, and we need to
see continued private investment in that. We also need to make
sure that in the world, in this transition consumers are
protected.
Mrs. Blackburn. Let me interrupt there just a second. Do
you think it is necessary for you to drive it or do you think
that the free market drives it?
Mr. Genachowski. I think the free market is driving
tremendous investment. I think we create a climate for
investment, and we have to make sure that any rules we have in
place that shouldn't be there get taken away, and things we
need to protect----
Mrs. Blackburn. Can I submit a list?
Mr. Genachowski [continuing]. Consumers, public safety, and
competition, are in place.
Mrs. Blackburn. Commissioner Pai, 5 seconds.
Mr. Pai. I will try to be very brief. I would just support
the Chairman in his formation of the task force, look forward
to working with him, the Commission staff on making sure that
we have a regulatory framework that incentivizes, not
penalizes, investment in next generation networks.
Mrs. Blackburn. Well done. I will yield back. Mr. Chairman,
I have one question that I am going to submit for the record.
Mr. Terry. Thank you. The Chair now recognizes the
gentleman from Pittsburgh, Mr. Doyle.
Mr. Doyle. Thank you, Mr. Chairman, and I want to welcome
the Commissioners back to our committee room and tell you that
it was good to see all of you last week in your committee room.
Mr. Chairman, just very briefly, because this is a little
off topic, but I have to ask, can you give us any update on
special access?
Mr. Genachowski. Sure, it won't be the first time that you
asked that question and we have had a chance to talk about it.
As you know, we have been working as a commission on what we
have announced would be the next step, a data collection order.
I don't know if this has been announced, but I can tell you now
that order has been voted, and as soon as it is finalized it
will be issued, and we will be moving forward in the special
access area in the ways that we have announced.
Mr. Doyle. Excellent. And what is the timing? So that all
Commissioners have voted?
Mr. Genachowski. Yes, it has all been voted and the staff
is finalizing the process to release it.
Mr. Doyle. Very good. OK, thank you very much.
Mr. Chairman, I want to ask you about the Commission's work
on designing the forward auction process with regards to the
eligibility of competitive wireless carriers to bid for a
license. I think it is very important that we ensure a
competitive wireless marketplace, and that requires all
carriers to have a sufficient amount of spectrum to be able to
offer comparative quality of service. That means being able to
deploy 4G LTE service in a reasonable time frame and being able
to avoid frequent dropped calls. So for every carrier, the
ability to secure spectrum licenses means the ability to stay
competitive with other providers. So I think it is important,
Mr. Chairman, for the FCC to be able to give all potential
participants a fair shot at the bidding process. I would like
to see more carriers have LTE capability and more robust
coverage. That means the FCC has to design auctions in a way
that will maximize the competitive benefits of this resource.
Mr. Chairman, I do want to enter into the record before I
go further a letter from the Competitive Carriers Association
addressing the issue of bidder eligibility because I think it
does a good job in laying out the concerns these carriers have
with being able to participate in the auction. So I would like
that entered in the record.
Mr. Terry. Hearing no objection, so ordered.
[The letter follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Doyle. Thank you.
There should be no confusion on this point. The legislation
passed by Congress gives the FCC flexibility to design auctions
in a way that allows everyone to participate, including smaller
carriers. I want to urge all of the Commissioners to take
advantage of the tools at your disposal to protect competition.
So, Mr. Chairman, let me ask you, is this an issue to which
you will give close consideration?
Mr. Genachowski. Yes. And I agree with the way you
characterized it.
Mr. Doyle. Thank you. Mr. Chairman, I want to ask you a
little bit about media ownership, too. You might remember I
brought up this issue at a previous hearing, and I continue to
be very concerned about moving forward with relaxing cross
ownership rules again before we complete an FCC analysis on the
impact such a rule would have on changes in female and minority
ownership. Mr. Chairman, the FCC's incentive auction NPRM
envisions that television stations could engage in channel
sharing in order to free up spectrum for reallocation. Have you
considered the impact of this proposal on media ownership and
diversity in light of the ownership order that you are
currently circulating?
Mr. Genachowski. We do think that the incentive auction
process will provide new opportunities for minority owners to
continue providing service in a difficult marketplace, by
receiving money for sharing channels or by potentially
receiving money for moving from UHF to VHF, so we see the
incentive auctions as a net plus for minority ownership, and we
are working and will continue to work with the community to
work through those issues.
Mr. Doyle. Yes, I think some are just concerned that we
understand what these impacts are before we move forward
because the concern is sometimes after a ruling is made and you
continue to study these issues, it is very hard to get the
genie back into the bottle, so to speak. So I would just urge
you and the Commissioners to take a closer look at the impact
of these auctions in light of your media ownership review, and
I thank you for the work that you are doing.
Mr. Chairman, with that I will yield back my time.
Mr. Terry. Thank you, Mr. Doyle. At this time recognize the
gentleman from Louisiana, Mr. Scalise.
Mr. Scalise. Thank you, Mr. Vice Chairman, and appreciate
the hearing and especially the five Commissioners for being
here with us. I want to start by looking at the Congressional
Budget Office estimate on the spectrum auction. If you look at
the NPRM, the estimates are that it would raise about $25
billion from the broadcast incentive auctions, and I just want
to get your take on what you think can be achieved. If you look
at the CBO report, does that match with where you think you
will be? I will start with the Chairman, get your take on that.
Mr. Genachowski. Well, both CBO and OMB have looked at the
proposal, they scored it, and certainly it is not in our
expertise to revise that scoring. We are certainly focused on
running an auction that generates very substantial revenue for
FirstNet and beyond. One of the key factors in that will be
broadcaster participation, and that is why we are all working
together with the industry and with others, why we are happy to
see the group formed that we heard about at the beginning of
the hearing from Chairman Walden of broadcasters who are saying
you know what, this makes sense, and we want to work
proactively with the Commission to design rules that encourages
our participation because that is the best way to free up the
most amount of spectrum.
Mr. Scalise. Commissioner McDowell?
Mr. McDowell. I am a little bit more cautious. I hesitate
to use the word ``pessimistic.'' And I hope that I am proven
wrong as to how much that will actually raise. As was pointed
out earlier in this pie chart, it has the 55 megahertz actually
being auctioned. You have to keep in mind that in the markets
where we need spectrum the most, these are the largest cities,
that is where we are the most spectrum constrained for mobile
broadband. That is also where broadcasting is the most
profitable because there are more eyeballs condensed, you know,
compacted into a small area, like, let's say, New York City
where there are 28 TV stations. So in order to yield 60
megahertz, let's say, at 6 megahertz per TV station, that is 10
TV stations or licensees that would have to go dark or channel
share in a New York City, for instance. That is more than a
third. That is a lot. I hope that is the case. I hope it
actually happens, but I am not convinced yet that it will.
So I think we need to be more cautious and sort of fiscally
conservative with some of the assumptions that went into the
CBO or the OMB estimates.
Mr. Scalise. If I could just emphasize because, you know,
there are some components of the bill for public safety, other
expenditures, but another part of that legislation was to
provide some revenue to pay down the national debt. $15 billion
is right now estimated to be raised that would go towards
paying down the debt. So as you are conducting the auction,
clearly we want to free up more spectrum, and that is going to
create jobs, it is going to allow us to do a lot more things
that we can't do today, but it also allows us an opportunity to
have some real money to start paying down the debt. So I would
like to emphasize that as well.
I want to talk about the Dubai hearings, and I know you
touched on it, both Chairman Genachowski, Commissioner
McDowell, I want to thank you all for both representing the
United States in those talks, and we are going to be following
it, and I was glad that we passed the legislation out of the
House, now the Senate and House have both spoken very loudly in
a bipartisan and unanimous way that we oppose any attempt by
the United Nations to take over parts of the Internet, and we
want to see it continue to be an open and free model with a
multi stakeholder approach. I think, Commissioner McDowell, you
touched on this some in your opening. Do you see some hypocrisy
where Title II is open here in the United States and yet we are
in Dubai telling them not to use this outdated approach to
trying to grab more pieces of the Internet internationally, but
here in the United States there still seems to be this open
ended question with Title II open that that maybe sends a mixed
signal. I wonder if either of you would like to touch on that.
Mr. McDowell. Excellent question, and I will try to be
diplomatic with the response because we are at a crucial time
in these diplomatic negotiations. The answer is both yes and
no. Yes in that we say internationally we want to keep
government out of the space, that the multi stakeholder model
is the way to resolve conflicts, and it has worked very well
for consumers ultimately. No in that one of the messages being
put forth is that each nation has the sovereign right to
determine what its Internet policy should be, and there should
not be an international regulatory overlay. So there is a
distinction between an international regulatory overlay and a
domestic policy overlay. I happen to think it is more
intellectually honest and consistent to say that government
should stay out of the space altogether as much as possible,
and we should therefore close things like the Title II docket.
Mr. Scalise. Chairman Genachowski.
Mr. Genachowski. In both cases the goals and the actions
are designed to preserve Internet freedom and openness, to
preserve the Internet as we know it, and to ensure that no
gatekeepers, public or private, interfere with Internet freedom
so that we have the innovation and free speech that we have
seen from the Internet for the last 20 years continue for the
next 20 years and beyond.
Mr. Scalise. Thank you for your time and answers, and I
yield back the balance.
Mr. Walden. The gentleman's time has expired.
The Chair now recognizes the gentlelady from California,
Ms. Matsui.
Ms. Matsui. Thank you, Mr. Chairman. I want to thank you
very much for holding this hearing today.
And I want to thank the Commission for being here today.
And, well, as you know, you are going to be arguably
undertaking probably the most complex spectrum auction in
history, and I think you all know it needs to be transparent.
And I believe Congress must work closely with the Commission to
ensure the auction's success.
Mr. Chairman, the Middle Class Tax Relief and Job Creation
Act directed the FCC to auction up to 120 megahertz of
additional spectrum to be reallocated from mobile broadband
services for the broadcast incentive auction. If we don't see
strong participation from the broadcasters during the incentive
auction process that reaches Congress' goals, does FCC have a
fallback plan?
Mr. Genachowski. Well, our focus is on implementing the
statute. It is a very good idea to provide a mechanism to
reallocate spectrum from existing commercial to broadband. I
say that not only because Congress passed it, but because we
originated it in our national broadband plan in 2010.
I think ``caution'' is a good byword here. But we are
seeing more and more reason to be optimistic, including the
formation of the group of Chairman Walden mentioned before. And
my hope and expectation is that we will see a successful
process. Certainly, we are on optimizing all of our work to
make the process simple, understandable, and allow broadcasters
to be in a position with a--can make an economically rational
decision.
Ms. Matsui. OK. In case, just in case it does not work out
quite the way you feel it should work out, do you have a next
step at all? I mean, where do you look for the next tranche of
spectrum? I am sure you are looking at this not just in a
linear way. That is not the way everyone operates here. You are
thinking about other opportunities here.
So where do you see the next tranche of spectrum coming
from after the upcoming incentive auction? Are you looking at
the 1755 to 1850 band?
Mr. Genachowski. Yes. It is a great question. And we don't
see these as mutually exclusive at all. And so 1755, the 3.5-
gigahertz item that we will vote on later today, which is 100
megahertz that we are very excited about, 40 megahertz of
spectrum that the Commission voted on last night to free up in
the satellite band, 30 megahertz of WCS, we see other
opportunities for government spectrum. So this is a very high
priority; as a commission, we all agree on it. And whatever
happens with incentive auctions, we will continue to move
forward relentlessly on all of the other opportunities and
policies.
On the incentive auction piece, I expect it will work.
Congress will continue to be interested. I think what Congress
has done in the law is to say, this is a band where we expect
to see a significant amount of spectrum freed up for mobile
broadband.
Ms. Matsui. Right.
Mr. Genachowski. This is how we would like to see it work.
And I expect that the broadcast industry will get that message.
Ms. Matsui. OK. Commission Rosenworcel, you know, spectrum
is going to be a big part of the budget debates in the coming
years. So we will need to generate new revenues for the
Treasury. As stakeholders continue their efforts for a long-
term spectrum solution, do you see any opportunities for a
meaningful amount of revenues that can be generated, at least
probably in the short term, from sharing opportunities? What
are your ideas on ways to generate revenues from sharing and
ways to incentivize agencies to relocate?
Ms. Rosenworcel. With respect to spectrum, I think demand
is only going to continue to grow. So we are going to need to
have an all-of-the-above approach. That will include things
like sharing. And as you are probably aware, with the 1755
band, we are trying to identify if that is viable for sharing
with the 2155 megahertz band that we need to auction within the
next 3 years.
With respect to existing Federal users, I believe that
agencies are mission-focused. They use their spectrum in
service of their missions, but they lack today incentives to
use that spectrum efficiently. I think it is time that we
infuse those missions with rewards for using their spectrum
efficiently. And if we do that, we are highly likely to be able
to call more spectrum back from Federal users over time and
repurpose it for commercial use.
Ms. Matsui. So in working with some of the agencies and
talking with them, I think they understand that. But this idea
of relocating en masse is something they can't do. Not in a
short term, anyway.
So as we move forward, I think we need to be very creative
about how we incentivize the agencies to move forward in a way
that is timely by trying to figure out more incentivizing ways
to do this and also incentivize the sharing as maybe an interim
step as moving forward. And I think what I am saying is what we
need to do is have a long-term process with certain benchmarks
along the way so there is a sense that we are moving forward.
So anyway, I thank you very much for everything you are
doing, and I yield back my time.
Mr. Walden. The gentlelady yields back the balance of her
time.
The Chair recognizes is incoming vice-chair of the
Subcommittee on Communications and Technology, the gentleman
from Ohio, Mr. Latta.
Mr. Latta. Thank you very much, Mr. Chairman, and thank you
very much for conducting the hearing today, and again to all
the Commissioners for appearing before us today.
I have an explanation from Cisco, ``Why Spectrum of 5
Gigahertz is Better for Unlicensed Use Than Even the White
Spaces.''
I would request unanimous consent to submit it for the
record.
Mr. Walden. Without objection.
[The information follows:]
[GRAPHICS NOT AVAILABLE IN TIFF FORMAT]

Mr. Latta. Thank you very much, Mr. Chairman.
Commissioner Pai, the statute identifies an additional 195
megahertz of spectrum above 5 gigahertz for unlicensed use. In
light of that, does it make sense to jeopardize the auction and
the public safety network by pulling out for unlicensed use the
broadcast incentive spectrum ideally suited for licensed
wireless broadband?
Mr. Pai. Thank you for the question, Congressman.
As I stated in my testimony, I am very bullish about
unlicensed use in the 5 gigahertz band for the reasons that I
expect are identified in the letter you just submitted for the
record. I have spoken with Cisco and other players in the
industry who have worked on and helped develop Super Wi-Fi
technologies that would be compatible with the 5 gigahertz
band, 802.11ac standard, which I mentioned earlier.
But the basic reason I am bullish about 5 gigahertz in
particular is this: If you think about what the ideal use for
unlicensed is, it is fast speeds for data transmission within a
relatively small area, such as a home or an office. Five
gigahertz is perfect for that because you can, as the Spectrum
Act envisions, dedicate gigantic channels that would be 160,
even larger megahertz, for the sole purpose of transmitting
data.
And, additionally, not an engineer--much to my parents'
chagrin--but what I have been informed is that the propagation
characteristics of 5 gigahertz waves are such they don't travel
through walls, they don't travel very far. So you don't have
the risk of interference that you might have lower in the band.
So if you have, you know, gigabit wireless throughput,
thanks for 5 gigahertz, that is a tremendous opportunity that I
think we should take advantage of.
So I am pleased that the Spectrum Act requires the
Commission to commence the rulemaking process on 5 gigahertz by
February, because I think that this is an area, consistent with
the Chairman's call for greater innovation and investment in
unlicensed, where we could really see some bang for relatively
little bucks.
Mr. Latta. Thank you.
Commissioner McDowell, the administration has talked a lot
about the need to bring additional spectrum to the market for
commercial use. In your view, has their behavior matched the
rhetoric and how important is the secondary market in dealing
with the spectrum crunch?
Mr. McDowell. I think there are two issues, actually. One
would be spectrum sharing in the Federal spectrum space, and
the other would be secondary markets.
So to answer a your secondary markets question first, I
think we could do better to ensure a freer and faster flow of
spectrum in those markets to make sure that spectrum flows to
its highest and best use in as unencumbered a way as possible.
Secondly, I would love to see the executive branch, Federal
users spectrum, actually do a better job of offering up
spectrum for auction rather than sharing. Sharing can be very
beneficial, as we have just discussed; unlicensed use, that is
a form of sharing. But there is no substitute for exclusive-use
licenses.
I think Congress can have a role here in maybe trying to
provide Federal users of spectrum an incentive to get off their
spectrum. It is an opaque process right now. The law says that
if it costs more to move them off their spectrum than it would
raise at auction that you can't move them. So let's do what we
can to get them off that spectrum and try some carrots.
Mr. Latta. Thank you.
Chairman Genachowski, in the NPRM it talks about a
geographic area. It says, ``items available for bid.'' And when
I was reading through this and kind of going back, what Mr.
Dingell was also talking about because, you know, where we are
located from northwest Ohio, and of course growing up as a kid,
we got Canadian television stations in our area, and vice versa
for Canadians.
What is the definition and how would you define that
geographic area because you say the multiple blocks of spectrum
available in a geographic area? What is a geographic area?
Mr. Genachowski. I think that is a question that we teed up
for comment and input in our public proceeding.
If I could say one thing on the border issues, these are
very important issues that come up every time there is any
transition in spectrum, whether it is commercial or public
safety, and we have very good processes in place both with
Canada and Mexico to negotiate through these issues. And in
decades of work, our countries have solved every one of them.
And so I fully expect that that will happen here and that we
will address the border issues in a way that doesn't interfere
with the incentive auction.
Mr. Latta. Thank you very much, Mr. Chairman, and I yield
back.
Mr. Walden. The gentleman yields back the balance of his
time.
The chairman recognizes the gentleman from New Jersey, I
believe is next, Mr. Pallone.
Mr. Pallone. Thank you, Chairman Walden.
Let me quickly say that I encourage the FCC to keep on
track with implementation of this spectrum law, but not to
overlook important details that will ensure a successful
auction for all stakeholders.
However, today, I am interested in discussing the recent
superstorm Sandy. Its devastation has greatly impacted my
district and many other districts in New Jersey and New York.
An examination of the communications performance and
reliability in the wake of Sandy is of great importance. And
that is why my Democratic colleagues sent a letter to you,
Chairman Walden, requesting a hearing following the storm. It
seems that communication services failed to perform as needed
during and after the storm, power outages and floods disrupted
many types of communications, including wireless, TV,
telephone, and Internet services. According to the FCC, the
storm knocked out a quarter of the cell towers in an area
spreading across 10 States, leaving millions of cell phone
users unable to make calls.
I had three questions I wanted to ask Chairman Genachowski.
And first, what are you doing to ensure the reliability of the
communication networks during and after natural disasters? And,
more specifically, what efforts are underway at the FCC to
identify and highlight best practices and, where necessary, to
address potential vulnerabilities in our communications
infrastructure?
All that in a minute or two.
Mr. Genachowski. Let me try to cover a little bit of
ground. Obviously, the devastation in New Jersey and that
region was tremendous. And I want to note that our 24/7
operations center at the FCC played in this disaster as it had
in others a very important role in the recovery efforts. In New
Jersey in particular, we were engaged with the New Jersey
Broadcaster Association in efforts to get fuel to cell towers
as quickly as possible, working with State and local
authorities in New Jersey, as well as FEMA.
We did receive your letter. And, in fact, as you might
know, we have announced field hearings that we will be starting
in January. That continues an effort that has been underway at
the Commission to ensure, working with State and local
authorities, the resilience and reliability of our
communications networks.
These disasters show that communications devices, mobile
communications devices, are interwoven in our lives. They are
how we communicate with our families, with emergency services
providers, our businesses. And we need to constantly look at
these issues, make sure we have in place systems, including
best practices, that give us a reliable communications network.
And we have to take seriously the interconnection between our
communications grid and our power grid which have their own
issues----
Mr. Pallone. Right.
Mr. Genachowski [continuing]. And address what we need to
do to make sure the communications networks stay up.
Mr. Pallone. Let me move on because I want to ask two more
things.
But if those field hearings haven't been scheduled, if
there is some way to coordinate it with our schedule in the
House, because it would be nice to be able to be there, if that
is possible.
Mr. Genachowski. We will work with you on that.
Mr. Pallone. Large numbers of people, as you know, because
they didn't have power, turned to the radio and other
broadcasting. You mentioned the broadcasters. Audiences were up
247 percent Monmouth County, 195 percent in Middlesex. These
are part of my district.
How are you working with the broadcasters to ensure that
they continue to play an important and robust role in
information sharing during natural disasters like Sandy?
Mr. Genachowski. I agree with your point. And we saw both
TV and radio continue to play a important role in disasters at
the same time as we see mobile and new Internet, social media
play important roles. I agree with Craig Fugate, our FEMA head,
that these multiple platforms together can help improve our
public safety profile all around.
The broadcasters, one of the things that we do during
crises like these is make sure that when they have tower or
other issues affected by the storm, we immediately do what we
need so that they can stay on the air. And during this
disaster, we granted a number of what are called STAs,
essentially Special Temporary Authorizations, to make sure
broadcasters can stay on the air. This is a hard thing for
broadcasters to do, and others.
And I just want to take a moment to note that the
broadcasting industry, the mobile industry, the cable industry,
in the worst parts of the storm, each of those sectors had
people on the ground, at risk to their own personal safety----
Mr. Pallone. That is true.
Mr. Genachowski [continuing]. To get networks up and get
them back up.
Mr. Pallone. Let me just ask you lastly about Wi-Fi. When
many citizens in the States lost access to wireless and
Internet, I understand that Wi-Fi hotspots were offered for
free in public areas during and after the storm and became an
alternative for Internet access.
Does this highlight the approach you discussed today about
the need for a balanced spectrum policy that includes
unlicensed uses like Wi-Fi?
Mr. Genachowski. Yes.
Mr. Pallone. You have 2 seconds for that.
Mr. Genachowski. Yes.
Mr. Pallone. All right. Thanks so much.
Thank you, Mr. Chairman.
Mr. Walden. Were you able to get the questions in you
needed?
Mr. Pallone. Yes. ``Yes'' was fine for the last one. Thank
you.
Mr. Walden. All right, thank you. We will look forward,
Chairman, to the results of your hearings out there as well. I
think the committee, obviously, on both sides, very concerned
about response in a disaster situation. And as we have talked
after the nationwide EAS test, which you initiated for the
first time didn't quite come out as we would all hope. These
things matter a lot. So thank you.
We will go now to the gentleman from California, Mr.
Bilbray, for questions.
Mr. Bilbray. Thank you, Mr. Chairman. And Mr. Chairman, I
would like to follow up on the questions from the gentleman
from Michigan, Mr. Dingell.
You know, Mr. Chairman, the conversation with Mr. Dingell
has got me kind of concerned. I don't know what part of the
country you hail from.
Mr. Genachowski. I was born in Boston, grew up in New York.
Mr. Bilbray. All right. Can you imagine what the response
would be from the people in Boston or New York or Washington,
DC, if they tried to make a phone call and someone in a foreign
language, or in English, notifies them that France--you know,
the Paris cell phone company has confiscated your call and that
if you want to make this call you need to call this number and
get a license--basically get an account with them.
That is the kind of response that people along our
international borders get, and have in the past.
Can you imagine my constituents or my brother says to me,
``When I am a part of the United States, why is a foreign
corporation confiscating my calls?''
So I am very concerned when, first of all, when Mr. Dingell
brought this issue up, it didn't seem to be on your radar,
quote, unquote.
And I am also concerned when you state that we have a
history of great cooperation with our neighbors to the north
and the south.
I want to make sure today that you are all aware this is an
issue that you need to address. And the people along the
fronteras, both north and south, are just a much a part of the
United States and have as much right to access to
telecommunications as somebody in New York, Boston or DC. And
should not have to accept the fact that, well, you are on the
border so you just accept the fact foreign companies can
confiscate your calls.
So that said, and I think I made it clear, what
conversations are you having today with the United States of
Mexico and Canada?
Mr. Genachowski. Well, I would like to follow up with you
on the issues you are mentioning and learn more.
With respect to the incentive auction transition and border
issues that will come up with broadcasters who may have to move
to stations where they are concerned, and I understand these
concerns with the potential for interference, we have begun the
process at the staff level with both Mexico and Canada to work
those issues out. These are similar to issues that have been
worked out in public safety bands and in other bands. But I
look forward to working with you and make sure we fully
understand your concerns.
Mr. Bilbray. I mean, it is an essential issue. My hometown,
at least half of the city cannot make cell phone calls at
certain times because of foreign interference. And then we
finally worked that out with some deals.
But how close are we to resolve these issues, though?
Mr. Genachowski. I would say we are at the beginning of the
process with respect to incentive auctions in Canada and
Mexico.
Mr. Bilbray. What incentive is there for Canada and Mexico
to cooperate with us on this issue?
Mr. Genachowski. Ultimately, they seek to put in place
spectrum-related services in their countries that have
counterbalancing effects on people who live on the U.S. side.
And so it is in both countries' interests in order to maximize
their own services to reach accommodations at the borders. It
is true for both commercial and public safety. It is sometimes
a bumpy process, and I certainly wouldn't want to overstate how
easy it is to get through--these issues resolved. But I do know
over the last 4 years while I have been chairman, we have
resolved some very complex issues and then our expectation is
we will be able to do that here and we will work very hard to
do so.
Mr. Bilbray. OK. Let me say for the record, because
everybody's talking about what--you know, the situation with
Sandy.
First of all, somebody who had family that lived through
Katrina, and I was in there after Katrina and in California
that lived through the fires in San Diego, the reverse 911 and
the cell phone capabilities worked extraordinarily well in San
Diego. That technology was a lifesaver and worked well.
The fact is that those of us that were hit by Hurricane
Katrina found that it was much more probable that when your
electricity gave out that your cell phone worked enough to be
able to call and say you were out of power. And I know it for a
fact that transformers were replaced. And it was because of
that public/private partnership that we had during those
disasters, both in San Diego and down in the Gulf that that
ability to have that public/private was absolutely essential.
So I just got to tell you, with everything, the problems we
pointed out, the fact is that it was much more probable after
Katrina that you had phone services than if you had power
services.
And so those who want to talk about the old hard line
technology as being dependable, it definitely was not more
dependable than the new technology we had. So with all problems
they talk about Sandy, I will just tell you as somebody who
lived through two disasters, the system worked well.
My concern still is on you. The people along the borders of
the United States put up with a lot because of where they live.
They darn well shouldn't have to put up with foreign
corporations or foreign governments confiscating their
communication system. And you, all of you, have as much
responsibility to make sure that does not happen again and make
sure they have equal assess to their technology or their
government and their system as somebody who lives in Kansas.
And with that, I yield back, Mr. Chairman.
Mr. Walden. Gentleman yields back.
And I appreciate the Chairman's willingness to continue to
work with our colleague from California in the future.
Now I recognize the gentlelady from the Virgin Islands, Dr.
Christensen, for 5 minutes.
Mrs. Christensen. Thank you, Mr. Chairman. And thank you to
the Commissioners for being here this morning.
I guess a lot of my questions have been at least in part
answered. We talked about the importance of the radio and
television broadcasters during Sandy. And as a person who comes
from an area that is prone to hurricanes, those are important
to us. And we also--Congressman Pallone talked about the
importance of Wi-Fi, and we know that the cable companies were
able to use Wi-Fi and provide services so that families could
communicate during Sandy and communicate with emergency
services.
So some of you have already indicated your commitment to
this, but I just wanted to assure from each of you that you are
committed to promulgating rules that will promote the use of
unlicensed technology in the guard bands.
I think you answered it, Commissioner Pai, in your last
question, that each of you are committed to promulgate rules
that will promote the use of unlicensed technologies in the
guard band?
Mr. Genachowski. Is that--that was our proposal. And we are
now seeking comment. And we have laid out the Commission
proposal, which is to do that.
Mrs. Christensen. OK.
And, again, on the issue of diversity, which at least two
questions were asked regarding this already. But a continuing
concern to the Tri-Caucus is the need for more women and
minorities in ownership positions in media companies.
Are you concerned at all, Chairman Genachowski and maybe
Commissioner Clyburn, that the television stations most likely
to offer to return their spectrum in a voluntary incentive
auction might also be stations that offer unique and more often
the more ethnically diverse programming?
Mr. Genachowski. I am concerned in general about diversity.
It is a fundamental obligation of the Commission. I do think
that the incentive auction provides new economic opportunities
for minority broadcasters, for language broadcasters, et
cetera, because in a difficult market it creates opportunities
to receive additional capital for spectrum sharing or for
moving from UHF to VHF. And we certainly heard from members of
the minority community that they are interested in learning
more about those possibilities, because this could be win-win
for minority broadcasters.
Mrs. Christensen. Commissioner Clyburn.
Ms. Clyburn. As you know, the existing ecosystem as it
relates to diversity, particularly with people of color and
women, it is almost nonexistent. I mean, we are talking about
single-digit ownership engagement. So that always has been,
even before I got sworn in, has always been an interest of mine
and a concern of mine.
As it relates to this current pathway, as it relates to
incentive auctions, one of the things that I say all the time,
and I am very monotone and repetitive about it, is this is a
voluntary engagement. And because of that, even though the
numbers could be few, they do have an opportunity to
participate in this framework. I am hopeful that it will take
advantage of and consider any and all opportunities, including
sharing, so existing programming cannot or will not be lost.
Mrs. Christensen. And perhaps the Tri-Caucus could be
helpful in providing information and opportunities or
encouraging some of our stations to participate.
Ms. Clyburn. Absolutely. And as it relates to employment,
too, this office has been engaged with a lot of principals and
a lot of people in the ecosystem. And I look forward to working
with you on those issues.
Mrs. Christensen. Thanks, and Commissioner Rosenworcel,
just a follow-up to Ms. Matsui's question, were there specific
incentives that you had in mind for--I serve on the task force.
So we were discussing these with some of the government
agencies, how they can reallocate, give up some of their
spectrum. Did you have some specific ideas about incentives?
Ms. Rosenworcel. Yes. For starters, though, I want to say
that the task force that the subcommittee has set up on Federal
spectrum is a terrific idea. I appreciate that it is
bipartisan.
The wireless revolution is here to stay. The demands on our
airwaves are only going to continue to grow. As far as
incentives for Federal users, I think we need to create them so
that they can be efficient and they are inspired to return
spectrum so that we can auction it off for commercial uses.
That could include financial rewards associated with the
revenues from its subsequent auction for commercial use, it
could also include structural rewards in the budget and
appropriations process. And, finally, I think that these ideas
are consistent with the idea of synthetic currency, which was
proposed by the President's Council of Advisers of Science and
Technology in their recent report on Federal spectrum use.
Mrs. Christensen. Thank you.
And I guess my last question to the Chairman, Commissioner
Pai suggested June 30th, 2013, as a deadline for the auction.
Is that a reasonable or an achievable date?
Mr. Genachowski. I think, I stand to be corrected I think
it was 2014.
Mrs. Christensen. 2014. Sorry. Yes.
Mr. Genachowski. So 2014 is I think when we are targeting.
I think we will know more about what would maximize the
benefits of the auction as the comments come in. But we are
certainly on a path to conduct the auction in 2014.
Mrs. Christensen. Thank you, Mr. Chairman.
Mr. Walden. The gentlelady yields back the balance of her
time. The Chair recognizes the gentleman from Kentucky, Mr.
Guthrie, for 5 minutes.
Mr. Guthrie. Thank you very much. I really appreciate the
Commissioners for being here today. I appreciate your taking
your time to be here.
A couple of questions, three questions. One for the
Chairman first.
In the statute, the language ``all reasonable efforts,''
the language is in there designed to preserve the contour of a
current television signal.
Could you tell me what that phrase means to you, and will
that phrase be interpreted to mean no more than a certain
amount of interference will be tolerated and, if so, how much
will that be?
Mr. Genachowski. Well, I think that is the kind of question
where we have an obligation to run the process we are running,
hear from stakeholders and get input on the precise definition.
The statue is clear ``reasonable efforts on population and
coverage,'' and our obligation is to comply with the statute.
Mr. Guthrie. So you don't have any personal interpretation
of that?
Mr. Genachowski. No. No. We laid out, I believe, some
thoughts in the notice of proposed rulemaking, but we will work
very closely with stakeholders on giving content to the
Congressional directive.
Mr. Guthrie. All right, thanks.
Commissioner Pai, I was on the working group for government
spectrum, and Congresswoman Matsui and I led that effort, and
we took a deep dive into it. And one thing that we were looking
around is the issue of shared spectrum. So in the PCAST report,
the 2012 PCAST report suggested that we should move away from
licensing and towards a greater reliance on spectrum sharing.
And my question for you is, are you aware of any commercial
available product that is available today for use if we move
towards a system of sharing? And to the extent that
infrastructure and devices are not currently built around the
concept of sharing, what might the challenging tradeoffs be?
Mr. Pai. It is a great question and I think I am not
personally aware at this point. But one of the things I do have
concerns about with the sharing is it is a largely untested,
untried endeavor that requires coordination among potentially
hundreds of Federal users. One of the fears, as I pointed out
in my testimony, is that while larger players and on the
commercial side may be up for the challenge of doing that kind
of coordination, some of the smaller players might not.
I think--I am not opposed to innovative sharing strategies,
as I said, again, in the testimony, that geographic sharing,
for example by creating exclusion zones, can allow us to reuse
the spectrum in places where Federal users aren't using it. But
I think, by and large, our focus really should be on clearing.
I think an unencumbered right to spectrum creates a maximum
incentive for a user on the commercial side to develop it and
to deploy it in an efficient manner to the benefit of
consumers. And so one of the things that I think we really need
to prioritize is not just sharing writ large or even sharing as
an interim measure, but clearing as the gold standard for our
approach to Federal spectrum in particular.
Mr. Guthrie. Thank you.
Then for Commissioner McDowell, also from the work of the
working government spectrum working group, the GAO recently
reported that total percentages of the most highly valued
spectrum exclusively or predominantly used by Federal
government is as high at 57 percent. And given Federal
agencies' budgets, many of these systems are not up to date and
thus operate inefficiently.
And would you discuss whether or not some of these Federal
uses could be served by commercial mobile private providers and
how could Federal spectrum holdings be operated more
efficiently? So could commercial also take some use of this
Federal--of government use and then how would it be more
efficient?
Mr. McDowell. Excellent question. And this is something I
have been talking about for years, actually, is the potential
for off-the-shelf private sector solutions, including with a
nationwide public safety network. I think that is going to have
to be a must. Seven billion isn't going to cover it, as the
statute calls for. You are going to have to have off-the-shelf,
private sector technologies to help there.
But we don't know how efficiently the Federal Government is
using spectrum. I think we can safely assume, however, that it
is not using it terribly efficiently. And that is why I think
Congress really needs to step in here to try to make that whole
world less opaque and more transparent respecting classified
spectrum and all the rest, but to make it more transparent and
also to give Federal spectrum users an incentive to relinquish
their spectrum for exclusive use licenses through auction as
Mr.--as Commissioner Pai just eloquently pointed out. That does
provide the best incentive for build-out and use of these
frequencies.
Mr. Guthrie. While I have got a few--a half of minute, I
guess, basically, the question for Commissioner Pai, anybody
else want to respond to what was basically to commercial
available products that sharing will work or the likelihood of
it happening, it working.
Mr. Genachowski. I would just point out that it is in the
interest of both the commercial sector and the military to
develop incentives to get more commercial technology into
military use. The reason is, there is a growing gap between the
price and functionality of military communications equipment
and commercial. There always has been. It is getting larger
because of the tremendous innovation on the commercial side.
I have had a chance over the last few months to speak
directly with senior officials in our military services. And I
believe that there is real work going on to think about how to
take advantage of commercial innovation on the military side
more quickly, providing better communications to our troops at
lower cost.
Mr. Guthrie. Thank you very much.
I yield back, Mr. Chairman.
Mr. Walden. The gentleman yields back the balance of his
time.
The Chair recognizes the gentleman from Illinois, Mr. Rush.
Mr. Rush. Thank you, Mr. Chairman. And to the
Commissioners, happy holiday. And I welcome you here to this
hearing.
You five Commissioners are some of the--are five of the
most important people in our Nation. You five Commissioners
oversee networks, industry, mediums that inform our democracy
and that are essential to protecting our freedom. You oversee
industry, the sectors that make up more than a fifth of our GDP
and employ tens of millions of our Nation's workforce.
However, I have been on this committee for about 17 years.
And for those--each of those 17 years, I have seen a litany or
many, many Commissioners come before us to discuss minority
ownership. And we seem to get more and more platitudes, less
promises, but absolutely no performance. And I am getting
pretty fed up with this continuum of excuses that seem to come
forth from the Commission itself. I think it is high time now
for you to get serious about this issue of media ownership.
As a matter of fact, there has been--and I am going to ask
you the question. And you each can answer this with a yes or no
answer. Is it acceptable to each of you that there are only 28
full-power TV broadcasters owned by minorities in this country?
Yes or no.
Mr. Genachowski. No, that is not acceptable.
Mr. McDowell. No.
Ms. Clyburn. No.
Ms. Rosenworcel. No.
Mr. Pai. No.
Mr. Rush. Does the Commission know, for example, how many
minority employees are in the broadcasting or new media
industries? Do you know the answer to that question?
Mr. Genachowski. I don't know the number off the top of my
head.
Mr. McDowell. No.
Ms. Clyburn. I don't have that information.
Ms. Rosenworcel. No, I don't have that information right
now.
Mr. Rush. I am also glad that you all postponed your
rulemaking on media or media ownership because you did not know
the impact of the proposed rules on minority ownership and
audiences. And so that leads me to another question that I
have.
What besides a new tax certificate policy could increase
diverse ownership of special licenses?
Let me just give you some figures.
In the 17 years that FCC had the minority tax certificate
policy, that policy produced 364 tax certificates and over 200
million transactions, totaling more than $1 billion in value.
That represented about two-thirds of all minority-owned
stations. When the policy, the tax certificate policy, began
minorities owned about 40 of the 8,500 broadcast stations. Over
its lifetime, the policy, the tax certificate policy, helped
raise that number to 333 stations; 290 radio stations, 43 TV
stations. It also yielded 31 cable systems. Currently, there
are no minority-owned cable systems that are operating today.
And my question to you is, what do you believe, other than
a new tax certificate policy, could increase diverse ownership
of broadcast licenses, given the history of the tax certificate
program, which was ended by the Republican Congress in 1995?
Mr. Genachowski. A few points, if I could. I agree with you
on tax certificates and encourage the ongoing consideration of
that. I will mention several areas of potential. One is the Low
Power FM order that we adopted last month, which will create
new opportunities for minority and other broadcasters to get
into the business at lower levels of capital. And so for new
entrants from the minority community, I think that is an
important opportunity.
A second is the work that we have been doing under the
leadership of Tom Reed in our Office of Communication Business
Opportunities to try to bring together capital and minority
women, other small business entrepreneurs. Very good work, and
I thank Tom Reed for that work.
And the third that I would point to is the Open Internet
Order, which keeps the Internet and content media on the
Internet available for anyone around the country to develop the
business and reach an audience. And we are seeing minority
entrepreneurs take advantage of that platform, create online
content businesses, and then use that as a way to move to
traditional media platforms.
Mr. Walden. I know the gentleman's time has expired, but go
ahead.
Mr. McDowell. With the Chair's indulgence, if I could add
to that. Five years ago this month, December 27th, the
Commission voted out its historic Diversity Order. There were
13 items adopted; six were turned back by the Federal appeals
court in Philadelphia, the Third Circuit, seven still remain.
I have been a long time, ardent supporter of the tax
certificate program, but there is more that can be done.
Incubator programs, incentives in general to make it easier to
convey stations from non-minority owners to minority owners. We
also need policies that promote more access to capital. This is
really what is at the root of all this. That is where the tax
certificate program is so helpful. So whatever policies we
could find, whatever we want to call them, that promotes access
to capital for minorities and disadvantaged businesses.
Ms. Clyburn. Number one, of course, is access--may I?
Mr. Walden. Yes.
Ms. Clyburn. Thanks. Number one of course, as my colleague
stated, is access to capital.
But number two, in terms of the FCC's jurisdiction, at this
time we do not have sufficient data in order to have a
judicially upheld standard of framework, to meet that framework
in order to move forward in any narrowly tailored approach. So
the studies, fully funded studies to that end could help.
Mr. Walden. If you want to be quick, then we have to get to
Mr. Stearns.
Mr. Pai. Very quickly, Congressman, two ideas that don't
depend on congressional action. One idea is an idea that I have
endorsed with the Minority Media and Telecommunications
Council, and that is increasing access to capital by allowing
more foreign investment in U.S. broadcast holding companies.
Currently, broadcasting is the only niche the communication
industry where the FCC maintains a 25 percent cap, which
inadvertently limits the amount of capital that U.S.
broadcasters, minority broadcasters in particular, can get.
Secondly, I endorsed in September the--what I call an AM
radio revitalization initiative. Minority broadcasters in
particular are disproportionately in the AM band. And it is
between 21 years since we have revisited our rules at the FCC.
So one of the things I would like to do is revitalize the band
by trying to figure out whether there are any of rules which,
inadvertently or not, stand in the way of greater minority
ownership on the radio side.
Thank you, Mr. Chairman, for your indulgence.
Mr. Walden. I know my ranking member wants to make a quick
comment. Then we will go to Mr. Stearns.
Ms. Eshoo. It is my understanding that, Mr. Chairman, that
you haven't allocated the funds for this study.
Mr. Genachowski. For--well, there is a study ongoing.
Ms. Eshoo. To meet that standard.
Mr. Genachowski. There is a study ongoing for which we have
allocated substantial funds. That is ongoing. And we have
requests for funds in our 2013 budget that would allow us to
move forward with the next round of studies.
Ms. Eshoo. Is it enough money to complete it?
Mr. Genachowski. I think the amount we have requested for
2013 is enough money to complete it, yes.
Ms. Eshoo. Thank you.
Mr. Walden. Well, having given almost twice as much time as
anybody else, we will now move on to Mr. Sterns to wrap up our
hearing.
Mr. Stearns. Thank you, Mr. Chairman. Mr. Chairman, this is
a very good hearing.
Chairman Genachowski, just a question. When we passed the
bill in February with this middle class tax cut, I think as I
recollect the figure was, we were going to try and give back or
auction off, make about 26 billion. Is that the figure you
remember?
Mr. Genachowski. I think the CBO score was roughly that.
Mr. Stearns. Roughly that. Based upon what you see now and
your effort so far, do you think that is feasible we will get
that kind of money back?
Mr. Genachowski. Well, I actually shared Commissioner
McDowell's characterization before, which was that we should be
cautious. But certainly maximizing, generating a very
substantial amount of revenue to at least cover First Net and
beyond is an important part of our implementation of the
statute.
Mr. Stearns. In your notice of proposed rulemaking, I think
there was a--there is some question I think in the industry by
some segments that they are worried about the--when you go to
different geographic locations there is not enough specific
information so that the repacking process is clear. And I guess
to minimize the extensive task of repacking for the
broadcasters, I guess, have you done an analysis across the
board on some geographic locations where that spectrum could be
more broad and less narrow, something like that? Does that make
sense?
Mr. Genachowski. Congress, in the law, it instructed the
FCC or had some language on how to calculate that. Reference to
OET Circular No. 69. So we are now working with the
congressional language. This is part of our proceeding. And to
the point Congressman Markey made before, rolling up our
sleeves with the engineers in the broadcast industry and the
mobile industry to maximize the opportunity.
Mr. Stearns. So you say it is a formula that you are using?
Mr. Genachowski. We haven't decided how we will do it. Our
job now is to implement the provision of the statute that sets
some guidance for the methodology for repacking.
Mr. Stearns. Should part of that be part of the notice of
proposed rulemaking so that they could understand what you are
doing, or is this just going to be after the notice is over?
Mr. Genachowski. The notice addresses this issue, and this
will be an ongoing process involving engineers at the
industries and at the FCC to maximize the ability to free up
spectrum.
Mr. Stearns. Commissioner McDowell, what percent of the
spectrum usable for mobility is controlled by the Federal
Government?
Mr. McDowell. I have seen estimates at about 60 percent.
That may vary.
Mr. Stearns. Is it a concern that other countries seem to
be able to clear spectrum for commercial use while we don't
seem to be making the same progress?
Mr. McDowell. First of all, I think the U.S. as always been
a world leader in spectrum. But we do have to have serious
concerns about our competitors abroad, yes.
Mr. Stearns. I think--is this a question of leadership for
us to be more expeditious, perhaps like folks overseas, or is
this just a failure of why we are not as equipped as they are?
Do you think there is any reason why we can't be? Or you just
think----
Mr. McDowell. So many thanks to Congress for passing the
Digital TV Act of 2005, and that opened the door to the last
major spectrum auction we had, which was almost 5 years ago, in
2008. That actually helped us leapfrog other nations. But in
the past 4, 5 years, we haven't had any major auctions, and we
need to get on to that.
Mr. Stearns. That is what I hear when I talk to other
countries, that they seem to be ahead of us. And so we just
wonder whether it is our leadership here or it is whether--what
can we do?
Let me move on here. Commissioner Pai, the July 2012 PCAST
report suggests that the new Federal spectrum architecture is
that the norm for spectrum use should be sharing, not
exclusivity. Comparing the track records for sharing and
exclusivity, which approach has driven more investment in our
wireless networks?
Mr. Pai. I think, Congressman, without question, it has
been the latter approach, clearing exclusivity----
Mr. Stearns. Exclusive is much more.
Mr. Pai. Correct.
Mr. Stearns. Right. And with that in mind, it is worth more
all the time?
Mr. Pai. I agree. And that is why I think it should be our
priority when it comes to spectrum policy in the Federal
spectrum area.
Mr. Stearns. OK. Mr. Genachowski, several of the major
wireless providers have joined efforts to work with the
Department of Defense on the testing of several of the systems
identified in the NTIA's 2012 report. It appears it is costly,
time consuming to relocate, and the DOD seems to be not
cooperating and negotiating well with them.
I guess the question is, have you followed this at all?
What is your status or----
Mr. Genachowski. Yes. You are asking about the 1755 band?
Mr. Stearns. Yes.
Mr. Genachowski. Yes. This is an area, there is a
tremendous opportunity to move forward with testing around
different bases. My understanding is that the DOD and the
wireless industry are in what I hope will be the final stages
of negotiating the details of the arrangement. I think it is
good for all the parties to hear that there is bipartisan
desire to move this process quickly so that we can test the
ideas and free up spectrum in that band and do it in time to
pair it with the other spectrum that Congress has required us
to auction by, I believe, 2015.
Mr. Stearns. We were just told about a month ago things
seem to have come to a grinding halt. Are you familiar with
that?
Mr. Genachowski. My understanding is that it is not moving
as quickly as we would all like. It has not halted and that
there is negotiations back and forth. Again, I think it is
helpful for everyone to know that there is strong desire in
Congress to see this done.
Mr. Stearns. Thank you, Mr. Chairman.
Mr. McDowell. Mr. Chairman, I would like to thank
Congressman Sterns for his service, and we are going to miss
you.
Mr. Stearns. Thank you.
Mr. Rush. Mr. Chairman?
Mr. Walden. Just a second. Just saying we all concur with
that statement. He has done a terrific job in this committee
for many years, in this subcommittee, and his leadership is
greatly appreciated, and we are going to miss you.
Mr. Stearns. Thank you, Mr. Chairman.
Mr. Walden. Mr. Rush has asked to be able to ask another
question or two. And I have yielded.
Mr. Rush. Thank you, Mr. Chairman. Thank you so much for
your consideration.
I want to say to Cliff, it has been a pleasure sitting with
you on this committee. We have not agreed on anything yet, but
it has still been a wonderful, wonderful pleasure serving with
you.
Mr. Stearns. If the gentleman would yield.
I think we had a privacy bill that we were working on
together and a data security for a while when you were the
chairman of the Commerce, Consumer Protection and Trade.
Mr. Rush. There was some agreement, not too much.
Mr. Walden. I will try and intercede.
Congressman Sterns, would you agree that Mr. Rush should
have another minute to ask another question?
Mr. Stearns. Yes.
Mr. Rush. Fine gentleman.
Mr. Walden. Mr. Rush for another minute or so.
Mr. Rush. One issue that doesn't get much attention, and I
want to thank Commissioner Clyburn for her excellent work, is
the exorbitant prison phone rates. As a matter of fact, it has
taken this Commission 9 years and some months to rule on the
right petition. That petition would cap prison phone rates at
reasonable levels. It shouldn't cost more to make a cell phone
call to Singapore than it is to receive a long distance call
from a loved one in prison.
Does the Commission intend to issue a notice at the next
Commission meeting to move forward with the right proceeding?
Mr. Genachowski. Thank you for that question. That
proposal, I believe, is on circulation and is being actively
considered by the Commission and hopefully will be resolved
soon.
Mr. Rush. Yes or no?
Mr. Genachowski. It is a yes, as quickly as possible.
Mr. Rush. Thank you. Thank you, Mr. Chairman.
Mr. Walden. Thank the gentleman.
Mr. Rush. Yield back.
Mr. Walden. I am happy to accommodate his additional
request.
I think that concludes our opportunity today. We appreciate
the work of the Commission, and your testimony helps guide us
in our understanding how the law it is being implemented. The
record will be open for 10 days for additional questions from
our members who maybe didn't get a chance to offer them or
think of a few others after the hearing. So we appreciate again
your work, look forward to continuing the dialogue as we go
forward to create jobs and innovation in America across all the
spectrum and all the bands. Thank you.
The committee now stands adjourned.
[Whereupon, at 12:50 p.m., the subcommittee was adjourned.]
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