[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
#CommActUpdate: PERSPECTIVES FROM FORMER FCC CHAIRMEN
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON COMMUNICATIONS AND TECHNOLOGY
OF THE
COMMITTEE ON ENERGY AND COMMERCE
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
JANUARY 15, 2014
__________
Serial No. 113-112
Printed for the use of the Committee on Energy and Commerce
energycommerce.house.gov
______
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88-469 PDF WASHINGTON : 2015
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COMMITTEE ON ENERGY AND COMMERCE
FRED UPTON, Michigan
Chairman
RALPH M. HALL, Texas HENRY A. WAXMAN, California
JOE BARTON, Texas Ranking Member
Chairman Emeritus JOHN D. DINGELL, Michigan
ED WHITFIELD, Kentucky FRANK PALLONE, Jr., New Jersey
JOHN SHIMKUS, Illinois BOBBY L. RUSH, Illinois
JOSEPH R. PITTS, Pennsylvania ANNA G. ESHOO, California
GREG WALDEN, Oregon ELIOT L. ENGEL, New York
LEE TERRY, Nebraska GENE GREEN, Texas
MIKE ROGERS, Michigan DIANA DeGETTE, Colorado
TIM MURPHY, Pennsylvania LOIS CAPPS, California
MICHAEL C. BURGESS, Texas MICHAEL F. DOYLE, Pennsylvania
MARSHA BLACKBURN, Tennessee JANICE D. SCHAKOWSKY, Illinois
Vice Chairman JIM MATHESON, Utah
PHIL GINGREY, Georgia G.K. BUTTERFIELD, North Carolina
STEVE SCALISE, Louisiana JOHN BARROW, Georgia
ROBERT E. LATTA, Ohio DORIS O. MATSUI, California
CATHY McMORRIS RODGERS, Washington DONNA M. CHRISTENSEN, Virgin
GREGG HARPER, Mississippi Islands
LEONARD LANCE, New Jersey KATHY CASTOR, Florida
BILL CASSIDY, Louisiana JOHN P. SARBANES, Maryland
BRETT GUTHRIE, Kentucky JERRY McNERNEY, California
PETE OLSON, Texas BRUCE L. BRALEY, Iowa
DAVID B. McKINLEY, West Virginia PETER WELCH, Vermont
CORY GARDNER, Colorado BEN RAY LUJAN, New Mexico
MIKE POMPEO, Kansas PAUL TONKO, New York
ADAM KINZINGER, Illinois JOHN A. YARMUTH, Kentucky
H. MORGAN GRIFFITH, Virginia
GUS M. BILIRAKIS, Florida
BILL JOHNSON, Ohio
BILLY LONG, Missouri
RENEE L. ELLMERS, North Carolina
7_____
Subcommittee on Communications and Technology
GREG WALDEN, Oregon
Chairman
ROBERT E. LATTA, Ohio ANNA G. ESHOO, California
Vice Chairman Ranking Member
JOHN SHIMKUS, Illinois MICHAEL F. DOYLE, Pennsylvania
LEE TERRY, Nebraska DORIS O. MATSUI, California
MIKE ROGERS, Michigan BRUCE L. BRALEY, Iowa
MARSHA BLACKBURN, Tennessee PETER WELCH, Vermont
STEVE SCALISE, Louisiana BEN RAY LUJAN, New Mexico
LEONARD LANCE, New Jersey JOHN D. DINGELL, Michigan
BRETT GUTHRIE, Kentucky FRANK PALLONE, Jr., New Jersey
CORY GARDNER, Colorado BOBBY L. RUSH, Illinois
MIKE POMPEO, Kansas DIANA DeGETTE, Colorado
ADAM KINZINGER, Illinois JIM MATHESON, Utah
BILLY LONG, Missouri G.K. BUTTERFIELD, North Carolina
RENEE L. ELLMERS, North Carolina HENRY A. WAXMAN, California (ex
JOE BARTON, Texas officio)
FRED UPTON, Michigan (ex 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........................................... 3
Hon. Robert E. Latta, a Representative in Congress from the State
of Ohio, opening statement..................................... 4
Hon. Anna G. Eshoo, a Representative in Congress from the State
of California, opening statement............................... 4
Hon. Doris O. Matsui, a Representative in Congress from the State
of California, opening statement............................... 5
Hon. Fred Upton, a Representative in Congress from the State of
Michigan, opening statement.................................... 6
Prepared statement........................................... 6
Hon. Marsha Blackburn, a Representative in Congress from the
State of Tennessee, opening statement.......................... 7
Hon. Joe Barton, a Representative in Congress from the State of
Texas, opening statement....................................... 7
Hon. Henry A. Waxman, a Representative in Congress from the State
of California, opening statement............................... 8
Hon. Michael F. Doyle, a Representative in Congress from the
Commonwealth of Pennsylvania, opening statement................ 9
Witnesses
Richard E. Wiley, Chairman, Wiley Rein LLP....................... 9
Prepared statement........................................... 12
Answers to submitted questions............................... 77
Reed E. Hundt, Principal, REH Advisors........................... 16
Prepared statement........................................... 18
Michael K. Powell, President and Chief Executive Officer,
National Cable and Telecommunications Association.............. 30
Prepared statement........................................... 33
Michael J. Copps, Special Advisor, Media and Democracy Reform
Initiative, Common Cause....................................... 43
Prepared statement........................................... 47
#CommActUpdate: PERSPECTIVES FROM FORMER FCC CHAIRMEN
----------
WEDNESDAY, JANUARY 15, 2014
House of Representatives,
Subcommittee on Communications and Technology,
Committee on Energy and Commerce,
Washington, DC.
The subcommittee met, pursuant to call, at 10:03 a.m., in
room 2123 of the Rayburn House Office Building, Hon. Greg
Walden (chairman of the subcommittee) presiding.
Members present: Representatives Walden, Latta, Shimkus,
Terry, Rogers, Blackburn, Scalise, Lance, Guthrie, Gardner,
Pompeo, Kinzinger, Long, Barton, Upton (ex officio), Eshoo,
Doyle, Matsui, Braley, Lujan, Dingell, Pallone, Matheson, and
Waxman (ex officio).
Staff present: Gary Andres, Staff Director; Ray Baum,
Senior Policy Advisor/Director of Coalitions; Sean Bonyun,
Communications Director; Matt Bravo, Professional Staff Member;
Andy Duberstein, Deputy Press Secretary; Gene Fullano, FCC
Detailee; Kelsey Guyselman, Counsel, Communications and
Technology; Sean Hayes, Counsel, Oversight and Investigations;
Grace Koh, Counsel, Communications and Technology; Gib Mullan,
Chief Counsel, Communications and Technology; David Redl,
Counsel, Communications and Technology; Charlotte Savercool,
Legislative Coordinator; Tom Wilbur, Digital Media Advisor;
Jessica Wilkerson, Staff Assistant; Shawn Chang, Chief Counsel,
Communications and Technology; Margaret McCarthy, Professional
Staff Member; Kara van Stralen, Policy Analyst; and Patrick
Donovan, FCC Detailee.
OPENING STATEMENT OF HON. GREG WALDEN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OREGON
Mr. Walden. I will call to order the Subcommittee on
Communications and Technology and thank our witnesses for being
here for this first of what will be many hearings as we look to
update the Communications Act. Few sectors of our economy are
equal to the communications and technology sector when it comes
to innovation, investment in the American economy, and job
creation. In these tough economic times, we as policy makers
should be committed to fostering this critical sector of the
economy. Yet, the laws that regulate the industry are outdated
at best, and some are affirmatively damaging. This is why
Chairman Upton and I, along with members of this subcommittee,
have decided to undertake the difficult task of updating the
Communications Act of 1934. In the eight decades since its
passage, Congress' have come and gone. Some have even made
substantial though targeted changes to the law. But none have
undertaken to rethink the act for the environment of
convergence and innovation in which we live today. It is time
for our laws to reflect our modern technological landscape, one
grounded in the networks and services of our past and driven by
our IP and mobile future.
Just yesterday, the DC Circuit issued its decision in the
net neutrality case, striking down the rules ordered by the
Federal Communications Commission. I for one was pleased to see
the Court remove the Government from the business of making
management judgments and give providers the freedom to make
decisions that are pro-competitive and pro-consumer. While this
decision benefits consumers and providers alike by keeping the
Internet free from Government interference, the rationale
highlights the ongoing confusion regarding regulation of
different services. This is yet another example of why it is
vital that we take a hard look at the laws in this space and
reconcile them with the realities of technology. The answer is
not to subject new technology to outdated regulations, but
rather to craft laws appropriate to innovative services and
platforms.
As we embark on this effort, it should come as no surprise
that I am focused on ensuring that we engage in a transparent
and collaborative process, not just with our colleagues here in
the Congress but also with the many stakeholders outside of
these halls. All we want is a dialogue.
Last week, the committee released the first of what will be
a series of white papers seeking input from the public. And I
hope that interested parties will take the opportunity to make
their voices heard to us.
Today's witnesses provide a unique and valuable perspective
on the Communications Act. As Chairmen of the agency tasked
with carrying out Congress' will in implementing the act, the
four witnesses today have had a front row seat to witness the
act in the real world to see where it works and where it
doesn't. These Chairmen have varied experiences and viewpoints
that in many ways represent the evolution of modern
communications.
When Chairman Wiley led the agency, telephone service was a
Government-regulated monopoly. Consumers got their news from
broadcast television and print newspapers, and the Internet was
still years away. Sixteen years later, when Reed Hundt took the
reins, the Internet was coming into full force and mobility was
beginning to take off. Chairman Powell's tenure saw the
convergence of services towards the bundled offerings we see
today, as well as the deployment of broadband to Americans. And
in the 4 years since Michael Copps served as Acting Chairman,
there have been dramatic changes to the way we communicate and
the technology that powers our lives. For example, the title of
today's hearing contains a hashtag. Twitter, then with no
vowels in its name, had yet to be ``discovered'' by--at South
by Southwest.
Neither we nor the august panel before us can predict the
future and what technological changes it will bring. But by
learning the lessons of the past, we can do our best to create
a legal and regulatory environment that will foster innovation
and competition, encourage consumer choice and optimum
services.
So again, I want to thank you for--to our witnesses for
this impressive panel. We look forward to hearing your
testimony. And we appreciate your public service.
[The prepared statement of Mr. Walden follows:]
Prepared statement of Hon. Greg Walden
Few sectors of our economy are equal to the communications
and technology sector when it comes to innovation, investment
in the American economy, and job creation. In these tough
economic times, we as policymakers should be committed to
fostering this critical sector of the economy. Yet the laws
that regulate this industry are outdated at best and some are
affirmatively damaging. This is why Chairman Upton and I, along
with the members of this subcommittee, have decided to
undertake the difficult task of updating the Communications Act
of 1934. In the eight decades since its passage, Congresses
have come and gone. Some have even made substantial, though
targeted, changes to the law. But none have undertaken to
rethink the act for the environment of convergence and
innovation we live in today. It's time for our laws to reflect
our modern technological landscape--one grounded in the
networks and services of our past and driven by our IP and
mobile future.
Just yesterday, the DC Circuit issued its decision in the
net neutrality case, striking down the rules ordered by the
FCC. I was pleased to see the court remove the Government from
the business of making management judgments, and give providers
the freedom to make decisions that are pro-competitive and pro-
consumer.
While this decision benefits consumers and providers alike
by keeping the Internet free from Government interference, the
rationale highlights the ongoing confusion regarding regulation
of different services. This is yet another example of why it is
vital that we take a hard look at the laws in this space and
reconcile them with the realities of technology. The answer is
not to subject new technology to outdated regulations, but
rather to craft laws appropriate to innovative services and
platforms
As we embark on this effort, it should come as no surprise
that I am focused on ensuring that we engage in a transparent
and collaborative process, not just with our colleagues here in
Congress, but also with the many stakeholders outside these
halls. What we want is a dialogue. Last week, the committee
released the first of a series of white papers seeking input
from the public, and I hope that interested parties will take
the opportunity to make their voices heard.
Today's witnesses provide a unique and valuable perspective
on the Communications Act. As Chairmen of the agency tasked
with carrying out Congress's will and implementing the act, the
four witnesses today have had a front row seat to witness the
act in the real world; to see where it works and where it
doesn't. These Chairmen have varied experiences that in many
ways represent the evolution of modern communications. When
Chairman Wiley led the agency, telephone service was a
Government-regulated monopoly, consumers got their news from
broadcast television and print newspapers, and the Internet was
still years away. Sixteen years later, when Reed Hundt took the
reins, the Internet was coming into full force, and mobility
was beginning to take off. Chairman Powell's tenure saw the
convergence of services towards the bundled offerings we see
today, as well as the deployment of broadband to Americans. And
in the 4 years since Michael Copps served as Acting Chairman,
there have been drastic changes to the way we communicate and
the technology that powers our lives. For example, the title of
today's hearing contains a hashtag. Twitter, then with no
vowels in its name, had yet to be ``discovered'' at South by
Southwest.
Neither we nor the august panel before us can predict the
future and what technological changes it will bring. But by
learning the lessons of the past, we can do our best to create
a legal and regulatory environment that will foster innovation
and competition, encourage consumer choice, and optimum
services. Again, thank you to our impressive panel of witnesses
today--we look forward to hearing your testimony and we
appreciate your public service.
Mr. Walden. With that, I would yield to the vice chair of
the subcommittee, Mr. Latta, for any opening comments he may
have.
OPENING STATEMENT OF HON. ROBERT E. LATTA, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF OHIO
Mr. Latta. Well, thank you very much, Mr. Chairman, and
thank you very much to our panel of distinguished witnesses for
testifying before us today. I appreciate you all being here.
Since 1996, we have witnessed an unprecedented
technological evolution in the communications industry. The
rapid emergence of new and innovative technologies has fostered
increased investment throughout the industry and the
development of a vibrant, competitive communications
marketplace. As we move into the future, it is important to
examine the Communications Act to ensure that our public policy
continues to encourage this kind of growth and innovation that
is essential to fueling our economy. Reforms to current law
should reflect the technology we enjoy today and be able to
adapt to the technology of tomorrow without further Government
intervention. Our efforts should be dedicated to ensure that
the laws governing the communications marketplace do not stifle
current and future investment, innovation, economic growth and
consumer choice in this dynamic and converging digital age of
communications.
I look forward to the testimony from our witnesses today.
And again, Mr. Chairman, I thank you very much for holding this
hearing.
Mr. Walden. I thank the gentleman for his comments. Now, I
turn to the gentlelady from California, Ms. Eshoo, the ranking
member of the subcommittee, for her opening comments. Good
morning.
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, to all of the members and the warmest welcome to each of
the witnesses that are at the table. Your combined public
service is--really stands as a hallmark of devoted service to
our country, but also to move the country forward in one of its
most important economic sectors. So welcome to you. It is
wonderful to see all of you at the same time at the table.
With news of the Court's net neutrality decision, today's
hearing I think is a timely opportunity to hear from each one
of you who have led the expert agency, the FCC. And combined,
it represents over 4 decades of services. That is nothing short
of extraordinary. And each of you have had a hand in really I
think changing our Nation's communications and technology
landscape. So not only kudos to you, thank you to you, but a
recognition of what each one of you accomplished.
When Congress passed the Telecommunications Act of 1996, it
was my second term in Congress, my first term on the committee.
And there were just 11 references to the Internet--the word
Internet, and only one mention of broadband across a 128 page
bill. Many proponents of updating the act have cited this as
evidence that the act is outdated and unable to keep up with
changes in technology.
But as Chairman Wheeler affirmed last week, the
Communications Act continues to provide the FCC with ample
authority to exercise its role in this new environment. The
Court's decision yesterday I believe furthers this argument by
upholding the FCC's existing authority to oversee broadband
services. And I think that is very important for consumers
across the country.
I make these points not to discourage the subcommittee's
review of the act. I join with the chairman to review this. I
think that it is a worthy exercise. But rather, we need to
ensure that we know what problems we are trying to fix before
undertaking a multi-year examination that include hearings,
stakeholder meetings, white papers, and such.
Since the '96 act was enacted, hundreds of new entrants of
emerged, and more than $1.2 trillion has been invested by U.S.
telecommunications companies. I want this success story to be
an unending one. And I think that is the goal of everyone on
this wonderful subcommittee.
So to that end, my goal throughout the subcommittee's
review will be to see more competition, greater consumer choice
and more innovation. I am so proud, as the Chairman was making
his opening remarks, that so much of this has been born in my
congressional district. And so, innovation, innovation,
innovation. And these goals were imbedded in the '96 Act, and
they remain just as important today.
At the same time, our process of examining the
Communications Act should not derail, in my view, a more
immediate update of our video laws, a view shared by a majority
of the witnesses at a September subcommittee hearing. Recurring
TV blackouts, coupled with the rising cost of broadcast
television programming with limited choice has left consumers
frustrated and looking to Congress and the FCC for answers. I
believe that working together on a bipartisan basis, we can
make this happen in 2014.
So, Chairman Walden, thank you for holding today's hearing
on the Communications Act. I welcome the review, and I look
forward to hearing the unique insights from the top experts
from our country who have given so much in terms of their
leadership in leading the expert agency. And with that, I have
34 seconds to yield to Congresswoman Matsui.
OPENING STATEMENT OF HON. DORIS O. MATSUI, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Ms. Matsui. Thank you, Ranking Member. And I want to
welcome all the former Chairmen. We welcome you here for your
ideas and experience that provide a basis for discussions
moving forward.
As technology evolves, I believe it is important that we
consider appropriate updates to the Communications Act that
with goals that promote competition and innovation in the
marketplace. To that point, I am pleased that yesterday, the DC
Circuit affirmed the FCC's authority to oversee broadband
services. In my opinion, that was the crux of the debate, and
the FCC's argument prevailed on the question of authority over
broadband. The FCC will need to exert its authority to ensure
now that all Americans have access to a free and open Internet.
A competitive marketplace with checks and balances will fare
well for all Americans.
I look forward to the hearing today, and I yield back the
balance of my time.
Mr. Walden. The gentlelady yields back the balance of her
time. The Chair now recognizes the distinguished member from
Michigan, the chairman of the full committee, Mr. Upton, for
opening comments.
OPENING STATEMENT OF HON. FRED UPTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF MICHIGAN
Mr. Upton. Thank you, Mr. Chairman.
Last month, you and I announced our plans for a
comprehensive update to the Communications Act of 1934. And the
changes in technology since the last update in '96 have been
dramatic, and existing laws have failed to keep pace with the
vibrant and dynamic telecommunication industry.
Communications and technology sectors have consistently
been areas of American leadership, innovated--innovation and
job creation, certainly. But the Communications Act is showing
its age, and our continued international leadership is indeed
at stake.
Yesterday's net neutrality decision, while a victory for
consumers in the economy, illustrates the uncertainty flowing
from the current statutory scheme and the need for this action.
It is time to revamp these laws to reflect the new competitive
landscape and changing consumer expectations. And as we begin
the open process leading to a Comm Act Update, we are looking
for input--yes, we are--from all of the stakeholders in the
communications and technology world. Where better to start than
with our distinguished panel of former leaders of the FCC?
These leaders served during diverse times in the evolution of
the communications sector, and they have seen the market
operate under the strong hand of the U.S. Government and the
challenges with them divorcing the Government from its heavy
regulation of the communications sector from times before. They
have seen cable grow from its stages of struggling startup.
They have seen satellite services succeed in bringing
competition to the video market, and failed to find success as
a competitor to mobile phone service. And they have seen the
Internet grow from a DOD project to a tool for research
universities, and now as the commercial economic force that we
know today.
Throughout the many nuanced iterations of Communications
Act, today's witnesses have firsthand seen the act at its
finest, and also when its inability to keep pace with
technological innovation has impacted those vital economic
issues. So I want to thank the witnesses for taking their time
to share their experiences with us. We value indeed their
expertise and welcome their thoughts on how we can ensure the
Communications Act fosters our communications and technology
sectors well into this century.
[The prepared statement of Mr. Upton follows:]
Prepared statement of Hon. Fred Upton
In December, Chairman Walden and I announced our plans for
a comprehensive update to the Communications Act of 1934. The
changes in technology since the last update in 1996 have been
dramatic and existing laws have failed to keep pace with the
vibrant and dynamic telecommunications industry. The
communications and technology sectors have consistently been
areas of American leadership, innovation, and job creation, but
the Communications Act is showing its age and our continued
international leadership is at stake. Yesterday's net
neutrality decision, while a victory for consumers and the
economy, illustrates the uncertainty flowing from the current
statutory scheme and the need for this action. It's time to
revamp these laws to reflect the new competitive landscape and
changing consumer expectations.
As we begin the open process leading to a #CommActUpdate,
we are looking for input from all of the stakeholders in the
communications and technology world. Where better to start than
with our distinguished panel of former leaders of the Federal
Communications Commission. These leaders served during diverse
times in the evolution of the communications sector. They've
seen the market operate under the strong hand of the U.S.
Government and the challenges with then divorcing the
Government from its heavy regulation of the communications
sector. They've seen cable grow from its days as a struggling
startup. They've seen satellite services succeed in bringing
competition to the video market--and fail to find success as a
competitor to mobile phone service. And, they've seen the
Internet grow from a DoD project, to a tool for research
universities, and now as the commercial economic force that we
know today. Throughout the many nuanced iterations of the
Communications Act, today's witnesses have seen firsthand the
act at its finest and also when its inability to keep pace with
technological innovation has impacted these vital economic
sectors.
I thank the witnesses for taking time to share their
experiences with us. We value their expertise and welcome their
thoughts on how we can ensure that the Communications Act
fosters our communications and technology sectors well into the
21st century.
Mr. Upton. And I yield the balance of my time to the vice
chair.
OPENING STATEMENT OF HON. MARSHA BLACKBURN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TENNESSEE
Mrs. Blackburn. And thank you, Mr. Chairman. And if I had
my iPhone in my hand, I would hit re-tweet for everything that
he has just said.
We do appreciate that you all are here. We do want to take
advantage of the perspective that you have had. Think about
what has happened in the past 17 years since '96 and the
changes that we have seen, not only in how we communicate but
the rapidity of those communications and entertainment and how
we access that, how we take it with us, how we consume it. So
we know that the pace of change means that we have to be very
judicious and careful as we look at a rewrite. We know that
there are issues that are going to come on the plate that we
are going to have to discuss also as we look at not only the
telecom rewrite but at the use of the virtual space, privacy,
data security, the way the virtual marketplace is used and the
way our constituents want to have a toolbox to protect, as I
call it, their virtual you online.
So we appreciate your time, your willingness to be with us
this morning. And I yield back to the chairman of the
committee.
Mr. Upton. Yield back.
Mr. Walden. The gentleman from Texas, Mr. Barton, will use
some of that time.
OPENING STATEMENT OF HON. JOE BARTON, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF TEXAS
Mr. Barton. Thank you. Thank you, Mr. Chairman. I have
served on this committee since 1986. I have served with three
of the four former Chairmen. Mr. Wiley preceded me. We have had
some agreements. We have had some disagreements. So it is good
to have all four of you gentlemen here today.
When I was chairman of the full committee back in 1996, my
committee introduced a bill we call the COPE Bill, the
Communication Opportunity Promotion Enhancement Act of 2006. It
dealt with national franchising, net neutrality, public
educational and governmental access, E911 and what we now call
VOIP. It passed this committee 42 to 12, and passed the House
321 to 101. But it didn't come up for a vote in the Senate. I
voted for the Telecommunications Act of '96 and the Cable Act
of '92. And I hope this year to get to vote for another major
bill that comes from the leadership of Mr. Upton, Mr. Walden,
Mr. Waxman and Ms. Eshoo. This is a good thing to be doing. And
we are going to get some good information from you gentleman.
And we appreciate you being here.
Mr. Walden. The gentleman's time has expired. I appreciate
his comments. We will now go to the former chairman of the
committee, Mr. Waxman, for opening comments.
OPENING STATEMENT OF HON. HENRY A. WAXMAN, A REPRESENTATIVE IN
CONGRESS FROM THE STATE OF CALIFORNIA
Mr. Waxman. Thank you very much, Mr. Chairman. I appreciate
your convening this morning's hearing and launching the
subcommittee's examination of potential updates to the
Communications Act. And I want to thank our distinguished panel
for being here to help us think through these ideas. And I
think I have been in Congress during the time that all of you
have been the heads of the FCC.
Technology has changed at a blistering pace since the
enactment of the 1996 Telecommunications Act, 18 years ago. The
communications and technology industries are a thriving sector
of our economy. As broadband plays an increasingly central role
in the daily life of our Nation, having a strong Federal
Communications Commission to oversee its successful growth is
more critical than ever.
Yesterday, the DC Court affirmed what never should have
been in question. The FCC is the expert agency charged by
Congress to oversee broadband networks. In doing so, the Court
reaffirmed that the FCC has broad, flexible authority to
regulate in the broadband and digital age. However, while the
Court recognized the FCC's jurisdiction, it also overturned the
specific rules the Commission had adopted in the open Internet
order. I believe the FCC now has an opportunity, as well as a
duty, to exercise the authority the Court recognized yesterday
and reinstate the no-blocking and nondiscrimination rules. An
open Internet is critical to the continuing growth of this
economic sector.
The Internet is a vibrant platform for commerce, innovation
and free speech. Having enforceable, open Internet rules of the
road means that consumers are in control of their experience
online. I am pleased that Chairman Wheeler has stated his
intention to expeditiously adopt a new set of rules following
the Court's guidance. And I look forward to working with the
chairman and my colleagues in Congress to make sure these pro-
consumer, pro-competition policies will continue to guide the
expansion of broadband services.
This subcommittee is now embarking on a journey to update
the Communications Act. And regardless of the advancements in
network architecture or transmission protocol, the principles
of competition and consumer protection remain as sound today as
they were in 1934. I know Chairman Wheeler recognizes the
importance of these values and the action of the FCC that plans
to take later this month to initiate technology transitions
trials reflects that.
I look forward to hearing from our witnesses about what
Congress can do to help the FCC meet the challenges of the
broadband and digital age.
Thank you, Mr. Chairman. I want to yield the balance of my
time to Mr. Doyle.
OPENING STATEMENT OF HON. MICHAEL F. DOYLE, A REPRESENTATIVE IN
CONGRESS FROM THE COMMONWEALTH OF PENNSYLVANIA
Mr. Doyle. Thank you, Mr. Waxman. Mr. Chairman, thank you
for holding this hearing. And thank you to this distinguished
panel. It is good to see all of you here in front of the
committee.
I just want to briefly concur with Mr. Waxman in light of
yesterday's decision by the DC Circuit that I want to encourage
Chairman Wheeler to work quickly to ensure that the Internet
remains an open platform for innovation, competition and
economic growth, which the FCC now clearly has the authority to
do. I look forward to working with the Commission and the
stakeholders to put in place a robust framework that sustains
an open Internet.
Mr. Waxman, I thank you for your courtesy. And I would
yield back to you if someone else needs some more time.
Mr. Waxman. Would--like a minute? If not, I yield it back,
Mr. Chairman.
Mr. Walden. The gentleman yields back the balance of his
time. We will proceed now to our distinguished panel of
witnesses and begin with Chairman Richard Wiley who was
nominated by President Nixon and served as Chairman of the
Federal Communications Commission from 1970 to 1977. As
Chairman for most of the '70s, Chairman Wiley's tenure at the
Commission predates many of the major changes in the
communications sector. Chairman, we are glad to have you here
today. Pull that microphone up close, and then we are good to
go. Thank you for being here. You need to push the button on
the microphone there one time.
STATEMENTS OF RICHARD E. WILEY, CHAIRMAN, WILEY REIN LLP; REED
E. HUNDT, PRINCIPAL, REH ADVISORS; MICHAEL K. POWELL, PRESIDENT
AND CHIEF EXECUTIVE OFFICER, NATIONAL CABLE AND
TELECOMMUNICATIONS ASSOCIATION; AND MICHAEL J. COPPS, SPECIAL
ADVISOR, MEDIA AND DEMOCRACY REFORM INITIATIVE, COMMON CAUSE
STATEMENT OF RICHARD E. WILEY
Mr. Wiley. Thank you very much, Chairman Walden, Ranking
Member Eshoo and other subcommittee members. Thank you for the
invitation to testify today.
While I know it is not going to be self-evident due to my
youthful appearance, I have been involved for nearly 45 years
in Federal telecommunications policy. And from my own
standpoint, what has occurred during that period is simply
amazing. When I was at the FCC in the 1970s, the average
American enjoyed just three broadcast television stations, and
one local and long distance telephone provider. And the
Department of Defense had just begun to explore a revolutionary
computer project known as ARPANET. But today, our citizens have
access to hundreds of video channels delivered by countless
providers and transmission technologies, dozens of voice and
tech services, numerous wire line and wireless companies. And,
of course, ARPANET has morphed into the Internet, which has
become a universal medium of communications.
Interestingly, the bulk of this stunning technological
metamorphosis has emerged since the 1996 Telecommunications Act
was passed. That legislation significantly altered the rules
governing virtually every aspect of communications. The act's
purpose was as simple in theory as it was complex in
implementation. That is to provide for a pro-competitive,
deregulatory national policy framework designed to accelerate
the deployment of advanced services and open all telecom
markets to competition.
To this end, the statute sought to eliminate cross-platform
barriers and to encourage competition among service suppliers,
previously treated as monopolies or oligopolies. Now to the
credit of the drafters, the 1996 act helped to bring about the
vibrant competition that consumers enjoy today in a variety of
communication sectors, be it voice, data or video. Whether
delivered by twisted pair coaxial cable, optical fiber or the
electromagnetic spectrum, myriad providers today are offering
their customers suites of advanced services in a marketplace
that really could not have been imagined 18 years ago.
In my view, where the statute and indeed FCC implementation
has succeeded is when a lighter regulatory touch has been
applied to markets such as mobile and information services. The
result has been that these sectors have thrived. For example,
in the robustly competitive wireless marketplace, there are now
more wireless subscriber connections than the population of the
United States. Just think of that. And mobile broadband has
spawned an entirely new industry. Mobile apps, one that is
estimated to employ more than 500,000 developers and related
jobs, and contributes billions to the economy.
A similar success story is unfolding in the delivery of
digital content where seemingly unlimited video streaming Web
sites have developed to compete against traditional MVPDs
offering an eagerly waiting public new ways to consume video.
This marketplace, I would suggest, is emerging because of
innovation and competition and not because of Government
regulation.
Conversely, where the Government has been less effective in
maintaining is in maintaining highly restrictive regulations on
traditional industries like, for example, wire line telephony
and broadcasting. The end result has been to disadvantage these
sectors, even though they may be providing services that are
often equivalent to those offered by their less regulated
competitors. In the developing IP centric world, all types of
providers should be able to market all kinds of services,
employing the same computer oriented language that defines
digital communications.
And yet, the 1996 act continues to regulate communications
markets differently based on the conduit used to reach the
customer, as well as the geographic location where traffic
originates and terminates. Now, the underlying problem is not a
failure of Congressional or FCC vision. Instead, the reality is
that the Government has great difficulty in writing laws or
promulgating regulations that can keep pace with advancing
technology, and especially so in a dynamic and ever changing
industry like communications.
Thus, I would suggest that the objective of a statutory
rewrite should not be to legislate premised on the current
state of the marketplace, or even on predictions of what it may
look like in the future. Instead, Congress may want to consider
a flexible and technologically neutral framework that will be
capable of adapting to technical invention and innovation,
whatever that may prove to be.
In this regard, let me close by setting forth a few
principles that might guide the drafting of a new statue.
First, the industry's silos embedded in the 1996 act should be
abolished. And, instead, functionally equivalent services
should be treated in the same manner, regardless of who
provides them or how they are delivered to consumers. Second,
the traditional dichotomy between interstate and intrastate
services should be eliminated, because regulatory
classifications based on geographical end points no longer
makes sense in an IP environment. Third, legislation should be
focused on maintaining consumer protection and public safety
regulations. Conversely, economic regulations should be
considered in the case of noncompetitive markets or in the
event of demonstrated market failure. And, fourth, new
regulations should be instituted with a lighter touch, as I
said, accompanied by sunset provisions so that the rational for
continued Government intervention can be reviewed on a regular
basis.
Thank you once again for the opportunity to testify.
[The prepared statement of Mr. Wiley follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Walden. Chairman Wiley, thank you very much for your
learned comments. We appreciate your counsel. We go now to
Chairman Reed Hundt who was nominated by President Clinton and
served as Chairman of the FCC from 1993 to 1997. Chairman
Hundt's tenure at the Commission saw the passage of the Omnibus
Budget Reconciliation of '93, which granted the Commission the
authority to auction spectrum licenses, and the
Telecommunications Act of '96. So, Chairman Hundt, thanks for
joining us today. We look forward to your comments as well.
STATEMENT OF REED E. HUNDT
Mr. Hundt. Thank you, Chairman Walden. Thank you for
inviting me. Good morning to Ranking Member Eshoo and to all
the other members of this distinguished committee. I am very
proud that many of you have become lifelong friends. And it is
a pleasure to be here with you.
I also want to thank the DC Circuit for giving me a
flashback to law school so that I was late last night
scrambling to read the key case right before this class. I have
a feeling I am not the only person here who did that, but I
also want to note I didn't have any staff or classmates. So I
apologize if I haven't read it correctly, but I thought that I
would throw away my remarks and, for whatever it is worth,
offer you my reading of the case.
In my view, the DC Circuit has written, first, a very, very
well-reasoned and very important case. There is no question
that this reflects that Circuit's experience in these topic
areas, and that they have brought that experience to bear in a
bipartisan way to express a view about how the United States
looked to grant the authority to create the legal culture that
governs broadband.
What have they said? I believe the Court has vindicated the
wisdom of Congress in the 1996 act. Specifically, the Court has
said that when Congress, in that act in Section 706 conveyed to
its expert agency the ``authority to enact measures encouraging
the deployment of broadband infrastructure.'' In doing that,
according to the DC Circuit, Congress said the FCC, you will be
our instrument for creating a flexible and a supple legal
culture that will change over time as the market changes and as
technology changes, but that can always be used to protect
competition, to protect consumers and, fundamentally, to make
sure that absolutely everybody in America is participating in
the common medium of the Internet, and that absolutely
everybody in America is able to use it to publish their views
and to review all the views of everyone else. Not all those
words are in this decision, but almost all those words are
actually in this decision.
Section 1706, of course, is just one part of the 1996 act.
But I know I don't have to remind many of the Members here.
Maybe I don't have to remind any of the Members here. That was
passed by a very large bipartisan vote in the Senate and in the
House. We all were--those of us who were in public service then
remember being in the Library of Congress when President
Clinton, the Democratic President, passed this law that was
passed by a Senate controlled by the Republicans and a House
controlled by the Republicans. And all came together and said
we have a common vision. And that is that there will be
networks. We did not know technically speaking what they would
all exactly look like, but that there would be networks that
would connect all of us to each other and to all of the
resources of information that in fact would be utilized for
entrepreneurship, for innovation and for learning. And I have
to say, this is what has happened.
Now, no one here thinks the Government built these
networks. No one thinks the FCC built these networks. But
everyone should know that the legal culture that was created by
Congress and its expert agency, through the terms of Republican
and Democratic Chairs, the legal culture is the legal culture
that is regarded all around the world as the absolute best
legal culture for governing the Internet. Any one of us knows
12 things that we think should be done differently, or maybe
two dozen. But we ought to recognize, just for a little while,
that we as a country should pat our country on the back and
say, for the last 20 years, the legal culture that has been
created that has governed the Internet has really created the
best possible environment for innovation, for entrepreneurship
for consumers. That is what has actually happened. And this
Court has said and that law still exists. This Court has said,
already, Congress has enacted the law that gives the FCC the
authority to protect competition and consumers. And that
authority, according to this Court, lies in Section 1706. And
the Court also said that Congress can--that the FCC can, if it
choose, classify broadband as a common carrier. It could use
either of these methods. It could use one of these methods. But
it can accomplish the goals that are stated in the act and that
have repeatedly been restated by this Congress.
The only thing the Court said is if you are going to pass
rules that look like common carrier rules, and you are going to
classify broadband as an information service, then you are
going to be creating a contradiction that we won't permit. You
can't call it an information service and then pass rules that
look like common carrier rules, because if it quacks like a
duck, it is a duck. So that is why it was sent back.
I read a lot of articles that said that this was a victory
for Verizon. This is a victory for Congress. If it was a
victory for Verizon, it was a Pyrrhic victory. It was the most
perfect example of a Pyrrhic victory since Pyrrhus. So I just
want to compliment this Congress on passing a supple law that
has worked well, and this Court has just said still will permit
you to achieve your goals through the expert agency. Thank you.
[The prepared statement of Mr. Hundt follows:]
[GRAPHIC] [TIFF OMITTED]
Voice. Thank you.
Mr. Walden. Thank you, Chairman Hundt. We appreciate your
comments and your staying up all night to cram for our hearing.
We will now turn to Chairman Michael Powell who was nominated
by George W. Bush and served as Chairman of the FCC from 2001
to 2005. During Mr. Powell's Chairmanship, they saw a
significant increase in the deployment of broadband to American
homes, as well as convergence of services toward the bundles of
services that are common today, among many other things.
Chairman Powell, thank you for joining us today. And please, go
ahead.
STATEMENT OF MICHAEL K. POWELL
Mr. Powell. Thank you, Mr. Chairman. And as a former
Chairman, I am happy to be sitting around with a bunch of these
other Chairmen offering, as best we can, our historic
perspectives on how to prudently go about rewriting the act,
should that be your intention. And I am pleased to be with
Ranking Member Eshoo again and all the distinguished members of
the committee.
I think it goes without saying, and all of us will say it
in different ways that the world has changed quite radically
from 20 years ago in terms of markets and services. But don't
ask us, ask your kids. Ask them to name three broadcast
networks, if you will. Ask them to do without the Internet for
a week. And for God sakes, ask them to put their phone down at
dinner and see what reaction you get. I think you will be
convinced.
That transformation has taken place largely because of an
enormous revolution in network architecture in the form of the
Internet, which has unleashed a form of intermodal competition
that heretofore wasn't really possible. And it has really
introduced an exciting world. And we should remember, gave
birth to a host of companies and opportunities that never were
envisioned before, the companies that aren't here--Google,
Facebook, Amazon, eBay, Twitter, Instagram, you name it--all
able to be born and flourish because of this transformation.
I would say that any consideration of the act should start
with not only cataloging its ills but cataloging its success,
as much as Reed was alluding to. I think it is really important
to note that over this period, we have seen the most stunning
amount of investment in infrastructure and architecture that we
have ever seen. We have reached 90 percent of Americans faster
than any other technology in world history. Innovation and
growth have continued at exponential rates with broadband
increasing over 19 times just in the last decade, doubling
basically, increasing about 50 percent annually. That is a
stunning achievement and something we should make sure we keep
going. So I think, you know, being guided by the old maxim of
do no harm is an important cautionary tale.
As I thought about how you might think about architecting a
new regime, I am guided by the idea of the Internet itself,
which is the fundamental principle of simplicity as a design
principle. It has been a very, very powerful one in the
Internet. And I think it offers some guidance in this space as
well.
So I would like to, toward that end, offer--I am going to
see Mr. Wiley's four principles and do them three better and
offer you seven as briefly as I can. The first is we have heard
a lot about innovation. I do think the principle goal of the
Government should be to nurture that innovation. This is the
kind of formenting change we have never been able to harness as
fully as we are today. Innovation has allowed us to bring
completely new products and services and network changes to the
market. It has created a form of creative destruction that
keeps the market energetic and keeps a monopoly in check. And I
think it has created new kinds of transparency for the American
consumer through crowdsourcing and visibility. And we should
study the conditions that go into innovation and make sure we
harness them. I think three are critical. Innovations really do
require freer markets. And a market that moves at Moore's Law
speed, the pace of adaptation, transformation and change are
incredibly fast. And there needs to be a constant and intense
dialogue between producers and consumers. And we should be
careful to protect that.
Innovation requires risk taking. And ask we know, most new
adventures fail. There has to be room in Government policy for
failure. There has to be room in Government policy for
encouraging taking those risks. And innovation requires
stability. Investing more than a trillion dollars, as
Congressman Eshoo was talking about earlier, since 1996 is
stunning. But it requires a stable regulatory environment to
provide that uncertainty. Because if investment slows,
innovation will slow with it.
The second rule of simplicity I think is once you have
created a lighter regulatory environment by trying to pursue
the maxim of less is more, organize it better. We certainly
have heard about the challenges of silos and buckets. Clearly,
that had its place in another time when these technologies,
applications and type of companies were deeply intertwined,
were not able to provide alternative services in other spaces.
That day has moved on, and we certainly crave a more unified,
integrated kind of legal regime that doesn't make those sorts
of distinctions. In fact, as I have heard mentioned today, I
think yesterday's court decision in the multi-year debate on
net neutrality that illustrates the almost torturous
challenges, sometimes, of addressing a modern circumstance in
using provisions of last century's rules. I think there is
certainly widespread agreement on core principles around an
open Internet. After somewhat kludge past we have had to follow
in an effort to implement them has made the matter, I believe,
infinitely more complex and controversial than necessary. And
the threat of radically upending the longstanding light
regulatory foundation of broadband on which massive investment
and growth have been built with good effect, to implement one
set of rules seems distressing. Any shift of that magnitude, I
do think would require Congress'--the people's representatives
to weigh in on.
A third principle, give regulators the ability and
obligation to address changing markets. As we have said, the
markets move drastically. And the FCC often has limited ability
to make those migrations. Yes, in places they have. There are
other instances in which they have not been able to, even when
they concede that the fundamental circumstances are changed.
Fourth, the law should ensure competitive parity and
technical neutrality. There is a hodgepodge of applications of
statutes I could point out in which certain rules apply to one
sector of a service and not to other sectors. This has just
really been an outgrowth of the passage of years and the
changing nature of companies. But there are many rules that
apply to cable, for example, that don't apply to DBS for no
discernible reason. One very valuable thing for the committee
to do is prune through the statute to try to harmonize those
differentiated treatments as best as possible.
Fifth, the FCC should police markets, not create them. I
think this is genuinely well understood. But there is a role
for a cop on the beat. What I don't think there should be is a
master chef who believes it is the Commission's objective to
make markets or create the conditions and circumstances for
them.
And, finally, the last two, timeliness. If you are working
in Moore's Law, you need timely and prompt decisions from the
Government.
Lastly and most importantly, the law still needs to
preserve important societal values and protect consumers from
harm. And the FCC and the Government will always have a sacred
responsibility in that regard.
Thank you for your time.
[The prepared statement of Mr. Powell follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Walden. Chairman, thank you. Speaking of cops on the
beat----
Mr. Copps. Here I am.
Mr. Walden. We will now go to Michael Copps, served as
Acting Chairman of the Federal Communications Commission from
January to June of 2009, and served as Commissioner from 2001
to 2011. Prior to joining the Commission, Commissioner Copps
worked right here on Capitol Hill and the U.S. Department of
Commerce. Commissioner Copps, Chairman Copps, thank you for
being with us. And we look forward to your comments to round
out our panel.
STATEMENT OF MICHAEL J. COPPS
Mr. Copps. Thank you, Chairman Walden, Chairman Upton, Ms.
Eshoo, Mr. Waxman, vice chairmen, former chairmen, and all the
members of the committee. I am delighted to be here.
We are here today to review whether the Communications Act
needs to be updated or otherwise reformed. I have heard some
say that simply because the act is old, it must be obsolete,
that no matter how well it has served us, an act written 18
years ago cannot have relevance in today's altered world. Now,
as someone only a little younger than the original act of 1934,
I would raise a caution flag or two. The Declaration of
Independence and the Constitution were written long ago, too.
Yet, we still find them critically relevant in our lives. While
it is praiseworthy to ponder changes to the law, I would
suggest firstly that the framework of the current statute
remains in many ways strong, and secondly that the current
act's provisions can still do much to improve our
communications landscape to enlarge economic and social
opportunity for all of us and nourish the kind of civic
dialogue upon which successful self-government inevitably
rests.
In an ideal world, most of us would welcome an up-to-the-
minute rewrite of the law to reflect how we believe it could be
improved. The last such revision in 1996 was born of a unique
political moment that aligned a sufficient and sundry number of
stakeholders across sectors and constituencies who were able to
negotiate a compromised statute that, while far from perfect,
at least envisioned delivering to every American, no matter who
they are, where they live or the particular circumstances of
their individual lives, the most advanced communications,
technologies and services feasible at reasonable and comparable
prices, replete with consumer protections, rights of privacy,
assurances of public safety and utilizing competition to help
achieve these goals. Putting the statute to work to deliver
these benefits was my mission at the FCC, working with some of
the most amazing public servants anywhere. Nowadays, I carry
out my public interest mission in the nonprofit sector at
Common Cause.
In the immediate wake of the new law's passage, the
Commission indeed made important strides to carry out these
congressional mandates. But, alas, things changed. Some of the
very interests who helped negotiate the new Communications Act
spend more time undermining the statute than implementing it.
Such efforts continue to this day, as we saw in yesterday's
court decision that, left unaddressed, will seriously
jeopardize the future of the open Internet.
I appeared in front of this panel many times over the years
to voice my dissent on Commission decisions involving the
reclassification of communication services, industry
consolidation across both our telecom and media sectors, the
elimination of policies that had long safeguarded the public
interest, and the heavy toll thereby exacted on consumer
choices, consumer prices, and slowing the deployment of
competitive, low-cost, high-speed broadband--this century's
most important infrastructure.
We can I know debate for hours, but a record of these
hearings needs to show that many people do not share the easy
optimism that others express about the state of America's
communications readiness. As you consider legislation in the
coming months, some will tell you that America is a veritable
broadband wonderland, a triumph of free market entrepreneurship
that puts us at the front of high-tech nations. But there are
stubborn facts we must never avoid. The United States,
originator of so much of the technology behind the Internet,
has fallen from leader to laggard in broadband penetration.
According to the OACD, our country is 16th in wired broadband
connections for 100 residents. Worse, comparative research
shows that Americans are paying more and getting less than
wired broadband consumers in competitor countries. The
Department of Justice has noted that the local wireless
marketplace offers consumers little in the way of choice, even
as mobile data plans are saddled with data caps that harm
consumption and innovation alike. And once again, for the third
time, the FCC found itself unable to certify that we enjoy a
competitive wireless marketplace. Surely, the time is now for
proactive and pro-consumer measures to make quality broadband
universally affordable once and for all.
While we are not gathered here this morning to rehash those
decisions, I do think it is important to understand that many
of the faults attributed to the current statute are more the
result of powerful industry efforts to undermine it and of
Commission decisions that too often aid and abet the effort. So
while we open discussions on revising communications law, let
us recognize that our present statute has been interpreted and
implemented in ways not originally intended, and that many of
its constituent parts are still relevant, workable and
consumer-friendly. There is a statute to enforce, and putting
that job on hold while we consider changing it is not a good
option.
Additionally, I think most of us here this morning
understand that finding a new correlation of interest that can
come together to forge the Communications Act of 2015 or 2020
would be even more challenging than the jockeying that gave
birth to the current law.
As the world races ahead, we have a duty to make the best
possible use of the laws we have in order to achieve the
ongoing goals that Congress laid out. These remain powerful
interests. A statute that invokes the public interest over 100
times, that highlights the universality of service,
competition, and consumer protection, and that underlines the
necessity for media that informs communities and engages
citizens cannot be all bad. Would I have some preferences for a
reworked statute? Of course, although a good part of it would
be making sure the Commission and the industry follow through
on what is already on the books, to foster competition and
consumer protection, to deliver on public safety, to preserve
privacy in this age of massive intrusion, to avoid never-ending
industry consolidation, to put the brakes in gatekeeping in our
media, both traditional and new, and to provide the FCC with
the resources it needs to discharge its responsibilities.
My greatest disappointment at the Commission is that we
didn't do enough to encourage media that truly reflects the
diversity of our people. Can you believe that today there is no
African-American-owned full-power commercial television station
anywhere in the land? America is diversity. And if our media
fails to represent diversity--diversity of providers and
content and viewpoint and ownership--it fails us. The sad
plight of communications across our native lands needs to be
addressed with renewed urgency and additional resources.
Imagine that there are still areas where the majority of first
Americans cannot access even plain old telephone service, let
alone the kind of high-speed broadband that is the most
powerful tool they could have to create opportunity where there
is so little opportunity now.
I would hope we could find ways to stimulate basic
communications research by private-public partnerships. I am
not talking about the next glitzy app, but the basic
fundamental research that will determine who wins and loses in
the global sweepstakes.
I am for making the Commission more efficient, like doing
away with the closed-meeting rule that prevents more than two
Commissioners from even talking to one another. And I hope that
reform needs to go forward, whether or not it is accompanied by
more far-reaching revisions. And I believe that when three
Commissioners have something they want to do at the FCC, that
item should go on the agenda.
My list could go on, and I welcome the opportunity to
discuss such things today. But I always come back to democracy,
because that is what concerns me most. Our country is in
trouble, reminiscent in many ways of the severity of the
economic, global, and social crises it faced in the 1930s, and
there are no guaranteed happy outcomes. I just do not see how
citizens can be expected to navigate through all these issues
and come out with smart decisions for our Nation's future when
the telecommunications tools we need are not available to all
and in a media environment where community outlets have been
short-circuited, investigative journalism hangs by a thread,
and wherein we expect some invisible hand to produce those
things that the market itself no longer produces and which in
fact the market alone has never produced.
Communications are vital to our economy, but they are the
lifeblood--the lifeblood of our democracy. They must be
available to all, open to all, never the exclusive province of
the affluent or the few, always alive to the common good. We
shouldn't see our communications world as part telecom, part
media or part traditional media, part new media. We have one
communications ecosystem. And our job is to make it work for
everyone. And I know of no greater challenge that confronts the
Congress, the Commission or the country.
Thank you for holding this hearing today and for inviting
me to be a part of it, and I look forward to our discussion.
[The prepared statement of Mr. Copps follows:]
[GRAPHIC] [TIFF OMITTED]
Mr. Walden. Chairman Copps, thank you for your thoughtful
presentation. We appreciate it. And as you know, our
subcommittee has moved forward on some of these initiatives,
and we welcome encouragement over on the other side of the
building on Sunshine Act and a few other things.
So I would like to open up the questioning process now with
the questioning of Chairman Powell. Since you have presided
over the Federal Communications proceedings that classified
cable and telco-delivered broadband services as information
services, do you think we would have seen the same level of
broadband investment during the past decade had the FCC
classified these services as common carrier communication
services?
Mr. Powell. I think in short, my judgment is no. I think
the Internet at the time that that classification decision was
made was more unknown than known. I think it was a period of
rampant experimentation. I think the capital required to drive
and produce the broadband networks that were not in place
needed conditions that allowed them the flexibility to make
those choices without the risk that they would be put back into
kind of the monopoly era regulatory model. So I think it was an
important component, disbursing that investment.
Mr. Walden. Chairman Wiley, does the Federal Communications
Commission need to continue to have broad discretion over
mergers and acquisitions, or should the Department of Justice
anti-trust review be enough?
Mr. Wiley. Well, I think there has been duplication from
time to time. Although I would point out that the Justice
Department is looking at anti-trust aspects, and the FCC has
got a broader public interest standpoint. I think the two
agencies need to work together, and I think they have worked
together through the years. So I think the process is
appropriately developing. But I do worry sometime that we see
great delays in the handling of these consolidations and
mergers, which I think is contrary to the best interest of the
companies involved, and also contrary I think to the public
interest and consumers.
Mr. Walden. And to both Chairman Powell and Chairman Wiley,
can the FCC ever really future proof regulations given how
rapidly technology is changing? And are elements of the
Communications Act holding the Commission back from flexibly
addressing new technologies?
Mr. Powell. No, I don't think any agency can future proof
the regular environment, no more than Congress could write a
statute that wouldn't overtime fray in its relevancy in a
market that is driven by technological change. I do believe
though that there are tools to give greater flexibility and not
more prescriptive constraints that we have seen in some
regulatory vehicles. So no, they can't future predict. And I
thought--I think the other guidance is I think asking the
Commission to engage in anything that requires predictive
judgment about future outcomes should be avoided where
possible.
Mr. Wiley. Yes, and that is why I suggested in my prepared
testimony that we ought to have an opportunity to have a light
touch here and have the Government--in your statute, have a
very flexible technology-neutral type of approach to this,
because it is very hard to predict. And the 1996 drafters did
not really foresee the development of the Internet to become a
universal medium. And I don't think they predicted broadband to
be what it is today. So I think you have to step back a little
bit and I think allow the technology to develop and to allow
innovation--invention to occur without stifling it.
Mr. Walden. OK. I am going to start with Chairman Powell,
and then each of you can take this one in the minute and a half
I have left. Should the Internet be regulated as a common
carrier under Title II?
Mr. Powell. Well, for me, that is easy. No. I think one of
the things I would like to say about that though is that people
should fully understand what that means. Even if that were able
to give you a better basis for recovering these two components
of the rules, it would be the instant application of thousands
of pages of decades old regulations instantly to the Internet
where they heretofore have not been, both through--on a
bipartisan basis, we have had a much more regulatory
environment. The shatter to investment backed expectations that
would result I think would be exceedingly damaging and more
than most people realize.
Mr. Walden. Chairman Hundt, do you care to comment on that?
Mr. Hundt. Just two points. The 1996 act was shorter than
the rules for Little League Baseball, meaning Congress does not
necessarily have to write thousands of pages. And in its
wisdom, it did not do so in 1996. And that act now has given
the FCC the ability to achieve the fundamental goals. As I
mentioned earlier, it can choose to use the specific methods
that are dictated by the Common Carrier Treatment. But it
absolutely does not have to use very many of these methods to
accomplish its goals. In fact, the Court on page 61 outlined
its view of what the FCC should do----
Mr. Walden. Right.
Mr. Hundt [continuing]. And said you can treat it as common
carrier and have about 30 words that establish the principles.
I am not saying they should do that. I am saying they can do
that.
Mr. Walden. Do you think they should?
Mr. Hundt. I think what they should do--and I hesitate to
say to the current Chairman what he ought to do, but since you
asked, I think they ought to take a fresh look at all the facts
and law as exist right now, and they also ought to be down here
listening to you all and having a robust discussion. But the
key point is they have the authority.
Mr. Walden. Got it. Real quickly, the two remaining,
because I have gone over my time--violated the rule. Conclude.
Mr. Wiley. I think--OK.
Mr. Walden. No, go ahead.
Mr. Wiley. All right. I think it would be a big mistake to
turn away from the information service pathway that we have
started and go back to common carrier regulation however that
might be defined. I think we want to provide an environment
where there is I think opportunities for investment,
encouraging innovation, allowing businessmen to try to
experiment and try to find ways to serve the customer. And I
think to go back to a 1934 style common carrier regulation,
which was really based on regulating the railroads, I think
doesn't make any sense at all.
Mr. Walden. All right. Mr. Copps, real quick?
Mr. Copps. My answer is yes, I do. The Court says we have
the authority to do that. Whatever we do, we need to do it
quickly, promptly and provide some certainty in the
marketplace.
Mr. Walden. OK.
Mr. Copps. I have always stressed the importance of that
reclassification. People talk about Section 706. I have always
said that there is authority there to do a lot of things. But
what--we don't need now to get into months of third ways and
fourth ways and fifth ways to thread this needle. We need some
clarity. Business needs clarity.
Mr. Walden. Right.
Mr. Copps. Consumers need clarity.
Mr. Walden. Yes----
Mr. Copps. The Commission needs clarity, too. And we have
to make sure whatever we do that things like interconnection
and those things, consumer protections, are provided.
Mr. Walden. Appreciate that. I thank the indulgence of the
committee. I turn now to the Ranking Member, Ms. Eshoo, for 5
minutes.
Ms. Eshoo. Thank you, Mr. Chairman, and to each one of our
distinguished witnesses. What a rich, rich hearing with your
testimony. Thank you very, very much. To Chairman Hundt, thank
you for your eloquent summation, without any staff or other
counsel to assist you late last night.
In your testimony, you discussed the importance of the
decision that this country made to allow Internet service
providers full use of the existing telephone network without
paying the owners anything. It was a very, very--I mean one of
the essential platforms in the success of the Internet. So,
essentially, we said the incumbents could not be gate keepers
that charge a toll for getting online. In your view, does
yesterday's circuit decision reverse that longstanding policy?
Mr. Hundt. No, it doesn't. And I think, Congresswoman, that
you have put your finger on the central issue, if I may say.
Yes, Internet service providers are gate keepers. And they also
are two-sided networks--or two-sided gate keepers, like any
gate keepers.
Ms. Eshoo. Um-hum.
Mr. Hundt. There is somebody on one side and somebody on
the other side.
Ms. Eshoo. On the other--um-hum.
Mr. Hundt. And so the situation then is very similar to the
credit card industry. So we all have credit cards. And then
there is the credit card company. And then on the other side of
that, there is the restaurant. And it is very useful for
restaurants that we all have credit cards. And it is useful for
us that all the restaurants will take them. But it is not so
useful if the gate keeper says now, some of these restaurants,
we are not going to allow them to participate in the system.
Ms. Eshoo. Um-hum.
Mr. Hundt. Translating that to the present, if the Internet
service provider were to say, you know, not all the people that
are putting the content on their computers, we don't want all
of them to be able to have access to all of the users.
Ms. Eshoo. Um-hum.
Mr. Hundt. That is a problem if the gate keeper behaves
that way.
Ms. Eshoo. Um-hum. Thank you very much.
Mr. Hundt. That is the central issue.
Ms. Eshoo. Yes, thank you very much. To Chairman Powell, it
is wonderful to see you again. As you know, under current law,
cable subscribers are required to buy the so called broadcast
basic tier as a condition of getting access to any other cable
programming. As we transmission consent fees continue to rise
and are inevitably being passed on to consumers in the form of
below the line fees--I mean, I don't think it is a sustainable
business model, most frankly. I just don't think that it can
continue to work this way. Do you think that the so called must
buy requirement makes any sense? Shouldn't consumers have the
ability to lower their bills by electing to receive broadcast
channels over the air?
Mr. Powell. I don't. I think it should be an extraordinary
circumstance in which the Government tells the consumer you
have to buy a television package as a prerequisite of buying
more of what you want, which is essentially what the rule does.
Ms. Eshoo. Um-hum.
Mr. Powell. The other grounds on which I think it is
fatally flawed is only cable subscribers have that obligation.
DISH and direct satellite subscribers do not have that
obligation. And they are the second and third largest MVPDs in
the United States. Yet, a consumer who subscribes to DirecTV
does not have to, under a must-buy rule, purchase those
programming. But if they switch to Comcast or Time Warner
Cable, they do. That is the parity point that I was making, and
I think is a perfect place for harmonization.
Ms. Eshoo. Um-hum. Thank you very much. Chairman Copps,
thank you for being here today, the man with real wisdom, the
man that we always count on to put--place Democracy front and
center of everything.
Mr. Copps. Thank you.
Ms. Eshoo. You know so well that since Citizens United, the
last two election cycles that have set records for money spent,
including hundreds of millions of dollars from undisclosed
sources, the bulk of this so called dark money spending by
outside groups that hide their donors go toward negative TV
ads. We all know that. Would you recommend changes to the
Communications Act to ensure that voters are informed about who
exactly is behind these anonymous TV ads, and is there anything
in your view that the FCC can do on its own without
Congressional intervention?
Mr. Copps. I would recommend enforcing the statute that we
already have. And if you take a close look at Section 317,
which has to do with sponsorship identification, and which goes
back even before the Telecommunications Act of 1934 was
written. It goes back to 1927--ensuring that listeners and
viewers, more recently, know by whom they are trying to be
persuaded, whether it is a commercial product or a political
product. Those rules were last revisited in a meaningful way by
the FCC in the 1960s, which repeated that people have a right
to know by whom they are being persuaded. Since then, we have
all these new avenues of dark money and super PACs and all of
the rest. But we also have the authority, recently reemphasized
by the Government Accountability Office, the recommendation
that the Commission update those rules and get on with the job.
So we can have this kind of information available to consumers
so that when you see that negative ad, and it says brought to
you by citizens for Purple Mountain Majesties and Amber Waves
of Grain, and it is really a chemical company dumping sludge
into the Chesapeake Bay, potential voters--citizens have a
right to know that and will know that. That is basic
information that you need to have if you are going to have a
viable civic dialogue. So this is something the FCC can do. It
doesn't await a President to making a proposal to do this. It
doesn't involve Congress having to pass a law. It involves the
Federal Communications Commission doing its job. And it could
do this within 90 to 120 days and update the rules to take mind
of the new dark money avenues that I was talking about earlier.
So this would be a real way to shine a little bit of sunlight
on the dark world of TV political advertising.
Ms. Eshoo. Thank you very much. And, Mr. Wiley, thank you
for your wonderful distinguished public service. I will submit
my questions to you in writing. All right?
Mr. Wiley. All right. Thank you.
Ms. Eshoo. Thank you. Thank you, Mr. Chairman.
Mr. Walden. Thank you. We will now turn to the vice chair
of the full committee, the gentlelady from Tennessee, Mrs.
Blackburn, for 5 minutes.
Mrs. Blackburn. Thank you, Mr. Chairman. And thank you all
for the time this morning. I want to pick up where the
subcommittee chairman left off talking about the responsibility
of the FCC and what it would look like going forward. I think
that it is fair to say--and, Mr. Powell, I will address this to
you, because I have heard you say, you know, AOL was on top at
one point when you were on top of the game. And where are they
now I think was the comment. But anyway, looking at what the
FCC would be, and as we look at the Telecom Act, should be
begin to think in terms of the FCC being more as enforcement
rather than regulatory in its scope? Mr. Powell, and then Mr.
Wiley, I would like to hear from you.
Mr. Powell. I think some aspects of that deserves a fresh
examination. You know, the FCC, which I am a huge supporter of.
I have served there with great people, and I think it does an
enormously great public service and that we functions that are
critical to it in spectrum management and many other things.
But it is one of the last of the New Deal era agencies that
actually has affirmative economic regulatory power, that is the
ability to set the prices, terms and conditions of market
activity as opposed to having a more significant enforcement,
policing or consumer protection role. Not to say that some of
that may or may not still be warranted, but I do think that is
a kind of holdover from judgments of different administrative
eras. And I would recommend, you should look at the dichotomy
and the balance of that role.
Mrs. Blackburn. Look at the balance?
Mr. Powell. I do think good leaders, and many of the
sitting at this table have migrated more toward that more
defensible role. But many of those provisions still remain. And
I think they are worthy of second consideration.
Mrs. Blackburn. OK. Mr. Wiley?
Mr. Wiley. Yes. I would agree with--largely with what
Chairman Powell has suggested. I think the Commission does have
strong enforcement efforts today. And some would say almost too
strong in some instances. But I think frankly a lighter touch
is the way to go in this area.
Mrs. Blackburn. OK. Let me ask you this, privacy data
security, it is front-page news right now. It is going to be.
Do you think that now is the time for the FCC to focus on its
core competencies, or should it move over and look at privacy
data security, or leave that to the FTC, Mr. Wiley?
Mr. Wiley. I didn't hear that one. I didn't hear it. I am
sorry.
Mrs. Blackburn. Oh, privacy data security, leave it to the
FTC and the FCC focus on its core mission, or what is your
thought on that?
Mr. Wiley. I think so.
Ms. Blackburn. You think so.
Mr. Wiley. I would agree with that.
Mrs. Blackburn. OK. Mr. Powell, coming back to you, 706, we
are hearing a lot about that today. And you may have had others
who think that, you know, the FCC--that 706 is an invitation to
come in and regulate Internet services. So as you look at 706,
do you agree that the provision was intended to give the FCC
the ability to forebear from regulations that would stifle
broadband investment and innovation?
Mr. Powell. I agree that the decision certainly gives them
the power to forebear. And for many years, many people
interpreted 706 as principally deregulatory. It speaks of
removing barriers and removing obstacles, less so than
introducing them. I certainly was serving at a time where the
Commissions had held that that was not a separate basis of
authority. And in fairness to the facts, every Commission had
so held until recently. So that was the position of the law
when I was there at least. I will say though that I think if
the Commission is going to have a role in broadband, I highly
would prefer that be under the construct of the light
regulatory information services definitions that reside around
with 706 than to make a radical transformation to Title II as a
regulatory framework for those questions.
Mrs. Blackburn. OK. Thank you very much. Mr. Chairman, I
will yield back the balance of my time.
Mr. Walden. The gentlelady yields back, and the Chair now
recognizes the gentleman from California, the ranking member of
the committee on the Democrat side, Mr. Waxman.
Mr. Waxman. Thank you very much, Mr. Chairman. My
colleague, Ms. Blackburn, suggested the FCC needs to act more
like the Federal Trade Commission. The FTC does important
consumer protection work, but I believe we need an agency like
the FCC that can write forward-looking rules of the road for
industry and consumers. Chairmen Hundt and Copps, do you agree
with that?
Mr. Hundt. Absolutely, Mr. Waxman. Forward looking is--here
is the best example of a useful forward looking law. It is in
the incentive auction legislation that you passed where this
Congress said we want the FCC to establish, before the auction,
a generally applicable rule about how much spectrum anybody can
buy. That has to be forward looking. You don't want to go into
the auction with your money and not know whether or not you are
going to be permitted to win in the--keep the license that you
thought you were the high bidder on. That has to be forward
looking. So that is a great example of you all asking for a
forward looking rule and really deserving a forward looking
rule.
Mr. Waxman. Um-hum. And, Mr. Copps?
Mr. Copps. Absolutely. I concur. We all talk about how
rapidly the telecommunications, technology and services are
changing. The Commission has to be aware of that, have the
flexibility to react to that, and certainly to fulfill its
responsibilities to look into the future and try to determine
how best to fulfill its mission, which includes consumer
protection, includes privacy and includes ubiquity of services.
Mr. Waxman. Um-hum. Mr. Powell, in light of yesterday's
decision, the DC Court circuit recognized the authority granted
by Congress to the FCC in the '96 act. Do you believe that the
Agency can properly oversee the growth of broadband
infrastructure services?
Mr. Powell. I do. For a matter of record, as Chairman of
the FCC and the Commission that classified broadband the way
that it is today, we quite pointedly recognized that the
importance of that continuing role to a degree. And we believe
that the authority existed within that Title I framework to
take care of those circumstances. Whether you agree or
disagree, the Court certainly validated yesterday, from a
judicial standpoint, that Title I and 706 do provide that
flexible authority.
Mr. Waxman. Um-hum. And, Mr. Wiley----
Mr. Wiley. Yes.
Mr. Waxman [continuing]. If you agree the FCC has the
authority, do you think it ought to use it?
Mr. Wiley. Well, the Court said that the Commission could
have authority in this area. I would strongly advise, in my own
view, the Commission to let the marketplace develop and if
problems do exist, then to step in. There are avenues--if we
find blocking, if we find discrimination, there are avenues
that can be taken. I think the problem is sometimes we are in
search of a problem here that may not exist. I think if you
look at all the suggestions of the carriers that have come out
of the decision from yesterday, all want to keep the
marketplace open, all want to give consumers access to various
kind of content. And I take them at their word. I think that is
going to develop.
Mr. Waxman. Um-hum. Mr. Hundt, if we want to keep the
marketplace open, isn't it reasonable to anticipate that some
of the players will not want it to be so open if it is to their
financial advantage? Shouldn't the FCC play a role to make sure
prospectively that we have an open, competitive market with the
consumers being in charge?
Mr. Hundt. I completely agree. And if I might, I think it
is important--well, let me say this. I have the view that the
case and the statute have the following meaning. Section 1706
gives the FCC the authority to accomplish the goals you just
stated, without also requiring the FCC to make a classification
decision.
Mr. Waxman. Um-hum.
Mr. Hundt. That is to say it can make a classification
decision and act with the authority that would come from that,
but it doesn't need to do that in order to pass rules that are
authorized under Section 1706. Meaning 1706 and the common
carrier provision are two independent bases for FCC action.
That is why the FCC can choose both or either in order to have
a--making that would accomplish the goals you described.
Mr. Waxman. Didn't the Court say that the FCC made the
wrong choice and they have two titles they can rely on? You are
saying they don't need either title, they can just go ahead and
think about regulation?
Mr. Hundt. Yes, I think what the Court said is if you do
choose the information services classification, then you are
bound by the restrictions in that.
Mr. Waxman. Um-hum.
Mr. Hundt. But you don't need to make that choice in order
to accomplish the goals that you are desiring, which the Court
has said that it approves of the goals.
Mr. Waxman. Um-hum. And you don't need to be a--regulate as
a common carrier either?
Mr. Hundt. Beg your pardon?
Mr. Waxman. You don't have to regulate it as a common
carrier either?
Mr. Hundt. The Court has said you can choose that, or you
can choose 706 or you could choose both. The only thing you
can't do is choose information services classification and pass
common carrier like rules.
Mr. Waxman. Um-hum. I see. Thank you. That is very helpful.
Thank you, Mr. Chairman. Yield back my time.
Mr. Walden. The gentleman yields back. And the Chair now
recognizes for 5 minutes the former chairman of the full
committee, the gentleman from Texas, Mr. Barton.
Mr. Barton. Thank you, Mr. Chairman. I have listened to our
testimony and our questions so far. I am going to make a brief
statement before I ask a question.
I was here in 1996. And that act was a philosophical change
from where the committee had been and, to some extent, where
the country had been in terms of telecommunications policy. You
had a Republican Congress, House and Senate for the first time
in over 50 years, maybe 60 years. You had a Democratic
President, Mr. Clinton, who came from a kind of conservative
pro-business background down in Arkansas. And the former
chairman of the committee, Mr. Dingell, and Mr. Waxman and Mr.
Markey and some of those folks, had a very regulatory approach,
although not totally so, and the Telco Act of '96, Mr. Bliley
and Mr. Fields, we went--we decided to go with a market
approach. And, Mr. Copps, as he has pointed out, markets don't
always work. But, generically, if they are open and
transparent, unless there is a natural monopoly, they do give a
lot more choice to people. And that is what the Telco Act of
'96 did. It rejected the philosophy that the Government knows
best, that the regulatory knows best, that people can't--if
they have access to appropriate information, can't make choices
that are good choices. And we see reflected today in some of
the questions that Mr. Waxman especially just asked, you know,
that some of my friends on the Democrat side just don't like a
market approach. You know, how dare it be possible that under
Title I, Informational Services, you can have an open,
transparent Internet, and you don't need the FCC to tell you
what to do? My God, that is scary. We better get that FCC back
on the job. They just maybe--you know, if they can't do it
under Title II as a common carrier, well, they are just going
to have to figure out how to regulate under Title I.
Well, you know, if you look at the explosion and what has
happened, I mean, I had a young person, a very young person
about 9 years old, come into my office down in Texas and
apparently did not know there was such a thing as a hard line
telephone--did not know what that was on my desk. This young
lady thought a phone was just something you carried around with
you. And her parents were very young, and they didn't have hard
line phones in their home. And they worked out of his truck
doing contracting and stuff. She didn't know what it was.
So, you know, this thing that Mr. Upton and Mr. Walden are
starting to take a real comprehensive review, and working with
Mr. Waxman and Ms. Eshoo, it is a good thing. But
philosophically, I don't want to go back to where I have to
depend on the intelligence of Mr. Copps or Mr. Powell or Mr.
Hundt or Mr. Wiley and the three or four other wise people at
the FCC to know what is best for me in telecommunications
policy. You know, I think if we set the ground rules--and I
agree that you have to have a traffic cop. But I don't agree
that you got to be so prescriptive that the market just flat
gets strangled before it even has a chance to get underway.
So my question, and I throw it open to the panel: Is there
still a need for a Title II in the telecommunication
marketplace today, could we deregulate the telephone companies
in totality because, you know, there really is no such thing as
a natural monopoly anymore?
Mr. Copps. If we can find a way to assure that some of the
qualities that people fought for long and hard in terms of
privacy and public safety and consumer protection do not
accompany the new tools of broadband and the Internet as the
accompanied telephone, then I think we are in trouble. I like
the market approach, too. And it was decided long ago that the
telecommunications industry, the media industries would operate
on the capitalistic system. And you don't blame business for
trying to seize market control or capture the market, or even
to have gate keeping. But we have always, since very early in
the last century, had protections against untrammeled building
toward monopoly and duopoloy.
I read the '96 act, and I wasn't as intimately involved
with it as you were. But I followed it with some degree of
interest. As being somewhat more proactive, I read that act as
instructing the Federal Communications Commission to do what it
needs to do to encourage bringing the most advanced
telecommunications feasible to all of our citizens, no matter
where they live at reasonably comparable prices, reasonably
comparable services, allowing them to access media that serves
communities and provides information that are necessary to
exercise a citizen's responsibilities in a Democratic society.
So I think yes, a light touch where possible. But, you know, we
set here and talk about well, we have to do away with these
stove pipes and all. And I agree to that with some extent. But
we have--in trying that--I mean, if we are going to say we are
going to treat a telephone call you make in the Internet
entirely different than we make a telephone call somewhere
else, that is not functional equivalent. That is not treating
technologies alike. So I think----
Mr. Barton. I know my time is way over. But it is something
to think about, because we have got a real chance in the rest
of this Congress and the next Congress to build on what we
started in '96.
Mr. Wiley. I would just like to say that I agree with much
of what you say. I think in a competitive marketplace that we
see today with the kind of IP centric world, I think economic
regulation has to be considered with some skepticism. Because
if the markets are competitive, if you don't have market
failure, then the question is why should the Government be
stepping in? Consumer protection, E911, you know, those kinds
of things, that is a different story.
Mr. Barton. Right.
Mr. Wiley. But we are talking about economic regulation
here. And I think it is more questionable. And I certainly
wouldn't be thinking about going back to common carrier world
in an information services environment. I don't think that
makes sense.
Mr. Walden. Well, thank you. The gentleman's time has
expired. And the Chair recognizes for 5 minutes the gentleman
from Pennsylvania, Mr. Doyle.
Mr. Doyle. Thank you, Mr. Chairman. Once again, thank you
to our witnesses for your testimony today. We have talked a lot
about net neutrality in the court decision. So I would like to
maybe go to a couple different topics and ask Chairman Hundt
and Chairman Copps about special access. How can the FCC
enhance competition in the special access marketplace? And is
new statutory authority necessary, or do you think the
Commission has the sufficient authority to ensure that the
markets are competitive?
Mr. Copps. On a special access, I think what needs to
happen, yes, I think the Commission has the authorities for the
FCC to make up its mind. I was before this committee, and I
think you were here too. And perhaps it was Mr. Markey or
somebody who asked us all back in 2007 to sign a letter saying
we would have this problem resolved by September. And we all
said whoopee, let us do that. And it hasn't been done yet. All
these 7 years have gone by. Enormous amounts of money are at
stake here. The ability of competitors to enter the business
and to compete is at stake here. I am pleased to--at some signs
now that the FCC is beginning to move. And I want to especially
commend you, because I know you were a big proponent of getting
this data collection process going. And that is the
prerequisite of doing something final on this. The Commission
also has to look at allegations of anti-competitive practices
in special access, such things as loyalty mandates and
excessive early termination and shortfall penalties. But
getting this right is important. And each year that goes on is
billions of dollars going to maybe where they should go or
maybe where they shouldn't be going.
Mr. Doyle. Thank you. Commissioner Hundt?
Mr. Hundt. I echo Commissioner Copps' remarks and would
just add this is another example of a very useful forward
looking rule. Or to put it another way, we could all use a
forward looking rule on this topic.
Mr. Doyle. Thank you. Yes. And, Commissioner Copps, we have
been waiting years and years and years. And I hope before my
tenure in Congress is over that we will see the FCC do
something on special access.
Mr. Copps. Yes.
Mr. Doyle. And I intend to be here a little bit longer.
Commissioner Copps, the FCC recently closed a very successful
low power FM application process, and is currently considering
thousands of LPFM applications. And I want to personally thank
you for your efforts in that regards, and ask you what other
opportunities you see for the FCC to further empower
communities in innovative ways?
Mr. Copps. Well, first of all, I want to thank you, because
without you and the leadership of your colleagues here, this
would not have happened. We wouldn't have had that window, the
first one opened since 2000. And it is a window of enormous
potential. So number one, we want that to move forward with all
dispatch and maybe go from 800 low power stations to maybe
thousands of them.
Going beyond that though, we just have to look at whatever
kind of options we can think of to encourage community radio,
to revivify the peg channels and make sure that they are not
just cast aside as some of the big companies seem to want to
do, look at new models for noncommercial media, nonprofit
media. And that applies not just to media companies but to
telecom companies, newspapers and so many other things. And
there is a lot of potential here in a market that doesn't seem
to be able to provide all the tools that we need for media and
for news for nonprofit media to step in. But they are also
dragging its feet on making a lot of these determinations that
it should be making. So low power, yes, looking at channels
five and six are all sorts of options out there, put some
special emphasis on using community radio and diversity in
communities and native lands. It is just a field that is rife
with potential if we can just step up to the plate and realize
our responsibility to do it.
Mr. Doyle. Thank you. Gentlemen, thank you for your insight
today. We appreciate it here on the committee. And I will yield
back, Mr. Chairman.
Mr. Latta [presiding]. Thank you very much. The gentleman
yields back the balance of his time. And the Chair now
recognizes himself for 5 minutes.
And, Mr. Powell, thanks again for you being here today. And
if I could just start with some questions to you?
Mr. Powell. Yes, sir.
Mr. Latta. Yes, it is kind of interesting, because I am
reviewing your testimony and also Mr. Wiley's. You both used
very similar language in spots. And in your opening statement,
you said that this market requires a greater degree of business
flexibility, fewer prescriptive rules and an assurance that any
Government involvement is applied on a technology-neutral basis
and creates a better investment climate. And I also saw that
Mr. Wiley said in his testimony that the Government can't keep
up, and there is a need for flexibility and a technology-
neutral framework in his testimony, as well. So, very similar
language.
But in your testimony, when you go through it--and I found
it interesting, because when you are going through your seven
points--and for simplicity--one of the things that you bring
out--because you were also talking about flexibility and having
a better business climate--you state in your testimony that
since 1996, we have seen a trillion dollars invested in an
Internet infrastructure. And then you also laid out that the
simplicity has to be there. But in that simplicity, you said
that practicing simplicity can be scary.
Mr. Powell. Yes.
Mr. Latta. And it takes courage to discourage--discard old
ideas and rules that are no longer needed. Could you give a
couple examples of those?
Mr. Powell. Yes. It is a great, challenging question. I
think I might actually go back to some of what Mr. Barton was
talking about. If you think about one of the wisest things that
was done in the 1996 act, it has nothing to do with the
individual rules. It was the fundamental judgment that the
Government rejected the natural monopoly thesis and believed
instead that competition was the more fruitful approach. But
common carriage law inherently is about a Government-sanctioned
monopoly. It is essentially the queen of the realm who grants
an exclusive license to a ferry boat captain to go across the
river and in exchange for all the privileges of that monopoly,
they agree to be bound to serve all the citizens in a
nondiscriminatory way and other things that the sovereign
wishes to have as part of that exclusive benefit--mutual in
some regards: The monopolist gets the exclusive profits, and
the realm gets the benefits of serving all the citizens.
In some ways, in 1996, the Government sued for divorce from
companies through, you know, the notion of an exclusive
monopoly and instead said, ``Go compete, raise your own
capital, no guaranteed return on investment, no guaranteed
success.'' But yet, the lingering notions of common carriage,
which are still in the statute and, by the way, still being
raised in the context of the net neutrality debate, still hover
around our regulatory questions. To me, whether the country
comes to some committed conclusion that even with its
challenges and the need for oversight that we are really about
competition and are really ready to let go of common carriage
is a great example, a fundamental one, of how to make that
decision.
Mr. Latta. Thank you. And let me follow up with another
question. When you are looking at assessing the competition in
the communications industry, do you think updating the
Communications Act should modify how the FCC currently conducts
its competitive analysis?
Mr. Powell. I think so, only because I think there is some
ambiguity there that when managed in responsible hands works
fine. At times, it doesn't. I am worried about the FCC merger
review process in part because it professes to do a competitive
analysis following essentially anti-trust guidelines
administered by other departments. But under the public
interest standard, which I do think is valuable, it turns into
a competition of conditions. And as an anti-trust lawyer, I
used to believe that the FCC, if they are doing something bad,
shoot them. If they are not, don't let them cure harm by how
many good jelly beans you can put on the scale and to make the
thing go away. And then by doing it in a way that it extracts
these concessions as a voluntary proffer, you make sure that
the case can't be appealed to the courts, because you no longer
have standing. I think insulating the review process from
judicial review through the conditioning mechanism, and
allowing the commissioning mechanism to be a vehicle by which
the Commission can legislate beyond its authority can get
companies to do things in the context of that proceeding it
couldn't pass laws about, borders on kind of administrative
improbability. So does that happen every time? No. Do I think
it happens sometimes? Yes. And I think Congress should at least
examine the review process and see if whether better controls
could be in place.
Mr. Latta. Thank you very much. And I see my time has
expired. And the Chair now recognizes for 5 minutes the
gentlelady from California, Ms. Matsui.
Ms. Matsui. Thank you, Mr. Chairman. And I want to thank
all of the former Chairmen for being here. This has been really
an interesting and formative discussion.
Under Section 254, carriers have certain obligations to
provide universal access. In the DC Circuit's decision
yesterday, the Court made clear the FCC has a similar charge
under 706 to ensure that all Americans have access to broadband
and that the FCC has authority over broadband providers to meet
that mandate from Congress. I have two questions for all of the
Chairmen relating to the Court's decision yesterday.
The first, do you agree the FCC should and must promote
universal access to broadband for all Americans, Mr. Wiley?
Mr. Wiley. Yes, I would agree with that.
Ms. Matsui. Sir?
Mr. Hundt. Yes.
Ms. Matsui. Mr. Powell?
Mr. Powell. Yes.
Mr. Copps. Absolutely. There is no way you can be a
functioning member of society without access to this
technology.
Ms. Matsui. OK. Then does the Court's decision yesterday
affirm the FCC's authority to transition the universal service
fund to broadband, Chairman Wiley?
Mr. Wiley. Yes, I think the FCC has done a good job in
looking at that. I am concerned somewhat with the size and the
growth of the universal service fund, and I think the
Commission has got to look at the competency, the pay and the
covering that and some issue that has got to be looked at, I
think.
Ms. Matsui. But it is generally yes. Chairman Hundt?
Mr. Hundt. Yes.
Mr. Powell. Yes, I would commend Chairman Genachowski for
migrating the fund toward broadband, and he did it on a theory
of 706. So in that extent, I think seven--the ruling yesterday
only strengthens the Commission moving in that direction.
Ms. Matsui. Good.
Mr. Copps. Yes.
Ms. Matsui. Chairman Copps? That is great. I appreciate
your views, because I believe that it is one of the potentially
biggest unintended consequences avoided by the Court's
decision, because transitioning a USF to broadband is really a
critical step toward achieving universal access and adoption in
this country.
Chairman Hundt, you said that yesterday's circuit decision
is a victory for Congress and the smart flexible approach of
the 1996 Telecom Act. How can we continue that success? Are
there any unintended consequences we should watch out for as
this committee starts the process of updating the
Communications Act?
Mr. Hundt. Well, I think as a number of you have mentioned,
of course the FCC on remand needs to commence a new proceeding,
which I believe Chairman Wheeler has already said that he
intends to do.
Ms. Matsui. Um-hum.
Mr. Hundt. And, naturally, that should be and will be an
open proceeding. I am sure this committee will have an ample
opportunity to express its views. I don't myself have the
ability to forecast where that will come out or should come
out, because I think it is really, really important to examine
all the new facts about emerging network architectures and
about competition problems on both sides of the two-sided
network. I would just say that is why it is so useful that the
Court has said that the FCC's authority is broad and powerful,
because the technologies in the network architectures and the
competition problems are constantly changing. And the FCC, in
rulemaking, has the ability to adapt to those changes,
sometimes eliminating rules, sometimes writing new rules. So
this is a very, very workable process that we have here. And,
as I said before, congratulations to this committee for the
1996 act, which did create this legal culture.
Ms. Matsui. Um-hum. Chairman Powell, would you like to
comment?
Mr. Powell. I am sorry. Can you refresh the question?
Ms. Matsui. Well, I really----
Mr. Powell. Sorry.
Ms. Matsui. You know, we--as Chairman Hundt commenting that
the Court decision he felt was a victory for Congress and for
the smart flexible approach of the '96 act, are there any
unintended consequences that we should watch out for as we
reexamine and update the Communications Act moving forward?
Mr. Powell. Yes. Yes, I more or less would agree with
Chairman Hundt.
Ms. Matsui. Oh.
Mr. Powell. I mean, I think to the degree that, you know,
in some ways I saw a quote the other day that I thought summed
it up great, which is it is not a victory for any side, but it
might have been a victory for the debate. And that is that the
Commission continues to have a meaningful role in the oversight
and protection of broadband without crossing the line into the
more dangerous concerns around common carriage. And if that is
ultimately the outcome, maybe that is workable. Unintended
consequences, I do think the Court even struggled with them
itself, which is 706 is an extraordinarily broad, unconstrained
provision. How it is interpreted, and how responsibly it is
interpreted and applied, I think is important, because I think,
you know, Congress hasn't spoken with much specificity about
broadband regulation. And to take a provision as open-ended as
vague as 706 and see that as the foundation for everything
broadband going forward has potential risks and dangers, but I
think that will be worked out over time through the--through
its application and through dialogue with Congress.
Ms. Matsui. Thank you very much. Chairman Copps?
Mr. Copps. While I am pleased that the Court recognized the
authority of the Commission, I don't know that I am ready to
declare victory yet. If it is a victory for the debate, that is
not necessarily a good thing, because we have had so many years
of debate while the evolution of the Internet continues and
gate keeping shows the rise of its ugly head. So it is a
victory if the Commission reacts and reacts promptly and
provides some certainty and some guarantees. But we have lost a
couple of years looking for third ways and other ways, and I
don't want to lose a couple more years going down that road.
Ms. Matsui. Well, I think it is an opportunity here.
Mr. Wiley. Well, I was just going to say----
Ms. Matsui. Yes?
Mr. Wiley [continuing]. I think if it is a victory, I think
it is a victory for technical innovation, a victory for
investment, and ultimately a victory for the consumer. And I
think that we ought to see how the marketplace develops in this
area, and see where the problems, as I said earlier, really
come about as some people predict.
Ms. Matsui. Well, I think this is an interesting moment in
time. And we have to provide a thoughtful way as we move
forward. And I appreciate all your comments. Thank you very
much, and I yield back.
Mr. Walden [presiding]. The gentlelady yields back. The
chairman now recognizes the gentleman from Illinois, Mr.
Shimkus.
Mr. Shimkus. Thank you, Mr. Chairman. Welcome you all. It
is good to have you. And I think it would be safe to say that
no one envisioned this world in which we live in
technologically, no one envisioned in '96. So really, the basic
first question is, in a rewrite for public policy elected
officials, or even folks in a Commission to envision what the
world will be like 10 years after a rewrite, that is going to
be--that is impossible to do, is that--most people view that as
correct? No one knew what '96 would come. So that talks about
what these basic premises that I enjoy, Democracy, freedom,
marketplace, capitalism. The one thing that hasn't really been
addressed is consumer choice, and how that really does drive
innovation and drives--and it is that marketplace that--and I
remember going to the consumer electronics show, and the MP3
was being unveiled. And I just was amazed at how much capital
flowed for just music in this space, in the technology space.
And that is the same thing now with Internet, broadband,
downloads, Pandora, you name it. It has all migrated to that.
So we don't ever want to lose the aspect of the power of the
individual consumer in this debate, you know, versus what some
people would say would be the power of a governmental
regulatory arena or agency. And, Mr. Copps, I think that is
true for these segments of society that feel they don't have
access. I think that you can pull together, based upon
technology, ability to get the word out through broadband
information, newsletters and the like. I mean, the technology
has allowed us to really--there is really no excuse for people
not to have access to information flow today, even if they go
through a universal service fund or they go to the library,
they get on broadband through what we have been able to do
through the E-Rates and all that other stuff, which we talked
about a lot in your day, Mr. Hundt. So here is the basic
question I have, because I--and a couple of you, in your
opening statements, talk about silos. You were all members of
the Commission, and you all were Chairmen, which is a different
position than just being a standard Commissioner, because you
had the responsibility for the whole body of workers within the
FCC. So we have got consumer--we have got the bureaus and other
things other than the bureaus. I only talk about bureaus. But
you go on the Web site, you see all these other little offices
and stuff, consumer and government affairs, enforcement,
international media, public safety, wireless and wire line. So
in a rewrite of the '96 act, should there not be some
discussion on how we reform the Commission itself based upon
what current technology is today? And I think, Mr. Wiley, you
kind of talked about this a little bit. And just a guess at
where it might head in the future? I mean, there is a future
look, right, Mr. Copps? There is a future. But how do we reform
the FCC itself and start tearing down some of these silos,
which some of you have addressed are a problem? And if we can
go from left to right? Mr. Wiley, if you want to go first? And
that will be the end of my questions.
Mr. Wiley. Yes. I think what has changed in the Internet
world is that you find different parties doing the same kinds
of services, providing the same kind of activities that you
wouldn't have thought of before.
Mr. Shimkus. Right.
Mr. Wiley. You wouldn't have thought of broadcasters being
in the technology end, or cable being in the wire line field.
But this is happening now. And I think therefore the Commission
probably does have to change its internal structure. In a
digital world, if you have functionally equivalent services
being provided by different parties, I think they should be
regulated in a functionally equivalent way. And that is not the
way the Commission has done it through the years. It is not the
way they are organized. It is going to take some change. I----
Mr. Shimkus. Thank you. Mr. Hundt?
Mr. Hundt. You know, the French say well, that works in
practice, but, you know, maybe it doesn't really work in
theory. And I think it is really, really important to focus on
practice. The current structure allows the FCC Chair, in what I
will definitely describe as an open process, to reorganize the
FCC to meet the objectives that are set by any particular
Congress in any particular situation. And that is a good thing.
So when this Congress had the wisdom to ask the FCC to auction
spectrum in 1993, I was allowed--thanks to you--but not because
of a statutory mandate, but because of flexibility, I was
allowed to create a wireless bureau which previously did not
exist. At any given moment, it is hard to say exactly what the
administrative structure ought to be. And I think the current
system, which tells the Chair, ``Figure it out, tell us what it
is, you are held accountable.'' That is a good system.
Mr. Powell. I do think form follows function. And I think
certainly when I was Chairman, we merged few bureaus. Cable was
a separate bureau from broadcasting. Today, it is the media
bureau now with changes we made to try to reflect. I think a
common principle is organize around the way it is seen through
the eyes and the ears of consumers. And, you know, to me, at
the time, television was television to most Americans. And
making sure you had cross- pollenization of the bureaucrats,
professionals who--the bureaucracy and the professionals who
manage that I thought was important so that they saw their
functions through the same eyes of our constituents. And I
think that is one principle you can follow. I do agree with
Reed. I think the Chairman is also CEO. The statute assigns
them that responsibility. I don't think we talk enough about
the CEO role and the management of that operation. But I think
there is plenty of flexibility to respond to that, if it is
clear what it is we are trying to execute.
Mr. Copps. I don't think there is any magic formula.
Certainly, there have been times when the stove pipe approach
has been too much in presence. I think Michael tried to work
against that and go towards a little more holistic type of
view. So did Chairman Genachowski. That being said though, you
need the experts in these specific bureaus. There is a specific
telecom expertise in the wire line and the wireless and all the
details of that, and special access and everything else we are
talking about. So I think you still have to have those bureaus.
But if you can have--I think Chairman Genachowski established a
consumer taskforce whose job it was to go across those agencies
and look at whatever--or those bureaus--at whatever those
bureaus were doing to assess the impact on consumer wellbeing.
So I think that is a good approach. But it is a management thin
and something that I think is the product of good leadership at
the Commission and good oversight by the committee.
Voice. Mr.----
Mr. Walden. We need to move on to Mr. Dingell, I think, for
the next 5 minutes. Mr. Chairman?
Mr. Dingell. I want to commend you for this hearing. I
think this has been an important hearing. In the events of this
week, you tell us that it is time that the committee is going
to have to start looking at what we are going to do about
bringing the '96 act up to date. I have enjoyed the comments
that my dear friend, Mr. Barton, made in announcing my position
as being strongly regulatory. Sometimes I have a hard time
recognizing my position when it is set forth by other members.
In any event, that is not important. But I would just like to
remind everybody that this business of the '96 act started when
we began to try and get Judge Greene out of the business of
regulating the telecommunications industry. It also started
when we started trying to get the amount of spectrum that was
held out of use by industry and business and government, and
get that available to people, and to see to it that we had a
fair program for dealing with our legislation and a fair
program for dealing with these matters. I would like to welcome
our friends, the Chairmen here for their appearance and for
their assistance to us, and for what it is that they have done
with us over the years.
If there is an attempt made to update the Communications
Act, I will offer my support. Yesterday's court decision
vacating the anti-discrimination and anti-blocking rules of the
Federal Communications Commission open Internet order is proof
that the Congress needs to bring our communication laws into
the 21st century. Only clear direction from Congress will
strengthen consumer protections, promote competition and give
industry the regulatory certainty it needs to innovate in the
future.
Now, as we go about this important work, I caution that we
do so with great care, and on the benefit of a carefully
collected and substantial body of evidence. This is going to
require a rigorous oversight by the committee and considerable
work to get the information that we have need of so that we can
legislate properly. And I hope that the undertaking will be
bipartisan in order so that any final product that we complete
here moves through the Senate and to the President's desk for
signature.
We have to resolve a number of very important high line and
hard questions to inform our work as we move forward. I
respectfully suggest that these questions included--or rather
include but are not limited to the following. First, how do we
improve and protect American's access to content, while also
preserving the ability of private companies to monetize their
investments for future growth? Likewise, how do we best foster
the ongoing development of future technologies that will ensure
American leadership in the fields of technology and
communications? And then we have to decide how we are to
promote the more efficient and fair use of value and
increasingly scarce commodities like spectrum, which we have
not administered too well of late, and if administered at off
times on the basis of perhaps the amount that we could get for
it in money rather than how it would serve the Nation to
allocate this spectrum? Lastly, we are going to have to decide
how we will ensure that the Federal Communications Commission,
the National Telecommunications and Information Administration,
and other related bodies function smoothly, protect consumers
and promote growth rather than hindering it. Regardless of
these answers, and the answers to these questions and others, I
submit that our work should proceed from the conviction that
the public interest is still and always going to remain the
central concern that we have with regard to the Communications
Act.
I have had the good fortune to be one of the authors of
almost every major piece of telecommunications legislation
passed by the Congress in the past three decades. And the
public interest is in the heart of each, going back to the '33
and '34 act. I see no reason why that should be any different
this time around. The only issue here worth exploring is what
that standard has meant in years past, and whether there is any
reason to give the Commission different guidance for the future
in interpreting it as we address the other questions I have
just outlined.
Mr. Chairman, I wish you Godspeed in this endeavor. And I
offer you my support. And I am delighted that the Chairmen of
the Commission who have been here this morning to assist us in
beginning this process, which I hope will go forward with
reasonable speed, with great care and again, with great
attention to the public interest. I thank you all for listening
to me.
Mr. Walden. Chairman Dingell, thank you for your kind
comments and your always generous words and willingness to work
to improve our communication and other laws. We look forward to
working with you. My only disappointment is you did not have a
list of yes-or-no questions for this panel.
Voice. Yes.
Mr. Walden. Now, with that, we will turn to Mr. Terry from
Nebraska. And we look forward to your comments and questions,
sir.
Mr. Terry. Yes, you do. Thank you. And I just, for our
esteemed guests here today, I want to follow-up on what my
friend from California, Ms. Matsui, began. And that is with
high cost areas. But I want to take it from a little bit
different angle and get your input.
As kind of mentioned here, we have seen a convergence of
technologies and services that are all kind of being wrapped
into one anymore. And the same as--we talked about it in my
early days on this committee in voice, and Barton brought that
up. Well, now, it is in video. And so when we talk about a
rural telecom and the Internet as a basis of delivering video
today, it is kind of making--well, it is altering the way that
rural telecoms used to work. And so we have a current legal
structure with this QRA, and a mindset of--on treating rural
telecoms like old copper wires, which a lot of them still are
using. So I just want to ask your opinions about in Reform 4--
or within the FCC, should rural and high cost areas--so, Mr.
Copps, it even comes back to inner-city where you have low-take
by high-cost. How do we think about this differently in making
sure that if you live in rural America, or you are setting up a
wind farm where you want to continuously oversee but remotely,
thereby requiring broad broadband for all of that data? Do we
need to think about things differently than high-cost, rural
high-cost, inner city? Mr. Wiley, why don't we start with you?
Mr. Wiley. Well, I am not an expert in the rural telephone
area. But I still think there is a concern that is different
than in the big cities. And I think, therefore, high-cost funds
still are something that have to be part of the full equation,
in my opinion. And you know that better than anybody in
Nebraska.
Mr. Terry. Yes.
Mr. Wiley. So I don't have any huge input to you today as
to how to change the system.
Mr. Terry. Yes. And later, I guess to clarify, since video
and Internet are becoming the same, and your telecom is really
maybe your sole provider of that, it is all meshed together.
Does that change anything, Mr. Hundt?
Mr. Hundt. I think that many people have said we really
want broadband to be the network for everyone in the country.
In rural areas, as I am sure you know, Congressman, there are
many places where the cable broadband penetration is as low as
15 and 20 percent, not anything nearly as high as it is in
Washington DC or in the suburbs. Now, that is a problem that
the FCC really does need to think about in conjunction with the
industry that Michael represents so ably. And in particular,
not to touch too many other buttons, the recent increases in
the prices of the content have a disproportionate impact in
rural America. Because when those content price increases are
passed on by the cable industry, they are taking a lot of money
out of the wallets of the people in those areas, and those are
the same areas where broadband is expensive. And so as people
are paying more for the broadcast content and the cable channel
content, they have less available to purchase broadband. This
is a problem that is real and existing right now. And this also
gives me a chance to pass the solution over to Chairman Powell.
Mr. Powell. Congressman, I think you make a couple of
important points that we should just put top of mind, which is
the challenge of reaching that last five to seven percent is
because under traditional market fundamentals, they are
uneconomic. And if they are uneconomic, the only way to cure
something is you have to change the economic equation. This is
why I have always had no problem understanding and respecting
the Government has a meaningful and significant role in terms
of our ubiquity objectives in universal service, of
universality and affordability, to play a role through either
the universal service program or any other properly constructed
program to try to change the economic equation that attracts
the infrastructure that those communities deserve.
I think it is a more optimistic scenario in the modern
world than it was before. Because in the old world, we had a
single technology that tried to string twisted copper wire
between two farms 300 miles apart, and that was enormously and
hideously expensive. One of the things I think really opens up
an opportunity today is because of a common IP platform, we can
essentially deliver almost any kind of service over almost any
kind of network. So that means that wireless and probably its
companion of satellite available services have real hope and
promise for rural America. That is they have very dynamically
different cost characteristics. A satellite at 28,000 feet sees
rural Nebraska no differently than it sees Manhattan. Wireless
has a much lower cost infrastructure for some of those areas.
So I think that isn't a complete answer. But putting a lot of
energy and investment into how those services will solve those
problems is useful. And I think as the Chairman of the FCC is
moving toward and IP network common regulatory proceeding, that
convergence you are talking about also can get harmonized and
the universal service program get harmonized along with it.
Mr. Terry. Thank you. Agree.
Mr. Copps. I have a little different answer. Reasonably
comparable services at reasonably comparable prices is the
injunction and the charge of the Telecommunications Act.
Reforming USF, which the Commission is in the process of doing
with lots of wrinkles and problems to work out, no question
about that, is certainly an important part of the equation. But
anybody who thinks that the universal service fund alone is
going to bring this country the kind of high speed low-cost
broadband that we need to have to be competitive in the world
arena in the 21st century, I think is not looking at the
situation as it is. This has to be an infrastructure mission.
Our country has had infrastructure missions before when we came
together to build highways and railroads and rural electricity,
and so on and so forth. And that is what we need now. We are
not going to be competitive. We are not going to get out of the
holes that we are in unless every citizen in this country has
that access. And, yes, it is reaching that last five to seven
percent. That is extremely important. But way more than half of
our homes don't have the kind of high speed, low-cost
broadband, fiber broadband, that we are going to really need to
be competitive. So we need to look at that, not just as an FCC
problem but as a problem confronting our Government and our
society, and act upon it and figure out whether we are really
serious of being competitive in the global sweepstakes.
Mr. Terry. Thank you.
Mr. Walden. The gentleman yields back. I look to the
gentleman from New Mexico, Mr. Lujan, for 5----
Mr. Lujan. Mr. Chairman, thank you very much. And I must
say, I was concerned with some of the approach that was being
taken in the line of questioning leading up to those last
responses to my colleague where for the first time I heard the
importance of rural America. Coming from a western State, a
congressional district that represents 17 of New Mexico's 22
tribes and the sprawling nature associated with what the west
brings us, many parts of rural America where our food is grown,
where energy is generated, critically important to be able to
get coverage to these areas. And as I joked with Chairman
Wheeler when we had him in front of us a couple of weeks ago, I
explained to him that, you know, these last flights home, it
has been great to see the TSA debating whether we can make
phone calls at 30,000 feet. I know that I have streaming video
content at 30,000 feet. I can communicate with my office and
anyone else that I so choose to. So if I can communicate with
constituents and get the video content that I want at 30,000
feet, why can't I do it on the ground in rural America? The
technology is here. And there is no reason that we can't push
it out. To the three responses, I just can't say thanks enough
for that.
Chairman Copps, with the response associated with the very
aggressive push to infrastructure investment in America, it is
absolutely needed. And we shouldn't forget, especially as we
talk about different ideals and philosophies that we have on
this committee, and even in this Congress and across the
country, that it was in many conservative and rural parts of
America that benefited from Government investment with rural
electrification, with major water projects that provide us
power now that could be in question because of water flows--a
whole other topic of conversation, but nonetheless that we need
to make sure that we are addressing.
So, Chairman Powell, you talked about twisted pairs and
what that brought us, decisions that were made as a result of
the '96 act. And looking at Section 706(a), I am not certain
what we are arguing about with concerns in that particular
area. It is encouraging deployment of reasonable and timely
basis on advanced telecom, especially for educational purposes.
There may be some concerns with some of my colleagues on a
price cap regulation. But regulatory for bands, measures that
promote competition in local markets. This could be read by any
member on this committee, encouraging ideals that I think that
we all share.
But one thing that hasn't been talked about very much--and
even given the fact that there was a huge data breach with
Target, 70 million customers that were impacted, is the
security of this network. I would hope that--and I would like
to get your opinion if 706(a) provides us the necessary
standards to be able to bring safeguards, or if you think that
that is something that needs to be addressed? And I would like
to invite comments from each of you. Mr. Hundt?
Mr. Hundt. As Chairman Powell said, Section 1706 is very
broad. And I think that it is an opportunity and a duty for the
FCC to dig into it and to create an appropriate framework, with
the help of this committee and its counterpart in the Senate.
If I might continue your point--your theme of rural America,
there are a number of other provisions as well in the '96 act
that the FCC can use to try to achieve the goal of completely
widespread broadband, even in rural and high cost areas. And
one that I would identify is the current proceeding to re-
imagine the E-Rate.
The E-Rate, if we went--I just recently met with the chief
librarian in Pima County, Arizona, which isn't very far away
from you. And you know the geography is not dissimilar. They
have a fantastic system of broadband for not just the central
library in Tucson, but all the branch libraries. All over this
very, very sparsely populated geography, the library is the
number one public Internet access point in southern Arizona.
Therefore, it is the proper focus of extra E-Rate support, and
the proper focus of the combination of network architectures
that might well resemble what Chairman Powell was talking
about. We shouldn't decide that part. But we should decide that
is a very flexible tool, also, that can be used to deliver the
right participation in the American community to rural America.
Mr. Lujan. Chairman Powell?
Mr. Powell. Congressman, I really would like to put a
punctuation on what you raise. Because I think it goes to the
committee's desire, I hope, to try to harmonize and see the
communication landscape as a single ecosystem. All the
wonderful benefits we are bragging and celebrating are
continuously and daily at risk. I think cyber threat, data
retention, breach are all issues that are the Achilles Heel of
all the promise of the network that we are celebrating. But
they require very complex solutions that look through an entire
ecosystem. 706 is no more--is not particularly up to that job.
Why? Even for no other reason that you can't have a discussion
without software involved. The cyber security question on a
global--ecosystem basis means a conversation with every element
of that massive connective chain. And that is the web
companies, the infrastructure companies, wireless companies,
content companies, there is just no way, in my opinion, even
with its breadth that one could look hopefully to that as the
single point of authority to make the most meaningful impact on
this issue, mostly because 50 percent of that ecosystem aren't
even implicated by that provision.
Mr. Lujan. Chairman?
Mr. Copps. I hope 706 is up to the job. I think it does
confer a lot of authority. But I don't want this to become just
a solution de jure and we talk about 706 for the next 2 years.
And then another court somewhere strikes that down or whatever.
I do want to highlight one thing that you mentioned in terms of
getting broadband out. And I commend you for your interest and
your work with native lands and Native Americans. And one area
where I think maybe a rewrite would help would be to more
formally institutionalize--put some flesh on the bones of the
trust relationship and the consulted--consultative mechanisms
that we have between the Commission and Native Americans. It is
not--it is working better than it has. I think there has been
more emphasis in recent years. Obviously, back in Chairman
Kennard's time, who is not here today, there was an interest in
moving us forward and getting us into a new trust relationship.
But that is 13 or 14 years ago. And the situation, as you point
out, is so dire when one member of a tribe can't call somebody
else, but you can make the call from 30,000 feet. That is
something wrong there. But that might be a concrete area where
the Commission can--or where the Congress can actually lend a
hand.
Mr. Lujan. Appreciate that.
Mr. Walden. Appreciate that. The gentleman's time has
expired. We will now go to the gentleman from New Jersey, Mr.
Lance, for 5 minutes.
Mr. Lance. Thank you, Mr. Chairman. And to the
distinguished panel, this is among the most interesting
hearings in which I have ever participated. And it is my honor
to be able to meet all of you.
I gather there is a consensus from the distinguished panel
that the 1996 legislation needs, to some extent, statutory
update and revision, is that accurate, from the panel?
Voice. I would agree.
Mr. Hundt. I don't agree.
Mr. Lance. And, Chairman Hundt, if you would indicate why
you do not agree there needs to be statutory update?
Mr. Hundt. I think that the DC Circuit has made it very
clear that the '96 act has given the authority to the FCC to
address all the economic and social problems that this
committee, in recent years and in past years, has asked the FCC
to address.
Mr. Lance. Other distinguished members----
Mr. Copps. I basically concur and agree with what Chairman
Hundt has said.
Mr. Lance. Um-hum.
Mr. Copps. Sure, it is always nice to have some additional
clarity. But time is of the essence here. We have a statute
that I think can deliver on a lot of the things that need to be
delivered, and we should be about that job. I just--it is so
difficult to see the correlation of forces coming together to
give birth to an act after what we went through in 1996. And I
don't think it is going to be any easier in 2014 to do that
than it was 18 years ago.
Mr. Lance. Chairman Powell?
Mr. Powell. I think, by any measure, a deliberative process
in the legislature would take a meaningful number of years, as
the chairman--as Chairman Walden himself has recognized in
setting out a multi-year process. I do think there are
sufficient conditions to justify the institution of that kind
of examination over that period of time, because I think the
market is radically different and the relevancy of law as
applied to reality should be a core principle of governance.
Mr. Lance. Thank you.
Mr. Wiley. I think the very fact that you didn't have the
Internet really developed, you didn't have broadband, you
didn't have all the technological changes that have occurred
since 1996, really gives I think substance to taking another
look. And I think that gives Congress an opportunity I think to
perhaps make some suggestions to the regulatory body that I
think would be very helpful.
Mr. Lance. Thank you, Chairman Wiley. Am I accurate--I have
not read the decision. I have reviewed its consequences, but I
have not read it. And I certainly will read yesterday's
decision. Am I accurate that the FCC decided in 2004 that
Internet access services would not be classified as
telecommunications services? Is that true, Chairman Powell?
Mr. Powell. Yes, sir. That is correct.
Mr. Lance. And if that decision were to be revisited, that
could be revisited by the administrative agency, is that
accurate as to how it could proceed?
Mr. Powell. It is accurate. It could.
Mr. Lance. And if there were to be a revisiting of the 2004
decision that this is not classified as telecommunications
services, then there would have to be an extensive period of
review, and there would have to be some sort of high level
determination as to why a different decision were to be made.
Is that the way it would work?
Mr. Powell. Yes. Under administrative law, even with
deference, the Agency has to provide a reasoned explanation for
its change in policy. It would require a notice and comment
proceeding, which is open.
Mr. Lance. Yes.
Mr. Powell. And I wouldn't--you know, the suggestion has
been made that somehow that would lead to instant clarity. It
would lead to another 3-to-4-year period of conflict and
litigation----
Mr. Lance. And litigation. And, Chairman Copps?
Mr. Copps. But I would just say I don't think it would take
forever to compile that record. I and a lot of other people I
know would be happy to contribute to the rational for that sort
of action. So it is not really starting at--on the tabula rasa.
I think a lot of that information is out there. It was just a
route not taken. And now we need to go back and look at it.
Mr. Lance. And the FCC's reclassification would be
considered arbitrary and capricious unless there were a period
of comment and refreshing the record, and some sort of
heightened standard, is that accurate legally?
Mr. Powell. Yes, sir. They have to follow the
Administrative Procedure Act obligations.
Voice. And I am certain they would.
Mr. Lance. I would presume that would be the case. And,
finally, the decision that yesterday possibly could be appealed
to the Supreme Court, but it is not clear whether or not either
side is likely to do that.
Voice. That is correct.
Mr. Lance. Thank you very much. My time has expired, Mr.
Chairman.
Mr. Walden. I thank the gentleman. Now, I turn to Mr. Long
from Missouri. I think our last member to ask questions. Please
go ahead.
Mr. Long. Thank you, Chairman. And, Chairman Hundt, last
night you said that you spent quite a bit of time trying to go
through the court ruling of yesterday. And most of the
congressmen were home trying to read through a 1,562 page bill
that we are going to be voting on this afternoon. So I have
ordered my staff to bring a copy of that to you. And if you
could peruse that over your lunch hour and kind of decipher it
for me, I would appreciate it.
Earlier in your testimony, Chairman Hundt, you said that--
and I didn't get--understand your point, I don't think,
concerning the auction. You said, if I remember right, that we
need a cap so people know what they are buying. Can you kind of
tell me what you were--in full disclosure, I come from a 30-
year career as an auctioneer before I came to Congress a few
years ago. So I have got a lot of interest in how an auction
operates and try and make it operate the best it can for the
public and the taxpayers.
Mr. Hundt. I remember very well that in our first auction,
we had Senator Burns who had a----
Mr. Long. Conrad Burns, you are right.
Mr. Hundt [continuing]. Come and conduct the very first
auction.
Mr. Long. He is from Missouri. Now, he served from Montana,
but he is originally from Missouri. So that is two of us.
Mr. Hundt. He did claim that particular heritage. And he
did a great job. And I would recommend to Chairman Wheeler that
he should come and ask you to conduct the next auction.
Mr. Long. I am not worried about conducting as much as I am
the--you know, how it is put together. And that is what I have
been trying to drill down on.
Mr. Hundt. Well----
Mr. Long. But what was your comment? I didn't understand
you said that we need a cap so people know what they are
buying. What exactly did you mean?
Mr. Hundt. So in any auction, when folks come in, you want
the high bidder to be able to walk away with whatever was
auctioned. And the way to do that I believe is to make sure
that everybody bidding in that auction knows the following,
what are the rules about how much you can buy. It doesn't have
to be a cap. It could be--some people think it should be an
aggregation level. There is many different ways to define it.
But people ought to know as they are about to take the money
out of the wallet, as they are about to raise the hand and say
that they are putting in the high bid, they ought to know that
they can walk away with whatever they can buy, instead of
having to have another proceeding where they ask the FCC or the
Department of Justice later, am I permitted to walk away with
this, because I don't know whether or not I have violated any
of your aggregation rules. So this Congress, in the Incentive
Auction Rule, did say that the FCC should create a generally
applicable aggregation rule. And I think that was a very wise
thing to do, that way everybody going into the auction can
estimate in advance whether or not what they buy is what they--
what they bid on and win on is what they can walk away with.
Mr. Long. OK. Talking to the interested parties that are
interested in buying this spectrum, they have told me--and this
is probably a topic for another day. But they said if they can
buy A, B and C spectrum, then maybe they want to buy L, M, N,
O, P later in the auction. Or if they can't buy A, B and C, L,
M, N, O, P doesn't--if they can't but that too, then the first
three things that they bought--so it is a very confusing
situation. So do you any of you have any staff--anybody you
want to get with my staff that we can talk about to kind of
sort that out, I would appreciate it.
I want to move to Chairman Wiley for a minute. If you turn
on the TV at night, the only reason it is not 100 percent phone
company ads and the cellular companies and things is because it
is interspersed with auto insurance ads. So there would be
more--so it seems like there is quite a bit of competition out
there now. And as far as the auction that I was talking about
with Chairman Hundt, the wireless market I think appears to be
extremely competitive. And you do have larger companies, AT&T,
Verizon, T-Mobile, Sprint. And given that, doesn't it make
sense that the FCC--why will they--should they not--they
shouldn't handicap bidders, should they, to get the most money
for the taxpayers and have the best auction they can where
either some people are wanting to limit who can buy what? Can
you kind of walk me through that?
Mr. Wiley. Well, my view is that the auction ought to be
available, open to all. I think if Congress really wants to see
the maximum amount of revenue derived in order to support the
public safety network we are going to have to pay the
broadcasters, it is a very complex process. And I do--I am
concerned about the fact that we start to begin to limit people
in this that you are going to find you are going to have less
revenue than might be otherwise anticipated. I think a free
auction ought to be open to all.
Mr. Long. All right. When people would attend my auction, I
was always interested in having the most people there and
having them spend the most money that they could. And if they
didn't want to bid, I would bid for them. I would tell them
just to hold their hand up in the air. And when they paid
enough, I would tell them to take it down. So with that, Mr.
Chairman, I yield back.
Voice. That is quite an auction.
Mr. Walden. I want to thank our distinguished panel of
witnessed, both for your prior Government service and your
continuing involvement and interest in public policy to assist
us in our mission and goals in updating the Communications Act.
I draw attention to those who are observing our hearing. They
can go to our hashtag at CommsActUpdate. I think it is right in
front here--and give us your information. A lot of people have
been doing that during the hearing. We appreciate that. Another
reflection of how technology is changing the world, and we need
to keep up with it. So thank you for your participation. Our
subcommittee stands adjourned.
[Whereupon, at 12:25 p.m., the subcommittee was adjourned.]
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