[House Hearing, 113 Congress]
[From the U.S. Government Publishing Office]
IS THE FCC RESPONDING TO THE NEEDS OF SMALL BUSINESS AND RURAL AMERICA?
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HEARING
before the
COMMITTEE ON SMALL BUSINESS
UNITED STATES
HOUSE OF REPRESENTATIVES
ONE HUNDRED THIRTEENTH CONGRESS
SECOND SESSION
__________
HEARING HELD
SEPTEMBER 17, 2014
__________
[GRAPHIC] [TIFF OMITTED]
Small Business Committee Document Number 113-083
Available via the GPO Website: www.fdsys.gov
______
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HOUSE COMMITTEE ON SMALL BUSINESS
SAM GRAVES, Missouri, Chairman
STEVE CHABOT, Ohio
STEVE KING, Iowa
MIKE COFFMAN, Colorado
BLAINE LUETKEMEYER, Missouri
MICK MULVANEY, South Carolina
SCOTT TIPTON, Colorado
JAIME HERRERA BEUTLER, Washington
RICHARD HANNA, New York
TIM HUELSKAMP, Kansas
DAVID SCHWEIKERT, Arizona
KERRY BENTIVOLIO, Michigan
CHRIS COLLINS, New York
TOM RICE, South Carolina
NYDIA VELAZQUEZ, New York, Ranking Member
KURT SCHRADER, Oregon
YVETTE CLARKE, New York
JUDY CHU, California
JANICE HAHN, California
DONALD PAYNE, JR., New Jersey
GRACE MENG, New York
BRAD SCHNEIDER, Illinois
RON BARBER, Arizona
ANN McLANE KUSTER, New Hampshire
PATRICK MURPHY, Florida
Lori Salley, Staff Director
Paul Sass Deputy Staff Director
Barry Pineles, Chief Counsel
Michael Day, Minority Staff Director
C O N T E N T S
OPENING STATEMENTS
Page
Hon. Sam Graves.................................................. 1
Hon. Nydia Velazquez............................................. 2
WITNESS
Hon. Thomas Wheeler, Chairman, United States Federal
Communications Commission, Washington, DC...................... 3
APPENDIX
Prepared Statement:
Hon. Thomas Wheeler, Chairman, United States Federal
Communications Commission, Washington, DC.................. 20
Questions and Answers for the Record:
Questions and Answers from Hon. Sam Graves to Hon. Thomas
Wheeler.................................................... 27
Questions and Answers from Hon. Blaine Luetkemeyer to Hon.
Thomas Wheeler............................................. 32
Questions and Answers from Hon. Jaime Herrera Beutler to Hon.
Thomas Wheeler............................................. 35
Questions and Answers from Hon. Tom Rice to Hon. Thomas
Wheeler.................................................... 38
Additional Material for the Record:
National Association of Realtors............................. 41
IS THE FCC RESPONDING TO THE NEEDS OF SMALL BUSINESS AND RURAL AMERICA?
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WEDNESDAY, SEPTEMBER 17, 2014
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 2:00 p.m., in Room
2360, Rayburn House Office Building. Hon. Sam Graves [chairman
of the Committee] presiding.
Present: Representatives Graves, Leutkemeyer, Collins,
Tipton, Hanna, Rice, Velazquez, Schrader, Clarke, Hahn, Payne,
and Barber.
Chairman GRAVES. Good afternoon. We will call the hearing
to order.
Today we welcome Chairman of the FCC Board of
Commissioners, Thomas Wheeler, to our Committee, and he is
going to be discussing how the FCC is responding to the needs
of small businesses in rural America. And I want to thank you
all for taking the time to be with us, and thank you, Mr.
Chairman.
Mr. WHEELER. Thank you, Mr. Chairman.
Chairman GRAVES. Modern communications technologies provide
endless opportunities to small businesses and to rural America,
and the growth of the telecommunications industry and the
advances in the way that we communicate with each other in the
past 15 years has been no less than astonishing. We have seen a
digital revolution that has fundamentally changed the way
America does business. Because of this rapid advancement, small
firms can communicate with potential buyers around the world.
Family farmers are using wireless technologies to monitor their
crop production and entrepreneurs can launch a website or
application from their living room or just about anywhere in
the United States. Most importantly, these new technologies
provide the gateway and opportunity for economic growth and job
creation, especially in the rural areas. Continued
congressional oversight of the FCC is essential to ensure that
the concerns and ideas of small firms and those enterprises
located in rural America are given due consideration during the
regulatory process. This is a theme that this Committee has
tried to hammer home throughout the past two Congresses,
including when Chairman Wheeler's predecessor appeared here two
years ago. Policymakers need to listen to small businesses.
There are 28.2 million small businesses in America, and
they make up 99.7 percent of the U.S. employer firms and create
63 percent of all the net new jobs in this country. We cite
these statistics often because it is our job to remind people
in Washington how important the vitality of our small
businesses are. By almost every measurable mark, small
businesses drive our economy.
What we want to do here today is to ensure that the FCC
gets the job done right when developing their regulatory
policies. This means ensuring an open and free Internet that
will allow for the free flow of information and services,
facilitating the build-out of high speed Internet to rural and
unserved areas and providing needed spectrum to industry
players, both small and large, to ensure that our tech
companies continue to innovate and create jobs.
Our Committee can be a valuable resource for the FCC as it
moves forward with the numerous actions it is working on, and
we would like to be your partner in that process. It is
important for small businesses to have a seat at the table
early in the regulatory process as they can provide real-world
examples of how regulation is going to affect them and provide
regulators with potentially less burdensome but similarly
effective options.
I want to thank everyone for being here again, particularly
the Chairman, and I now yield to Ranking Member Velazquez for
her opening statement.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Today's hearing offers an opportunity to examine the
benefits and challenges of broadband deployment. More small
businesses are embracing broadband than ever before, and it is
rapidly changing the way business is conducted. Many new
businesses are designed around emerging technology based on the
access of broadband. For this reason, it is even more important
to enable small firms to utilize broadband and the nearly
limitless technologies derived from it. Giving small companies
this access helps them become more successful and efficient.
Enhancing broadband availability is not only good for small
businesses, it is good for America. The number of jobs
dependent on technology is suspected to grow, creating
opportunities for large and small companies in every sector of
the U.S. economy.
We have seen the benefits broadband technology can bring to
our daily lives in a variety of ways. However, there are still
many people without basic access to reliable Internet
connections in both rural and urban areas. Unfortunately, the
adoption gap may further widen without adequate support for
broadband deployment. While federal programs have helped reduce
the digital divide in communities across the country, much work
remains to be done.
Today's hearing will focus on improving broadband access in
order to strengthen the small business economy. The insights
gathered today will enable us to ensure that policies are
effectively supporting network deployment. Additionally, we
will examine other critical telecommunications and technology
issues facing small businesses. Among these are the Connect
America Fund, spectrum auctions, and of course, net neutrality.
While many of these rules are just starting to take shape, our
duty is to protect the interest of small firms, working within
the industry and those who rely on these services as customers.
Balancing the needs of all parties is significant to
guaranteeing competition within this industry and its
customers. This committee will ensure that the needs of small
firms are taken into account in all FCC rulemaking procedures
because our continued leadership in technological innovation is
at stake.
In advance of the testimony, I want to thank Chairman
Wheeler for taking the time to be here with us today. We look
forward to hearing your insight on these important topics, and
with that I yield back, Mr. Chairman. Thank you.
Chairman GRAVES. All right. Our witness today is The
Honorable Thomas Wheeler, Chairman of the Federal
Communications Commission. He is a graduate of Ohio State
University and he was appointed chairman by President Obama in
November of 2013. He has a 30-year career spanning several
segments of the telecommunications industry, including stops as
managing director of Core Capital Partners, a venture capital
firm investing in early-stage Internet protocol-based companies
and is co-founder of Smart Brief, the Internet's largest
electronic information service for vertical markets. From 1979
to 1984, he served as president and CEO of the National Cable
Television Association, and from 1992 to 2004, he served the
same role for the Cellular Telecommunications and Internet
Association.
Chairman Wheeler, thanks for being here.
STATEMENT OF THE HONORABLE THOMAS WHEELER, CHAIRMAN, UNITED
STATES FEDERAL COMMUNICATIONS COMMISSION
Mr. WHEELER. Mr. Chairman, thank you. Ranking Member, I
appreciate both of your thoughts. It is a privilege to be here,
both as chairman of the FCC and, Mr. Chairman, as you just
indicated, as a small business man myself. I am one of the 28.2
million that you talked about because for over 30 years, I have
helped start or started myself a series of companies. Some
worked, some did not, which is the story of small business
life. But I know firsthand that being a small business person
is a 24/7 activity and means living on the edge. And I bring
that experience to this job. As you indicated, for most of the
past decade, I was a partner at a venture capital firm where we
invested in and helped grow early stage startup companies who
were by definition small businesses. And I think that as an
entrepreneur I had a special awareness or understanding of the
challenges that they faced.
I am also an amateur historian, and from those studies I
know that the networks that connect us are the networks that
define our economy. And today, those networks have never been
more important because the historic change that we are all
living through right now is that our networks are our new
economy. Previous networks were enablers of economic activity.
The railroad would haul raw materials to a central point where
it would be fabricated and hauled back out to a mass market, or
the telephone company would enable commerce in physical
products. But today our economy is all about nonphysical
products, and use of information is the key activity of every
21st century business, regardless of its size, even the
physical product business.
How information flows across networks and how information
creates new information is what the new economy is all about.
And based on that reality, our goals at the FCC are rather
direct--to see that everyone has access to 21st century
connectivity, including the necessity to subsidize service
where it is not otherwise economically feasible; to assure that
networks freely interconnect to become a collection of open
networks, networks that are open to all; to preserve the
historic principles, such as public safety, and to assure that
they are maintained despite the evolution in technology, and to
protect network users, whether they are small business people
or consumers from those who might exploit them. And, of course,
to provide for the national security. Those are what I have
termed the ``network compact.'' They are the principles that
are at the core of the relationship between those who build and
operate networks and those who use them.
As a businessman, I would also add to that that I believe
fervently in the power of competition. There is a mantra around
the Commission that goes like this: competition, competition,
competition, or more frequently, competition, competition,
competition, as our North Star, because at times of rapid
technological change, regulation can never be as efficient as
competitive innovation in keeping pace. Thus, we must protect
competition where it exists. We must promote it where it cannot
exist. And we must make sure that where broadband competition
is unrealistic that we shoulder the responsibility to promote
its deployment.
But going back to my small business roots, I believe that
our telecommunications networks are the onramp to opportunity.
That whether it is the local insurance agency that needs to
communicate to be able to be able to receive and process
claims, or a guy and a gal and a dog in a garage inventing the
next thing on the Internet. That the key component determining
each party's success is their access to modern, high speed,
open communications networks. Our networks have never been more
important than they are now, and that is why I look forward to
discussing these issues with you. Thank you for inviting me.
Chairman GRAVES. Thank you, Mr. Chairman.
We will start questions with Mr. Tipton.
Mr. TIPTON. Thank you, Mr. Chairman. And Mr. Wheeler, thank
you so much for taking your time. I am pretty heartened by some
of the comments that you are making in terms of addressing
localism, the importance of connectivity, and the economies
that we are in.
I would like to speak a little bit on what may at first
blush perhaps seem to be just a provincial issue, but we have
examples of this literally across the country. I come from the
Third District of Colorado.
Mr. WHEELER. Yes, sir.
Mr. TIPTON. We have Montezuma and La Plata Counties in that
district that are labeled as orphan counties when it comes to
being able to get instate transmissions of television. And as a
result of curtain policies and the DMA market that we are
relegated to, which is currently Albuquerque, we simply do not
receive Colorado news, Colorado weather forecasts, Colorado
emergency broadcasts. And probably equally important to many
people in my district, our folks are forced to watch the Dallas
Cowboys lose rather than the Denver Broncos win.
So this is an important issue in all sincerity. We have one
example that came out of our district, when we were having the
fire in Colorado Springs. Had folks in the two counties who had
relatives. They could not get updates in terms of what was
going on, possibly endangered family members.
So given in your testimony that you stated that promoting
this localism in a broad spectrum is the Commission's mission,
I would like to hear what the FCC is thinking about the
retransmission policy for places like southwest Colorado. We
have three DMAs in state that they could be part of, rather
than being stuck with an out-of-state market.
Mr. WHEELER. Thank you, Mr. Tipton.
And I understand the challenge. It is beyond silly. The
difficulty that we face is the authority that we have to deal
with it under various statutes. And I know that there is talk
right now in the other body about an amendment that might open
the door and help on the retransmission side. There are also
some copyright questions involved. It is a thorny kind of issue
that I think boils down to if I could find a solution I would,
and every time we go looking for it we come across limitations
as to what our statutory authority may be. But I understand the
issue, and I would like to be helpful in it to the extent that
it is possible.
Mr. TIPTON. I appreciate that. Your predecessor did
indicated he was willing to work with us to resolve these
issues. We were not able to get in touch with his office even
though we tried. So you are making a commitment to us that you
are willing to work with us to be able to address these very
credible concerns in our district?
Mr. WHEELER. Mr. Tipton, the day you call, I will be back
to you post haste.
Mr. TIPTON. Great. And we will have you help reach out to
our Senate side who will work with us as well on this.
I also want to be able to move on on the broadband issue.
Back in May we had over 130 representatives and Senators that
wrote you in support of broadband mechanism to promote network
deployment in areas served by small independent rural carriers.
And just given--I heard your comments but I would like you to
be able to expand and receive comments on the proposed
standalone broadband funding mechanism on whether the FCC has
made any progress towards moving towards that goal.
Mr. WHEELER. So we have just closed the comment period on
the proceeding I think last week. And we will be moving through
that process. I know the standalone broadband is an important
issue. I know that it also is an issue that has a couple of
sides because some people say, ``Well, wait a minute. If you
are no longer going to support voice, what is the impact of
that going to be on older people and minorities who cannot
otherwise afford broadband.'' And we have to work our way
through those. But I am hopeful that, as I say, this proceeding
has just recently closed, and we want to move on it with
dispatch.
Mr. TIPTON. Great. Do you see some policy changes that need
to happen to promote broadband deployment into these rural
areas that are underserved and develop an environment literally
to attract sorely needed competition into these rural areas?
Mr. WHEELER. Well, the key word that you just said is
competition, because the interesting thing is that our telecom
policy, our policy to support expansion into rural areas is one
that is based on a ``Hello, Grandma'' kind of a concept of
voice calls. And in that situation, we were talking about
twisted pair copper as the only way to get it done. In a
broadband environment there are, hopefully, an increasing
number of ways to get it done. You can get it on DSL over
copper, you can get it on fiber, you can get it from satellite,
you can get it in microwave. There are multiple ways of being
able to do that.
And so one of the things that we have to be working our way
through is saying, okay, how do we make sure that we, (a)
maintain service and the investment that the American people
have made in the service, while at the same point in time
making sure that we are not excluding new potentially improved
service providers. And so our solution to that has been that we
ought to run some taste tests, and we ought to run some trials.
And so we have got $100 million that we have said we will use
to fund atypical rural broadband deployment trials--with the
emphasis on trials--to find out whether there, in fact, beyond
the hypothetical, can be put in place alternatives to the
system that has always existed. And we will be taking the final
bids on these--I am sorry, not bids--the final offers to
provide service the middle of next month, and I hope that we
will have made our decision by the end of the year and that
there will be trials operational next year.
Mr. TIPTON. Great.
Mr. Chairman, thank you for your indulgence. Chairman
Wheeler, thank you for being here. I yield back.
Chairman GRAVES. Ranking Member Velazquez?
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Mr. Wheeler, what steps is the FCC taking to ensure that
there is a smooth transition for the affected businesses so
that they do not experience increased costs or a reduction in
alternative services?
Mr. WHEELER. Well, I think that that is the biggest
challenge that we face. Well, there are two challenges. One is
how do we make sure that we are keeping up with technology and
that people are getting the kind of service levels that is
warranted by new technology? And then if there are going to be
transitions, how do we make sure that they mitigate the impact
on consumers, as well as those who have been relying on it?
And so one of the things that we are doing, for instance,
is this taste test, as I said, is this trial of $100 million to
let us find out, for instance, what is the impact if commercial
high speed broadband service is offered by the municipal co-op
and how does that affect both those who would use the service
as well as competitors that it might be overbuilding on top of.
I think it is a ``try before you buy'' kind of a situation.
Ms. VELAZQUEZ. But more specifically, can you tell us what
type of outreach you are doing with the small business
community?
Mr. WHEELER. With the small business community? Well, I
mean, I think that the small business community, as I said, the
key to success of any business, but particularly important for
small business, is to make sure that they are the recipients of
the bandwidth necessary for them to conduct business. How do we
do that? We have outreached to the small business community on
multiple issues, ranging from cybersecurity to what is going on
in broadband. We also work with the SBA in our activities and
that we make sure that in our proceedings it is open to all and
that we have voices of small business people heard.
Ms. VELAZQUEZ. Have you performed any small business impact
analyses conforming the Regulatory Flexibility Act?
Mr. WHEELER. Yes, ma'am.
Ms. VELAZQUEZ. Okay, good. Thank you.
The court has stated that the commission could not adopt
net neutrality rules that ban discrimination and blocking, if
the commission does not reclassify broadband as Title II
service. Whether to adopt Title II is a highly debated topic
now. What are the repercussions for adopting Title II for the
overall market, and what are the challenges finding a balance
between your current proposal and the more stringent Title II?
Mr. WHEELER. So what the court said was that the way in
which the 2010 rules were implemented was inappropriate, but
that the Commission had authority to deal with anything that
interfered with what they called the virtuous cycle; that new
applications drive better bandwidth which drives new
applications and you have this virtual cycle. Activities like
you named--blocking, choosing one player over another,
degrading service, fast lanes, this sort of thing--I believe
all interfere with the virtuous cycle. And the question then
becomes do we use the Section 706 authority that the court
pointed to or do we use Title II? And in our Notice of Proposed
Rulemaking, we have specifically asked for input on the Title
II question. And Title II is very much on the table. And that
comment period just closed this week. And I look forward to
moving forward on that as well. But I will assure you that
Title II is very much a topic of conversation and on the table
and something that we specifically asked for comment on in the
proceeding.
Ms. VELAZQUEZ. Thank you.
While it is important to protect competition within the
market, there are really only a handful of dominant carriers
that dictate prices due to a lack of true competition. How will
the FCC further regulate this industry and strengthen
competition, especially for those small carriers competing
against the giants of the industry?
Mr. WHEELER. Well, I think there are a multitude of issues
there. One is obviously we want to continue to orient our
universal service support to broadband. Second of all,
competitive carriers and those providing competitive services
rely on what is called special access which is the connection
between businesses, if you will. Consumers do not get involved
in this. And there has for a long time been an inability for
the Commission to move on special access. We are now moving on
special access. We are collecting data. I set a deadline of the
15th of December for the data that we need, and we are going to
address the special access question as well.
Ms. VELAZQUEZ. Will you anticipate any more delays?
Mr. WHEELER. I hope not. In all candor, the thing that has
held us back to this point has been getting OMB approval to
collect the data, and we went back to OMB and we said, ``Look,
this is important stuff.'' And we were able to negotiate with
OMB the kind of data that got collected. And it was just the
other day that we put out the public notice to begin collecting
that data, and that is due on the 15th of December. I do not
want any more delays on this. We have waited on special access
long enough.
Ms. VELAZQUEZ. Thank you.
Thank you, Mr. Chairman.
Chairman GRAVES. Mr. Rice?
Mr. RICE. I am concerned about the adoption of Title II
with respect to the Internet, and you were saying that your
concern is that certain activities interfere with this so-
called virtuous cycle.
Mr. WHEELER. Right.
Mr. RICE. Those activities you said were blocking and
prioritizing service?
Mr. WHEELER. Blocking, prioritizing, requiring some kind of
paper form, degrading a service in order to offer a higher
service, favoring----
Mr. RICE. Is that going on now? Are providers doing that?
Mr. WHEELER. So I think that what we have seen thus far is
a series of instances. This whole thing started, for instance,
when Comcast blocked Bit Torrent and their folks from getting
Bit Torrent. We have seen instances where carriers have blocked
or degraded the ability to get Skype because it is competitive
to their voice service. We saw in the mobile world how AT&T
blocked FaceTime early on after it was introduced on the iPhone
because it was competitive. So the issue is that yes, there are
indications of these kinds of problems having happened in the
market.
Mr. RICE. These things that you are talking about, I mean,
they could be dealt with through other laws, could they not?
Mr. WHEELER. Well, that is a really great question, Mr.
Rice. And they have not been.
Mr. RICE. Here is my point. The Internet has been kind of a
``Wild, Wild West'' it appears to me, and there has been an
incredible explosion of innovation that has come out of the
Internet. And when the federal government steps in and starts
regulating, you will stifle that. You will stifle it far more
than anybody else who is trying to block a competitor that
could be attacked under any of these other anti-trust laws. I
would caution greatly against further federal regulation of the
Internet.
Mr. WHEELER. Well, I think you have just hit on what the
challenge is, because it is clear that there must be an open
Internet. I mean, that is what is necessary for the small
business; that is what is necessary for the entrepreneurs; that
is what is necessary for consumers.
At the same point in time, communications carriers are
investing $60 billion a year in infrastructure, and we have got
to have that kind of infrastructure build out. And you do not
want to put in place rules that would disincentivize companies
from making that kind of continued investment.
Mr. RICE. And my point, Mr. Wheeler, is the federal
government. And I am not picking on you. You can put in
whatever regulations that you want that can be the most well-
intentioned things possible, but you will not be able to
foresee everything, and you will stifle innovation. And the
Internet has been a fountain of innovation that has helped to
bring prosperity to this country and the world, and you will
stifle that if you mushroom the regulation under Title II.
Mr. WHEELER. So the interesting challenge is that, as you
know, most of America's major carriers have said we will adhere
to the 2010 open Internet rules even though they have been
thrown out by the court. And in adhering to them, have
continued to innovate and continued to invest, and that is the
process that we want to see continue.
Mr. RICE. These things that you named that you thought were
problems that you felt like you needed to add additional
regulation for, can you name any instances of those occurring
that could not be handled by other areas of the law, like anti-
trust?
Mr. WHEELER. Yes, sir. I think that there is a significant
difference between what is an anti-competitive behavior defined
under the Sherman Act and what are the public interest
obligations that the Telecommunications Act mandates that we
deal with. And that while many issues may be able to be dealt
with on an anti-trust basis, not all issues and the ability to
deal with them with a public interest orientation rather than
the strict construct of anti-trust law is one that will go more
to all of the issues and less to specialized issues.
Mr. RICE. My friend, if it is not broke, do not fix it. It
is working great. Let us please do not stamp it out. I am a
firm believer in the scariest phrase that you will hear is ``I
am from the government. I am here to help.'' So let us do our
best to keep the hands off, and I for one will do what I can to
keep the FCC from adopting Title II with respect to the
Internet. Thank you.
Mr. WHEELER. Thank you, Mr. Rice.
Chairman GRAVES. Ms. Hahn?
Ms. HAHN. Thank you. Thank you, Mr. Chairman, Ranking
Member Velazquez, and thank you, Mr. Wheeler, Chairman Wheeler,
for coming to our Committee to talk about FCC and how it
impacts small businesses. This might be a little different line
of questioning, but I did hear the Broncos being brought up, so
I am going to bring up the Dodgers.
As you know, Monday was a big day for the FCC. The Dodgers,
City of Los Angeles, Time Warner Cable, and KDOC came to an
agreement to broadcast the final few games of the regular
season. And as you probably know, this entire baseball season,
70 percent of the region's viewers had been unable to watch the
Dodgers. They only have six remaining home games to broadcast
and the impact it has on small businesses is something I did
not realize until it started getting brought up to me. I was
always just on the side of the fans and how unfair it was to
have this dispute, not allowing the fans to watch the games.
But then I got a lot of calls into my office from small
businesses, many of whom are restaurants, sports bars, who
really depend on those local games being broadcast. A lot of
times customers would call and say, ``Hey, are you showing the
Dodgers game?'' And they would have to say no, and it really
did hurt their bottom-line when this was happening.
So I am happy about the small breakthrough that happened,
and I know you were instrumental in bringing all the parties to
the table and I hope you share my call that some of us in
Congress had to have all the providers enter into binding
arbitration so we can finally put this issue to rest.
So I am just going to ask you, how can we fix this
arbitration process so disputes such as this do not go on for
an entire season? Really, of course, a crushing blow to the
fans, but a lot of our small businesses really were impacted by
this silly dispute. So I would like to hear your comments on
that.
Mr. WHEELER. I think you used the right descriptor there
about when you characterized the dispute. I, as you know, wrote
to the CEO of Time Warner Cable which owns the rights, as well
as to every one of the cable and satellite providers, saying
exactly what you said, ``Can we not come together here?'' I got
a little more specific with the CEO of Time Warner Cable
because what has happened here, as you know, is that Time
Warner Cable has purchased the exclusive rights to the Dodgers.
And they purchased them paying a price that at least the media
analysts say negatively affected their performance last year
because the analysts claimed they overpaid. And the other
providers, the DIRECTVs, the cable systems, et cetera, all
said, ``Well, wait a minute. I do not want to pay--you are
telling me that I am going to pay this kind of a fully-loaded
price or I cannot get it at all does not make any sense to
me.'' There has got to be a way to come together.
So I am happy that the decision was made, and for the last
six games this is absolutely terrific. And then it is into the
playoffs and it is a whole different contractual reality and
that is wonderful.
Ms. HAHN. And not the World Series.
Mr. WHEELER. I would not go that far, please. I am a
Dodgers fan, but I also want to see the Nationals get in.
Ms. HAHN. This is our year. This is our year. I want to go
on record that this is our year.
Mr. WHEELER. But I have then opened up an inquiry, an
investigation with Time Warner Cable because I want to know
more about what is going on here. Because the reality is that a
lot of money was put on the table to support an entity that is
doing all right itself economically, and consumers ended up
suffering. That is not right and I want to know more. And so I
have gone back and opened an investigation with Time Warner to
find out exactly what the facts of this are. I have talked to
each of the CEOs of each of the distribution channels, and they
have all said to me, ``I am ready to do it. I want to do it.
But just because they paid a lot, why do I have to pay a lot?''
And we have got to get over that kind of hurdle.
Ms. HAHN. Well, thank you. I appreciate that a lot. As you
know, I think all the congressional members of the L.A.
delegation had written to you, asking you to get involved
because we thought that would be helpful. And again, while this
was a small step, this agreement, we need long term to not put
fans and small businesses at the mercy of these kinds of
disagreements in the future.
Mr. WHEELER. I agree.
Ms. HAHN. And I look forward to seeing how you are going to
solve it.
Mr. WHEELER. Thank you, ma'am.
Ms. HAHN. Dodgers and Nationals series would be awesome.
Mr. WHEELER. That would be okay. That would be all right.
Wait a minute. That will not happen. Sorry. Earth to Tom, that
will not happen.
Chairman GRAVES. Mr. Luetkemeyer?
Mr. LUETKEMEYER. Thank you, Mr. Chairman.
Thank you, Mr. Chairman for being here today. I normally do
not read my questions but I have got two questions I want to be
sure and get to today so I am going to cut my own remarks short
here so I can make sure I get to the questions.
I heard from many small business owners in rural Missouri
which I represent with little or no access to high speed
broadband who had recently written to you, Mr. Chairman, on the
subject of Connect America Fund II. I am concerned that if we
do not set the floor for support at a reasonable speed, such as
megabytes per second, that for years to come most of the rural
constituents in my district will be left on the wrong side of
the digital divide.
As you have not yet responded to my letter which I wrote to
you August 15th, I wish you would address to the Committee
today with regards to the speed requirement you set in your
Connect America Fund II order that it will provide support for
adequate facilities based on high speed broadband for the small
businesses in rural America looking to compete in the global
economy with urban competitors, number one.
Number two, in addition, the Connect America Fund is for
deploying broadband in rural areas currently served by large
price capped carriers. A long-term Connect America Fund program
for those carriers was supposed to be in place almost two years
ago. When you consider the hurdles the FCC has faced to
implement Connect America Fund for just over a dozen larger
carriers, how long do you think it will take to produce a
Connect America Fund program for the smaller carriers and is
there a way to do this on a faster basis? If you could respond
to that, please.
Mr. WHEELER. Thank you. First of all, I apologize. I did
not realize that we are a month from a letter that you have
written. That is inexcusable, and I am normally a zealot on
getting quick responses.
Mr. LUETKEMEYER. Well, we were in recess. You probably
thought we would not be here. That is okay.
Mr. WHEELER. I got that.
So first of all, we have proposed increasing the throughput
in order to get universal service funds from four megabits per
second to 10 megabits per second for precisely the reason that
you mention: That you cannot have a digital divide. When 60
percent of the Internet's traffic at prime time is video and it
takes four or five meg to deliver video, a four meg connection
is not exactly what is necessary in the 21st century. And when
you have got a half a dozen different devices, wireless and
other connected devices in a home that are all going against
that bandwidth, it is not enough.
So what we were saying is we cannot make the mistake of
spending the people's money, which is what universal service
is, to continue to subsidize something that is subpar. As I
said, before the comments on this have just closed. I am
hopeful that by the end of the year we will be able to have
that issue tidied up.
On your second issue about the rate of return carriers, it
gets much more complex, unfortunately. The rate of return
carriers serve less than 5 percent of the population but get 50
percent of the high cost allocation because their situation is
so unique and costly. And muddling around with that has higher
potential opportunity costs. We have a proceeding on that as
well that has multiple parts that include some suggestions made
by the representatives of the rate of return carriers that we
have put out for comment. That also has just closed, and I am
hopeful that we will be able to get to that. I do not think we
will be able to get to it as quickly as the Connect America
Fund, but I think it is an early 2015 kind of an issue.
Mr. LUETKEMEYER. Okay. One more question.
As a result of the predominately rural district I
represent, I appreciate the Agency's efforts to address the
rural call completion problem that continues to harm rural
Americans when calls destined for rural business, hospitals,
public service, whatever are dropped before reaching their
provider. Can you update the Committee on the status of
implementing the recordkeeping or retention rules adopted last
year? In particular, why have not those been implemented a year
after they were adopted and when can we expect to see the rules
finally put in place?
Mr. WHEELER. Great. A couple of things on that.
One, we have been in active enforcement activities. We
fined Windstream $2.5 million. We fined Level 3 almost a
million dollars because of their failure to deliver on the call
completion expectation. We also had a proceeding in which we
said we want to begin to collect data that allows us to get
more granular to understand exactly where things are happening.
That ran into two problems. Problem number one was that a bunch
of carriers filed for reconsideration saying, well, these kind
of connections you should not look at and redefine what you are
looking at, and we had to go through that process and that is
now taken care of. And the other is again back to another OMB
issue where OMB had to give us permission under the Paperwork
Reduction Act to go out and ask questions. Those have now both
been resolved, and we are moving forward on the collection of
data, which is going to allow us to get very granular on what
the rules need to be.
Mr. LUETKEMEYER. Very good. I appreciate your candid
remarks. As a Cardinal fan, maybe if the Dodgers had a better
team or a better fan base you would not have those problems.
I yield back.
Chairman GRAVES. Mr. Barber.
Mr. BARBER. Well, thank you, Mr. Chairman, Ranking Member
Velazquez, for holding this important hearing. And thank you
for being with us, Mr. Chairman.
I will steer clear of the sports analogies and go right to
the issue that is significant in my district. I represent
southern Arizona, Tucson being the urban area, and all of
Cochise County, which is one of the nine districts in the House
that is a border community with Mexico. And as I talk to people
in my district, particularly in Cochise County and rural Pima
County, which is where Tucson is based, I hear stories over and
over again about the lack of access to broadband or wireless.
I was in Huachuca city just the other week talking to the
mayor who has a system that is archaic. So archaic it hardly
works at all. And the situation is even worse in Tombstone.
They are famous for Wild West City or the town too tough to
die. And so we really have a desperate need for small
businesses in my district, and I am sure it is true in rural
districts all over the country, to have increased access to
broadband and to high speed Internet that they need. The
economies of those communities rely on better Internet service
and they just do not have it.
So Mr. Chairman, I have just three questions for you. I
will take them in order and perhaps I will give them all three
to you so you can respond and we will not go back and forth.
With 12 million Americans living without access to
broadband, could you share with us what the FCC's goal is for
increasing broadband access in the next five years, and how are
you engaging the private sector to meet that goal?
And secondly, as you are talking to small businesses across
our country, how are broadband speeds and broadband prices
influencing their business strategies and decisions?
And finally, Mr. Chairman, in a slightly different vein,
cyber threats are growing every day. We have many briefings in
the House Armed Services Committee, in the Homeland Security
Committee on which I sit about the threat and the hits that we
are getting every single day. And our small businesses need to
be aware of these threats as much as the big companies. They
must have the security tools and the resources they need.
So I would like to ask, Mr. Chairman, if you could explain
what kind of outreach the FCC is conducting with our small
businesses to make sure that they are prepared. So if you could
try to answer those, I appreciate it.
Mr. WHEELER. Thank you, Mr. Barber.
So there is no doubt you have to have high speed if you are
going to play in the 21st century economy. The question is, as
I said before in response to another question, that our
universal service program was based on voice and based on
supporting companies that provided the voice. My predecessor
wisely moved off of voice to focus on supporting broadband. The
next questions that we have to face are, as was previously
asked: (1) Is that broadband speed fast enough? And (2) Are
there competitive alternatives to get that broadband?
So, for instance, if on LTE Wireless, LTE, you can get 25
to 100 megabits, should that be the solution to serving these
kinds of areas? If you can get not quite as fast but
significantly faster than four megabits service off of
satellite, should that be a solution?
And so we are moving into a period where there are going to
be competitive alternatives. We are also moving into a period
where the existence of those competitive alternatives has an
economic impact on the people who have traditionally provided
connectivity to your area. And so it becomes this kind of a
balancing act as to how we make this progress happen. But it
has to happen.
And then insofar as your cyber question, I could not agree
more, which is one reason that we have published several
brochures and tips and talking points for small business about
how they need to be worried about cyber and how it is a real
issue and what they can do, and those are available on the FCC
website and we promote their availability.
But the bigger question is that whether it is the local, as
I said, insurance agent or the company that is providing last
mile service, they are getting service from big network
providers and those network providers have to provide a level
of cybersecurity in their networks. And we are working with
them to develop both a set of standards that can be measured to
so that we can identify what the issues are and hopefully
remediate them and to try and do it in a voluntary process so
that we get as much participation from everybody as possible.
Mr. BARBER. Thank you, Mr. Chairman. I yield back.
Chairman GRAVES. Mr. Collins?
Mr. COLLINS. Thank you, Mr. Chairman.
Thank you for attending today.
Mr. WHEELER. Mr. Collins.
Mr. COLLINS. I have got a very rural district, western New
York, eight counties, a couple of them have definite broadband
issues as well as, frankly, even cell phone coverage issues.
But let us start with we certainly agree, or I certainly agree,
10 megabytes should be the minimum download. There are no two
ways about it.
So the basic question is, under special access rules, it is
1.54 megabytes and so it is a simple question that since we all
agree the minimum should be 10, and we all have to look at our
priorities, why is the FCC continuing to deal at all with
special access at 1.54 and new regulations and the like for
what I would call an outdated, obsolete service?
Mr. WHEELER. Well, 1.5 is what is called T1 and it is kind
of the table stakes for interconnection amongst and between
various carriers and businesses. Special access is not
controlled by speeds. Special access is a carrier, normally a
dominant carrier like AT&T or Verizon, selling services to
others who need it, whether it be the local cable company--I am
sorry, the local cellular company or a rural telephone company
or others, who are typically competitors. Therein lies the rub.
And so what we are now finally getting in a position to be able
to do is to have the data--because we were prevented from
getting the data that you have got to have to make this
decision--having the data that enables us to address just how
can we make sure that there is a fairly priced, readily
available, sufficient capacity to your point, special access
available for these competitors. That is what our rule is all
about, and by the end of this year we are going to have the
data that is going to allow us to be very granular on that.
Mr. COLLINS. So in my remaining time, let me ask you one
other question on the data. My county, Orleans County, one of
ours, if you look at the FCC, I think they would say that
county has 95 percent access to broadband, but I have
determined that data is in many cases driven off the last four
digits of the nine digit zip code. And if you look at the way
some of them are served, by definition, if a single customer in
that last four digit of the nine digit zip code, if a single
customer has access, it is deemed every customer has access.
And so they are actually paying right now with another county
to do a joint study where they believe their access is in the
50 to 60 percent where because of that nuance in the definition
of the data, with good data we make good decisions, with bad
data that is not the case, are you aware of that very
interesting nuance and what are we doing about it?
Mr. WHEELER. Yes, sir. And one of my mantras is we have to
have data-driven decisions.
Mr. COLLINS. I agree.
Mr. WHEELER. And if it is garbage in, it is garbage out.
Mr. COLLINS. Right.
Mr. WHEELER. And so there are a couple of things that are
interestingly going on. The National Broadband Map, which we
have recently taken responsibility for from NTIA, has these
kind of anomalies in it in large part because the information
is submitted, not collected. And there is a significant nuance
there when we are saying you tell us what is going on rather
than us going and finding it.
And the other interesting thing that has happened with the
Connect America Fund in the process that we have now
established for Phase Two is that people are able to challenge
whether or not there is service. A potential competitor is able
to challenge and say, ``Wait a minute. There is not service.
You say there is not, there is. There is or there is not.''
Either way. And that is helping us enrich the map. But I agree
with you, sir, that if you are going to be data driven, you
have to have good data.
Mr. COLLINS. Speaking for the counties, they are actually
paying their own money to do another study to try to disprove
the 95 percent.
Mr. WHEELER. I look forward to--I thank them for doing that
and I look forward to their results.
Mr. COLLINS. Okay, very good. Thank you.
Mr. WHEELER. Thank you, Mr. Collins.
Chairman GRAVES. Mr. Payne?
Mr. PAYNE. Thank you, Mr. Chairman and to our ranking
member.
Let us see, Mr. Wheeler, during your testimony you
mentioned that the FCC is reviewing diversity issues to see how
best we can promote a diversity of voices, including women and
minorities. Can you elaborate on this process and how the FCC
believes they can accomplish this goal?
Mr. WHEELER. Yes, sir. And we are in a situation right now
where let us talk about broadcast properties for a second. When
you have got less than a couple of percent of the broadcast
properties in America owned by minorities, something is wrong.
And when I came in here is what I found. There was a game being
played by Washington broadcast lawyers that said we will create
all kinds of fancy legal structures that will allow companies
to combine in an individual market, where we have a rule that
says there is one licensee per market because we want to have
diversity of voices and diversity of ideas and diversity of
ownership. We will allow the creation--we will construct these
creations--where the company does not really own the license
but they get the use of the license and they can get around the
rules. And what that had the impact of doing was chasing out
small business opportunity because the big guys were able to
outbid and the big guys were able to have economies of scale.
And the big guys fixed it. It was done through a structure
called JSA, Joint Sales Agreements. And we came in and we
changed that rule. There was a huge human cry. Oh, it is the
end of broadcasting efficiencies. Oh, you are going to really
hurt small business and minorities because we are so good to
them. And we went ahead and did it and we were supported by 20
different minority groups saying this is the right thing to do.
And Congressman, I am happy you asked that question because
I am happy that I can sit here today and say that last week I
was at the Commission when people were coming through led by
the Minority Media and Telecommunications Council, talking
about how they were now minority owners of broadcast outlets
that came on the market because of our change in this rule. And
it is not enough but it is a start. And I also think, by the
way, that the whole issue of open Internet is crucial, and the
opportunity--I am going up to, as you know, Mr. Rush is on the
Telecomm Subcommittee Energy and Commerce, and he has asked me
to come up and meet with a group of entrepreneurs in Chicago to
talk about how to use broadband to create opportunity for
entrepreneurs who are working on workshops at this across the
country, doing webcasts across the country at the FCC. But I
think there is also great opportunity in an open Internet for
small business and minority entrepreneurs.
Mr. PAYNE. Well, I appreciate that effort moving in that
direction, and for me, it is not so much about a preference as
it is leveling the playing field. As you say, a bunch of
Washington lawyers got together and crafted something that
would not allow certain individuals to be able to compete, so I
applaud those efforts and hope you continue to move in that
direction.
And with that I will yield back.
Chairman GRAVES. Ms. Clarke?
Ms. CLARKE. Thank you, Mr. Chairman. And I want to thank
the ranking member as well. I would like to thank Chairman
Wheeler for appearing before us today, and quite frankly, I
want to associate myself with the comments of Mr. Payne and
will be looking forward to your continued advocacy in this
regard because when you look at the fact that 7 percent of full
power commercial stations are owned by women and that there are
just 2.2 percent minorities when we comprise 40 percent of the
population, someone has got their thumb on the scales clearly.
Mr. WHEELER. I was hoping Mr. Tipton would still be here
and tell him when you see him that one of those, an outfit
called Cheng Media, which is now the only Asian-owned broadcast
outlet in the United States, is now operating in his district
and it is operating as a result of this rule change that we
just talked about.
Ms. CLARKE. Outstanding. Well, we want to encourage your
continued support of those endeavors.
My district has access to broadband. I am from Brooklyn,
New York, but it has serious adoption and digital literacy
gaps. These are the skills that are essential for participating
in the 21st century economy. So I want to hear from you what
you think FCC can do or is doing to address this concern, and
how will E-rate modernization affect these gaps?
Mr. WHEELER. So I think you just raised a key issue here
with E-rate. I am old enough that I took shop class in high
school. I do not even think they offer shop class anymore.
Right? But it was deemed important that I learn how to work a
metal lathe, right, which has not exactly helped me in my
activities to date. But I had that hands-on experience. The
thing that was really exciting to me about what the E-rate has
done is that it is giving students an exposure to the Internet
and the use of computers that is not, well, we are going to go
to Computer class now, but it is, ``You have got to live with
it.'' And this is how we all learn things. And you get the 21st
century skills by doing 21st century things every day in every
class.
And so what we have done in the E-rate is we came in and
identified that there was a huge problem--that E-rate was doing
a very good job of getting broadband connectivity to the
school. About two-thirds of schools in America are connected by
fiber now. But it was not doing a good job getting connectivity
to the student. And how do you have each student have Wi-Fi
access?
So we identified what we call the Wi-Fi Gap. And we found a
billion dollars this year, and a billion dollars next year that
we have targeted specifically for Wi-Fi in schools and
libraries and specifically made sure that it does not
cannibalize the money that is used for the important
connectivity in the first place. But, if as a result students
in their everyday classroom activities are becoming digitally
literate just by repeated use, by repeated exposure, then I
think we have sent them out after graduation with the skillsets
that are necessary to exist in a 21st century economy, and it
has happened by osmosis. And that is the best way to learn
something.
Ms. CLARKE. And in terms of the embrace of sort of the Wi-
Fi and making that available, has there been any real pushback?
Because I could certainly see those who offer Wi-Fi for a fee
being concerned about the competition.
Mr. WHEELER. But unfortunately, they were not offering it
for a fee in schools and it was not there. I am actually quite
proud, Ms. Clarke, that one of the things that we also did was,
utilize a small amount of money--a billion dollars is a small
amount of money--a finite amount of money, and we were able to
get the schools in America to be able to piggyback on the GSA
contracts for Wi-Fi access points, the largest purchaser of
equipment in the world, and now schools in Brooklyn or in
Missouri can get pricing for their Wi-Fi equipment that is the
same price that the U.S. Government pays. Not through a federal
purchasing program but just through a structure that we were
able to create. And that in itself is going to drive more Wi-Fi
into schools and libraries.
Ms. CLARKE. Well, I thank you very much once again, Mr.
Chairman, and Mr. Graves, I yield back.
Chairman GRAVES. The Internet has obviously flourished the
last 20 years and it has fundamentally changed how small
businesses and small firms are doing business nationally and
internationally, and preserving that is obviously something
that is pretty important to me, and I have concerns about how a
more heavily regulated Internet is going to affect small
businesses. But my question to you is have you considered what
the proposed net neutrality regulations are going to do to
small businesses and have you sought out the input from small
businesses? I would be curious about what the input is.
Mr. WHEELER. Yes, sir, in multiple ways.
As you may have read, we have had 3.7 million comments on
this document. There has never been more public input to
something that the FCC has done. And they are wildly in support
of open Internet requirements. I have probably received myself
tens and tens of thousands of emails addressed to me, and a lot
of them, you get things that are like them, too, that are not
exactly the ones you want to show your mother. But I look at
them, and the ones that I have been most interested in are the
ones from teachers and small business people who are saying,
``I am a small business person in so-and-so. Let me tell you
how this is important to me and why it is important to me.'' I
have met with startup companies and venture capitalists in
Silicon Valley as well as in Silicon Alley, in Brooklyn, as a
matter of fact is where the meeting was held. And sat down with
them and said as small business people, as entrepreneurs, as
the lifeblood of growth, let us talk about how this works.
So, yes, sir. And I also, I would add that even if I had
not done any of that, I bring 30 years of experience as a small
business person, including the scars of my companies being
denied access to networks, and I am a fervent believer in open
Internet.
Chairman GRAVES. Any other questions?
Ms. Clarke?
Ms. CLARKE. Thank you, Mr. Chairman. I do have one more
question for Chairman Wheeler.
While the FCC included initial reg flex analysis, it looked
primarily at small entities in the tech and telecomm industry.
I recognize these industries will be impacted, but I am
concerned about the 28 million small firms that utilize the
Internet in one way or another for business purposes. Has a
similar analysis been done to look at the effect on small firms
as end users?
Mr. WHEELER. This is in the open Internet proceeding? Yes,
we have specifically asked questions about that. And we also
have proposed an idea which is a unique idea in the history of
the Agency, and that is that how does a small business who does
not have the cash to hire a Washington lawyer to go represent
them before the FCC, get their voice head at the FCC? And so we
have proposed the creation of a small business ombudsman at the
FCC to on an email be able to advocate--to find out the facts
and advocate on behalf of this small business.
Ms. CLARKE. Good answer.
I yield back, Mr. Chairman.
Ms. VELAZQUEZ. Mr. Chairman?
Chairman GRAVES. Yes, ma'am.
Ms. VELAZQUEZ. Based on your experience, because I have
been on this committee for 22 years and for 20 of them we have
been dealing with the issue of the digital divide, especially
for small businesses and rural America. And I hear that you are
involved in increasing the speed and deployment infrastructure
for broadband, but what else can we do to increase or attract
competition in rural America to improve public policy, or what
else do we need to do? Or do you have all the tools that are
needed?
Mr. WHEELER. I believe that we have tools that are
adequate. I am not sure we have all the tools that are needed
or that would be nice to have. Let me put it that way.
The challenge is how do you recognize that one of the great
things about the Internet economy is that there is no longer
the telephone monopoly, that there are multiple ways of
reaching people? And how do you provide the necessary incentive
for for-profit companies to do that, while at the same time
recognizing that for the last 80-90 years there have been
companies out there that have received some kind of a subsidy
to enable them to offer services, and that they have entered
into debt agreements, they have hired people and made
representations, and this sort of thing?
And so one of the most challenging things in this evolution
is how do you embrace competition in a way that is logical and
responsible? And that is why we are supporting these trial
projects, because I do not know the answer. I could sit down
and hypothesize and answer, but I would much rather have a
market test, and that is what we are trying to do.
Ms. VELAZQUEZ. Thank you, Mr. Chairman.
Chairman GRAVES. Again, thank you, Mr. Chairman for
testifying before the Committee.
As I mentioned in my opening statement, I would like to see
the FCC and this Committee be partners moving forward and make
sure that we keep the lines of communication open as we look at
broadband and deployment and make sure those obstructions are
alleviated. But again, we appreciate you coming in. This is my
last hearing as chairman of the Committee. So thank you for
being that individual.
Mr. WHEELER. It is a privilege to be your final witness,
Mr. Chairman. Ms. Velazquez, thank you very much for inviting
me today.
Ms. VELAZQUEZ. I will be here.
Mr. WHEELER. I have a feeling he will still be here, too;
right?
Chairman GRAVES. With that I would ask unanimous consent
that all members have five legislative days to submit
statements and supporting materials for the record. And without
objection that is so ordered. And with that the hearing is
adjourned.
[Whereupon, at 3:20 p.m., the Committee was adjourned.]
A P P E N D I X
Statement of
Tom Wheeler, Chairman
Federal Communications Commission
Before the
Committee on Small Business
U.S. House of Representatives
Hearing on
``Is the FCC Responding to the Needs of Small Business and
Rural America?''
September 17, 2014
I. Introduction
Chairman Graves, Ranking Member Velazquez, members of the
Committee, thank you for the opportunity to be here today.
Having spent the past decade in the private sector, helping
to grow new businesses, I have a unique appreciation for the
entrepreneurial spirit of America's small business owners.
Small businesses are a key driver of job creation and economic
growth, and they are the foundation of local economies across
America--from Missouri's countryside to the neighborhoods of
Manhattan.
Since becoming Chairman less than a year ago, I have
traveled to many of those areas--including some of the most
rural and remote areas and Indian Reservations--and met with
small businesses, as well as schools, libraries, and citizens,
to learn more about how we can improve their access to modern
communications services, especially high-speed broadband. I've
also met with small and rural telcos to better understand their
unique challenges and the ways the Commission can help overcome
them through our various programs.
In the 21st century information economy, starting and
operating a small business requires access to 21st century
communications. High-speed broadband, wired and wireless, helps
small businesses better serve existing customers through
improved operations, and reach new ones by making anyone with
an Internet connection a potential customer.
At the FCC, we are committed to harnessing the power of
broadband communications to grow our economy and improve the
lives of the American people. Our work is guided by what I call
the Network Compact--a set of values Americans have a right to
expect from their network providers--such as universal access,
consumer protection, and public safety. Overarching these
values is the belief that competition is superior to
regulation, and competition is the Commission's most effective
tool for driving innovation, investment, and consumer and
economic benefits.
II. Expanding Access of Small Businesses and Rural Areas to
High-Speed Broadband
Consistent with these guiding principles, the FCC has taken
multiple actions to assist small businesses and expand
communications opportunities for rural America. Those actions
start with making sure every American small business has access
to true high-speed broadband.
Currently, about 12 million Americans live in areas where
wired broadband isn't available. These are homes with students
at a disadvantage compared to their connected neighbors. These
are small businesses, whether a local florist or a hunting
lodge, that can't compete in a connected world. And these are
communities that can't attract businesses to locate to their
towns and offer jobs to those in need. To help connect these
unserved areas, the Commission has modernized the Universal
Service Fund to focus on broadband, including establishing the
Connect America Fund (CAF). Roughly a quarter of all universal
service contributions come from small businesses, and by
increasing efficiencies these reforms help ensure that
consumers and small businesses are getting more bang for their
universal service buck.
In Phase I of the Connect America Fund, the Commission has
made investments that will make broadband available to 1.6
million unserved Americans in areas served by the nation's
largest traditional local providers--known as ``price cap''
carriers. In addition, Mobility Fund Phase I investments also
include $300 million to expand advanced mobile wireless service
and nearly $50 million for better mobile voice and broadband on
Tribal lands.
The Commission took another important step forward last
January, when we authorized in our Technology Transitions Order
experiments to advance the deployment of voice and broadband-
capable networks in rural areas with support from the Connect
America Fund. Our challenge is to preserve the values that
consumers and businesses, both large and small alike, have come
to expect from their networks, while unleashing new waves of
investment and innovation, which will deliver untold benefits
in the form of modern broadband networks for the American
people, including rural America. We cannot be a nation of
opportunity without networks of opportunity. That's why we are
moving forward with these trials, which will provide an
opportunity to consider how better to ensure that all of our
universal service programs are working together effectively to
ensure that residential consumers, small businesses, and anchor
institutions have access to evolving services delivered over
scalable networks.
Building on that action in January, we recently adopted an
Order establishing a $100 million budget for the rural
broadband experiments, criteria for what we expect from
applicants, and an objective, clear-cut methodology for
selecting winning applications. These rural broadband
experiments will allow us to explore how best to structure our
second phase of CAF investments, including through the use of a
competitive bidding process in price-cap areas, and gather
valuable information about deploying next generation networks
in high-cost areas.
Importantly, this is the first time the Commission will
attempt to use the tool of competitive bidding to bring
broadband to rural America through the Connect America Fund.
Competition holds the promise of better services at lower
costs--it is time to use that dynamic for the benefit of rural
America.
CAF Phase II will result in another five million Americans
getting access to broadband for the first time. We expect to
move forward with CAF Phase II with all dispatch, and the
lessons learned in our rural broadband experiments will help us
achieve our goal of delivering world-class voice and broadband
networks to rural America.
We also want to make sure small businesses not only have
access to broadband, but also that they have broadband with
sufficient bandwidth to meet their evolving needs.
When a single HD video requires 5 Mbps of capacity, it's
clear that the FCC's current benchmark for broadband--4 Mbps--
isn't adequate. This is why, as part of a Notice of Inquiry
issued this August, we have proposed updating the broadband
speed required for universal service support to 10 Mbps. We
also ask whether to include latency, data usage allowances, or
other characteristics in benchmarking broadband; whether to
establish separate benchmarks for fixed and mobile services;
how to best evaluate mobile and satellite services; and how to
take into account differences in broadband deployment,
particularly between urban areas versus non-urban and Tribal
areas.
We also want to make sure that anchor institutions like
schools and libraries have robust broadband connections to meet
community needs. This July, we took a major step forward in
making sure that every school and library in America has high-
capacity broadband to the building and within every classroom
and library, particularly for smaller schools and libraries in
rural areas. Previously, smaller, rural schools and libraries
had difficulty securing E-rate funding for internal connections
within a school or library. The Order increases support
targeted for Wi-Fi in rural school districts by nearly 75
percent and is expected to expand Wi-Fi connectivity to nearly
20 million students during its first two years, as well as
ensure more equitable availability of funds to rural schools
and libraries. While an important step, there are still far too
many rural and Tribal schools and libraries that do not have
sufficient broadband connectivity to the building and we are
actively working on tackling this issue through the next steps
of E-rate modernization and implementation of the next phase of
the Connect America Fund.
III. Promoting Wireless Connectivity and Competition to All
Americans
When we talk about access to broadband in 2014, we are
increasingly talking about wireless connectivity. The
Commission is working aggressively to make sure small
businesses and all Americans can take advantage of the new
services and applications enabled by mobile broadband.
We are taking multiple actions to make more spectrum
available for wireless broadband. In February, the Commission
concluded its first major auction of mobile broadband spectrum
since 2008, auctioning the 10 megahertz H-Block, which raised
more than $1.5 billion, much of which will be put to use toward
funding FirstNet's nationwide public safety broadband network.
This March, the Commission adopted a Report and Order
establishing service rules for our upcoming AWS-3 auction of 65
megahertz of highly desirable spectrum this November. The
Commission in March also changed rules to make 100 megahertz of
unlicensed spectrum in the 5 GHz band usable for purposes
including gigabit Wi-Fi.
In May, the Commission adopted a Report and Order that
establishes ground rules for our historic Incentive Auction, as
well as Mobile Spectrum Holdings policies to promote
competition in our upcoming auctions as well as potential
future spectrum transactions. By marrying the economics of
demand with the economics of current broadcast spectrum
holders, the Incentive Auction will harness market forces to
determine the highest and best use of spectrum, while providing
a potentially game-changing financial opportunity to America's
broadcasters.
Underlying all of our work on auctions is a commitment to
competition and ensuring smaller businesses have a shot to
compete. For instance, the ``market-based reserve'' spectrum in
the Incentive Auction will provide opportunities for wireless
providers to gain access to important low-band spectrum that
could enhance their ability to compete and help ensure that two
dominant carriers can't run the table in the auction. Our
establishment of smaller geographic license areas and 5 by 5
spectrum blocks in both the Incentive Auction and AWS-3 auction
will also enhance small businesses' ability to compete for and
win spectrum licenses.
In August, I circulated a Notice of Proposed Rulemaking to
update the FCC's competitive bidding rules--also known as our
Designated Entity or DE rules--to recognize the challenges new
entrants face in entering the wireless industry, such as
raising funds to compete in an auction, finding a revenue
stream to support business expansion or developing a business
model based on market needs rather than regulatory mandates.
This proposal would provide innovative, smaller companies with
the opportunity to build wireless businesses that can spur
additional investment and offer more choices to consumers.
The FCC's Office of Communications Business Opportunities
(OCBO) continues to conduct workshops to educate and empower
small business owners to take advantage of opportunities in the
communications sector. Our annual conference on capitalization
strategies for small and diverse media and communications
businesses will be held again this fall. Through seminars and
one-on-one interviews, OCBO connects entrepreneurs with
financial experts who make daily decisions about capital
infusion.
Early participants in OCBO's Cap Access program have seen
real benefits. For example, the National Association of Latino
Community Asset Builders made the initial, crucial connections
at our conferences that ultimately led to $3.7 million in
federal funds through the Broadband Technology Opportunities
Program. With that much-needed capital, they established
broadband-enabled small business support centers throughout the
country.
IV. Promoting Competition, Localism and Diversity in the
Media Marketplace
Related to these on-going efforts to promote and increase
participation in communications services, the Commission also
has a duty to promote competition, localism, and diversity
within the media marketplace. The Commission has taken actions
over the past year that could have a positive impact for small
business entities.
One of the first votes I took as Chairman of the Commission
at my first Open Meeting in November 2013 was to approve a
Declaratory Ruling to clarify our policies and procedures for
reviewing transactions in the broadcasting industry involving
foreign ownership and investment. Such a clarification could
unleash new capital to help existing broadcasters and potential
new entrants to serve the needs and interests of their
communities.
Additionally, we have rules in place that limit broadcast
ownership concentration. A major component was the initiation
of the quadrennial review of the Commission's media ownership
rules in March of this year. We sought comment on the various
rules and are exploring how to craft rules that can meet our
goals and survive judicial review. As part of this proceeding,
we are reviewing diversity issues to see how best we can
promote a diversity of voices, including women and minorities.
While our quadrennial review is underway, we have to
enforce our existing rules and close loopholes where necessary
to ensure there's a level playing field for all--including
small business entities. In March, we took a significant step
to close a loophole in our attribution rules for TV Joint Sales
Agreements (JSAs) that had been exploited by some to circumvent
our local TV ownership limits. These new rules will protect
viewpoint diversity and competition goals. As an example, just
a few weeks ago, Gray Communications announced that it had
terminated some sharing agreements with six TV stations in
smaller markets and engaged the Minority Media
Telecommunications Council (MMTC) to find new buyers for those
stations. I applauded the news in late August that MMTC was
successful in finding new buyers that will increase diversity
of ownership and programming in each of these markets, all of
which are in areas that serve smaller communities, including
Grand Junction, Colorado; Monroe, Louisiana; and Fargo, North
Dakota.
For other instances where there are attributable JSAs, and
parties believe those existing or proposed agreements would be
in the public interest, we will entertain waiver requests and
process them on an expedited basis.
V. Fostering Innovation and Entrepreneurship Through an
Open Internet
The Internet's open design has empowered innovators and
entrepreneurs across the country to launch small businesses--
some of which have grown to become world-leading companies.
This May, the Commission adopted a Notice of Proposed
Rulemaking that begins the process of crafting rules to protect
and promote the open Internet. The focus of the proposals we
put forward and the questions we ask in this Notice is on
maintaining a broadly available, fast, and robust Internet that
serves as a platform for economic growth, investment,
innovation, free expression, and competition.
September 15th marked the close of the comment period for
this proceeding. We are closely examining the issues and
reviewing the public record, which includes more than 3 million
comments--the largest body of comments for any FCC rulemaking
proceeding. And we're not stopping with that. Just yesterday,
we began a series of six public roundtable forums through which
we are soliciting the views of Americans, as well as expert
advice from a wide array of stakeholders, about how best to
craft enforceable rules of the road that will bring certainty
to the marketplace.
As this process moves forward, we will continue to enforce
our Open Internet Transparency rule, which was upheld in court
and is an important tool to help small businesses make informed
choices about the Internet access services they buy. It is my
goal to get final rules back on the books as quickly as
possible to give consumers, businesses and innovators the Open
Internet protections they currently lack.
VI. Ensuring Network Safety, Security and Reliability
The Commission is also working to make sure that the
broadband networks small businesses rely on are safe, secure,
and reliable.
To ensure that all Americans are not harmed and benefit
from the transition to next-generation networks, we are
obtaining data on the impact of technology transitions in rural
areas, including Tribal lands, where residential consumers,
small businesses, and anchor institutions may not have access
to advanced broadband services.
The Commission is working to stop rural call completion
problems, which can damage small and large businesses alike.
Last year, the Commission enhanced our ability to investigate
this problem with new data retention and reporting
requirements. Thus far, our Enforcement Bureau has issued three
consent decrees to combat this problem, and we will continue to
take action against carriers that fail to provide reliable
communications.
To protect against cyber threats, our Public Safety and
Homeland Security is working with the private sector and other
government agencies to create a new paradigm for cyber
readiness. This private sector-led effort must be more dynamic
than traditional regulation and more measurably effective than
blindly trusting the market or voluntary best practices to
defend our country.
We are working with industry to identify public goals,
working with the affected stakeholders in the communications
industry to achieve those goals, and letting that experience
inform whether there is any need for next steps.
We also have practical tools like our Small Business Cyber
Planner, which lays out a number of common-sense steps small
businesses can take to improve security.
VII. Process Reforms
The Commission is sensitive to the impact of our regulatory
processes on the entities we serve, including small businesses.
In fact, process reform has been a priority since Day One of my
Chairmanship, when I tasked staff to develop, within 60 days,
specific recommendations to improve the efficiency and
transparency of the FCC's processes. For instance, the
Commission has conducted a review of its regulatory fee
structure to update the payment scale and provide regulatory
fairness for all of the Commission's licensees. Among the
changes we have made is raising the de minimis payment level to
exclude those licensees owing less than $500 from having to pay
a fee, giving small businesses a break, and also enabling the
Commission to realize cost savings for processing.
VIII. Conclusion
I want to thank the Committee again for this opportunity to
discuss the many things the Commission is doing to benefit
America's small businesses. I look forward to working with
members of this committee on these and other relevant issues,
and I welcome your questions.
[GRAPHIC] [TIFF OMITTED]
Small Business Committee Hearing
``Is the FCC Responding to the Needs of Small Business and
Rural America?''
Wednesday, September 17th
Chairman Sam Graves--Questions for the Record
1. This committee is very concerned about the time and
other resources that rural carriers spend on sometimes outdated
regulatory requirements. Earlier in September, the FCC put out
a notice (79 FR 52334) seeking comment on information and data
collection by the Commission. Is it your intention to reduce
the amount information that small communications carriers are
required to gather and submit?
RESPONSE:
Generally, the Commission continually strives to reduce
burdens on the entities we regulate--especially small
businesses. One of the priorities of my Chairmanship is to
improve the way the Commission functions, as well as to modify
or eliminate unnecessary regulations. We have made progress,
and will continue the effort to reduce burdens, where
warranted.
The Federal Register notice cited above is a required
Paperwork Reduction Act (PRA) notice that addresses rules
adopted by the Commission on February 20, 2014, governing the
quality of closed captioning on television programming. In
adopting the new closed captioning quality rules, the
Commission had to carefully balance Congressional mandate to
provide the millions of Americans who are deaf or hard-of-
hearing with full access to video programming through the use
of closed captioning with the burdens such rules may place on
the video programming distributors. While we believe we
appropriately struck such a balance, the PRA notice
specifically seeks comment on, among other things, whether the
proposed collection of information is necessary for the
Commission to properly function and whether there are ways to
minimize the burdens. In addition, we note that the Commission
rules provides that petitioners who submit a request for
exemption based on economic burden are automatically exempted
from the closed captioning obligations while their petitions
are pending, thereby deferring and potentially eliminating any
burden on the petitioners. PRA comments are due to the
Commission on November 3, 2014 where they will be reviewed by
staff.
2. Most independent communications carriers, especially in
rural areas, are small businesses that serve small businesses.
Do you have a time line for implementing Connect America Fund
distribution criteria for rural rate-of-return carriers?
RESPONSE:
The Commission is focused on updating the universal service
fund high-cost program to ensure that we are delivering the
best possible voice and broadband experiences to residents and
businesses in rural America within the confines of our Connect
America budget, while providing increased certainty and
predictability for all carriers and a climate for increased
broadband investment and expansion. In April, the Commission
adopted the Connect America Fund Further Notice of Proposed
Rulemaking that sought comment on proposals from rural carrier
associations and also other possible methods to establish a
Connect America Fund for rate-of-return carriers within the
current budget for the program, and how to provide rate-of-
return carriers with a way to transition to new forms of
support. In that same proceeding, the Commission eliminated the
Quantile Regression Analysis benchmarks rule for all rate-of-
return carriers because it was not serving its intended
purpose. We have received a thorough record of these issues,
and they are under consideration by Commission staff. Please be
assured that we will take into consideration the issues and
concerns presented by all stakeholders as the Commission
reviews the record in this proceeding as expeditiously as
possible.
3. The Commission is in the process of implementing a $100
million rural broadband experiment program to determine how to
conduct Connect America Fund auctions. This has garnered the
interest of many new players in this arena--local governments,
rural electric cooperatives and other entities. How do you
justify subsidizing carriers beyond the companies and
cooperatives already getting Universal Service Fund support?
RESPONSE:
The Commission has a responsibility to ensure that the
funds we collect to support our universal service programs are
used in the most efficient and effective way possible, and
these experiments give us the opportunity to, for the first
time in the history of universal service, leverage the benefits
of competition to determine which provider will receive the
support to serve a particular area. In the USF/ICC
Transformation Order, the Commission concluded that it would
use a competitive bidding mechanism for Phase II of the Connect
America Fund to award support in those states where price cap
carriers decline to make a state-level commitment in exchange
for model-based support. In the January 2014 Tech Transitions
Order, we unanimously adopted targeted experiments to advance
the deployment of voice and broadband-capable networks in rural
areas with Connect America support and gain data on the impact
of technology transitions on rural America where residential
consumers, small businesses, schools, libraries, and health
care providers may not have access to advanced broadband
services. And in July 2014, the Commission unanimously adopted
a $100 million budget and established objective criteria for
selecting projects. These experiments will allow us to explore
how to structure the Connect America Phase II competitive
bidding process in price-cap areas.
The universal service program is one of the most important
tools at our disposal to ensure that consumers and businesses
in rural America have the same opportunities as their urban and
suburban counterparts to be active participants in the United
States of the 21st century. Therefore, it is important that we
allow all interested parties an opportunity to compete to bring
robust broadband to rural areas. It is critical that we have a
universal service program that supports providers who are
willing to step up and deliver service consistent with the
Commission's performance standards.
Importantly, any recipient of rural broadband experiment
funding must be designated as an eligible telecommunications
carrier by the state(s) where it is seeking to offer service or
by the Commission (if the relevant state lacks jurisdiction
over that entity). This helps to ensure that these new
participants in the universal service program meet the same
baseline standards consumers have come to expect from incumbent
providers. Designating rural broadband experiment participants
as eligible telecommunications carriers also assists state and
federal regulators in monitoring and overseeing the use of
universal service funds.
Competition holds the promise of better services for rural
America at lower costs. Better service at lower cost is the
result of broadband competition in other areas of the country,
and it is time to use that same dynamic for the benefit of
rural America.
4. What protections do FCC policies contain to prevent an
ISP from using its position as a broadband provider to target,
through its network forensics and management technologies, the
customers of a competitor, including those that provide alarm
services?
5. How can the FCC help that ISPs do not, using
preferential treatment or priority to they or an affiliate
provide, create an unfair competitive market advantage over
small businesses that also reach customers using the same
broadband network owned by the ISP?
RESPONSES TO QUESTIONS 4-5:
Small companies and startups must be able to reach
consumers with their innovative products and services, and they
must be protected against harmful conduct by broadband
providers. As a result of the D.C. Circuit Court of Appeal's
January decision in Verizon, there are currently no rules in
place that prevent a broadband provider from engaging in
conduct harmful to Internet openness, such as blocking a
consumer from accessing a requested website, degrading the
performance of an innovative Internet application, or
preventing attachment of a lawful device (such as an alarm
monitor) to a broadband network. The Open Internet is too
important to leave consumers and innovators unprotected. We
must reinstate strong, enforceable Open Internet rules, and we
must do so with dispatch.
As you know, in May, the Commission adopted a Notice of
Proposed Rulemaking (``Notice'') to begin that process. We
asked a fundamental question: What is the right public policy
to ensure that the Internet remains open? And we sought comment
on the best way to achieve that fundamental policy goal. The
response has been remarkable: Over 3.7 million comments were
filed by the close of the comment period on September 15, 2014.
This record-setting level of public engagement reflects the
vital nature of Internet openness and the importance of our
getting the answer right in this proceeding. The Notice
proposes clear rules of the road and aggressive enforcement to
prevent unfair treatment of consumers, edge providers and
innovators. It also proposes a rebuttable presumption that
exclusive contracts that prioritize service to broadband
affiliates are unlawful, and asks more broadly whether paid
prioritization should be banned outright or otherwise presumed
to be illegal.
The Commission is considering several options that would
form the legal foundation for the rules, including Section 706
and Title II of the Communications Act. The Notice specifically
asks questions about these approaches, including whether the
Commission should revisit its classification of broadband
service as an information service or whether we should
separately identify and classify under Title II a service that
``broadband providers... furnish to edge providers.'' For
approaches involving a Title II classification, we also ask
about how our forbearance authority should be used to tailor
Title II obligations to achieve our public policy goals. Since
the Notice, record filings by some parties--such as AOL,
Mozilla, the Center for Democracy and Technology, a coalition
of library and higher education associations, Congressman Henry
Waxman (D-CA), and others--have suggested additional approaches
that would combine aspects of both our Section 706 and Title II
authority. We are looking closely at these approaches as well.
This reflects what I said before the House Committee on
Small Business: All options remain o the table, including Title
II, so that we can properly protect small businesses and
startups.
Questions for the Record from
Rep. Blaine Luetkemeyer (MO-3)
Committee on Small Business
U.S. House of Representatives
``Is the FCC Responding to the Needs of Small Businesses and
Rural America?''
House Small Business Committee
September 17, 2014
Questions to Tom Wheeler, Chairman of the Federal
Communications Commission
1. Earlier this year, it came to my attention that the
FCC's docket regarding the Telephone Consumer Protection Act
(TCPA) causes regulatory uncertainty, rather than clarity, for
small businesses. In fact, 15 of my colleagues, including
members of this Committee, sent a letter last month urging the
Commission to enact common-sense reforms to the telemarketing
statute by acting on one of the many TCPA-related petitions for
declaratory ruling that are awaiting action by your agency. How
is the Commission planning to provide regulatory certainty for
small businesses seeking to gain customers without violating
the statute? When will the Commission take action on the
numerous TCPA-related petitions for declaratory ruling?
RESPONSE:
Congress enacted the TCPA in 1991 with a goal of protecting
consumers from unwanted calls and facsimiles, while not
inhibiting useful and expected communications between parties.
The petitions for declaratory ruling that are pending before
the Commission raise questions about how the TCPA should be
applied to calling practices that, in many cases, businesses
and other parties are either currently using or are proposing
to use in the future. The petitions also raise questions about
how the TCPA applies to certain calling technologies and
whether distinctions should be drawn between telemarketing and
informational calls in some contexts, among other issues. In
evaluating the important and challenging issues raised by these
petitions, the Commission will seek to protect consumer privacy
from unwanted calls while ensuring that parties who wish to
make calls that consumers find desirable can do so without
legal uncertainty.
The Commission has received several petitions regarding the
applicability of the TCPA and the Commission's related rules,
and routinely seeks comment on them with a view toward building
a complete public record on the specific issues that they
raise. The comment cycles for a number of these petitions have
been completed, and the Commission staff is carefully reviewing
the records. In addition, the staff has held numerous meetings
with interested parties on these issues, which have been very
informative. Please be assured that we will take into
consideration the issues and concerns presented by all
stakeholders as the Commission continues to work on these
proceedings as expeditiously as possible.
2. As with other telecommunications and technology
regulations, the Telephone Consumer Protection Act is outdated
and needs common-sense reforms. For example, it is my
understanding that if a wireless number is re-assigned to a new
customer, a business that seeks to contact the previous owner
of the number faces liability for calling the new customer even
though there is no way for the business to know the number was
re-assigned. That just doesn't make much sense. How does the
FCC plan to address and rectify this issue? Isn't there a place
for common-sense solution here such as creating a ``safe
harbor'' for entities that respect the request of a new
reassigned number holder to not be called a second time by
adding the recycled number to a suppression list?
RESPONSE:
Since its enactment in 1991, the TCPA has required prior
express consent for non-emergency autodialed or prerecorded
calls to a wireless telephone number. Petitions for declaratory
ruling currently pending before the Commission raise the issue
of how the TCPA should apply when a party unknowingly makes
such a call to a wireless number that was originally held by a
subscriber who consented to such calls, but has subsequently
been re-assigned to another subscriber. The Commission has
sought comment on this issue, including proposals by
petitioners that the Commission adopt a ``safe harbor' from
liability for such calls when the caller has complied with the
subsequent subscriber's request not to be called. The comment
cycles for these petitions have been completed, and interested
parties have made informative presentations on this issue to
the Commission staff, which is actively reviewing the entire
record. In resolving this issue, the Commission will seek to
carry out the TCPA's statutory goal of protecting consumers
from unwanted autodialed or prerecorded calls while recognizing
the practical concerns of parties who seek to comply with the
law. Please be assured that we will consider the views and
concerns of all stakeholders as we work toward an expeditious
resolution of this important issue.
3. I also understand that the TCPA requires businesses to
obtain express consent from consumers in order to contact them.
However, there seems to be some confusion about whether
businesses need to obtain express consent for each type of
contact. For example, if a customer gives a business his phone
number for account service purposes, doesn't it make sense for
the business to be able to call that customer for billing and
collections purposes?
RESPONSE:
The TCPA has, since its enactment in 1991, required prior
express consent for non-emergency autodialed or prerecorded
calls to wireless telephone numbers. Petitions for declaratory
ruling now pending before the Commission raise a variety of
issue concerning how consent must be obtained to comply with
this statutory requirement. The Commission has sought comment
on these petitions, and the staff is now closely reviewing the
record of comments that have been filed, as well as information
provided by interested parties during ex parte presentations.
In evaluating the consent issues before it, the Commission
will consider the consumer's interest in deciding which calls
he or she wishes to receive, as the TCPA provides, as well as
the practical concerns of parties who wish to make calls to
such consumers. As you have noted in your question, the context
in which a telephone number is provided may be a significant
factor in the Commission's review of consent issues. For
example, in its original 1992 Report and Order adopting rules
under the TCPA, the Commission found that ``persons who
knowingly release their phone numbers have in effect given
their invitation or permission to be called at the number which
they have given, absent instructions to the contrary.'' More
recently, in 2008, the Commission addressed consent in the debt
collection context, clarifying that ``autodialed and
prerecorded message calls to wireless numbers that are provided
by the called party to a creditor in connection with an
existing debt are permissible as calls made with the `prior
express consent' of the called party.'' We will carefully
consider the precedential value of such previous Commission
decisions, as well as the comments of all interested parties,
as we move toward resolution of the pending petitions that
raise consent issues important to consumers and callers alike.
Questions for the Record
Small Business Committee
``Is the FCC Responding to the Needs of Small Business and
Rural America?''
Wednesday, September 17th
Congresswoman Jaime Herrera Beutler - QFRs
1. ``I understand there is an issue pending before the FCC
concerning the selection of the next Local Number Portability
Administrator. It is very important that the voices of all
carriers including the small and medium sized competitive
carriers be heard. I understand the LNP Alliance, which
represents the Northwest Telecommunications Association, filed
comments in this proceeding and that they have expressed their
concern about the fact that this proceeding is happening at a
critical time during the IP transition. I share that concern
and I am also concerned what type of transition costs may be
imposed on these telcos, both today and in the future in an all
IP world. Does the selection process envision a neutral,
shared, allocation of costs in the IP world?''
RESPONSE:
There has been considerable participation by small and
medium-sized carriers in the ongoing process to select the next
Local Number Portability Administrator (LNPA), including from
the LNP Alliance and its members as well as others such as
Comptel. We are currently evaluating the record in this
proceeding, which includes the bids as well as the comments
filed by the LNP Alliance and others. This proceeding to select
the LNPA, however, does not change the Commission's numbering
or cost-allocation rules, so any concerns about matters such as
how costs are allocated are not part of the LNPA selection
process.
2. The Commission has stated that the 600 MHz incentive
auction will commence in mid-2015; however, the National
Association of Broadcasters has challenged the Order in court,
and the FCC must also address numerous rules concerning the
auction process before it can conduct the auction.
3. Are you on track to meet your commitment to hold the 600
MHz incentive auction by mid-2015 or will the NAB's lawsuit
delay the process? What developments pose the greatest risk to
conducting the 600 MHz incentive auction by mid-2015?
4. If you are not on track for a mid-2015 auction, please
explain the problems you are having and why they cannot be
overcome on a timely basis. Please also explain in detail your
plans for resolving any such problems.
RESPONSES TO QUESTIONS 2-4:
The Commission has worked to meet its goal to commence the
world's first spectrum incentive auction in mid-2015. We have
known from the start that the incentive auction is a complex
undertaking, and we want to make appropriate, and timely,
decisions to ensure a successful auction. I am confident that
our initial Report and Order released in early June complies
with all of the statutory directives. However, as you note,
court challenges to the auction rules by the NAB and Sinclair
Broadcasting could delay of the incentive auction
implementation process.
On October 22, the court announced a revised briefing
schedule under which final written briefs will not be due until
the end of January 2015, with oral arguments to follow at a
later date yet to be determined. We are currently evaluating
the impact of this new schedule on the timing of the auction.
Despite the complexity of the auction, and even in the face
of uncertainty due to lawsuits, the Incentive Auction task
force has been making consistent progress implementing the
auction, and we continue to make headway in our efforts.
For example, in the past month, the Commission adopted five
Incentive Auction-related items:
A Notice of Proposed Rulemaking regarding
unlicensed operation in the TV band and new 600 MHz
band, including operation of fixed and personal/
portable white space devices and unlicensed
microphones.
A Notice of Proposed Rulemaking to address
the needs of wireless microphone users.
A Declaratory Ruling regarding protection of
coverage areas and population served of broadcast
stations during the repacking process.
A Second Report and Order and Further Notice
of Proposed Rulemaking to address (1) the methodology
for predicting interference between broadcast and
wireless operations in the same or adjacent channels in
nearby markets during and following the Incentive
Auction, and (2) outstanding proposals for additional
measures to prevent interference between TV stations as
a result of the repacking process.
A Third Notice of Proposed Rulemaking and a
Suspension Public Notice for Digital LPTV to address
measures to facilitate the low power TV digital
transition and to mitigate the potential impact of the
Incentive Auction and the repacking process on the low
power TV services.
For stations eligible to participate in the auction, we
have increased our outreach activities to provide additional
information on the benefits of this once-in-a-lifetime
opportunity. On October 1, we released an informational
package, prepared by the investment firm Greenhill and Co., to
every eligible broadcast station. The package outlines the
options available in the incentive auction, includes FCC staff
estimates of high end compensation that could be paid for
broadcast spectrum rights in each market, and information from
the IRS on tax implications. In the coming weeks, Commission
staff will embark on an expanded broadcaster outreach effort
that includes sitting down with broadcasters at town halls and
individually to discuss the opportunities presented by the
auction. It is my hope and expectation that broadcasters will
give participating in the incentive auction careful
consideration. That information has been provided to the public
on our Learn Everything About Reverse Auctions Now (LEARN)
webpage (See www.fcc.gov/LEARN).
We also recently released a Public Notice seeking comment
on a draft reimbursement form to be used by broadcasters and
other entities that incur expenses due to the post-auction
relocation process. The Notice on the form builds on prior
action where the Commission worked with and sought comment from
the broadcast industry.
The staff also is actively working on a Public Notice to
seek public input on the final auction procedures, and
reviewing the issues raised in the Petitions for
Reconsideration on the Report and Order that were filed with
the Commission in late August.
Questions for the Record
Committee on Small Business Full Committee Hearing
September 17, 2014
Congressman Tom Rice (SC-07)
1. My colleagues and I appreciate the agency's apparent
willingness to address the rural call completion problem that
continues to harm rural America when calls destined for rural
businesses, hospitals, public safety officials, and individuals
are dropped before reaching the local provider. Because of the
critical need to fully resolve this problem, please provide a
more detailed update on the status of your agency's actions to
do so, including a more detailed explanation of why it has
taken so long to implement the recordkeeping and retention
rules the Commission adopted on this subject nearly a year ago.
The FCC has fined three companies in the past couple of years
for failing to ensure that rural calls are completed. Have
these enforcement actions been effective in discouraging other
bad actors from dropping calls? Why do you think the record
retention and reporting will help solve the problem? What more
can be done?
RESPONSE:
The consequences of call completion and service quality
problems can be dire, impacting businesses, families, and
public safety, and thus the Commission is committed to ensuring
reliable telephone service in rural America. In the Rural Call
Completion Report and Order and Further Notice of Proposed Rule
Making, the Commission adopted new rules governing the delivery
of long-distance calls to rural areas, including prohibiting
false ring signaling, and requiring data retention and
reporting of call completion performance. The rule prohibiting
false ring signaling is already in effect. The record retention
and call completion performance reporting requirements will
need approval from the Office of Management and Budget (OMB)
before going into effect. We are currently addressing petitions
for reconsideration and waiver filed following the Rural Call
Completion Order. Recently, I circulated an Order to my fellow
Commissioners to address five petitions that were filed asking
the FCC to reconsider our rules.
To be sure, we are not waiting for the new rules to go into
effect to take what actions we can under our existing rules. In
particular, the Commission has taken a number of enforcement
actions in this area. In addition to the Consent Decree entered
with Level 3 in 2013 ($975,000), earlier this year the
Enforcement Bureau negotiated consent decrees with two major
long distance providers--Windstream Corporation ($2.5 million)
and Matrix Telecom ($875,000).
Our investigations, in conjunction with other enforcement
efforts, which include issuing an advisory on how providers
should address consumer complaints about rural call completion
problems, have had positive effects in combatting this complex
problem. These efforts have raised awareness among long
distance providers as to how an individual intermediate
provider (often called a ``least cost router'') performs in
delivering calls to rural areas and, as a result, long distance
providers have removed poor performing intermediate providers
from particular routes. These efforts also have improved the
process through which long distance providers address and
resolve complaints by rural carriers and consumers about call
completion problems.
The new rules will further help us ensure that customers in
rural areas receive reliable telephone service. For example,
the data that providers file with the Commission should show us
whether an individual long distance provider is completing
calls to a specific rural area at a lower rate than other
providers, which should help us take targeted, appropriate
action, including enforcement action, if necessary. This
information, as well as the additional data that long distance
providers will collect and retain, will also assist long
distance providers in monitoring the performance of each of
their individual intermediate providers to discrete rural areas
and highlight whether provider's call completion rates to a
particular rural area is unacceptably low. Once the new rules
take effect, we expect that other long distance providers, like
Matrix, will remove poor performing intermediate providers to
improve all completion performance to rural areas.
We will continue to investigate the call completion
practices of other voice communications providers, enforce our
rules, and evaluate whether any additional measures are
appropriate to ensure reliable telephone service in rural
America.
2. You and your staff have made statements that indicate
you're considering security mandates for telecom providers if
you decide the industry is not effectively securing its own
assets. What security threshold will companies have to meet to
ensure their security measures aren't regulated? When you
consider the wide variation of network and service providers,
how would your agency develop mandatory standards that are
relevant for all entities when the cyber threats are always
changing? Wouldn't it be more efficient for companies to be
made aware of threats so they can adopt the security measures
that are the best fit for their company? How do you plan to
help companies in implementing such measures?
Secure communications networks and the public safety
functions that rely on them are crucial to our national
security. As these networks transition to IP-based
technologies, forward-looking market innovation driven by the
business interests and expertise of the private sector is
indispensable to their security and central to consumer and
investor confidence in the communications market. This is the
guiding principle of our cybersecurity efforts at the FCC. The
strongest posture our nation can have is a capable private
sector leading the development and implementation of effective,
defensive cybersecurity measures.
Among communications sector companies, there is a wide
range of cyber defense capabilities. Effective employment of
cyber capabilities varies depending on a number of factors,
including company size and scale, reliance on public facing
Internet infrastructure, experience with adversary exploitation
attempts, and workforce training, among other factors. However,
given the seriousness and sophistication of the threats that
these networks face and the accelerating convergence of public
safety communications around IP-based networks, I am extremely
concerned that the relevant information is simply not yet
available for the FCC--or any other entity--to have an informed
understanding of the sufficiency of the protections that are in
place. Developing a well-informed understanding of cyber risks
for our core networks is a threshold issue for our country's
national security interests and for the Commission's execution
of its statutory public safety responsibilities.
Tackling our nation's cybersecurity challenges will require
a collaborative effort. We need a new regulatory paradigm that
is both more dynamic than reactive compliance with rules and
more effective than blindly trusting the marketplace. The
companies that make up the communications sector must recognize
their special role and the value proposition, and we look
forward to continuing to work with these stakeholders, such as
through the Communications Security, Reliability, and
Interoperability Council (CSRIC), an industry-led FCC advisory
group, which has a working group tasked with developing and
recommending implementation details for the NIST Cybersecurity
Framework in the communications sector.
Over 100 subject matter experts from industry and other
stakeholders are working urgently to establish an approach to
cybersecurity in which they generate the sufficiency thresholds
for their internal cybersecurity controls consistent with the
NIST Cybersecurity Framework. Everyone involved in this effort
is working toward the same goal: a business-driven approach to
measuring, managing, and communicating cyber risk. I do not
wish to prejudge this important industry-led effort, and it
would be premature to comment on where the effort may conclude.
We all want this effort to succeed, and the FCC will work
diligently with communications providers and other stakeholders
to make it so.
Regarding threat information sharing, we agree that
companies themselves are our country's eyes and ears in
detecting and addressing these threats. At the FCC, we are
evaluating the legal concerns that may complicate threat
information sharing in the communications sector, and we are
working collaboratively with communications stakeholders and
companies in other sectors to find information sharing
solutions. Again, however, it would be premature to speculate
on what other options might be needed beyond the efforts that
are presently underway, as neither the FCC nor the
communications providers themselves have sufficient data or
information on which to base such determinations.
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